124423.doc

Federal Communications Commission FCC 12-95

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

Applications of Cellco Partnership d/b/a

Verizon Wireless and SpectrumCo LLC and Cox

TMI, LLC For Consent To Assign AWS-1

Licenses

Applications of Verizon Wireless and Leap for

Consent To Exchange Lower 700 MHz, AWS-1,

and PCS Licenses

Applications of T-Mobile License LLC and Cellco

Partnership d/b/a Verizon Wireless for Consent to

Assign Licenses

)

WT Docket No. 12-4

ULS File Nos. 0004942973, 0004942992,

0004952444, 0004949596, and 0004949598

WT Docket 12-175

MEMORANDUM OPINION AND ORDER AND DECLARATORY RULING

Adopted: August 21, 2012 Released: August 23, 2012

By the Commission: Chairman Genachowski and Commissioners Clyburn and Rosenworcel issuing

separate statements; Commissioners McDowell and Pai approving in part,

concurring in part and issuing separate statements.

TABLE OF CONTENTS

Heading Paragraph #

I. INTRODUCTION.................................................................................................................................. 1

II. BACKGROUND.................................................................................................................................... 7

A. Description of Applicants ................................................................................................................ 8

1. Verizon Wireless .......................................................................................................................8

2. Leap ......................................................................................................................................... 11

3. SpectrumCo ............................................................................................................................. 12

4. Cox .......................................................................................................................................... 13

5. T-Mobile.................................................................................................................................. 14

B. Description of Transactions ...........................................................................................................16

C. Transaction Review Process .......................................................................................................... 20

III. STANDARD OF REVIEW, PUBLIC INTEREST FRAMEWORK AND OVERVIEW ................... 28

IV. QUALIFICATIONS OF APPLICANTS.............................................................................................. 33

V. SPECTRUMCO AND COX EFFORTS TO USE THE SPECTRUM................................................. 41

VI. POTENTIAL PUBLIC INTEREST HARMS......................................................................................47

A. Competitive Analysis..................................................................................................................... 47

1. Overview ................................................................................................................................. 47

2. Market Definition .................................................................................................................... 52

a. Product Market.................................................................................................................. 53

b. Geographic Markets.......................................................................................................... 54

c. Input Market for Spectrum................................................................................................ 59

Federal Communications Commission FCC 12-95

3. Competitive Effects of Transactions on Mobile Telephony/Broadband Services:

Spectrum Concentration .......................................................................................................... 64

a. Verizon Wireless-Acquisition of Spectrum From SpectrumCo-Cox-Leap and-T-

Mobile............................................................................................................................... 66

b. Leap’s Acquisition of Spectrum From Verizon Wireless ................................................. 79

c. T-Mobile’s Acquisition of Spectrum From Verizon Wireless.......................................... 80

B. Competitive Impact of Transactions on Roaming ......................................................................... 81

C. Competitive Impact of Transactions on Interoperability ............................................................... 85

D. Other Public Interest Issues Raised by Petitioners......................................................................... 90

VII. POTENTIAL PUBLIC INTEREST BENEFITS ............................................................................... 95

A. Analytical Framework.................................................................................................................... 96

B. Asserted Benefits ........................................................................................................................... 99

C. Discussion.................................................................................................................................... 106

VIII. REMEDIES...................................................................................................................................... 111

IX. BACKHAUL AND WI-FI ................................................................................................................. 123

X. REVIEW OF THE COMMERCIAL AGREEMENTS...................................................................... 139

XI. FOREIGN OWNERSHIP AND DECLARATORY RULING .......................................................... 170

1. Verizon Wireless ...................................................................................................................171

2. T-Mobile................................................................................................................................ 179

XII. CONCLUSION ................................................................................................................................ 182

XIII. ORDERING CLAUSES .................................................................................................................. 183

APPENDIX A - Pleadings in ULS File No. 0004942973

APPENDIX B - Pleadings in WT Docket No. 12-4

APPENDIX C - Petitioners and Commenters in WT Docket No. 12-175

APPENDIX D - Reporting Requirements

I. INTRODUCTION

1. In late 2011, the Commission received multiple applications seeking to assign to Verizon

Wireless a substantial number of licenses for Advanced Wireless Services (“AWS”)-1 spectrum, a key

spectrum band suitable for the provision of commercial mobile broadband services. The first application

sought to assign to Verizon Wireless a significant number of AWS-1 licenses, as well as certain Personal

Communications Services (“PCS”) licenses, from affiliates of Leap Wireless International Inc.

(collectively, “Leap”). It also sought to assign to Leap from Verizon Wireless one Lower 700 MHz A

Block license. Shortly thereafter, we received applications seeking to assign to Verizon Wireless AWS-1

licenses providing near nationwide coverage from Comcast, Time Warner Cable, and Bright House

Networks (via SpectrumCo, LLC), and from Cox, respectively (hereinafter, collectively, “the Cable

Companies”). These applications were part of a larger transaction between Verizon Wireless and the

Cable Companies that also includes commercial arrangements under which: (1) Verizon Wireless and the

cable operators will act as sales agents of one another’s services; (2) each of the cable operators may

become resellers of Verizon Wireless’s services; and (3) the parties (other than Cox), through a joint

venture, seek to develop ways to integrate wireline and wireless services (collectively, “the Commercial

Agreements”). Finally, in June, 2012, Verizon Wireless and T-Mobile filed five applications seeking

Commission consent for the full and partial assignments of AWS-1 licenses by and between T-Mobile

and Verizon Wireless.

2. As discussed below, as part of our determination as to whether the transactions are in the

public interest, we evaluate the competitive effects of Verizon Wireless’s post-transaction spectrum

holdings on a local and national level, and both overall and within the AWS-1 spectrum band. Based on

these dimensions, we find that, absent mitigating measures, the acquisition by Verizon Wireless of

Federal Communications Commission FCC 12-95

spectrum from SpectrumCo, Cox, and Leap would be substantially likely to result in certain public

interest harms through foreclosure or raising of rivals’ costs, and that the associated benefits would be

insufficient to determine on balance that the transaction as proposed was in the public interest.

Specifically, we find that (1) these transactions raise competitive issues with respect to Verizon

Wireless’s aggregation of spectrum and its substantial aggregation within the unique AWS-1 band; and

(2) the data roaming market may be further constrained as a result of the transaction.

3. In addition, after a thorough review, we conclude that, though nascent, the Commercial

Agreements as originally drafted had the potential to reduce competition and harm consumers in a manner

that would also render the transaction inconsistent with the public interest. Specifically, while the

Commercial Agreements had the potential to offer consumer benefits, as initially conceived they raised

potential competitive concerns with respect to: (1) wireline broadband, video, and voice services; (2)

wireless home broadband services; (3) wireless/wireline integration services; and (4) mobile wireless

services.

4. To address the serious concerns raised by Commission staff regarding Verizon Wireless’s

aggregation of spectrum, in late June, Verizon Wireless reached an agreement with T-Mobile to, among

other things, assign a significant number of AWS-1 licenses from Verizon Wireless to T-Mobile,

including a number of licenses that Verizon Wireless was proposing to acquire from SpectrumCo, Cox,

and Leap. In addition, on August 15, 2012, Verizon Wireless filed a letter offering certain commitments

with respect to the provision of roaming service and to the aggressive buildout of the AWS-1 licenses it

would acquire in these pending transactions. We conclude that the filing of the T-Mobile/Verizon

Wireless application and the Verizon Wireless commitments mitigate the spectrum concentration harms

that would otherwise result from the proposed transfers of spectrum to Verizon Wireless, and we apply

conditions to Verizon Wireless accordingly. We also find that the spectrum acquisitions by Leap and T-

Mobile are unlikely to result in competitive or other public interest harms and are likely to result in

meaningful transaction-specific public interest benefits that support approval of these proposed

transactions.

5. Regarding the Commercial Agreements, the Department of Justice (“DOJ”) Antitrust

Division, working in close coordination with Commission staff, has negotiated a proposed Consent

Decree with Verizon Wireless and the Cable Companies. That Consent Decree requires that the parties to

the agreements alter them in multiple, fundamental ways that address the key potential harms to

consumers and competition. As a result of Commission staff’s work with DOJ and the resulting proposed

Consent Decree, we conclude that we do not need to impose further conditions at this time, other than an

independent reporting obligation placed on Verizon. Because these agreements are in the early stages of

implementation and relate to evolving markets, it is difficult to predict their effects with certainty. Thus,

we find it essential to require Verizon to submit regular reports that will shed light on the impact of

certain essential elements of the Commercial Agreements.

6. Accordingly, we conclude that approval of the transactions before us, taken together and

as conditioned, will serve the public interest. The transactions will result in an expeditious transfer of

valuable spectrum into the hands of multiple national service providers that will put it to use in providing

the latest generation mobile broadband services well in advance of the Commission’s current deadlines.

Moreover, taking into account the substantial pending revisions to the Commercial Agreements, the

proposed Consent Decree, and Verizon’s voluntary reporting commitments, we conclude that nothing

about the Commercial Agreements in their substantially modified form alters our ultimate conclusion that

the transactions as a whole are consistent with the public interest.

Federal Communications Commission FCC 12-95

II. BACKGROUND

7. Below we describe all of the Applicants before us, the transactions themselves, and the

transaction review process.

A. Description of Applicants

1. Verizon Wireless

8. Cellco Partnership, which does business as Verizon Wireless, is a general partnership

formed as part of a joint venture between Verizon Communications Inc. (“Verizon”) and Vodafone Group

Plc. (“Vodafone”). Verizon owns a controlling 55 percent ownership interest in the joint venture, and

thus has control of Verizon Wireless and its subsidiaries; Vodafone owns the remaining 45 percent.

Verizon Wireless states that Vodafone’s interest in the partnership and its qualifications as a foreign

corporation to hold indirect ownership interests in common carrier licenses have been previously

authorized by the Commission under the Communications Act of 1934, as amended (“Communications

Act”).

9. Verizon Wireless is one of the largest wireless service providers in the United States as

measured by total number of customers and revenue.

It has deployed a fourth-generation (“4G”) Long

Term Evolution (“LTE”) network that, as of May 2012, covers more than 200 million people. The

company plans to expand its LTE network to 260 million people by the end of 2012 and to its entire EV-

DO footprint by the end of 2013.

In 2011, its domestic wireless revenues were $70.2 billion,

representing approximately 63 percent of Verizon’s aggregate revenues.

See Verizon Communications Inc., SEC Form 10-K (for the fiscal year ended Dec. 31, 2011)(“Verizon 10-K”), at

2, available at http://www.sec.gov/Archives/edgar/data/732712/000119312512077846/d257450d10k.htm (last

visited Aug. 13, 2012). Verizon is a holding company that, acting through its subsidiaries, also provides wireline

communications products and services such as voice, Internet access, broadband video and data, Internet protocol

network services, network access, long distance, and other services.

Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo, LLC for Consent to Assign Licenses,

WT-Docket 12-4 (filed Dec. 21, 2011), Public Interest Statement (“Verizon Wireless-SpectrumCo Public Interest

Statement”) at 3; see also Applications of T-Mobile License LLC and Cellco Partnership d/b/a Verizon Wireless for

Consent to Assign Licenses, WT Docket No. 12-175 (filed June 25, 2012), Public Interest Statement (“T-Mobile-

Verizon Wireless Public Interest Statement”) at 8 (citing, inter alia, Applications of Cellco Partnership d/b/a

Verizon Wireless and Atlantis Holdings LLC For Consent to Transfer Control of Licenses, Authorizations, and

Spectrum Manager and De Facto Transfer Leasing Arrangements and Petition for Declaratory Ruling that the

Transaction is Consistent with Section 310(b)(4) of the Communications Act, WT Docket No. 08-95, Memorandum

Opinion and Order and Declaratory Ruling, 23 FCC Rcd 17444, 17546 ¶ 232 (2008)(“Verizon Wireless-ALLTEL

Order”)).

See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and

Analysis of Competitive Market Conditions with Respect to Mobile Wireless, including Commercial Mobile Services,

WT Docket No. 10-133, Fifteenth Report, 26 FCC Rcd 9664, 9696-97 Tables 3-4 (2011)(“Fifteenth Annual

Competition Report”).

Verizon Wireless, Network Facts, http://aboutus.vzw.com/bestnetwork/network_facts.html, available at (last

visited Aug. 13, 2012); Fifteenth Annual Competition Report, 26 FCC Rcd at 9736 ¶ 109. EV-DO, or Evolution-

Data Optimized or Evolution-Data Only, is a group of related third-generation (“3G”) wireless technical standards,

optimized for data transmission.

Verizon, Investor Conferences – 4Q 2011 Quarter Earnings Conference Call Webcast, available at

http://www22.verizon.com/investor/webcast_2011_fourth_quarter_earnings_conference_call_webcast_01242012.ht

m (last visited Aug. 13, 2012).

Federal Communications Commission FCC 12-95

10. Verizon is incorporated in Delaware and headquartered in New York.

It provides

wireline, wireless, and broadband services to mass market, business, government, and wholesale

customers.

Verizon, which is traded on the New York Stock Exchange,

operates two reportable

business segments – Domestic Wireless and Wireline.

Vodafone is a public limited company

incorporated in England with a registered office in Newbury, England.

Vodafone provides mobile voice

and data, paging, and internet services in over 30 countries in Europe, Africa, Asia, the Middle East, and

the United States through subsidiaries, joint ventures, and other investments.

Its ordinary shares are

listed on the London Stock Exchange, and its American Depositary Shares are listed on the NASDAQ

Stock Market.

2. Leap

11. Leap Wireless International Inc. is a wireless communications carrier offering low-cost,

unlimited digital services under the “Cricket” brand at flat monthly rates without fixed-term contracts.

It wholly owns and controls Cricket Communications, Inc. and Cricket License Company, LLC

(“Cricket”),

and holds a non-controlling, majority economic interest in Savary Island Wireless LLC

(collectively, “Leap”).

For 2011, Leap reported $3.0 billion in revenues,

principally arising from the

sale of wireless services, devices, and accessories.

As of December 31, 2011, Leap reported 5.9 million

Verizon 10-K at 5; Verizon, Investor Relations, Company Profile, Corporate History, Current Statistics, available

at http://investor.verizon.com/profile/history/index.aspx?tabId=1 (last visited Aug. 13, 2012); Verizon, Investor

Relations, Company Profile, Corporate History, The History of Verizon Communications, available at

http://www22.verizon.com/investor/corporatehistory.htm (“Verizon Corporate History”)(last visited Aug. 13, 2012).

Verizon, Investor Relations, Company Profile, Overview, available at

http://www22.verizon.com/investor/companyprofile.htm (last visited Aug. 13, 2012).

Verizon Corporate History.

See Verizon 2011 Annual Report available at

http://www22.verizon.com/investor/app_resources/interactiveannual/2011/index.html at 21(last visited Aug. 21,

2012); at 21; Verizon 10-K at 2.

Vodafone, About Vodafone, available at http://www.vodafone.com/content/index/about.html (last visited Aug.

13, 2012).

See id.

See Vodafone, Corporate Governance, available at

http://www.vodafone.com/content/index/investors/about_us/governance.html (last visited Aug. 13, 2012).

Leap Wireless International, Inc., SEC Form 10-K (filed Feb. 21, 2012)(“Leap 10-K”), at 4, available at

http://www.sec.gov/Archives/edgar/data/1065049/000106504912000003/leap-dec2011q4x10k.htm (last visited Aug.

16, 2012).

See FCC 602 Ownership Disclosure Information for the Wireless Telecommunications Services, File No.

0004963672 (filed Nov. 21, 2011)(“Leap Form 602”).

Leap offers service in the upper Midwest through its 85 percent non-controlling membership interest in Savary

Island Wireless LLC. Leap 10-K at 4. Ring Island Wireless, LCC holds a 15 percent controlling interest in Savary

Island Wireless, LLC, which wholly owns and controls Savary Island License A, LLC and Savary Island License B,

LLC (collectively, “Savary”). See Leap 10-K at 8; Leap Form 602.

Leap 10-K at 40.

Id. at 43.

Federal Communications Commission FCC 12-95

customers with service offered in 47 states covering approximately 289 million POPs.

3. SpectrumCo

12. SpectrumCo LLC (“SpectrumCo”) was created in 2006 as a joint venture among

subsidiaries of Comcast Corp. (“Comcast Communications”), Time Warner Cable Inc. (“Time Warner

Cable”), Cox Communications, Inc. (“Cox”), Bright House Networks, LLC (“Bright House”), and Sprint

Nextel Corporation (“Sprint Nextel”). SpectrumCo was the successful bidder for 137 wireless spectrum

licenses in the Commission’s AWS-1 auction, which concluded in September 2006 (Auction 66). In

2007, Sprint Nextel withdrew from SpectrumCo, and the SpectrumCo members purchased Sprint

Nextel’s interests for an amount equal to Sprint Nextel’s capital contribution to the joint venture. In

2009, Cox also withdrew from SpectrumCo, taking its share of the AWS-1 spectrum under the

SpectrumCo LLC agreement. Today, SpectrumCo is owned by Comcast (63.6 percent), Time Warner

Cable (31.2 percent), and Bright House (5.3 percent).

4. Cox

13. Cox TMI, LLC (“Cox”) is a subsidiary of Cox, one of the largest cable companies in the

U.S. and a long-time provider of high-speed Internet and local telephone services.

Cox

Communications reports that it has more than 6 million customers, including more than 2.6 million local

and long distance voice service customers and nearly 4 million high-speed Internet customers, in markets

across the country.

Cox Communications, through an affiliated company, Cox Wireless Investments,

was an original member of SpectrumCo.

5. T-Mobile

14. T-Mobile License LLC (“T-Mobile License”) is a wholly-owned subsidiary of T-Mobile

USA, Inc. (“T-Mobile”), which, in turn, is a wholly-owned, indirect subsidiary of Deutsche Telekom AG

(“DT”), a publicly-traded German corporation. T-Mobile states that, through DT, foreign entities and

persons indirectly hold 100 percent of the attributable ownership interests in T-Mobile.

The

Commission has previously authorized DT’s interest in T-Mobile and its licensed subsidiaries, including

T-Mobile, pursuant to Section 310(b)(4) of the Communications Act.

15. T-Mobile, headquartered in Bellevue, Washington, is the fourth largest wireless service

provider in the United States in terms of network coverage, number of subscribers, and revenues.

At the

end of the first quarter for 2012, T-Mobile reported a total of 33.4 million U.S. subscribers, and service

Id. at 4.

Verizon Wireless-SpectrumCo Public Interest Statement at 2.

Application of Cellco Partnership d/b/a Verizon Wireless and Cox TMI Wireless, LLC for Consent to Assign

Licenses, File No. 0004996680 (filed Dec. 21, 2011), Public Interest Statement (“Verizon Wireless-Cox Public

Interest Statement”) at 2.

Id.

Id. at 3.

T-Mobile-Verizon Wireless Public Interest Statement at 7. File No. 0005272585 is the lead application for this

transaction.

47 U.S.C. § 310(b)(4).

See Fifteenth Annual Competition Report, 26 FCC Rcd at 9695-97, Tables 1-4.

Federal Communications Commission FCC 12-95

revenues were $4.4 billion in the first quarter of 2012.

At the beginning of 2012, T-Mobile announced

plans to invest $4 billion towards network modernization and its 4G evolution effort, including the

planned launch of LTE technology in 2013.

B. Description of Transactions

16. Verizon Wireless-Leap. Verizon Wireless and Leap seek Commission consent to assign a

Lower 700 MHz Band Block A license for the Chicago Basic Economic Area (“BEA”) from Verizon

Wireless to Leap.

In addition, they seek consent to assign from Cricket to Verizon Wireless 23 PCS

licenses and 13 AWS-1 licenses, disaggregated portions of one PCS license and one AWS-1 license, and

partitioned portions of three AWS-1 licenses.

Also, Verizon Wireless and Savary seek to assign

partitioned portions of Savary’s AWS-1 licenses to Verizon Wireless.

If the applications are granted,

Leap would hold an additional 12 megahertz of Lower 700 MHz spectrum in 13 Cellular Market Areas

(“CMAs”) in the Chicago BEA,

and Verizon Wireless would hold an additional 10-20 megahertz of

PCS spectrum and 10-30 megahertz of AWS-1 spectrum in 202 CMAs.

17. Verizon Wireless-SpectrumCo and Verizon Wireless-Cox. Verizon Wireless,

SpectrumCo, and Cox seek Commission consent to assign 122 of SpectrumCo’s AWS-1 licenses and 30

of Cox’s AWS-1 licenses to Verizon Wireless. These licenses include 121 BEA licenses and one

Regional Economic Area (“REA”) license (covering Hawaii) from SpectrumCo, and 30 BEA licenses

from Cox (covering much of Cox Communication’s wireline territory). If the applications are granted,

Verizon Wireless would hold an additional 20-30 megahertz of AWS-1 spectrum in 630 out of 734

T-Mobile Financial Release, T-Mobile USA Reports First Quarter 2012 Results (May 9, 2012), available at

http://www.t-

mobile.com/Cms/Files/Published/0000BDF20016F5DD010312E2BDE4AE9B/5657114502E70FF30137A40F8FD

A8B84/file/Q1 2012 Press Release_Final.pdf (last visited Aug. 14, 2012).

Id. at 7.

Application of Cellco Partnership d/b/a Verizon Wireless and Cricket License Company, LLC, File No.

0004952444 (filed Nov. 23, 2011), Public Interest Statement (“Verizon Wireless-Cricket Public Interest Statement”)

at 1.

Applications of Cellco Partnership d/b/a Verizon Wireless and Cricket License Company, LLC, File Nos.

0004949596 and 0004949598 (filed Nov. 23, 2011); Verizon Wireless-Cricket Public Interest Statement at 1. AWS-

1 consists of spectrum in the 1710-1755/2110-2155 MHz bands.

Application of Cellco Partnership d/b/a Verizon Wireless and Savary Island License A, LLC, File No.

0004942973 (filed Nov. 23, 2011), Public Interest Statement (“Verizon Wireless-Savary Public Interest Statement”)

at 1; Application of Cellco Partnership d/b/a Verizon Wireless and Savary Island License B, LLC, File No.

0004942992 (filed Nov. 23, 2011). Hereinafter citations to documents contained in this transaction record will refer

to “File No. 0004942973.” See supra note 15 (describing Leap’s ownership interests in Savary Island subsidiaries).

These 13 CMAs cover approximately 11 million people, or 3.5 percent of the population of the mainland United

States, and include two of the Top 100 CMAs.

These 202 markets cover approximately 51 million people or approximately 17 percent of the population of the

mainland United States, and include 10 of the Top 100 CMAs. The Verizon Wireless-Leap transactions do not

include the transfer of customers, facilities, or assets other than spectrum licenses, and the assignment would not

create any customer transition issues or any discontinuance, reduction, or impairment of service to customers.

Verizon Wireless-Cricket Public Interest Statement at 1-5; Verizon Wireless-Savary Public Interest Statement at 1-

Federal Communications Commission FCC 12-95

CMAs nationwide.

18. In addition to the spectrum transactions, Verizon Wireless and the Cable Companies have

entered into the following commercial arrangements: (1) a series of agreements under which Verizon

Wireless and the Cable Companies will act as sales agents of one another’s services; (2) a series of

agreements that, as originally executed, provided each of the Cable Companies with the option, after

approximately four years, to become resellers of Verizon Wireless’s services; and (3) a joint venture

among Verizon Wireless, Comcast, Time Warner Cable, and Bright House (“Joint Operating Entity”) to

develop ways to integrate wireline and wireless services.

We note that Verizon Wireless and the Cable

Companies have already begun selling each other’s services in various markets outside of Verizon’s

footprint.

The parties contend that the Commercial Agreements “have no bearing on whether the

spectrum sale is in the public interest, do not require Commission approval, and, for several reasons, do

not need to be part of the formal record in this proceeding.”

On January 18, 2012, Verizon Wireless and

the Cable Companies nevertheless submitted the Commercial Agreements into the record of this

These 630 CMAs cover approximately 291 million people, or approximately 94 percent of the population of the

mainland United States, and include 94 of the Top 100 CMAs. This transaction does not include the transfer of

customers, facilities, or assets other than spectrum licenses, and therefore the assignment will not create any

customer transition issues or any discontinuance, reduction, or impairment of service to customers. Verizon

Wireless-SpectrumCo Public Interest Statement at 1, 3, 19-20; Verizon Wireless-Cox Public Interest Statement at 1,

4, 18.

Joint Opposition at 70-71; see also Verizon Wireless-SpectrumCo Public Interest Statement at 23; Verizon

Wireless-Cox Public Interest Statement at 20. Specifically, the Commercial Agreements consist of the following

fourteen documents: (1) Limited Liability Company Agreement of Joint Operating Entity, LLC, dated 12/2/11; (2)

VZW Agent Agreement between Cellco Partnership d/b/a Verizon Wireless and Comcast Cable Communications,

dated 12/2/11; (3) Comcast Agent Agreement between Comcast Cable Communications, LLC and Cellco

Partnership d/b/a Verizon Wireless, dated 12/2/11; (4) Reseller Agreement for Comcast Cable Communications,

LLC between Cellco Partnership d/b/a Verizon Wireless and Comcast Cable Communications, LLC; (5) VZW

Agent Agreement between Cellco Partnership d/b/a Verizon Wireless and Time Warner Cable Inc., dated 12/2/11;

(6) TWC Agent Agreement between Time Warner Cable Inc. and Cellco Partnership d/b/a Verizon Wireless, dated

12/2/11; (7) Reseller Agreement for Time Warner Cable Inc. between Cellco Partnership d/b/a Verizon Wireless and

Time Warner Cable Inc.; (8) VZW Agent Agreement between Cellco Partnership d/b/a Verizon Wireless and Bright

House Networks, LLC, dated 12/2/11; (9) BHN Agent Agreement between Bright House Networks, LLC and Cellco

Partnership d/b/a Verizon Wireless, dated 12/2/11; (10) Reseller Agreement for Bright House Networks, LLC

between Cellco Partnership d/b/a Verizon Wireless and Bright House Networks, LLC; (11) MSO Agreement

between C Spectrum Investment, LLC, Time Warner Cable LLC , and BHN Spectrum Investments, dated 12/2/11;

(12) VZW Agent Agreement between Cellco Partnership d/b/a Verizon Wireless and Cox Communications, Inc.,

dated 12/16/11; (13) Cox Agent Agreement between Cox Communications, Inc. and Cellco Partnership d/b/a

Verizon Wireless, dated 12/16/11; and (14) Reseller Agreement for Cox Communications, Inc. between Cellco

Partnership d/b/a Verizon Wireless and Cox Communications, Inc.

See, e.g., Steve Donohue, Comcast Expands Promotion with Verizon Wireless; Offers Free DVR, Streampix

Subscriptions, FIERCECABLE (June 21, 2012), http://www.fiercecable.com/story/comcast-expands-promotions-

verizon-wireless-offers-free-dvr-streampix-subsc/2012-06-21 (last visited Aug. 16, 2012); see also supra note 34

(listing reseller agreements).

Letter from Michael H. Hammer, Willkie Farr & Gallagher LLP, Counsel for Comcast, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Jan. 18, 2012 at 2 (“Comcast Jan. 18, 2012 Ex Parte”); Letter from J.G.

Harrington, DowLohnes PLLC, Counsel to Cox TMI Wireless, LLC, to Marlene H. Dortch, Secretary, FCC, WT

Docket No. 12-4, filed Jan. 18, 2012 at 2 (“Cox Jan. 18, 2012 Ex Parte”).

Federal Communications Commission FCC 12-95

transaction, subject to the First and Second Protective Orders.

The Applicants noted that they were

submitting the Commercial Agreements “[w]ithout waiving their position…in order to avoid undue delay

in the Commission’s review of the spectrum transaction, and in response to a Commission request.”

the Commission’s request,

the Applicants subsequently resubmitted the Commercial Agreements to

include certain portions that previously had been redacted.

19. T-Mobile-Verizon Wireless. In response to significant spectrum concentration concerns

raised by Commission and DOJ staff regarding the Verizon-SpectrumCo-Cox and Verizon-Leap

transactions, Verizon Wireless commenced negotiations to divest certain of the AWS-1 licenses it would

acquire as a result of the contemplated transactions. On June 25, 2012, Verizon Wireless and T-Mobile

filed five applications seeking Commission consent for the full and partial assignments of AWS-1

licenses by and between T-Mobile and Verizon Wireless (“T-Mobile-Verizon Wireless Applications”).

Among other things, Verizon Wireless seeks to assign to T-Mobile 47 licenses (covering all or portions of

98 CMAs) that Verizon Wireless has proposed to acquire from SpectrumCo, Cox, and Leap.

T-Mobile

and Verizon Wireless state that the assignments proposed in the T-Mobile-Verizon Wireless Applications

“will all occur simultaneously upon closing, contingent upon regulatory approval of the instant

transaction and regulatory approval and closing of the SpectrumCo-Cox Assignments and the Leap

Assignments.”

If the applications are granted, T-Mobile would hold an additional 10-20 megahertz of

AWS-1 spectrum in 125 CMAs, and Verizon Wireless would hold an additional 10-20 megahertz of

AWS-1 spectrum in 17 CMAs.

See Comcast Jan. 18, 2012 Ex Parte; Cox Jan. 18, 2012 Ex Parte. On January 17, 2012, the Wireless

Telecommunications Bureau (the “Bureau” or “WTB”) issued two protective orders to ensure that any confidential

or proprietary documents submitted to the Commission in connection with Docket No. 12-4 would be adequately

protected from public disclosure and announcing the process by which interested parties could gain access to

confidential information filed in the record. Application of Cellco Partnership d/b/a Verizon Wireless and

SpectrumCo LLC for Consent to Assign Licenses, WT Docket No. 12-4, Protective Order, DA 12-50 (Jan. 17,

2012)(“First Protective Order”); Application of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC for

Consent to Assign Licenses, WT Docket No. 12-4, Second Protective Order, DA 12-51 (Jan. 17, 2012)(“Second

Protective Order”).

See Comcast Jan. 18, 2012 Ex Parte; Cox Jan. 18, 2012 Ex Parte.

Letter from Rick Kaplan, Chief, WTB, FCC, to Michael Samsock, Cellco Partnership, WT Docket No. 12-4 (Mar.

8, 2012).

See Letter from Brien C. Bell, Willkie Farr & Gallagher LLP, Counsel for Comcast, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Mar. 9, 2012; Letter from J.G. Harrington, Dow Lohnes PLLC, Counsel

to Cox TMI Wireless, LLC, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed Mar. 9, 2012.

See supra note 23.

See Cellco Partnership d/b/a Verizon Wireless and T-Mobile License LLC Seek FCC Consent to the Assignment

of Advanced Wireless Service Licenses, WT Docket No. 12-175, Public Notice, DA 12-999 (rel. June 26, 2012)

(“T-Mobile Accepted for Filing Public Notice”) at 2 (citing Cellco Partnership d/b/a Verizon Wireless, SpectrumCo,

LLC and Cox TMI Wireless, LLC Seek FCC Consent to Assignment of AWS-1 Licenses, WT Dkt. 12-4, Public

Notice, 27 FCC Rcd 360 (Jan. 19, 2012) (“Verizon Wireless-SpectrumCo-Cox Comment Public Notice”); Verizon

Wireless and Leap Wireless Seek FCC Consent to the Exchange of Lower 700 MHz Band A Block, AWS-1, and

Personal Communications Service Licenses, Public Notice, 26 FCC Rcd 16810 (Dec. 14, 2011) (“Verizon Wireless-

Leap Comment Public Notice”)).

T-Mobile-Verizon Wireless Public Interest Statement at 2.

Id. at 1-2.

Federal Communications Commission FCC 12-95

C. Transaction Review Process

20. Applications and Pleadings. On December 14, 2011, the Bureau released a public notice

seeking comment on the Verizon Wireless-Leap transactions.

On January 11, 2012, the Bureau released

a public notice establishing WT Docket No. 12-4 for the Verizon Wireless-SpectrumCo and the Verizon

Wireless-Cox applications,

and subsequently took steps to protect confidential information in this

docket.

On January 19, 2012, the Bureau accepted the applications for filing and sought comment on

the proposed transaction.

The Verizon Wireless-SpectrumCo-Cox Comment Public Notice established

a pleading cycle for the applications, with petitions to deny due February 21, 2012, oppositions due

March 2, 2012, and replies due March 12, 2012.

The Verizon Wireless-SpectrumCo-Cox Comment

Public Notice also consolidated the applications for administrative convenience given the common issues

raised.

The Bureau also released a public notice on January 19, 2012 establishing an identical pleading

cycle for the Leap applications.

On March 8, 2012, the Bureau extended the deadline for the

SpectrumCo and Cox applications for filing replies and responses or oppositions to March 26, 2012.

21. In response to the comment public notices, 12 parties filed petitions to deny and 37

parties filed comments regarding the Verizon Wireless-SpectrumCo and the Verizon Wireless-Cox

applications, and two parties filed petitions to deny regarding the Verizon-Leap applications.

Verizon

Wireless, SpectrumCo and Cox filed a Joint Opposition to the petitions to deny on March 2, 2012, and

Verizon Wireless and Leap also filed a Joint Opposition on March 2, 2012. Twenty-three parties filed

replies regarding the Verizon Wireless-SpectrumCo and the Verizon Wireless-Cox applications, and two

parties filed replies regarding the Verizon-Leap applications.

Verizon Wireless-Leap Comment Public Notice.

Commission Opens Docket for Proposed Assignment of Licenses to Verizon Wireless from SpectrumCo and Cox

TMI Wireless, LLC, and Designates these Applications as Permit-But-Disclose under the Commission’s Ex Parte

Rules, WT Docket No. 12-4, Public Notice, DA 12-35 (rel. Jan. 11, 2012).

See supra note 37 (describing protective orders).

Verizon Wireless-SpectrumCo-Cox Comment Public Notice.

Id. at 3.

Id. at 1. In doing so, the Bureau granted in part a motion filed by MetroPCS Communications, Inc. and NTELOS

Holdings Corp. (“MetroPCS” and “NTELOS”) to consolidate the Commission’s consideration of the SpectrumCo,

Cox, and Leap applications, and to defer action pending consolidation. MetroPCS and NTELOS Motion to Defer

Action Pending Consolidation, ULS File Nos. 0004942973, etc. (filed Dec. 27, 2011) (“Motion”). The Commission

subsequently consolidated for review the Verizon Wireless-Leap applications with the Verizon Wireless-

SpectrumCo-Cox applications, thus granting the rest of the relief MetroPCS and NTELOS sought. See infra note

66.

Verizon Wireless and Leap Wireless Seek FCC Consent to the Exchange of Lower 700 MHz Band A Block,

AWS-1, and Personal Communications Service Licenses, ULS File Nos. 0004942973, etc., Public Notice, DA 12-69

(rel. Jan. 19, 2012).

Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC for Consent to Assign Licenses,

WT Docket No. 12-4, Order, DA 12-367 (rel. Mar. 8, 2012).

See infra Appendices A and B.

See id.

Federal Communications Commission FCC 12-95

22. On March 8, 2012, pursuant to Section 308(b) of the Communications Act, the Bureau

requested a number of documents and additional information from Verizon Wireless, SpectrumCo, and

Cox, as well as from the SpectrumCo interest holders – Comcast Corporation, Time Warner Cable, and

Bright House Networks.

23. On June 25, 2012, T-Mobile filed a petition seeking permission to withdraw its petition to

deny and subsequent filings pursuant to Section 1.935 of the Commission’s rules.

T-Mobile states that

its concerns have been addressed by its agreement with Verizon Wireless, which if approved by the

Commission, will result in a net transfer of spectrum to T-Mobile. We do not believe it would serve the

public interest to apply Section 1.935 to preclude Verizon Wireless and T-Mobile from entering into a

divestiture agreement to address legitimate competitive concerns raised by Commission and DOJ staff

regarding the underlying Verizon Wireless-SpectrumCo-Cox transaction. The underlying purpose of that

rule is to discourage the filing of pleadings “designed solely to extract money from sincere applicants,”

while still “providing some incentive for legitimate petitioners . . . to withdraw from proceedings and thus

expedite service to the public.”

Applying it in this instance would undermine those policy objectives,

and we therefore waive its application here on our own motion.

Given that other commenters have, in

some cases, relied on aspects of T-Mobile’s filings prior to its request for withdrawal, however, in

accordance with established Commission practice we will still consider the evidence contained in those

filings and the merits of their arguments.

24. On June 26, 2012, the Bureau released a public notice accepting the T-Mobile-Verizon

Wireless applications for filing and establishing WT Docket No. 12-175 for them.

The Accepted for

Filing Public Notice established a pleading cycle for the applications, with petitions to deny due July 10,

2012, oppositions due July 17, 2012, and replies due July 24, 2012.

The Bureau also took steps to

See letters from Rick Kaplan, Chief, WTB, FCC, to Michael Samsock, Cellco Partnership d/b/a Verizon Wireless

et al., WT Docket No. 12-4, Mar. 8, 2012.

47 C.F.R. § 1.935. Section 1.935 requires that such a request be supported by certifications that the parties have

neither received nor paid “money or other consideration” (beyond legitimate expenses) “in exchange for

withdrawing” the petition. The parties have provided such certifications, together with a letter related to the request

“to document and confirm certain understandings” and pursuant to which they have agreed to file such certifications

concurrently and within five days of the filing of their assignment applications. See Letter from Jean L. Kiddoo,

Bingham McCutchen LLP, Counsel for T-Mobile, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4,

filed June 25, 2012.

Revision of Part 22 of the Commission’s Rules Governing the Public Mobile Services, CC Docket No. 92-115,

Report and Order, 9 FCC Rcd 6513, 6549-50 (1994)(discussing prior codification).

See 47 C.F.R. § 1.3.

See Stockholders of CBS Inc. (Transferor) and Westinghouse Elec. Corp. (Transferee), Memorandum Opinion

and Order, 11 FCC Rcd 3733, 3739, 3741 ¶¶ 8, 14 (1995)(citing Application of Booth American Co. for Renewal of

License for Stations WJVA and WRBR(FM) South Bend, Indiana, File Nos. BR-1877 et al., Memorandum Opinion

and Order, 58 F.C.C.2d 553, 554 (1976)(“consistent with our precedent, we will consider the merits of [the

petitioner’s] allegations against the applications to insure that the public interest will be served by grant of these

applications”)); see also, e.g., KEGG Communications, Inc., MB Docket No. 05-95, Order to Show Cause Hearing

Designation Order and Notice of Designation for Hearing, 20 FCC Rcd 5768, 5768 n.1 (2005)(“in accordance with

longstanding practice … we consider these matters to insure that the public interest will be served by grant of those

applications ….”).

See T-Mobile Accepted for Filing Public Notice.

See id. at 3.

Federal Communications Commission FCC 12-95

protect confidential information in this docket.

In response to this public notice, four parties filed

petitions to deny and three parties filed comments. On July 17, 2012, T-Mobile and Verizon Wireless

filed a Joint Opposition to the petitions to deny,

and five parties filed replies.

25. On June 26, 2012, the Commission also released a public notice seeking comment on the

impact of the T-Mobile-Verizon Wireless Applications on the transactions in WT Docket No. 12-4.

Comments responding to the T-Mobile Comment Public Notice were due July 10, 2012. Thirteen parties

filed comments in response to the T-Mobile Comment Public Notice in WT Docket No. 12-4.

26. On August 3, 2012, the Bureau issued a public notice consolidating the Commission’s

review of, and the records for, all the applications considered in this Order.

27. The Rural Telecommunications Group, Inc. (“RTG”) asserts that the Commission should

hold the T-Mobile-Verizon applications in abeyance pending the outcome of the Verizon Wireless-

SpectrumCo, Cox, and Leap transactions, largely based on its spectrum aggregation concerns, but also

because it claims Verizon has no legal authority to transfer the subject licenses until the other transactions

are consummated.

The Commission’s rules do not prohibit the filing of sequential or concurrent

applications involving the same licenses, nor do they prohibit the filing of applications that are contingent

upon grant of another application

then pending before the Commission.

Moreover, we have since

See Applications of T-Mobile License LLC and Cellco Partnership d/b/a Verizon Wireless for Consent to Assign

Licenses, WT Docket No. 12-175, Protective Order, DA 12-1128 (rel. July 13, 2012); Applications of T-Mobile

License LLC and Cellco Partnership d/b/a Verizon Wireless for Consent to Assign Licenses, WT Docket No. 12-

175, Second Protective Order, DA 12-1129 (rel. July 13, 2012).

Joint Opposition, WT Docket No. 12-175, filed July 17, 2012.

See Wireless Telecommunications Bureau Seeks Comment on the Impact on the Verizon Wireless-SpectrumCo

and Verizon Wireless-Cox Transactions of the Applications of Verizon Wireless and T-Mobile to Assign AWS-1

Licenses, WT Docket No. 12-4, Public Notice, DA 12-998 (rel. June 26, 2012) (“T-Mobile Comment Public

Notice”).

See infra Appendix B.

See Wireless Telecommunications Bureau Consolidates Review of Verizon Wireless-SpectrumCo-Cox, Verizon

Wireless-Leap Wireless, and T-Mobile-Verizon Wireless Transactions, WT Docket Nos. 12-4 and 12-175, ULS File

Nos. 0004942973, etc., Public Notice, DA 12-1266 (rel. Aug. 3, 2012). The Bureau previously had not formally

consolidated Verizon Wireless-Leap Wireless Applications with the Verizon Wireless-SpectrumCo and Verizon

Wireless-Cox applications pending review of the record, though it had established an identical pleading cycle for all

of those applications. See Applications of Verizon Wireless and Leap Wireless for Commission Consent to the

Exchange of 700 MHz Band A Block, AWS-1, and Personal Communications Service Licenses, ULS File Nos.

0004942973, etc., Order, 26 FCC Rcd 17152, 17153 ¶¶ 6-7 (2011).

RTG Petition, WT Docket No. 12-175; RTG Reply, WT Docket No. 12-175, at 1-2. RTG concedes in its Reply

that the Commission has authority to review contingent applications but argues against doing so with these

applications given the magnitude of spectrum at issue. RTG Reply, WT Docket No. 12-175, at 3.

In the T-Mobile-Verizon Wireless applications the parties state that the “proposed license assignments will all

occur simultaneously upon closing, contingent upon regulatory approval of the instant transaction and regulatory

approval and closing of the SpectrumCo-Cox Assignments and the Leap Assignments.” T-Mobile-Verizon Wireless

Public Interest Statement at 2.

See, e.g., Applications of VoiceStream Wireless Corporation, Powertel, Inc., Transferors, and Deutsche Telekom

AG, Transferee, for Consent to Transfer Control of Licenses and Authorizations Pursuant to Sections 214 and

310(d) of the Communications Act and Petition for Declaratory Ruling Pursuant to Section 310 of the

Communications Act, and Powertel, Inc., Transferor, and VoiceStream Wireless Corporation, Transferee, for

(continued….)

Federal Communications Commission FCC 12-95

formally consolidated these matters for consideration in order to analyze whether their combined effect is

in the public interest, given that the T-Mobile transaction was entered into in order to address

Commission concerns with the initial SpectrumCo-Cox-Leap transactions. We therefore deny RTG’s

request to hold any of the applications that are the subject of this Order in abeyance or further delay

disposition of the applications.

III. STANDARD OF REVIEW, PUBLIC INTEREST FRAMEWORK AND OVERVIEW

28. Pursuant to Section 310(d) of the Communications Act, we must determine whether

applicants have demonstrated that a proposed assignment of licenses will serve the public interest,

convenience, and necessity.

In making this assessment, we first assess whether the proposed transaction

complies with the specific provisions of the Communications Act,

other applicable statutes, and the

Commission’s rules.

If the transaction does not violate a statute or rule, we next consider whether the

transaction could result in public interest harms by substantially frustrating or impairing the objectives or

implementation of the Communications Act or related statutes.

We then employ a balancing test

weighing any potential public interest harms of the proposed transaction against any potential public

interest benefits.

The applicants bear the burden of proving, by a preponderance of the evidence, that

the proposed transaction, on balance, will serve the public interest.

29. Our competitive analysis, which forms an important part of the public interest evaluation,

is informed by, but not limited to, traditional antitrust principles.

If the Commission is unable to find

that the proposed transaction serves the public interest for any reason or if the record presents a

substantial and material question of fact, we must designate the application(s) for hearing.

(Continued from previous page)

Consent to Transfer Control of Licenses and Authorizations Pursuant to Sections 214 and 310(d) of the

Communications Act, IB Docket No. 00-187, Memorandum Opinion and Order, 16 FCC Rcd 9779 (2001)(“DT-

VoiceStream Order”).

47 U.S.C. § 310(d).

Section 310(d) requires that we consider the application as if the proposed assignee was applying for the licenses

directly under Section 308 of the Act, 47 U.S.C. § 308. See, e.g., Application of AT&T Inc. and Qualcomm

Incorporated For Consent to Assign Licenses and Authorizations, WT Docket No. 11-18, Order, 26 FCC Rcd

17589, 17598 ¶ 23 (2011)(“AT&T-Qualcomm Order”).

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17598 ¶ 23, Applications of AT&T Inc. and Cellco Partnership

d/b/a/ Verizon Wireless, WT Docket No. 09-104, Memorandum Opinion and Order, 25 FCC Rcd 8704, 8716 ¶ 22

(2010) (“AT&T-Verizon Wireless Order”).

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17598-99 ¶ 23; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8716 ¶ 22.

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599 ¶ 23; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8716 ¶ 22.

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599 ¶ 23; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8716 ¶ 22.

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599 ¶ 25; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8717 ¶ 24.

47 U.S.C. § 309(e); see also News Corp. and DIRECTV Group, Inc., Transferors, and Liberty Media Corp.

Transferee, for Authority to Transfer Control, MB Docket No. 07-18, Memorandum Opinion and Order, 23 FCC

Rcd 3265, 3277 ¶ 22 (2008)(“Liberty Media-DIRECTV Order”); Application of EchoStar Communications Corp.,

General Motors Corp., and Hughes Electronics Corp. (Transferors) and EchoStar Communications Corp.

(continued….)

Federal Communications Commission FCC 12-95

30. Under certain circumstances, the Commission may determine that targeted remedies may

alleviate harms identified in its review of a pending transaction. Section 303(r) of the Communications

Act authorizes the Commission to prescribe restrictions or conditions not inconsistent with law that may

be necessary to carry out the provisions of the Communications Act.

The Commission has generally

imposed conditions to remedy specific harms likely to arise from the transaction or to help ensure the

realization of potential benefits promised for the transaction.

31. Overview of Analysis. We first address the parties’ qualifications. Next, we evaluate

claims that SpectrumCo and Cox have failed to put their spectrum licenses to use in violation of the

Commission’s rules. In Section VI, we describe the potential competitive harms and other public interest

harms that are likely to arise as a result of the proposed license acquisitions. We begin with an analysis of

the competitive effects resulting from increased spectrum aggregation resulting from: (1) Verizon

Wireless’s proposed license acquisition from SpectrumCo, Cox, and Leap and the subsequent application

for the assignment and exchange of spectrum between Verizon Wireless and T-Mobile in those markets in

which Verizon Wireless would receive additional spectrum; (2) Leap’s proposed acquisition of spectrum

from Verizon Wireless; and (3) T-Mobile’s proposed acquisition of spectrum from Verizon Wireless. We

find that the spectrum acquisitions by Leap and by T-Mobile are unlikely to result in harms, but that

Verizon Wireless’s proposed acquisition of spectrum from SpectrumCo, Cox, and Leap, without any

mitigating measures, has significant potential to harm competition in the wireless marketplace.

32. In Section VII, we review the potential public interest benefits of the transactions. We

find that the spectrum acquisitions by Leap and by T-Mobile offer concrete public benefits, and thus

without any associated harm, are in the public interest. We also find that, while there may be some public

interest benefits to Verizon Wireless’s acquisition of spectrum from SpectrumCo, Cox and Leap, we are

unable to credit fully a number of the applicants’ assertions as to its benefits. In the remaining sections,

we discuss Verizon Wireless’s conditional transfer of licenses to T-Mobile and its voluntary

commitments to aggressively build out its AWS-1 spectrum and to offer data roaming arrangements to

other wireless operators.

Taking these factors into account, we find that the potential spectrum-related

benefits of the proposed license assignments to Verizon Wireless will outweigh the potential harms. We

then discuss certain other spectrum-related issues raised by parties in connection with the proposed

license transfer and explain why we conclude that these issues do not warrant any further remedies.

Finally, we examine the substantial competitive concerns arising from the Commercial Agreements

between Verizon Wireless and the Cable Companies, and conclude that these concerns are adequately

addressed by subsequent changes made by the parties to those agreements through the proposed Consent

Decree, as well as Verizon Wireless’s agreement to reporting and monitoring requirements. We thus find

nothing to change our conclusion that the transactions, as modified, are in the public interest.

(Continued from previous page)

(Transferee), CS Docket No. 01-348, Hearing Designation Order, 17 FCC Rcd 20559, 20574 ¶ 25

(2002)(“EchoStar-DIRECTV HDO”).

47 U.S.C. § 303(r); see also, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17600 ¶ 26; AT&T-Verizon Wireless

Order, 25 FCC Rcd at 8717-18 ¶ 25.

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17600 ¶ 26; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8718 ¶ 25; Applications of AT&T Wireless Services, Inc. and Cingular Wireless Corporation, WT Docket No. 04-

70, Memorandum Opinion and Order, 19 FCC Rcd 21522, 21546 ¶ 43 (2004)(“Cingular-AT&T Wireless Order”).

See Letter from Kathleen Grillo, Senior Vice President, Verizon Wireless, to Rick Kaplan, Senior Counsel for

Transactions, FCC, WT Docket Nos. 12-4 and 12-175, File Nos. 0004942973 et al., filed Aug. 15, 2012 (“Verizon

Wireless Letter”).

Federal Communications Commission FCC 12-95

IV. QUALIFICATIONS OF APPLICANTS

33. As noted previously, when evaluating applications for consent to assign or transfer

control of licenses and authorizations, Section 310(d) of the Communications Act requires the

Commission to determine whether the proposed transaction will serve “the public interest, convenience

and necessity.”

Among the factors the Commission considers in its public interest review is whether the

applicant for a license has the requisite “citizenship, character, financial, technical, and other

qualifications.”

Therefore, as a threshold matter, the Commission must determine whether the

applicants to the proposed transactions meet the requisite qualifications requirements to hold and transfer

licenses under Section 310(d) and the Commission’s rules.

Section 310(d) also obligates the

Commission to consider whether the proposed assignee is qualified to hold Commission licenses.

34. Qualifications Challenge. The Diogenes Telecommunications Project (“Diogenes”) filed

substantially similar petitions to deny in WT Docket No. 12-4 (“Diogenes Petition”) and WT Docket No.

12-175 (collectively, “Diogenes Petitions”) requesting that the Commission hold an evidentiary hearing to

determine whether alleged misrepresentations and misconduct by Verizon Wireless related to a 2010

Enforcement Bureau investigation regarding certain Verizon Wireless data usage charges

warrant denial

of its applications and revocation of Verizon Wireless’s licenses.

In the Applicants’ Joint Oppositions

filed in each docket, they state that the EB Data Usage Charges Order concluded that that the

investigation raised “no substantial or material questions of fact as to whether Verizon Wireless possesses

the basic qualifications, including those related to character, to hold or obtain any Commission license or

authorization.”

35. Discussion. As an initial matter, we note that no parties have raised issues with respect to

the basic qualifications of Leap or T-Mobile. We find no evidence that Leap or T-Mobile lacks the

requisite citizenship, character, financial, technical, or other basic qualifications under the

Communications Act and our rules, regulations, and policies, to be the assignees of the relevant licenses.

47 U.S.C. § 310(d).

47 U.S.C. §§ 308, 310(d); see also, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17600 ¶ 27; AT&T-Verizon

Wireless Order, 25 FCC Rcd at 8718 ¶ 26; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21546 ¶ 44.

See 47 U.S.C. §§ 214(a), 310(d); 47 C.F.R. § 1.948; see also, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at

175600-01 ¶ 27; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8718 ¶ 26.

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 175601 ¶ 28; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8720 ¶ 29; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21546 ¶ 44.

See Verizon Wireless, Data Usage Charges, File No. EB-09-TC-458, Order, 25 FCC Rcd 15105 (EB 2010)(“EB

Data Usage Charges Order”); Verizon Wireless, Data Usage Charges, File No. EB-09-TC-458, Consent Decree, 25

FCC Rcd 15107 (EB 2010)(“EB Data Usages Charges Consent Decree”). The EB Data Usage Charges Order

adopts the EB Data Usage Charges Consent Decree.

See Diogenes Petition at ii-iii, 27-28. Diogenes also requests that the Commission release all available

information regarding certain Verizon Wireless data usage charges that were the subject of the EB Data Usage

Charges Order. Id. at 27-28.

Joint Opposition at 69; Joint Opposition, WT Docket No. 12-175 at 15 (quoting EB Data Usage Charges Order,

25 FCC Rcd at 15105 ¶ 4). The Applicants note that under the Commission’s rules, the EB Data Usage Charges

Order is final. See id. (citing 47 C.F.R. §§ 1.106(f), 1.115(d), 1.117(a)).

We note that the Commission has previously evaluated the qualifications of Leap and T-Mobile. See, e.g., Leap

Wireless International, Inc. and its subsidiaries, Debtors-in-Possession and Leap Wireless International, Inc. and

(continued….)

Federal Communications Commission FCC 12-95

36. Regarding Diogenes’ Petitions, Section 309(d)(1) of the Communications Act requires

that a petition to deny must contain specific allegations of fact sufficient to show that the petitioner is a

party in interest.

To establish party-in-interest standing, a petitioner must allege facts sufficient to

demonstrate that grant of the subject application would cause it to suffer a direct injury.

In addition, a

petitioner must demonstrate a causal link between the claimed injury and the challenged action,

establishing that the injury can be traced to the challenged action and that the injury would be prevented

or redressed by the relief requested.

37. The Diogenes Petition does not allege that allowing Verizon Wireless to acquire the

AWS-1 spectrum will cause competitive harm and makes no effort to demonstrate that Diogenes or any of

its members would suffer a direct injury if the Verizon Wireless-SpectrumCo-Cox applications are

granted. Diogenes states nothing more than that Diogenes member Antonio Kovar is a customer of

Verizon Wireless.

The Diogenes Petition does not explain how Mr. Kovar, as a Verizon Wireless

customer, might be injured by an assignment of spectrum to Verizon Wireless, much less how any such

injury would be redressed by delaying or denying the applications as a result of an evidentiary hearing.

Moreover, Diogenes’s ultimate requested relief, revocation of Verizon Wireless’s licenses, would harm

Mr. Kovar as a Verizon Wireless customer by terminating his service, not provide him with any relief.

38. Similarly, in its Petition to Deny filed in WT Docket No. 12-175, Diogenes raises no

issues specific to the T-Mobile-Verizon Wireless transaction. Diogenes claims that it has standing based

on a substantial likelihood that Verizon Wireless, given its alleged past behavior with respect to the data

usage charges, will defraud Diogenes member Mr. Kovar and many others at some time in the future

unless the Commission holds a hearing on Verizon Wireless’s character qualifications and imposes

sanctions up to and including revocation of licenses.

We conclude that these additional arguments

likewise do not demonstrate standing. Diogenes’s assertions of harm are wholly speculative, and its

underlying premise, even if it were accepted as true, is founded on past events that have no relation to the

transactions at issue here.

(Continued from previous page)

Its subsidiaries Applications for Consent to the Assignment of Licenses Pursuant to Section 3109(d) of the

Communications Act, WT Docket No. 03-263, Memorandum Opinion and Order, 19 FCC Rcd 14909, 14916-17 ¶

11 (2004); Applications of T-Mobile USA, Inc. and SunCom Wireless Holdings, Inc. For Consent to Transfer

Control of Licenses and Authorizations and Petition for Declaratory Ruling that the Transaction is Consistent with

Section 310(b)(4) of the Communications Act, WT Docket No. 07-237, Memorandum Opinion and Order, 23 FCC

Rcd 2515, 2520-21 ¶ 10 (2008)(“T-Mobile-SunCom Order”). We review the current foreign ownership of T-Mobile

under Section 310(b)(4) of the Communications Act in Section XI, infra.

47 U.S.C. § 309(d)(1); see also 47 C.F.R. § 1.939(d).

Application of Wireless Co., L.P. for a License to Provide Broadband PCS Service on Block A in the San

Francisco Major Trading Area, File No. 00005-CW-L-95, Order, 10 FCC Rcd 13233, 13235 ¶ 7 (WTB

1995)(“Wireless Co.”)(citing Sierra Club v. Morton, 405 U.S. 727, 733 (1972)).

Wireless Co. 10 FCC Rcd at 13235 ¶ 7.

Id. at 13235 ¶ 7. An organization may meet these standards in its own right or may demonstrate that one or more

of its members meets them. See, e.g., Friends of the Earth, Inc. and Forest Conservation Council, Inc. Various

Objections and Petitions to Deny against Applications to Register Antenna Structures (FCC Form 854) with

Environmental Assessments, File Nos. A0160814 et al., Memorandum Opinion and Order, 18 FCC Rcd 23622,

23622-23 ¶¶ 2-3 (2003).

Diogenes Petition at 1.

See Diogenes Petition, WT Docket No. 12-175, at 4-5.

Federal Communications Commission FCC 12-95

39. Moreover, and as an independent ground for dismissal, as noted above, the Enforcement

Bureau specifically found that the conduct that is the subject of the Diogenes Petitions did not affect

Verizon’s qualifications to be a Commission licensee. With respect to Diogenes’s assertion that Verizon

Wireless intentionally misrepresented to the Enforcement Bureau the nature of its actions in connection

with the foregoing investigation, it has failed, as further required by Section 309(d)(1) of the Act, to

include specific allegations of fact, supported by affidavits of persons with personal knowledge thereof, in

support of its claim.

Instead, its petition is purely speculative, and raises no substantial and material

question of fact concerning Verizon Wireless’s basic qualifications.

40. For the reasons explained above, we dismiss the Diogenes Petitions. Because Verizon

Wireless has previously and repeatedly been found qualified to hold Commission licenses,

we therefore

find that there is no reason to evaluate its basic qualifications further. We examine the foreign ownership

of Verizon Wireless and T-Mobile in Section XI, infra.

V. SPECTRUMCO AND COX EFFORTS TO USE THE SPECTRUM

41. Certain petitioners and commenters argue that because SpectrumCo and Cox have not

used the AWS-1 spectrum licensed to them, the Commission should deny the SpectrumCo and Cox

applications and require both SpectrumCo and Cox to return the AWS-1 licenses to the Commission for

dissemination to those who could put the spectrum to immediate use for the public’s benefit.

42. Cox maintains that since its acquisition of the licenses at issue in this transaction, it took

a number of steps to develop the AWS-1 spectrum, including entering into equipment contracts with

various vendors, initiating an actual build of wireless infrastructure and conducting limited network trials

in several areas (although it concedes that it never launched commercial facilities-based service).

May 2011, Cox announced that it would begin decommissioning the facilities it had constructed, a

process that remains ongoing.

100

43. SpectrumCo contends that since its successful auction bids in 2006, it took multiple steps

to develop its AWS-1 spectrum. For example, SpectrumCo asserts that it invested more than $20 million

to clear microwave links in the geographic area covered by its AWS-1 licenses, and undertook efforts to

test different 4G technologies and equipment for use with the AWS-1 spectrum – such as WiMAX, Ultra

Mobile Broadband (“UMB”), and LTE.

101

Notwithstanding the time, effort, and investment that

SpectrumCo put into clearing the AWS-1 spectrum and conducting technology tests, SpectrumCo asserts

47 U.S.C. § 309(d)(1). See, e.g., Providence Community Radio, Memorandum Opinion and Order, 23 FCC Rcd

4118, 4130 n.76 (2008).

See, e.g., Applications of Atlantic Tele-Network, Inc. and Cellco Partnership d/b/a Verizon Wireless for Consent

to Assign or Transfer Control of Licenses and Authorizations, WT Docket No. 09-119, Memorandum Opinion and

Order, 25 FCC Rcd 3763, 3777 ¶ 26 & nn.108-09 (2008)(“ATN-Verizon Wireless Order”).

See infra Section XI.

See, e.g., Free Press Petition at 34-36; NJ Division of Rate Counsel Petition at 12-14; MetroPCS Reply at 9-15.

Declaration of Suzanne Fenwick, Executive Director for Corporate Development for Cox Communications, Inc.

(“Fenwick Declaration”), Verizon Wireless-Cox Public Interest Statement, Exhibit 4.

100

Verizon Wireless-Cox Public Interest Statement at 19.

101

Verizon Wireless-SpectrumCo Public Interest Statement at 20; Joint Opposition, Declaration of David E. Borth,

Professor of Electrical and Computer Engineering at the University of Illinois-Chicago at 18-22, Exhibit 3 (“Borth

Declaration”).

Federal Communications Commission FCC 12-95

that it determined as a business matter that constructing and operating a standalone wireless system was

not financially feasible.

102

SpectrumCo also states that it explored a variety of other measures to allow its

owners to use the spectrum, including additional spectrum acquisitions, joint ventures, and network

sharing arrangements with Sprint Nextel and Clearwire.

103

44. Discussion. Pursuant to Section 1.948(i) of the Commission’s rules, applications for

transfer or assignment may be reviewed by the Commission to determine if the transaction is for purposes

of trafficking in service authorizations. Trafficking consists of obtaining or attempting to obtain an

authorization for the principal purpose of speculation or profitable resale rather than for providing

service.

104

Congress viewed a system of open competitive bidding wherein winning bidders would have

paid market prices for the licenses as a deterrent to trafficking.

105

Additionally, because winning bidders

pay market value for their authorizations, it effectively safeguards against speculation.

106

Therefore, the

transfer of licenses won pursuant to competitive bidding seldom raises any trafficking concerns.

107

45. We find no basis in the record to conclude that SpectrumCo or Cox obtained the AWS-1

licenses for the principal purpose of trafficking in those authorizations. As discussed above, Cox

constructed and tested AWS-1 facilities before deciding not to put them into commercial service.

108

Similarly, SpectrumCo expended considerable sums to prepare for commercial operations, and underwent

technological site testing and took other measures to evaluate the use of the spectrum (e.g., evaluated the

additional costs – such as roaming, device acquisition, etc. – necessary to launch a commercial wireless

service).

109

We also note that neither SpectrumCo nor Cox was under an obligation to build out the

spectrum under their 15-year licenses before the license expiration dates.

110

Therefore, the fact that they

did not fully build out and operate their systems before that date is insufficient evidence of trafficking.

46. However, where existing licensees do “not fully utilize or plan to utilize the entire

spectrum assigned to them,” the Commission has encouraged the use of secondary market transactions

such as the one before us to transition unused spectrum to more efficient use and allow network providers

to obtain access to needed spectrum for broadband deployment.

111

The decision to move the spectrum

into the hands of a willing buyer that has the wherewithal to use the spectrum meets those purposes. This

is particularly true given Verizon Wireless’s commitment to immediately utilize the spectrum and the

other public interest benefits discussed in this Order. We therefore decline to disapprove these

transactions on trafficking grounds and deny petitioners’ requests.

102

See Declaration of Robert Pick, Chief Executive Officer of SpectrumCo, LLC (“Pick Declaration”), Verizon

Wireless-SpectrumCo Public Interest Statement, Exhibit 4.

103

Joint Opposition at 33-35.

104

See 47 C.F.R. § 1.948(i)(2011).

105

See AT&T-Verizon Wireless Order, 25 FCC Rcd at 8768-69 ¶ 152.

106

Id.

107

Id.

108

See supra para. 42.

109

See supra para. 43; see also Joint Opposition, Borth Declaration at 18-22.

110

See 47 C.F.R. § 27.14 (Construction requirements; Criteria for renewal).

111

Connecting America: The National Broadband Plan at 83, Recommendation 5.7 (rel. Mar. 16, 2010)

Federal Communications Commission FCC 12-95

VI. POTENTIAL PUBLIC INTEREST HARMS

A. Competitive Analysis

1. Overview

47. Spectrum is an essential input in the provision of mobile wireless services, and ensuring

that sufficient spectrum is available for incumbent licensees as well as potential entrants is critical to

promoting effective competition and innovation in the marketplace.

112

The Communications Act requires

the Commission to examine closely the impact of spectrum aggregation on competition, innovation, and

the efficient use of spectrum in order to ensure that any transfer of control serves the public interest,

convenience, and necessity.

113

Our public interest analysis must consider not only the near-term, but also

the long-term, impacts of the proposed transactions on the implementation of Congress’s pro-competitive,

deregulatory policies aimed at developing and encouraging competitive markets.

114

48. In 2003, the Commission moved from a spectrum “cap” to a case-by-case review of the

competitive effects on the marketplace of spectrum aggregation, as well as the acquisition of business

units.

115

In previous transactions, the Commission has used an initial screen to help identify markets

where the acquisition of spectrum provides particular reason for further competitive analysis.

116

The

Commission is not, however, limited in its consideration of potential competitive harms in proposed

transactions solely to markets identified by its initial screen.

117

112

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17601-02 ¶ 30; Verizon Wireless-ALLTEL Order, 23 FCC

Rcd at 17481-82 ¶ 75; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21569 ¶ 109; see also Fifteenth Annual

Competition Report, 26 FCC Rcd at 9820 ¶ 266.

113

47 U.S.C. §§ 214(a), 310(d). See, e.g., 2000 Regulatory Review, Spectrum Aggregation Limits For Commercial

Mobile Radio Services, WT Docket No. 01-14, Report and Order, 16 FCC Rcd 22668, 22695 ¶ 54 (“Biennial

Review of CMRS Spectrum Aggregation Limits”), which sunset the Commission’s spectrum cap. As the

Commission stated, “[w]e find that, under the statutory regime set out by Congress, the Commission has an

obligation, distinct from that of DOJ, to consider as part of the Commission’s public interest review the

anticompetitive effects of acquisitions of CMRS spectrum, including those that occur in the secondary market.”

Biennial Review of CMRS Spectrum Aggregation Limits, 16 FCC Rcd at 22699 ¶ 62. Our goals relating to spectrum

concentration include discouraging anticompetitive conduct and ensuring that incentives are maintained for

innovation and efficiency in the mobile services marketplace. See, e.g., Biennial Review of CMRS Spectrum

Aggregation Limits, 16 FCC Rcd at 22695 ¶ 54.

114

See AT&T-Qualcomm Order, 26 FCC Rcd at 17601-02 ¶ 30; EchoStar-DIRECTV HDO, 17 FCC Rcd at 20586 ¶

56 (discussing the Commission’s general spectrum management policies).

115

See AT&T-Qualcomm Order, 26 FCC Rcd at 17602 ¶ 31; Applications of AT&T Inc. and Centennial

Communications Corp. For Consent to Transfer Control of Licenses, Authorizations, and Spectrum Leasing

Arrangements, WT Docket No. 08-246, Memorandum Opinion and Order, 24 FCC Rcd 13915, 13938 ¶ 50

(2009)(“AT&T-Centennial Order”); Cingular-AT&T Wireless Order, 19 FCC Rcd at 21525 ¶ 4; Biennial Review of

CMRS Spectrum Aggregation Limits, 16 FCC Rcd at 22668, 22693-94 ¶ 50 (stating that case-by-case review gives

the Commission flexibility to reach the appropriate decision in each case on the basis of the particular circumstances

of that case).

116

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17602 ¶ 31; AT&T-Verizon Wireless Order, 25 FCC Rcd at

872021 ¶ 32; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21552 ¶ 58.

117

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17609-10 ¶¶ 49-50; AT&T-Centennial Order, 24 FCC Rcd at

13946-48 ¶¶ 71-74, ¶ 85; Applications for the Assignment of License from Denali PCS, L.L.C. to Alaska Digitel,

L.L.C. and the Transfer of Control of Interests in Alaska Digitel, L.L.C. to General Communication, Inc., WT

Docket 06-114, Memorandum Opinion and Order, 21 FCC Rcd 14863, 14898 ¶ 85 (2006).

Federal Communications Commission FCC 12-95

49. In considering the applications before us, we first evaluate the potential effects on

competition resulting from Verizon Wireless’s proposed spectrum acquisition from SpectrumCo, Cox,

and Leap. We also analyze the competitive effects of the subsequent application for the assignment and

exchange of spectrum between Verizon Wireless and T-Mobile in those markets in which Verizon

Wireless would receive additional spectrum. Second, we consider the potential effects on competition

resulting from Leap’s proposed acquisition of spectrum from Verizon Wireless. Third, we consider the

potential effect on competition resulting from T-Mobile’s proposed acquisition of spectrum from Verizon

Wireless.

50. Specifically, we evaluate the competitive effects of Verizon Wireless’s post-transaction

spectrum holdings on a local and national level, and through the lenses of the company’s overall spectrum

aggregation as well as within the AWS-1 spectrum band. As detailed below, we conclude that Verizon

Wireless’s proposed acquisition of spectrum from SpectrumCo, Cox, and Leap, without any mitigating

measures, has a significant potential to harm competition in the wireless marketplace. By contrast, we

find that the spectrum acquisitions by Leap and by T-Mobile are unlikely to result in competitive or other

public interest harms.

51. In addition to spectrum holdings, roaming and interoperability are competitively

significant for mobile wireless providers. We therefore also consider the competitive effect of the

transactions on roaming and interoperability.

2. Market Definition

52. We establish at the outset the appropriate market definitions to aid our evaluation of the

proposed acquisition of spectrum by Verizon Wireless from SpectrumCo, Cox, and Leap, as well as the

spectrum it would acquire from T-Mobile, and Leap’s and T-Mobile’s acquisition of spectrum from

Verizon Wireless. These market definitions include the product and geographic market definitions

118

that

we will apply, as well as the relevant input market for spectrum. We consider arguments made in relation

to each transaction in establishing the appropriate definitions, and apply these market definitions to each

of these transactions.

a. Product Market

53. In this Order, as in the Commission’s most recent transaction reviews, we evaluate the

proposed transactions using a combined “mobile telephony/broadband services” product market

119

that is

comprised of mobile voice and data services, including mobile voice and data services provided over

advanced broadband wireless networks (mobile broadband services).

120

We find that Verizon Wireless,

Leap, and T-Mobile provide services in this product market and note that no party in any of the

proceedings before us has challenged the mobile telephony/broadband definition.

118

See, e.g., Horizontal Merger Guidelines, U.S. Department of Justice and the Federal Trade Commission, August

19, 2010, at § 4, p. 7 (“2010 DOJ/FTC Horizontal Merger Guidelines”).

119

See AT&T-Qualcomm Order, 26 FCC Rcd at 17603 ¶ 33; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8721 ¶

35; AT&T-Centennial Order, 24 FCC Rcd at 13932 ¶ 37. The Commission has previously determined that there are

separate relevant product markets for interconnected mobile voice and data services, and also for residential and

enterprise services, but found it reasonable to analyze all of these services under a combined mobile

telephony/broadband services product market. See AT&T-Qualcomm Order, 26 FCC Rcd at 17603 ¶33; AT&T-

Verizon Wireless Order 25 FCC Rcd at 8721 at ¶ 35; AT&T-Centennial Order, 24 FCC Rcd at 13932 ¶ 37.

120

See AT&T-Qualcomm Order, 26 FCC Rcd at 17602-03 ¶¶ 32-33; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8721 ¶ 35; AT&T-Centennial Order, 24 FCC Rcd at 13932 ¶ 37.

Federal Communications Commission FCC 12-95

b. Geographic Markets

54. The Commission has found that the relevant geographic markets for certain wireless

transactions are “local”

121

and also has evaluated a transaction’s competitive effects at the national level

where a transaction exhibits certain national characteristics that provide cause for concern.

122

55. The Applicants’ analysis of the competitive effects of the Verizon Wireless-SpectrumCo

transaction uses a local market definition.

123

Some parties argue that the Commission should consider the

impact of the proposed Verizon Wireless-SpectrumCo transaction at both a local and national level,

124

and

some of these parties contend that the AWS-1 at issue forms a near nationwide block, thus affecting

spectrum concentration and competition in the national wireless market.

125

56. Because most consumers use their mobile telephony/broadband services at or close to

where they live and work, they purchase mobile telephony/broadband services from providers that offer

and market services where they live, work, and shop.

126

Service sold in distant locations is generally not a

good substitute for service near a consumer’s home or work.

127

In addition, service providers compete at

the local level in terms of coverage, service quality, and localized promotions.

128

Consistent with past

transactions, we will primarily use CMAs as the local geographic markets in which we analyze the

potential competitive harms arising from spectrum aggregation as a result of these transactions.

129

57. As the Commission has previously recognized, however, two key competitive variables –

prices and service plan offerings – do not vary for most providers across most geographic markets.

130

Verizon Wireless states that its advertising and pricing strategies are predominantly set at a national

level.

131

The four nationwide mobile telephony/broadband service providers (Verizon Wireless, AT&T,

Sprint Nextel, and T-Mobile), as well as other providers, set the same rates for a given plan everywhere

121

See AT&T-Qualcomm Order, 26 FCC Rcd at 17604 ¶ 34; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8722 ¶

36; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21562-63 ¶¶ 89-90.

122

See AT&T-Qualcomm Order, 26 FCC Rcd at 17604-05 ¶¶ 34-37.

123

Verizon Wireless-SpectrumCo Public Interest Statement at 24-29, Exhibit 7; Verizon Wireless-SpectrumCo Joint

Opposition at 45-47. Verizon Wireless’s competitive analysis is for 15 EAs that include 18 CMAs. See Verizon

Wireless-SpectrumCo Public Interest Statement at 27, Exhibit 7.

124

RCA Petition at 41-53; Free Press Petition at 13, 19, 33-34; Greenlining Institute Comments at 7-8.

125

RCA Petition at 44-53; RCA Reply at 14-15; Free Press Petition at 13, 19, 33-34.

126

See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13934 ¶ 41; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at

17472 ¶; see also Fifteenth Annual Competition Report, 26 FCC Rcd at 9693 ¶¶ 23-24.

127

See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13934 ¶ 41; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at

17472 ¶ 52.

128

See, e.g., AT&T-Verizon Wireless Order, 25 FCC Rcd at 8728 ¶ 50.

129

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17604 ¶ 34. CMAs are the areas in which the Commission

initially granted licenses for cellular service. See 47 C.F.R. § 22.909.

130

See AT&T-Qualcomm Order, 26 FCC Rcd at 17604-05 ¶¶ 34-37.

131

Joint Opposition at 49-50.

Federal Communications Commission FCC 12-95

and advertise nationally.

132

In addition, certain key elements, such as development and deployment of

mobile broadband equipment and devices, are done largely on a national scale.

58. For purposes of evaluating the competitive effects of Verizon Wireless’s acquisition of

spectrum from SpectrumCo, Cox, and Leap, as well as from T-Mobile, we use both local and national

markets. In addition to the more traditional local market analysis, a national market evaluation of these

proposed transactions is appropriate because the proposed acquisition of spectrum by Verizon Wireless

would be in the majority of local markets across the country and harms that may occur at the local level

collectively could have nationwide competitive effects on the mobile telephony/broadband services

market.

133

Further, in evaluating T-Mobile’s proposed spectrum transaction with Verizon Wireless, we

also will analyze the competitive effects on both local and national markets. Although T-Mobile’s

proposed acquisitions will not cover as much of the nation as Verizon Wireless’s, it does span 125 CMAs

that are geographically dispersed throughout the United States, including several large urban markets, and

T-Mobile is one of the four nationwide mobile telephony/broadband service providers. As a result, T-

Mobile will gain spectrum in markets covering approximately 60 million people, expanding the

geographical scope of its AWS-1 holdings in order to deploy and expand LTE services. Therefore, we

also find it appropriate to consider any potential national effects that may result from this transaction.

Finally, we will evaluate Leap’s acquisition of spectrum from Verizon Wireless only on a local

geographic market level as its acquisition of spectrum in a single BEA is unlikely to implicate similar

national elements.

c. Input Market for Spectrum

59. When assessing spectrum aggregation in its review of wireless transactions, the

Commission evaluates the current spectrum holdings of the acquiring firm that are “suitable” and

“available” in the near term for the provision of mobile telephony/broadband services.

134

The

Commission has previously determined cellular, PCS, Specialized Mobile Radio (“SMR”), and 700 MHz

band spectrum, as well as AWS-1 and Broadband Radio Service (“BRS”) spectrum where available, meet

this definition.

135

The Commission has traditionally applied an initial screen to help identify local

markets where a proposed transaction might raise particular concerns of spectrum concentration.

136

The

current screen identifies local markets where an entity would acquire more than approximately one-third

of the total spectrum suitable and available for the provision of mobile telephony/broadband services.

137

For our analysis of the proposed transactions before us, we continue to apply the spectrum screen that the

Commission has used in recent mobile wireless transactions.

132

See AT&T-Qualcomm Order, 26 FCC Rcd at 17604-05 ¶¶ 34-37. See, e.g., Fifteenth Annual Competition

Report, 26 FCC Rcd at 9748-50 ¶¶ 129-136. See also VZW-TPK-FCC-041689 at VZW-TPK-FCC-041697 to

VZW-TPK-FCC-041699 [REDACTED] Feb. 15, 2012.

133

See, e.g., VZW-TPK-FCC-527547 at VZW-TPK-FCC-527549 to VZW-TPK-FCC-527550 [REDACTED] Oct.

13, 2011.

134

See AT&T-Qualcomm Order, 26 FCC Rcd at 17605-06 ¶ 38; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8722 ¶ 37; AT&T-Centennial Order, 24 FCC Rcd at 13933 ¶ 39.

135

See, e.g., Sprint Nextel Corp. and Clearwire Corp. Applications for Consent to Transfer Control of Licenses,

Leases, and Authorizations, WT Docket No. 08-94, Memorandum Opinion and Order, 23 FCC Rcd 17570, 17591-

92 ¶ 53 (2008)(“Sprint Nextel-Clearwire Order”).

136

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17602 ¶ 31.

137

See Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17473 ¶ 54.

Federal Communications Commission FCC 12-95

60. The Applicants in the Verizon Wireless-SpectrumCo transaction contend that spectrum

that is suitable and would be available within two years, including, in their view, BRS/ Educational

Broadband Service (“EBS”), Mobile Satellite Service (“MSS”)/Ancillary Terrestrial Components

(“ATC”), Wireless Communications Services, and PCS G Block spectrum, should be included in

evaluating the competitive effects of the transaction.

138

Opponents agree that the screen should be

adjusted, but have different views about how that should be accomplished.

139

Free Press contends that the

MSS/ATC spectrum cannot be considered available because no services are planned for the spectrum and

because the most likely candidate, the S-Band, is the subject of a pending proceeding.

140

Free Press also

argues against the inclusion of additional BRS and EBS spectrum because the Applicants have not

established that circumstances have changed warranting inclusion.

141

RCA urges the Commission to

revise the spectrum screen downward, due to the change in the 2010 DOJ/FTC Horizontal Merger

Guidelines that removed the two-year period for timeliness of availability of spectrum.

142

RCA

recommends that the Commission remove spectrum from the screen that it argues will not be usable for

mobile voice or broadband services in the near term: (1) 12.5 megahertz of SMR spectrum, as the

Commission noted it would in its recent order reviewing AT&T’s acquisition of 700 MHz spectrum from

Qualcomm,

143

and (2) the 10 megahertz 700 MHz D Block spectrum.

144

Further, RTG argues that the

trigger level for the spectrum screen should be reduced to approximately one quarter of available

spectrum and should only include spectrum ready for “prime time.”

145

61. More broadly, some opponents and commenters argue that not all spectrum is created

equal, and advocate for a screen that assigns values or “weights” to different spectrum bands based on,

among other things, their propagation characteristics.

146

Specifically, they argue that adopting a value-

based screen, particularly with respect to propagation characteristics, would provide a more accurate

138

Verizon Wireless-SpectrumCo Public Interest Statement at 29-33.

139

Public Knowledge also argues that the Commission should resolve the pending Petition for Reconsideration in

the Verizon/Alltel transaction (WT Docket 08-95). It states that a grant of the pending petition would return the

spectrum screen to 95 megahertz by eliminating BRS and AWS-1 spectrum from consideration in the screen. See

Letter from Harold Feld, Senior Vice President, Public Knowledge, to Marlene H. Dortch, Secretary, FCC, WT

Docket No. 12-4, filed June 18, 2012 at 2 (“Public Knowledge June 18, 2012 Ex Parte”).

140

Free Press Reply at 21.

141

Id.

142

RCA Petition at 50, Letter from Rebecca Murphy Thompson, General Counsel, RCA, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Jan. 19, 2012 at 2 (“RCA Jan. 19, 212 Ex Parte”).

143

See AT&T-Qualcomm Order, 26 FCC Rcd at 17607 ¶ 42.

144

RCA Petition at 50-52.

145

See RTG Reply at 6-7. RTG Petition, File No. 0004942973, etc., at 18-19, filed Feb. 21, 2012. In addition, in

WT Docket 12-175, RTG argues that if the Commission conditioned the Verizon Wireless transactions in WT

Docket 12-4 on a lowered spectrum screen or re-instituted a hard spectrum cap, then it may not be opposed to the

Verizon/T-Mobile spectrum swap. See RTG Petition at 3.

146

RTG Petition, File No. 0004942973, etc., at 18-19, filed Feb. 21, 2012. Free Press Petition at 10-19; Free Press

Reply at 23-25; Letter from Harold Feld, Senior Vice President, Public Knowledge, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Apr. 30, 2012 at 3 (“Public Knowledge Apr. 30, 2012 Ex Parte”); RCA

Petition at 41-53; Sprint Nextel Reply at 7-10.

Federal Communications Commission FCC 12-95

picture of the competitive advantage of each firm’s spectrum holdings.

147

Public Knowledge asserts that:

(1) spectrum should be weighted by its suitability for mobile data use; (2) spectrum held by dominant

providers or providers with substantial spectrum holdings should be weighted more heavily; and (3)

spectrum that has not yet been built out or that uses inefficient technologies should also be weighted more

heavily.

148

62. Verizon Wireless, SpectrumCo, and Cox jointly contend that adopting a spectrum

weighting approach would be “fundamentally unworkable” as different spectrum bands have different

characteristics that are valued differently by service providers at different times.

149

They further argue

that no party has demonstrated specific harm that would support the adoption of a screen that would

weigh the value of spectrum.

150

63. Discussion. We decline at this time to make any formal changes to the current spectrum

screen.

151

We find that it is unnecessary for purposes of reviewing the transactions before us to determine

what bands should or should not be included in the initial screen, because any such proposed adjustments

would not affect either our conclusion about markets in which competitive concerns exist or our

conclusion that those concerns are remedied as a result of Verizon Wireless’s transaction with T-Mobile

and its voluntary commitments concerning build-out and roaming.

152

We intend to initiate a proceeding

soon to review our policies governing mobile wireless spectrum holdings in order to ensure that they

fulfill statutory objectives, given changes in technology, spectrum availability, and the marketplace since

the last comprehensive review. We seek to ensure that we have rules of the road that are clear and

predictable, and permit parties to incorporate any significant shifts in policy into their pre-transaction

planning.

3. Competitive Effects of Transactions on Mobile Telephony/Broadband

Services: Spectrum Concentration

64. Given that spectrum is a critical and necessary input for the provision of facilities-based

mobile telephony/broadband services, the Commission has analyzed whether and to what extent proposed

acquisitions of wireless spectrum would affect competition in the mobile telephony/broadband services

market.

153

First, we analyze the potential competitive effects of total spectrum concentration for both

147

Free Press Petition at 10-19; Free Press Reply at 23-25; Public Knowledge Apr. 30, 2012 Ex Parte at 3; RCA

Petition at 41-53; Sprint Nextel Reply at 7-10; Letter from Michael Lazarus, Counsel to RCA, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Apr. 12, 2012.

148

Public Knowledge Apr. 30, 2012 Ex Parte at 3.

149

Joint Opposition at 59-61.

150

Id. at 58-61.

151

In response to Applicant’s arguments regarding the PCS G Block, we note that the Commission has included in

the screen, as part of the PCS spectrum band, the 10 megahertz of spectrum that Sprint acquired as a result of the

800 MHz Rebanding Order. See Joint Opposition at 56; Improving Public Safety Communications in the 800 MHz

Band, WT Docket 02-55, Consolidating the 800 and 900 MHz Industrial/Land Transportation and Business Pool

Channels, ET Docket No. 00-258, Report and Order, Fifth Report and Order, Fourth Memorandum Opinion and

Order, and Order, 19 FCC Rcd 14969 (2004).

152

See AT&T-Qualcomm Order, 26 FCC Rcd at 17607, n.126 (noting that when conducting competitive analysis in

the future, the Commission may decide to include only the 14 megahertz of SMR spectrum suitable and available for

mobile broadband services).

153

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17601-03 ¶¶ 30-33.

Federal Communications Commission FCC 12-95

local and national geographic markets of Verizon Wireless’s acquisition of spectrum from SpectrumCo,

Cox, and Leap, as well as for the spectrum Verizon Wireless is acquiring from T-Mobile. We also

examine Verizon Wireless’s concentration of AWS-1 spectrum, as it is acquiring a near nationwide

footprint of 20 megahertz or more (and post-transaction would hold as much as 60 megahertz in some

markets), which is currently the only large block of greenfield spectrum immediately available for mobile

telephony/broadband services.

65. Second, we evaluate any potential competitive effects of spectrum concentration for a

local geographic market resulting from the proposed assignment of a single 700 MHz spectrum license

from Verizon Wireless to Leap. Third, we consider the potential competitive effects of total spectrum

concentration for both local and national geographic markets resulting from the proposed assignment of

AWS-1 spectrum from Verizon Wireless to T-Mobile. As with the Verizon Wireless transactions, we

also consider the effects of T-Mobile’s acquisition of AWS-1 spectrum. Consistent with prior

transactions,

154

we consider facilities-based entities providing mobile telephony/broadband services using

cellular, broadband PCS, SMR, 700 MHz, AWS-1, and BRS spectrum as market participants for the

purposes of our competitive analysis of the Verizon Wireless spectrum purchases from SpectrumCo, Cox,

Leap, as well as T-Mobile and for the Leap-Verizon Wireless, and the T-Mobile-Verizon Wireless

transactions.

a. Verizon Wireless-Acquisition of Spectrum From SpectrumCo-Cox-

Leap and-T-Mobile

66. The Applicants argue in the Verizon Wireless-SpectrumCo-Cox and the Verizon Wireless-

Leap transaction that the transactions will not give rise to competitive concerns in any applicable market

area.

155

They also state that for each of the proposed transactions there is no transfer of customers, and

therefore there is no loss of an actual competitor.

156

For each transaction, the Applicants applied the

Commission’s current spectrum screen and conclude that no harms would result from the transactions.

157

67. Opponents respond that, although there is not a loss of actual competition, there would be

a loss of potential competition.

158

They contend that these transactions may result in an increased

likelihood of anticompetitive unilateral effects.

159

In their view, approving the proposed transactions

154

See, e.g., Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17600-01 ¶ 75.

155

See, e.g., Verizon-SpectrumCo Public Interest Statement at 19; Verizon-Cox Public Interest Statement at 18;

Verizon Wireless-Leap-Savary Island Public Interest Statements at 11.

156

Verizon Wireless-Leap-Savary Island Public Interest Statement at 12; Verizon Wireless-Cricket Public Interest

Statement at 15; Verizon Wireless SpectrumCo Public Interest Statement at 24; Cox Public Interest Statement at 18;

Verizon Wireless-T-Mobile Public Interest Statement at 4. In three CMAs, Leap will retain spectrum and operations

where it is assigning spectrum to Verizon Wireless. See Verizon Wireless-Cricket Public Interest Statement at 15.

157

The Applicants asserted that the current screen was not triggered for the Verizon Wireless-Leap transaction, see

Verizon Wireless-Leap-Savary Island Public Interest Statement at 12; Verizon Wireless-Cricket Public Interest

Statement at 15, and was triggered in 15 EAs (which include 18 CMAs) in the Verizon Wireless-SpectrumCo

markets. See Verizon-SpectrumCo Public Interest Statement at 26-27, Exhibit 7.

158

Free Press Petition at 23-24; RTG Petition at 11-12; RCA Petition at 25-30; RCA Reply at 4, 11-15. According

to RCA, this potential competition would also extend to roaming services. See RCA Reply at 11-12.

159

See, e.g., Consumers Union Reply at 2; Greenlining Institute Comments at 8-10; Level 3 Communications Reply

at 2-3; NTCA Reply at 3-4; NJ Division of Rate Counsel Petition at 19-21, 24-27; NTCH Reply at 2-5; Public

Knowledge Petition at 29-34; Rural Broadband Policy Group Petition at 2-4; RCA Petition at 8-15; RCA Reply at

(continued….)

Federal Communications Commission FCC 12-95

would increase consolidation in an already consolidated industry, increasing Verizon Wireless’s market

power and hindering the ability of smaller rival firms to acquire additional spectrum and compete.

160

Specifically, some parties contend that the aggregation of spectrum resulting from the proposed Verizon

Wireless-SpectrumCo-Cox transaction would increase wireless prices.

161

In response, Verizon Wireless

generally contends that: the transactions do not raise the issue of coordinated or unilateral effects;

162

robust national competition limits any potential for coordinated effects;

163

and commenters have failed to

demonstrate any competitive harm at the local or national level.

164

68. Commenters also express concern about the possibility that Verizon Wireless’s

acquisition of spectrum in all of the proposed transactions would result in spectrum warehousing,

foreclosing competitor access to spectrum, or raising rivals’ costs.

165

They note that Verizon Wireless

already has AWS-1 spectrum that it has not deployed.

166

They argue that approving the proposed

transaction would allow Verizon Wireless to warehouse additional AWS-1 spectrum, preventing other

service providers from obtaining access to it in the secondary market.

167

In particular, some commenters

argue that smaller and rural carriers, without access to useable spectrum, are at a competitive

disadvantage in competing against the larger wireless companies.

168

RCA asserts that the Commission

(Continued from previous page)

17-19; RTG Petition at 14-16; Sprint Nextel Comments at 16-18; T-Mobile Petition at 4-5; Computer and

Communications Industry Reply at 9-12.

160

Public Knowledge Petition at 29-30. See also NTCH Petition, WT Docket 12-4 and File Nos 0004942973, etc.,

at 1, filed Feb. 21, 2012. Free Press Petition, WT Docket 12-175, at 2-4; ITTA Comments at 3.

161

New Jersey Division of Rate Counsel Petition at 24; AAI Apr 16, 2012 Ex Parte, at Attach., AAI White Paper at

4; Public Knowledge Petition at 25. The New Jersey Division of Rate Counsel also claims that service quality

would degrade as a result of spectrum concentration from the proposed transactions. See New Jersey Division of

Rate Counsel Petition at 24. AAI also contends that the aggregation of spectrum also can lead to lower output. See

Letter from Richard M. Brunell, Director of Legal Advocacy, American Antitrust Institute, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Apr. 16, 2012, Attachment White Paper at 4 (“AAI Apr. 16, 2012 Ex

Parte”).

162

Joint Opposition at 46.

163

Id. at 49-50, Joint Opposition, WT Docket 12-175, at 2-8.

164

Joint Opposition at 41-52, Joint Opposition, WT Docket 12-175, at 2-8.

165

The Greenlining Institute Comments at 8-10; Public Knowledge Petition at 29-30; Rural Broadband Policy

Group Petition at 2-4; RCA Petition at 8-15; RCA Reply at 17-19; RTG Petition at 9-11; Sprint Nextel Comments at

16-18; Computer and Communications Industry Reply at 9-11; NTCH Petition at 2; Free Press Petition at 5; Free

Press Comments, WT Docket 12-175, at 8; ATN Comments, filed July 10, 2012, at 5. See also NJ Division of Rate

Counsel Petition at 20; RTG Petition, WT Docket No. 12-175, at 4; RTG Reply, WT Docket No. 12-175, at 5-6.

166

Level 3 Communications Reply at 3; RCA Reply at 25-26; T-Mobile Petition at 35; Ray Declaration at 7; T-

Mobile Reply at 14; Free Press Petition at 34-35; RCA Petition at 20-22; MetroPCS Reply at 2; CCIA Reply at 11-

12; Letter from Carl W. Northrop, Telecommunications Law Professionals, to Marlene H. Dortch, Secretary, FCC,

WT Docket No. 12-4, filed Jan. 27, 2012 at 2 (“MetroPCS Jan. 27, 2013 Ex Parte Ex Parte”); Letter from Carl W.

Northrop, Telecommunications Law Professionals, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4,

filed Apr. 26, 2012 at 1 (“MetroPCS Apr. 26, 2012 Ex Parte”); ATN Comments, filed July 10, 2012, at 7;

MetroPCS Comments, filed July 10, 2012, at 2.

167

Level 3 Communications Reply at 3; NTCA Reply at 5-6.

168

ATN Comments, filed July 10, 2012, at 5; RTG Petition at i, 9-11. See also RTG Petition, File Nos. 0004942973

etc., at 12-13. Rural Broadband Policy Group Petition at 3-4; RTG Petition, WT Docket 12-175, at 5-8; Hawaiian

Telcom Petition at 19; NJ Division of Rate Counsel Petition at 20.

Federal Communications Commission FCC 12-95

must recognize that Verizon Wireless and AT&T constitute a duopoly that have control over most of the

prime broadband spectrum, which makes it increasingly difficult for new entrants or other smaller

providers to offer effective competition in the industry.

169

Finally, Free Press contends that Verizon

Wireless would continue to have a significant spectrum advantage that would incentivize anticompetitive

behavior such as raising rivals’ costs.

170

69. In response, Verizon Wireless argues that there are competing wireless providers in each

market and there is nothing preventing other competitors from acquiring spectrum on the secondary

market.

171

Verizon Wireless disputes warehousing claims, asserting that it plans to deploy its AWS-1

spectrum beginning in 2013 in order to address its capacity needs,

172

thereby putting the spectrum to use

promptly rather than deferring buildout.

173

70. Discussion. These transactions raise competitive issues both with respect to Verizon

Wireless’s total aggregation of spectrum and its substantial aggregation within the AWS-1 band. To

evaluate the effects of these aggregations, we first apply the spectrum screen to all the transactions before

us, and then examine the effects of the transactions through the lens of the AWS-1 band, and the resulting

impact of Verizon Wireless’s aggregation on both a local and national level. The Commission has

recognized that the total amount of spectrum held by a service provider is not the only factor necessary to

remain a viable competitor in the provision of mobile broadband/telephony services.

174

A rigorous

competitive analysis requires full consideration of various factors, including the suitability and

availability of spectrum that would allow rival service providers to provide an effective competitive

constraint in the marketplace.

175

In particular, we recognize that the AWS-1 spectrum at issue in these

transactions is the lone large block of currently unencumbered near-nationwide spectrum with a well-

169

RCA Petition at 8. See also NTCH Petition, WT Docket 12-4 and File Nos. 0004942973, etc., at 2-3; AAI Apr.

16, 2012 Ex Parte at Attachment.

170

Free Press Petition at 5; Free Press Comments, WT Docket 12-175, at 8.

171

Joint Opposition at 8-12, 46.

172

Letter from Adam D. Krinsky, Wilkinson Barker Knauer, LLP, Counsel for Verizon Wireless, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed June 20, 2012 at 10 (“Verizon Wireless-Krinsky June 20 Ex

Parte”); Katz Declaration at ¶ 37; Stone Supplemental Declaration at ¶¶ 27-29 (detailing steps); see also Letter from

Tamara Preiss, Vice President Federal Regulatory Affairs, Verizon Wireless, to Marlene H. Dortch, Secretary, FCC,

WT Docket No. 12-4, filed June 1, 2012, Bill Stone Presentation at 2 (“Verizon Wireless June 1, 2012 Stone

Presentation Ex Parte”); Letter from Tamara Preiss, Vice President Federal Regulatory Affairs, Verizon Wireless, to

Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 31, 2012, Bill Stone Presentation at 2

(“Verizon Wireless May 31, 2012 Ex Parte”); Letter from Tamara Preiss, Vice President Federal Regulatory

Affairs, Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 17, 2012 at 3

(“Verizon Wireless-Preiss May 17, 2012 Ex Parte”).

173

Joint Opposition, WT Docket 12-175, at 14.

174

See AT&T-Qualcomm Order, 26 FCC Rcd at 17602 ¶ 31.

175

See Letter from Richard M. Brunell, Director of Legal Advocacy, American Antitrust Institute, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed Apr. 16, 2012 at 6-8 (contending that despite the fact that

Verizon Wireless might exceed the spectrum screen in only a few local areas, the Commission should consider the

quality of the spectrum held and the distribution of the remaining spectrum because other wireless providers face

capacity constraints). See also Public Knowledge Petition at 34-35 (stating that “[w]hile the Commission may be

guided by the spectrum screen in evaluating the proposed transactions, the screen is not a dispositive test of whether

the transactions would adversely impact competition”).

Federal Communications Commission FCC 12-95

developed ecosystem immediately available for the provision of mobile broadband service.

176

71. We apply the current spectrum screen to identify local markets where total spectrum

aggregation may raise concerns.

177

Our current spectrum screen triggers 18 local markets.

178

Applying

the screen to take into account the spectrum Verizon Wireless is acquiring from T-Mobile does not result

in any additional markets being identified by the spectrum screen.

179

72. We have looked closely at the markets identified by the current spectrum screen and

evaluated various characteristics of these markets

180

that would allow rival service providers to provide an

effective competitive constraint in the marketplace. Specifically, we looked at the likelihood that some

competitors or potential entrants would be foreclosed from expanding capacity, deploying 4G

technologies, or entering the market. We also considered the likelihood that these transactions may result

in a potentially significant increase in rivals’ costs to increase capacity in order to remain competitive.

We conclude that there is a potential for foreclosure or increased rivals’ costs in some of the local markets

that were identified by the screen from the Verizon Wireless-SpectrumCo, Cox, and Leap transactions. If

providers are unable to expand capacity or deploy 4G technologies, this may reduce quality and consumer

choice in these local markets. These localized competitive harms are limited to a few, small areas and are

not numerous enough or include a large enough percentage of the population such that they are likely to

176

See, e.g., Free Press Petition at 1, 12; Letter from S. Derek Turner, Research Director, Free Press, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed June 4, 2012 at 1-5 (“Free Press June 4, 2012 Ex

Parte”)(arguing that Verizon Wireless has a competitive advantage in nationwide LTE deployment for the

foreseeable future and the carrier does not need the all of the AWS-1spectrum in the instant proceeding). See also

VZW-TPK-FCC-013485 [REDACTED] Mar. 9, 2011 and VZW-TPK-FCC012289 [REDACTED] June 2011 and

VZW-TPK-FCC-527547 [REDACTED] Oct. 13, 2011 and VZW-TPK-FCC-026543 at VZW-TPK-FCC-026546

[REDACTED] Oct. 17, 2011.

177

See, e.g., AT&T-Verizon Wireless Order, 25 FCC Rcd at 8720-21 ¶ 32; Cingular-AT&T Wireless Order, 19 FCC

Rcd at 21568 ¶ 108. Our current spectrum screen is where the Applicants would have, on a market-by-market basis,

a 10 percent or greater interest in: 95 megahertz or more of PCS, SMR, and 700 MHz spectrum, where neither BRS

nor AWS-1 spectrum is available; 115 megahertz or more of spectrum, where BRS spectrum is available, but AWS-

1 spectrum is not available; 125 megahertz or more of spectrum, where AWS-1 spectrum is available, but BRS

spectrum is not available; or 145 megahertz or more of spectrum where both AWS-1 and BRS spectrum are

available.

178

The CMAs identified by the initial spectrum screen are: CMA15: Minneapolis-St. Paul, MN-WI, CMA48:

Toledo, OH-MI, CMA64; Grand Rapids, MI, CMA71: Raleigh-Durham, NC, CMA78: Lansing-East Lansing, MI,

CMA94: Saginaw-Bay City-Midland, MI, CMA264: Florence, SC, CMA310: Alabama 4 – Bibb, CMA314:

Alabama 8 – Lee, CMA334: Arkansas 11 – Hempstead, CMA455: Louisiana 2 – Morehouse, CMA486: Minnesota

5 – Wilkin, CMA489: Minnesota 8 - Lac qui Parle, CMA490: Minnesota 9 – Pipestone, CMA492: Minnesota 11 –

Goodhue, CMA496: Mississippi 4 – Yalobusha, CMA512: Missouri 9 – Bates, CMA658: Texas 7 – Fannin. These

18 markets exceeded the current spectrum screen by two to 19 megahertz. The screen was exceeded by two

megahertz in four CMAs and by 19 megahertz in one CMA. In 14 of the 18 CMAs, the screen was exceeded by less

than 10 megahertz.

179

With respect to the 125 markets in which Verizon Wireless would be incurring a net loss of spectrum to T-

Mobile, we note that in one of those markets -- Minnesota 8-Lac qui Parle (CMA 489) – Verizon Wireless would

continue to hold a maximum of 149 megahertz of spectrum post-transaction, which would exceed the screen by 4

megahertz. However, the likelihood of competitive harm in this market is low.

180

These factors include but are not limited to demographics, market shares, coverage, and availability of spectrum

within the market to provide mobile telephony/broadband services.

Federal Communications Commission FCC 12-95

result in a higher nationwide price.

181

73. We also analyze, given the current marketplace, potential local and national effects of

Verizon Wireless’s total post-transaction spectrum holdings of AWS-1 spectrum. We find that following

the acquisition of AWS-1 spectrum from SpectrumCo, Cox, Leap, and T-Mobile, Verizon Wireless would

hold a substantial proportion of the currently available greenfield AWS-1 spectrum. Combined, these

acquisitions would give it at least 20 megahertz of near-nationwide greenfield spectrum in conjunction

with its Upper 700 MHz C block spectrum,

182

allowing Verizon Wireless to deploy two 10x10 LTE

carriers on a near nationwide basis.

183

74. Verizon Wireless would hold more than 40 megahertz of AWS-1 spectrum (in at least

one county) in 101 CMAs.

184

Forty megahertz of AWS-1 spectrum represents almost half of the total

AWS-1 spectrum. In these local markets, rival service providers would likely be foreclosed from

acquiring AWS-1 spectrum, which is crucial for certain rivals’ LTE deployment and broadband growth.

In many local markets, there is little or no other greenfield spectrum with a developed ecosystem that is

currently available. Therefore, incumbent service providers likely would have to use more expensive

methods either to deploy a 4G network (such as customer migration),

185

increase 4G capacity,

186

and/or

181

The 18 markets identified by the screen reflect a population of approximately 8.9 million, approximately 3

percent of the U.S. population.

182

See infra para. 74. See also VWZ-TPK-FCC-013745 at VZW-TPK-FCC-013760 [REDACTED] Oct. 31, 2011;

VZW-TPK-FCC-016151 at VZW-TPK-FCC-016158 to VZW-TPK-FCC-016159 [REDACTED]; and at VZW-

TPK-FCC-016168 to VZW-TPK-FCC-016183; and at VZW-TPK-FCC-016204 Oct. 2010.

183

Clearwire is the only other mobile telephony/broadband service provider with sufficient spectrum to deploy two

10x10 LTE carriers, or the TDD equivalent of four 10 MHz TDD carriers, using greenfield spectrum in a significant

number of markets. See Verizon Wireless-SpectrumCo Application, Exhibit 6; Verizon Wireless-Cox Application,

Exhibit 6; Verizon Wireless-Savary Island Application, Exhibit 4; Verizon Wireless-Leap Application, Exhibit 5; T-

Mobile-Verizon Wireless Application, Exhibit 3. Fifteenth Annual Competition Report, 26 FCC Rcd at 9672, 9698,

9719-20, 9739-40; Clearwire, “TDD-LTE Network to Service 4G ‘Hot Zones’ in New York, San Francisco, Los

Angeles, Chicago, Seattle and More,” Apr. 26, 2012, available at

http://files.shareholder.com/downloads/CLWR/1540782937x0x563588/c277b3f6-de1b-4098-bdc7-

f9f2ce32b758/CLWR_News_2012_4_26_General_Releases.pdf (last visited Aug. 14, 2012)(stating that

Deployment of Clearwire's TDD-LTE network is targeting high demand "hot zones" in major urban centers where

demand for 4G mobile broadband access is high and the need for deep 4G capacity resources is most acute).

184

These 101 CMAs where Verizon Wireless would hold more than 40 megahertz of AWS-1 spectrum result only

from the Verizon Wireless-SpectrumCo-Cox-Leap transactions. The result is unchanged if one includes the AWS-1

spectrum Verizon Wireless is acquiring from T-Mobile.

185

See, e.g., Letter from Douglas Minster, Vice President, ATN, to Marlene H. Dortch, Secretary, FCC, WT Docket

No. 12-4, filed June 8, 2012 at Attachment (arguing that smaller providers will be unable to offer 4G service

because of the lack of acceptable 4G spectrum today). See also Letter from Tamara Preiss, Verizon Wireless, to

Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed June 8, 2012 at 15 (stating that the ability to rely on

cell splits, migration, and other techniques is difficult and costly).

186

Rival service providers that have deployed or are deploying a 4G network in certain local markets may need

access to additional spectrum, such as the spectrum in these transactions, to improve the quality of their current or

future service offerings. Through these proposed transactions, consumers would be harmed in some instances by the

inability of these rival service providers to offer a higher quality service or by higher prices that reflect higher costs

of alternative capacity expansion methods. In addition, this could potentially provide Verizon Wireless an incentive

to delay its own improvements in service quality or delay expansion of coverage in local markets.

Federal Communications Commission FCC 12-95

serve new customers.

187

In addition, smaller service providers that do not currently hold spectrum

licenses in a relevant local market would be foreclosed from an opportunity to expand their networks into

additional geographic markets.

75. In markets where Verizon Wireless, post-SpectrumCo, Cox, Leap, and T-Mobile

transactions, would hold 20-40 megahertz of AWS-1 spectrum, there is concern that in some of these

markets Verizon Wireless may not quickly deploy all the spectrum it would acquire, foreclosing

competitors’ access and resulting in a lessening of competition. Verizon Wireless would hold, post-

transactions, precisely 40 megahertz of AWS-1 spectrum in 362 of the 671 CMAs that are the subject of

the proposed transactions with SpectrumCo, Cox, Leap, and T-Mobile. Providers in some of these local

markets may be foreclosed from acquiring AWS-1 spectrum to either deploy 4G networks or increase

capacity on their 4G networks.

76. We also find that Verizon Wireless’s acquisition of this AWS-1 spectrum may have

nationwide price effects as a result of potential foreclosure in numerous local markets. If other service

providers find it significantly more difficult or expensive to enter or expand, in many of these markets

then mobile telephony/broadband prices may increase nationwide. Further, if competitors are unable to

compete vigorously with Verizon Wireless in a sufficiently large number of markets, then Verizon

Wireless may have an incentive and ability to unilaterally increase price at the national level.

188

77. It is also relevant that Verizon Wireless currently has the most substantial total spectrum

holdings of any mobile telephony/broadband provider at the national level. In considering providers’

current nationwide average total spectrum holdings on a megahertz basis, in approximate terms, Verizon

Wireless holds 90 megahertz, AT&T holds 88 megahertz, Sprint Nextel (excluding Clearwire)

189

holds 53

megahertz, T-Mobile holds 56 megahertz, Leap holds 11 megahertz, and MetroPCS and US Cellular each

hold 9 megahertz. If Verizon Wireless were to complete its proposed acquisitions of spectrum from

SpectrumCo, Cox, Leap, and T-Mobile, Verizon Wireless would hold an average of 107.5 megahertz of

total nationwide spectrum.

78. For the foregoing reasons, we find that Verizon Wireless’s acquisition of a substantial

amount of AWS-1 spectrum from SpectrumCo, Cox, and Leap in numerous local markets causes

significant competitive concerns.

b. Leap’s Acquisition of Spectrum From Verizon Wireless

79. We now consider the potential effects on competition resulting from Leap’s proposed

187

Although alternative methods to increase capacity to serve additional customers are available, such as adding

towers, splitting cells, or acquiring roaming rights on other networks, these substitute inputs are not equally cost

effective. An increase in rivals’ costs would lead to an increase in rivals’ prices, which would, in turn, provide

Verizon Wireless with an incentive to raise its own prices, if a sufficiently large number of local markets are

implicated, without fear of loss of customers.

188

If Verizon Wireless were to unilaterally increase its prices post-transactions, then a fraction of Verizon

Wireless’s customers would be expected to switch to a substitute service provider. To the extent that Verizon

Wireless’s rivals may be spectrum-constrained, without access to additional spectrum, then their ability to offer

service to these additional customers may be limited. Thus, if Verizon Wireless’s rivals are unable to offer a

comparable competitive service in a sufficiently large number of local markets, these rivals would be less effective

in disciplining any national price increase by Verizon Wireless.

189

Clearwire’s average total spectrum holdings on a megahertz basis is approximately 48 megahertz. Sprint Nextel,

through a wholly-owned subsidiary owns the largest interest in Clearwire with an effective voting and economic

interest of approximately 48.3%.

Federal Communications Commission FCC 12-95

acquisition of 12 megahertz of lower 700 MHz A-block spectrum from Verizon Wireless in 13 CMAs

(the Chicago BEA) on local geographic markets. The Applicants argue that the assignment of spectrum

from Verizon Wireless to Leap would not result in any competitive harms.

190

They also note that this

transaction does not involve the transfer of customers or other assets, and that Verizon Wireless will

continue to offer mobile wireless services in Chicago.

191

Post-transaction, Leap would hold no more than

22 megahertz of spectrum in any county within these 13 CMAs, which does not trigger the spectrum

screen

192

and is well below any level of spectrum aggregation that would raise competitive concerns. We

also note that no commenter has raised any concerns of spectrum concentration with respect to this

assignment to Leap. Based on our assessment of competitive conditions in these 13 local markets, we

find that this transaction is unlikely to result in competitive harms.

c. T-Mobile’s Acquisition of Spectrum From Verizon Wireless

80. Finally, we also consider the impact of Verizon Wireless’s proposed transfer of AWS-1

spectrum to T-Mobile on both local and national markets. The Applicants to this transaction argue that

the proposed transaction will not result in competitive harms and there will not be a loss of a

competitor.

193

ATN claims that T-Mobile would hold AWS-1 spectrum in Allied Wireless

Communications Corporation’s (“AWCC’s”) service territory that would be disproportionate to its needs

and should be carefully evaluated.

194

Although T-Mobile would be receiving a net transfer of spectrum in

125 CMAs, post-transaction, T-Mobile would hold no more than 90 megahertz of spectrum in any county

within these 125 CMAs, and does not trigger the current spectrum screen.

195

This amount of total

spectrum in these markets does not raise any competitive concerns. Post-transaction, T-Mobile would

hold more than 40 megahertz of AWS-1 spectrum in three CMAs and would hold 40 megahertz in at least

one county in 87 CMAs. We find that this AWS-1 spectrum concentration in unlikely to result in

competitive harms in any local market. Our evaluation of local markets, taking into consideration various

factors, finds that competitive harms are unlikely. Further, T-Mobile has already deployed a network on

its AWS-1 spectrum,

196

and is planning to deploy a nationwide LTE network using only its AWS-1

spectrum.

197

Since there is unlikely to be competitive harms in any local market subject to this

transaction, it is unlikely to result in an increase in prices that are set on a nationwide basis.

190

See Verizon Wireless-Cricket Public Interest Statement at 14.

191

See id. at 15.

192

The Applicants also state that the assignment of this spectrum to Leap does not trigger the spectrum screen. See

id. at 1.

193

See T-Mobile-Verizon Wireless Public Interest Statement at 6.

194

ATN Comments, filed July 10, 2012, at 5, 7. ATN also claims Verizon Wireless would hold a disproportionate

amount of spectrum in AWCC’s territory post transaction. See ATN Comments, filed July 10, 2012, at 5.

195

Applicants apply the screen to this transaction and conclude the spectrum screen is not triggered in any CMA.

See T-Mobile-Verizon Wireless Public Interest Statement at 6.

196

See Press Release, T-Mobile USA Begins Commercial 3G Network Rollout (May 5, 2008), available at

http://newsroom.t-mobile.com/articles/t-mobile-UMTS-HSDPA (last visited Aug. 2, 2012); Annual Report and

Analysis of Competitive Market Conditions with Respect to Mobile Wireless, Including Commercial Mobile

Services, WT Docket No. 09-66, Fourteenth Report, 25 FCC Rcd 11407, 11565 n.709 (2010).

197

Joint Opposition, WT Docket 12-175, at 3-6.

Federal Communications Commission FCC 12-95

B. Competitive Impact of Transactions on Roaming

81. Roaming occurs when the subscriber of one mobile wireless provider travels beyond the

service area of that provider and uses the facilities of another mobile wireless provider to place and

receive calls, continue in-progress calls, and transmit and receive data. Several petitioners and

commenters argue that Verizon Wireless’s acquisition of the Cable Companies’ AWS-1 spectrum and the

implementation of the Commercial Agreements could adversely affect the market for data roaming

services.

198

First, parties such as RCA, RTG, and NTCH contend that the transaction eliminates the Cable

Companies as potential AWS-1 band LTE roaming partners and that, as a result, competing carriers will

have fewer choices for roaming partners and will be more dependent on Verizon Wireless.

199

They also

argue that the transaction increases Verizon Wireless’s bargaining power in roaming negotiations and

reduces its incentives to enter into reasonable roaming arrangements with competing carriers, in part by

reducing Verizon Wireless’s need for spectrum and thus reducing the opportunity for other providers to

trade their own unused spectrum for a favorable roaming arrangement, which they contend has occurred

in the past.

200

RCA, Sprint Nextel, and MetroPCS argue that the data roaming rule adopted by the

Commission in 2011 does not address these concerns, because Verizon Wireless’s court challenge to the

rule remains pending and because even under the rule providers have difficulty negotiating reasonable

roaming arrangements.

201

In addition, Public Knowledge, MetroPCS, Free Press, and RCA state that

Verizon Wireless’s proposed divestiture of AWS-1 spectrum to T-Mobile does not resolve their concerns

that the Verizon Wireless-SpectrumCo-Cox transaction will negatively impact the roaming market.

202

RCA also asserts that Verizon Wireless has also refused to offer voice roaming agreements to other

providers on reasonable terms and conditions.

203

82. With respect to the Verizon Wireless-T-Mobile transaction, Public Knowledge, while

acknowledging it will result in some pro-competitive effects, argues that the transaction will reduce the

Applicants’ incentives to enter into reciprocal roaming arrangements with competing carriers. It asserts

that regional carriers would face reduced access at higher costs resulting in fewer competitors entering the

198

See New Jersey Division of Rate Counsel Petition at 15-16 (asserting that one consequence of license transfer is

that “smaller wireless companies could find it more difficult to negotiate favorable roaming arrangements”);

MetroPCS Reply at 17-19; Sprint Nextel Reply at 16-17; RTG Petition at i-ii, 11-12; RCA Petition at 31, 34-35;

NTCH Petition at 3, 6-7; see also Sprint Nextel Comments at 14, 16 (urging the Commission to “conduct a detailed

review of how the Verizon/Cable Company agreements will affect data roaming” and “determine whether the

addition of the [Cable Companies’] AWS spectrum will give Verizon even more incentive and ability to disrupt the

roaming opportunities of smaller carriers”); Public Knowledge Petition at 6-7, 48.

199

RCA Petition at 34; MetroPCS Reply at 17-20; RTG Petition at 11-12; NTCH Reply at 4; NTCA Reply at 5.

200

MetroPCS Reply at 15-16, 17-19 (asserting that some carriers have had success in getting “roaming concessions

from Verizon Wireless” when the requesting party had spectrum to trade in a particular locale that Verizon Wireless

wanted, and arguing that the transaction will reduce this possibility); RCA Petition at 32-34 & n.88. See also Public

Knowledge Reply, WT Docket 12-175, at 2-3.

201

RCA Petition at 33-34; Sprint Nextel Reply at 16-17; MetroPCS Reply at 20.

202

See Public Knowledge Comments, filed July 10, 2012, at 6; MetroPCS Comments, filed July 10, 2012, at 20;

Free Press Comments, filed July 10, 2012, at 7; Letter from Michael Lazarus et al. Telecommunications Law

Professionals PLLC, Counsel for RCA, WT Docket No. 12-4, to Marlene H. Dortch, Secretary, FCC, filed July 11,

2012, at 4.

203

RCA Petition at 33.

Federal Communications Commission FCC 12-95

market to offer consumers more choices and competitive rates.

204

83. Applicants respond that the parties have failed to demonstrate how the spectrum

acquisition will impact roaming and that the Commission has already addressed data roaming obligations

comprehensively.

205

Verizon Wireless further asserts that claims relating to voice roaming are not

germane to the transactions, that in any case the voice roaming rules have been in place since 2007 and

have not been challenged in a judicial proceeding, and that in the five years that those rules have been in

place, no party has filed a complaint against Verizon Wireless alleging a failure of compliance.

206

84. Discussion. We agree that the availability of roaming arrangements, particularly those

giving consumers roaming access to mobile broadband data services, is a significant issue. The

Commission previously has found that the availability of data roaming arrangements is critical to enabling

consumers to have a competitive choice of facilities-based providers offering nationwide access to

commercial mobile data services.

207

The transfer of AWS-1 spectrum to Verizon Wireless would place it

in the hands of a nationwide provider that has little incentive to provide the roaming capability necessary

for competitors with less than national footprints. Given the difficulties providers have had obtaining

broadband data roaming arrangements and the potential for AWS-1 to provide an important new source of

LTE roaming that might help alleviate these difficulties, we find that the transfer of the AWS-1 spectrum

to Verizon Wireless as originally proposed would constitute a concrete potential harm to future

competition.

C. Competitive Impact of Transactions on Interoperability

85. Several parties argue that the Verizon Wireless-SpectrumCo-Cox transaction increases

concerns that Verizon Wireless will utilize devices using AWS-1 spectrum that lack interoperability (i.e.,

devices that operate only over a portion of the AWS-1 band spectrum).

208

They argue that an

interoperability condition on the AWS-1 band will prevent Verizon Wireless from restricting the most

innovative handsets to its own spectrum bands and will ensure that equipment for these bands remains

open and available to competitors at reasonable prices.

209

NTCH proposes a condition that Verizon

204

Public Knowledge Reply, WT Docket No. 12-175, at 3.

205

Joint Opposition at 65-66; see also Joint Opposition, WT Docket No. 12-175, at 12.

206

See Letter from Kathleen Grillo, Verizon, to Marlene H.Dortch, Secretary, FCC, filed Aug. 21, 2012.

207

See Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers

of Mobile Data Services, WT Docket No. 05-265, Second Report and Order, 26 FCC Rcd 5411, 5419 ¶ 15

(2011)(“Data Roaming Order”), appeal filed, Cellco P’ship d/b/a Verizon v. FCC, Nos. 11-1135 & 11-1136 (D.C.

Cir. May 13, 2011)(“the availability of data roaming arrangements can be critical to providers remaining

competitive in the mobile services marketplace”).

208

RCA Petition at 57 (“If granted, the Transactions will give Verizon a commanding position with respect to AWS

spectrum, and the Commission must ensure that Verizon is prevented from restricting the best and most innovative

handsets to its own spectrum bands and technologies.”); Public Knowledge Petition at 53 (“Verizon . . . would have

such control over the AWS spectrum that it could control the equipment market”); NTCA Reply at 7-8 (“Small

wireless providers . . . will be irreparably harmed if Verizon continues down a path of non-interoperability,

restricting the best and most innovate[sic] handsets to its own spectrum bands.”). See also, e.g., Letter from Michael

Lazarus, Telecommunications Law Professionals PLLC, Counsel for RCA and ATN, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed June 22, 2012, at 5 (“The Commission must take action to ensure that

Verizon does not abuse its near-monopoly power with respect to [the AWS B and F Blocks] to create a chipset that

is limited only to the AWS bands used by Verizon”).

209

RCA Petition at 57; RCA Reply at 39; Public Knowledge Petition at 53; NTCA Reply at 7-8.

Federal Communications Commission FCC 12-95

Wireless’s devices have full two-way voice and data functionality across the AWS-1 band in order to

permit the use of AWS-1 to expand over the entire competitive landscape and to allow Verizon Wireless’s

customers to roam on other networks when out of their home markets.

210

RTG argues that approval of the

Verizon Wireless-T-Mobile transaction would provide Verizon Wireless with greater incentive “to create

a custom-made LTE band class” to limit LTE roaming and device interoperability.

211

86. Some parties also request interoperability conditions related to the Lower 700 MHz

band.

212

RCA asks the Commission to require Verizon Wireless to commit to deploying mobile wireless

services on its Lower 700 MHz A and B block spectrum in the near term to decrease its own warehousing

of spectrum and “allow other providers to deploy on their own Lower 700 MHz A and B block

spectrum.”

213

87. In response, Applicants contend that there is no transaction-specific evidence in the

record to warrant an interoperability condition on the AWS-1 band.

214

Applicants claim that there is no

basis to impose Lower 700 MHz interoperability conditions because no licenses in that band are involved

in any of the transactions and because Verizon Wireless has announced its intent to sell its Lower 700

MHz holdings.

215

Moreover, the Applicants note that the Commission recently initiated a proceeding to

address 700 MHz interoperability issues.

216

88. Discussion. While we agree with commenters that a fragmentation of the AWS-1

spectrum band similar to what has occurred in the 700 MHz band may be a serious concern, there is

simply no basis in the current record to conclude that, as a result of this transaction, such fragmentation is

likely to occur. The only LTE Band Class defined for AWS-1 (Band 4) covers operations over the entire

AWS-1 band.

217

Therefore, manufacturers and providers building AWS-1 devices to the LTE

210

NTCH Petition at 7-8.

211

RTG Petition, WT Docket No. 12-175, at 6-7.

212

See, e.g., NTCH Petition at 7-8 (proposing as a condition that any device operated by Verizon Wireless on paired

spectrum in the Lower 700 MHz band must operate on all paired spectrum in the Lower 700 MHz band and to

prohibit the design or procurement practices for 700 MHz equipment that impedes competition in that band or

excludes access to A block spectrum in LTE wireless devices). See also NTCA Reply at 7-8. NTCH also proposes

that at least 50 percent of Verizon Wireless’s LTE devices sold over the next two years must be operable across the

entire 700 MHz band, including Lower 700 MHz spectrum, Upper 700 MHz spectrum, and the first responder band.

NTCH Petition at 8.

213

RCA Petition at 57-58.

214

Joint Opposition, WT Docket No. 12-175, at 14.

215

Joint Opposition at 66; Letter from Adam D. Krinsky, Wilkinson Barker Knauer, LLP, Counsel for Verizon

Wireless, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 2, 2012 at 13 (“Verizon Wireless

May 2, 2012 Ex Parte”).

216

Verizon Wireless May 2, 2012 Ex Parte at 13; see also Letter from John T. Scott, III, Counsel for Verizon

Wireless, et al., to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed June 11, 2012 at 1.

217

Industry standards for Long-Term Evolution (LTE) wireless broadband technology are developed by the 3rd

Generation Partnership Project (3GPP), a consensus-driven international partnership of industry-based

telecommunications standards bodies. 3GPP, established in 1998, is an industry-based group and it is not associated

with any governmental agency. Its world-wide partners come from Asia, Europe, and North America. 3GPP’s

many technical specification groups meet in various countries throughout the year to carry out the organization’s

mission. See 3GPP – ABOUT 3GPP, http://www.3gpp.org/-About-3GPP.

Federal Communications Commission FCC 12-95

specifications necessarily will be producing devices interoperable across the AWS-1 band. Verizon

Wireless’s current proposal being considered by 3GPP to enable LTE carrier aggregation between AWS-

1 and 700 MHz Upper C block also includes the whole AWS-1 band,

218

and we are not aware of any

proposal before 3GPP that would fragment the AWS-1 band. Nor are we aware of any manufacturers or

operators seeking such specifications. We note that the AWS-1 band’s already mature ecosystem of

broadband devices has a history of interoperability in other technologies. Nonetheless, the Commission

encourages continued interoperability in the AWS-1 band, and we will continue to closely monitor the

development of equipment and standards for services that use the AWS-1 band. The Commission

continues to believe that interoperability is an important aspect of future deployment of mobile broadband

services, and will closely examine any actions taken that may have the potential to thwart interoperability

that currently exists in the AWS-1 band.

219

89. We also find that any issues of interoperability in the Lower 700 MHz band raised by

commenters are not transaction-related. The interoperability issues in the Lower 700 MHz band long

predate these transactions. Further, the Commission has already initiated a rulemaking proceeding earlier

this year to address these issues on an industry-wide basis.

220

D. Other Public Interest Issues Raised by Petitioners

90. In addition to the competitive concerns addressed above, several commenters raise other

issues for consideration by the Commission. These commenters propose that conditions be placed on any

assigned AWS-1 licenses or request other relief to address their concerns with regard to the SpectrumCo

and Cox transactions.

91. NTCH and Public Knowledge claim that acquiring additional AWS-1 spectrum will

increase Verizon Wireless’s leverage by making it more dominant and eliminating a source of potential

competition.

221

Therefore, NTCH asks that the Commission condition its approval of the transactions on

Verizon Wireless acquiring handsets and devices in a manner that makes these devices available to other

smaller wireless carriers at similar prices and in volumes as low as 1000 devices; prohibit Verizon

Wireless from entering into exclusive handset agreements with manufacturers that prevent devices from

being made available to others; and require Verizon Wireless to “ratably increase the percent of AWS-

compatible devices that it sells to 75% over a three-year period” to significantly accelerate the roll out of

AWS-1 spectrum by other carriers.

222

IAE argues that the Commission should require Verizon Wireless

to incorporate AWS capability into future LTE devices and make them available to any other

218

See, e.g., RP-111678, “Revised WID: LTE Advanced Carrier Aggregation of Band 4 and Band 13”, Verizon

Wireless, Ericsson, ST Ericsson, available at http://www.3gpp.org/ftp/tsg_ran/TSG_RAN/TSGR_54/docs/ (last

visited Aug. 16, 2012).

219

We note that manufacturers have already begun to offer smartphones with full LTE Band 4 support. See, e.g.,

http://www.phonescoop.com/phones/phone.php?p=3801 (Samsung Galaxy S III)(last visited Aug. 16, 2012);

http://www.phonescoop.com/phones/phone.php?p=3339 (LG Nitro HD)(last visited Aug. 16, 2012);

http://www.phonescoop.com/phones/phone.php?p=3824 (Motorola Atrix HD)(last visited Aug. 16, 2012).

220

Promoting Interoperability in the 700 MHz Commercial Spectrum, WT Docket No. 12-69, Notice of Proposed

Rulemaking, 27 FCC Rcd 3521 (2012). Comments were due on or before June 1, 2012 and reply comments were

due on or before July 16, 2012. 77 Fed. Reg. 19575 (Apr. 2, 2012).

221

NTCH Petition at 1-3, 9-10; Public Knowledge Petition at 53. See also RCA Petition at 31.

222

NTCH Petition at 9-10; Letter from Donald J. Evans, Counsel to NTCH, to Marlene H. Dortch, Secretary, FCC,

WT Docket No. 12-4, filed June 15, 2012 at 2 (“NTCH June 15, 2012 Ex Parte”).

Federal Communications Commission FCC 12-95

CDMA/LTE operator and their customers at the same device cost as it incurs in acquiring the devices.

223

In response, Applicants state that handset exclusivity claims already are the subject of a separate request

for rulemaking and the parties failed to provide sufficient basis that the transaction impacts` handset

exclusivity.

224

92. New Jersey Division of Rate Counsel argues that Verizon Wireless’s proposed

acquisition of substantial amounts of new spectrum combined with its commercial agreements with cable

companies to cross-market services heightens potential threats to net neutrality, and that “[i]f . . . the FCC

approves the [applications], it should do so only contingent upon Verizon Wireless agreeing to abide by

the third rule in the FCC’s Net Neutrality Order.”

225

In their Joint Opposition, Applicants respond that

“Open Internet issues are matters of industry-wide relevance,” that if “parties disagreed with the

Commission’s rulemaking findings, the proper course of action was to seek reconsideration or judicial

review,” and that Open Internet conditions “would bear no relationship whatsoever to the license

assignment under review.”

226

93. New Jersey Division of Rate Counsel also raises concerns regarding interstate special

access, arguing that broadband deployment continues to be harmed as a result of high special access

rates.

227

New Jersey Division of Rate Counsel asserts that Verizon Wireless and AT&T hold a significant

competitive advantage over their competitors because their extensive affiliated wireline distribution

facilities allow them to avoid having to purchase special access in most of their service areas.

228

Therefore, New Jersey Division of Rate Counsel requests that the Commission promptly recalibrate the

supracompetitive interstate special access rates that stymie wireless broadband deployment.

229

Applicants

argue that the question of what rates may be charged for special access by entities not a party to this

proceeding is not within the scope of the subject spectrum license assignment applications and are better

considered in the context of an industry-wide, comprehensive review.

230

94. Discussion. Commenters have not demonstrated, and we find insufficient evidence in the

record to conclude, that it is necessary or appropriate to impose any of these conditions in these

223

IAE Petition, WT Docket No. 12-175, at 8-9.

224

Joint Opposition at 68. Handset exclusivity was the subject of a petition for rule making filed, but later

withdrawn, by the Rural Cellular Association. See Petition for Rulemaking Regarding Exclusivity Arrangements

Between Commercial Wireless Carriers and Handset Manufacturers, RM-11497, Public Notice, 23 FCC Rcd 14873

(2008), Order, 12 FCC Rcd 5294 (2012).

225

New Jersey Division of Rate Counsel Petition at 34-37. In 2010 the Commission adopted an order codifying

three Net Neutrality rules, but declined to apply the third rule—non-discrimination—to wireless providers given the

nascency of the mobile broadband market. See Preserving the Open Internet, GN Docket No. 09-191, Broadband

Industry Practices, WC Docket No. 07-52, Report and Order, 25 FCC Rcd 17905, 17956-58 ¶¶ 93-96 (2010).

226

Joint Opposition at 67-68.

227

New Jersey Division of Rate Counsel Petition at 33.

228

Id. at 33-34.

229

Id. at 34. It also argues that the Commission should require the wireless industry to report to the Commission

“regular, uniform, and comprehensive data” regarding rates, terms, and conditions and require the top wireless

carriers to file detailed cost studies for its voice, data, and broadband services to enable the Commission to monitor

whether carriers are charging supracompetitive rates. New Jersey Division of Rate Counsel Petition at 37.

230

See Letter from Adam D. Krinsky, Counsel for Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, WT

Docket No. 12-04, filed May 17, 2012 at 2 (“Verizon Wireless-Krinsky May 17, 2012 Ex Parte”).

Federal Communications Commission FCC 12-95

transactions. In addition, these requests are not transaction-specific and the Commission generally will

not impose conditions to remedy pre-existing harms unrelated to the transaction at issue.

231

We therefore

decline to adopt these additional conditions or grant these requests for relief.

VII. POTENTIAL PUBLIC INTEREST BENEFITS

95. After assessing the potential competitive harms of the proposed transactions, we next

consider whether the proposed assignment of the licenses is likely to generate verifiable, transaction-

specific public interest benefits that outweigh any identified competitive harms.

232

In doing so, we ask

whether the assignee would be able and would be likely to pursue business strategies resulting in

demonstrable and verifiable benefits to consumers that would not be pursued but for the transaction.

233

As described above, we have under consideration four transactions involving spectrum transfers to Leap,

T-Mobile, and Verizon Wireless. We first examine the benefits of the transfers of spectrum to Leap and

T-Mobile, respectively, and conclude that the acquisition of spectrum by Leap and T-Mobile from

Verizon Wireless is likely to result in meaningful transaction-specific public interest benefits that support

grant of the Commission’s approval to these proposed transactions. Next, we consider the transfer of

spectrum to Verizon Wireless in all four transactions collectively. We conclude that the asserted public

interest benefits from Verizon Wireless’s proposed acquisition of spectrum from SpectrumCo, Cox, Leap,

and T-Mobile would not outweigh the potential for competitive harms discussed above, absent mitigating

measures.

A. Analytical Framework

96. The Commission has recognized that “[e]fficiencies generated through a merger can

mitigate competitive harms if such efficiencies enhance the merged firm’s ability and incentive to

compete and therefore result in lower prices, improved quality of service, enhanced service or new

products.”

234

This same analysis applies to an acquisition of assets like that contemplated by the proposed

transactions before us. Under Commission precedent, the Applicants bear the burden of demonstrating

that the potential public interest benefits of the proposed transaction outweigh the potential public interest

harms.

235

97. The Commission applies several criteria in deciding whether a claimed benefit should be

considered and weighed against potential harms. First, the claimed benefit must be transaction-specific.

Second, the claimed benefit must be verifiable. Because much of the information relating to the potential

benefits of a transaction is in the sole possession of the applicants, they are required to provide sufficient

evidence supporting each claimed benefit so that the Commission can verify its likelihood and

231

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17622 ¶ 79; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at

17463 ¶ 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17582 ¶ 22; Cingular-AT&T Wireless Order, 19 FCC

Rcd at 21546 ¶ 43.

232

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17622-23 ¶ 81; AT&T-Verizon Wireless Order, 25 FCC Rcd

at 8736 ¶ 73; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21599 ¶ 201.

233

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17623 ¶ 81; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8736 ¶ 73; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21599 ¶ 201.

234

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17623 ¶ 83 (internal quotations omitted); see also, e.g.,

AT&T-Verizon Wireless Order, 25 FCC Rcd at 8736 ¶ 74; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21599 ¶

204.

235

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17623 ¶ 83; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8737 ¶ 74; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21599 ¶ 204.

Federal Communications Commission FCC 12-95

magnitude.

236

In addition, “the magnitude of benefits must be calculated net of the cost of achieving

them.”

237

Furthermore, as the Commission has explained, “benefits that are to occur only in the distant

future may be discounted or dismissed because, among other things, predictions about the more distant

future are inherently more speculative than predictions about events that are expected to occur closer to

the present.”

238

Third, the Commission has stated that it “will more likely find marginal cost reductions to

be cognizable than reductions in fixed cost.”

239

The Commission has justified this criterion on the ground

that, in general, reductions in marginal cost are more likely to result in lower prices for consumers.

240

98. Finally, the Commission applies a “sliding scale approach” to evaluating benefit

claims.

241

Under this sliding scale approach, where potential harms appear “both substantial and likely” –

as is the case here – “a demonstration of claimed benefits also must reveal a higher degree of magnitude

and likelihood than we would otherwise demand.”

242

B. Asserted Benefits

99. Verizon Wireless-Leap. Verizon Wireless and Leap assert that their proposed transaction

would result in underutilized spectrum being put to more efficient use in order to better serve their

customers.

243

Leap, which currently holds 10 megahertz of spectrum in the Chicago area, states that the

additional 12 megahertz of spectrum would permit it to offer better broadband service and compete better

by expanding its service offerings and enabling LTE deployment in a key market.

244

Leap also states that,

236

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17623 ¶ 84; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8737 ¶ 75; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21600 ¶ 205.

237

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17623-24 ¶ 84 (internal quotations omitted); see also, e.g.,

AT&T-Verizon Wireless Order, 25 FCC Rcd at 8737 ¶ 75; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21600 ¶

205.

238

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17624 ¶ 84 (internal quotations omitted); see also, e.g.,

AT&T-Verizon Wireless Order, 25 FCC Rcd at 8737 ¶ 75; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21600 ¶

205.

239

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17624 ¶ 84 (internal quotations omitted); see also, e.g.,

AT&T-Verizon Wireless Order, 25 FCC Rcd at 8737 ¶ 75; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21600 ¶

205.

240

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17624 ¶ 84; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8737 ¶ 75; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21600 ¶ 206.

241

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17624 ¶ 85; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8737 ¶ 76; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21600 ¶ 206.

242

See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17624 ¶ 85; AT&T-Verizon Wireless Order, 25 FCC Rcd at

8737 ¶ 76; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21600 ¶ 206; cf. DOJ/FTC Merger Guidelines § 4 (“The

greater the potential adverse competitive effect of a merger . . . the greater must be cognizable efficiencies in order

for the Agency to conclude that the merger will not have an anticompetitive effect in the relevant market. When the

potential adverse competitive effect of a merger is likely to be particularly large, extraordinarily great cognizable

efficiencies would be necessary to prevent the merger from being anticompetitive.”).

243

Verizon Wireless-Leap-Savary Island Public Interest Statement at 1; Verizon Wireless-Cricket Public Interest

Statement at 1, 7.

244

Verizon Wireless-Cricket Public Interest Statement at 1, 7; Verizon Wireless, Leap Wireless International Inc,

Cricket Communications, Inc., Cricket License Company, LLC, Savary Island A, LLC, and Savary Island B, LLC

Joint Opposition to Petition to Deny, File Nos. 0004942973, etc., filed March 2, 2012 (“Verizon Wireless-Leap Joint

Opposition”) at 9, 11.

Federal Communications Commission FCC 12-95

with other providers upgrading to LTE, such deployment is critical to delivering competitive broadband

services, and that proceeds from the transaction would help finance advances in all of its markets.

245

Verizon Wireless states that the acquisition of spectrum from Leap is necessary to supplement the

spectrum on which the company currently offers LTE and EV-DO technology to its subscribers.

246

100. Verizon Wireless-T-Mobile. Verizon Wireless and T-Mobile assert that the proposed

transaction would permit each to better rationalize its AWS-1 spectrum and use it more efficiently for the

benefit of customers.

247

Specifically, they argue that: (1) in markets in which T-Mobile would receive a

net transfer of spectrum, T-Mobile would be able to address capacity constraints it is experiencing from

rapidly rising demand for data services; (2) in markets in which Verizon Wireless would receive a net

transfer of spectrum, Verizon Wireless would be able to address LTE capacity constraints; and (3) the

intra-market spectrum swaps will improve efficiency and enhance capacity by increasing the contiguity of

spectrum held by each company and further aligning each company’s spectrum blocks in adjacent

markets.

248

101. IAE states that T-Mobile’s acquiring additional spectrum from Verizon Wireless is an

efficiency-enhancing spectrum transfer, and that T-Mobile has demonstrated a need for additional

spectrum.

249

MetroPCS states that the intra-market swaps serve the public interest by enhancing capacity

and data throughput, but do not mitigate spectrum concentration and warehousing concerns with respect

to the proposed acquisition of spectrum licenses by Verizon Wireless from SpectrumCo, Cox, and

Leap.

250

102. Verizon Wireless-SpectrumCo/Cox. Verizon Wireless, SpectrumCo, and Cox argue that

the transactions would move the Cable Companies’ currently unused spectrum to a provider that would

make efficient use of it, and that the spectrum would provide necessary capacity for Verizon Wireless to

meet rapidly growing consumer demand for broadband data services.

251

Verizon Wireless states that,

while it has sufficient spectrum to meet its immediate needs, the proposed transactions would supplement

the spectrum it uses to provide 4G LTE service and would alleviate spectrum constraints that otherwise

would degrade service – in some areas as early as 2013 and in many others by 2015.

252

Verizon Wireless

asserts that additional spectrum is needed because techniques to enhance the efficient use of spectrum

alone cannot meet the accelerating demand for more network capacity, and it is already achieving most if

not all of the benefits it can from these techniques.

253

245

Verizon Wireless Cricket Public Interest Statement at 7; Verizon Wireless-Leap Joint Opposition at 9, 11.

246

Verizon Wireless Cricket Public Interest Statement at 13-14; Verizon Wireless-Leap Joint Opposition at 12-13.

247

T-Mobile Verizon Wireless Public Interest Statement at 4-6.

248

Id. at 4-6. See also Joint Opposition, WT Docket No. 12-175, at 3-9.

249

IAE Petition, WT Docket No. 12-175, at unnumbered 3-5; see also Free Press Petition, WT Docket No. 12-175,

at 3-4.

250

MetroPCS Comments, filed July 10, 2012, at 2 & n. 5.

251

Verizon-SpectrumCo Public Interest Statement at 6-7, 10; Verizon-Cox Public Interest Statement at 6-7.

252

Joint Opposition at 12-13.

253

Verizon-SpectrumCo Public Interest Statement at 15; Stone Declaration at ¶ 14; Verizon-Cox Public Interest

Statement at 14. Verizon Wireless also asserts that it is an industry leader in efficient spectrum use, claiming that it

already serves more customers per megahertz of spectrum than other national providers. Joint Opposition at 24.

Opponents claim this analysis is flawed because it was performed on a nationwide basis instead of a market-by-

(continued….)

Federal Communications Commission FCC 12-95

103. Opponents argue that Verizon Wireless has not demonstrated that it needs the spectrum it

proposes to acquire, and certainly has not done so for every market,

254

and that other providers would put

the spectrum to more immediate and efficient use.

255

In particular, opponents assert that Verizon Wireless

already has substantial holdings of spectrum for 4G LTE deployment,

256

and that Verizon Wireless’s

claims of spectrum need are particularly overstated in markets where it already holds AWS-1 spectrum.

257

Free Press contends Verizon Wireless’s documents show it has no need for additional spectrum

[REDACTED],

258

[REDACTED]

259

Opponents also contend that Verizon Wireless’s claims that it

would need 40 megahertz of AWS-1 spectrum in certain markets to meet capacity constraints is

undermined by its sale of 10 megahertz of AWS-1 spectrum in these markets.

260

104. To support its assertion that it needs additional spectrum to meet demand by 2015 in most

markets and by the end of 2013 in some markets,

261

Verizon Wireless submitted maps it generated using

its ordinary-course-of-business network planning tool.

262

Verizon Wireless subsequently filed modified

(Continued from previous page)

market basis, and does not take into account the different usage profiles of smartphones and feature phones. See

MetroPCS Reply at 6-7; Letter from Alan Pearce, Ph.D. President and CEO, Information Age Economics, to

Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 29, 2012 at 4 (agreeing with T-Mobile’s

analysis).

254

Free Press Petition at 27-36; Free Press Petition, WT Docket No. 12-175, at 4-6; RCA Petition at 22-24;

Greenling Institute Reply at 4; MetroPCS Reply at 3-4, 8-9; RCA Reply at 28-29; MetroPCS Comments, filed July

10, 2012, at 9-14; Free Press Comments, filed July 10, 2012, at 2-6; RTG Petition, WT Docket No. 12-175, at 4-8,

Colum McDermott Comment, WT Docket No. 12-175, at 1.

255

See, e.g., Free Press Petition at 27-36; RCA Petition at 15-24, 46; Public Knowledge Petition at 32-33; NJ

Division of Rate Counsel Petition at 12-14; ATN Comments, filed July 10, 2012; see also T-Mobile Petition at 35-

36.

256

See, e.g., Free Press June 4, 2012 Ex Parte at 4; RCA Petition at 3, 23; Letter from Jean L. Kiddoo, Bingham

McCutchen, Counsel for T-Mobile, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 15,

2012 at 5; Ray Declaration at ¶ 3.

257

See Letter from Paul Desai, Communications Policy Counsel, Consumers Union, Derek Turner, Research

Director, Free Press, Michael Calabrese, Senior Research Fellow, New America Foundation Open Technology

Institute, Harold Feld, Senior Vice President, Public Knowledge, to Marlene H. Dortch, Secretary, FCC, WT Docket

No. 12-4, filed June 14, 2012 at 2 (“Public Knowledge June 14, 2012 Ex Parte”); Free Press June 4, 2012 Ex Parte

at 7.

258

Letter from Derek Turner, Research Director, Free Press, to Marlene H. Dortch, Secretary, FCC, WT Docket No.

12-4, filed Apr. 26, 2012 (“Free Press Apr. 26, 2012 Ex Parte”); Free Press June 4, 2012 Ex Parte at 2, 9-12; Letter

from Derek Turner, Research Director, Free Press, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4,

filed June 18, 2012 at 1-2 (“Free Press June 18, 2012 Ex Parte”).

259

Free Press Apr. 26, 2012 Ex Parte; Free Press June 4, 2012 Ex Parte at 2, 12-13.

260

Free Press Comments, filed July 10, 2012, at 5-6; ATN Comments, filed July 10, 2012, at 6-7; Free Press Reply

at 4-6. Free Press points out that Verizon Wireless is selling 10 megahertz of spectrum in Philadelphia,

Pennsylvania, Washington DC, Milwaukee, Wisconsin, Memphis, Tennessee, and Albany and Rochester, New

York—all markets where Verizon Wireless claimed to have significant capacity needs. See Free Press Comments,

filed July 10, 2012, at 5.

261

Stone Supplemental Declaration at ¶ 30.

262

Letter from John T. Scott, Vice President & Deputy General Counsel, Verizon Wireless, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Apr. 30, 2012 at 2 (“Verizon Wireless Apr. 30, 2012 Ex Parte”); Letter

from Adam D. Krinsky, Counsel for Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4,

(continued….)

Federal Communications Commission FCC 12-95

and additional maps that take into consideration the potential for PCS refarming

263

and updated traffic

projections using LTE data through April 2012.

264

MetroPCS claims that the markets Verizon Wireless

selected were not representative,

265

and Free Press argues that the data are inconsistent with Verizon

Wireless’s earlier predictions and designed only to achieve regulatory approval.

266

Verizon Wireless

contends that its updated traffic forecasts cover a longer timeframe of LTE data usage and are more

accurate.

267

105. Aside from disputing Verizon Wireless’s evidence of need, opponents of the transactions

assert that Verizon Wireless is not adequately making use of available alternatives to address its spectrum

needs, including cell splitting, refarming spectrum, deployment of small cells, and Wi-Fi offloading.

268

Verizon Wireless states that it is investing in new macro sites and will deploy a variety of capacity

enhancing techniques including cell splitting, small cells, and refarming PCS spectrum.

269

However, it

claims that these techniques are not sufficient, and it still needs to acquire additional spectrum to serve the

expected demand of its customers.

270

C. Discussion

106. Spectrum Transfers to Leap and T-Mobile. No party disputes that Leap and T-Mobile –

(Continued from previous page)

filed May 29, 2012 at 2 (“Verizon Wireless May 29, 2012 Ex Parte”). These maps depict capacity constraints in the

99 markets where Verizon Wireless launched LTE by year-end 2011 and is proposing to acquire AWS-1 spectrum.

These maps reflect capacity constraints taking into account the Company’s Upper 700 MHz C Block spectrum and

its existing AWS-1 spectrum and other technology advancements to achieve capacity gains. See Letter from John T.

Scott III, Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 8, 2012 at 2-3

(“Verizon Wireless May 8, 2012 Ex Parte”); Verizon Wireless-Preiss May 17, 2012 Ex Parte at 2.

263

Verizon Wireless-Preiss May 17, 2012 Ex Parte at 6-12; Letter from Tamara Preiss, Vice President Federal

Regulatory Affairs, Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 31,

2012 at 5-25 (“Verizon Wireless May 31, 2012 Ex Parte”); see also Letter from Tamara Preiss, Vice President

Federal Regulatory Affairs, Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed

May 31, 2012 at Attachment “Verizon Wireless: Meeting Customers’ Broadband Needs” (“Verizon Wireless May

31, 2012 Ex Parte with Attachment”).

264

Letter from Tamara Preiss, Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed

June 1, 2012 (Verizon Wireless June 1, 2012- LTE Projections Ex Parte).

265

MetroPCS Reply at 4; RCA Reply at 28.

266

Free Press June 4, 2012 Ex Parte at 1, 13.

267

See Verizon Wireless June 20, 2012 Ex Parte at 5; Verizon Wireless May 31, 2012 Ex Parte at 2. Verizon

Wireless also contends that by year-end 2015 its LTE traffic is projected to be five times higher than the peak data

traffic on its 3G EV-DO network. See Verizon Wireless June 20, 2012 Ex Parte at 7. See also Joint Opposition,

William Stone Supp. Decl. at ¶ 9.

268

See, e.g., Free Press Petition at 32-34; Free Press Reply at 12; Free Press June 4, 2012 Ex Parte at 13-18; Public

Knowledge at 33; MetroPCS Comments, filed July 10, 2012, at 8-9; Public Knowledge June 14, 2012 Ex Parte at 2.

269

Verizon Wireless Apr. 30, 2012 Ex Parte at 4; Verizon Wireless May 8, 2012 Ex Parte at 1-2, 4-5; Verizon

Wireless May 29, 2012 Ex Parte at 6.

270

Joint Opposition, William Stone, Supp. Decl. at ¶ 41; See Joint Opposition, William Stone Declaration at 6, WT

Docket No. 12-175, July 17, 2012 (other capacity enhancing approaches raised by petitioners including software

defined radio, mesh networks, channel bonding, use of unlicensed frequencies deployment of DAS, and next

generation standards are also insufficient to address Verizon Wireless’s forecasted network congestion); Borth

Declaration at ¶¶ 27-33.

Federal Communications Commission FCC 12-95

as well as their current and potential customers – would benefit from the additional spectrum they seek to

acquire. We find that that the acquisition of spectrum by Leap and T-Mobile from Verizon Wireless is

likely to result in meaningful transaction-specific public interest benefits – rationalization and more

efficient use of spectrum – that support grant of the Commission’s approval to these proposed

transactions.

107. Spectrum Transfers to Verizon Wireless. We find that the proposed transfer of spectrum

from SpectrumCo, Cox, Leap, and T-Mobile to Verizon Wireless would have some important public

interest benefits. Most importantly, the transfers from SpectrumCo, Cox, and Leap would result in

utilization of currently fallow spectrum to meet the rapidly growing public demand for mobile broadband

capacity, and help the United States continue to lead the world in 4G deployment and development.

Given that the current licensees are not utilizing the spectrum for any purpose and appear unlikely to do

so in the future, this will provide significant public interest benefits. In addition, we find that the record

supports a public interest benefit in the intra-market transfers of equal amounts of spectrum between

Verizon Wireless and T-Mobile, as the rationalization of spectrum holdings would enable more efficient

deployment and use of the spectrum.

108. Based on our review of the pleadings, data, and documents, however, we also have

concerns that Verizon Wireless has not, in the face of serious objections, sufficiently supported its claim

that it will use all of the spectrum it proposes to acquire from SpectrumCo, Cox, Leap, and T-Mobile in

the near term to enable its LTE network to support growing consumer demand for mobile broadband,

absent more imminent buildout deadlines.

109. The documents indicate that Verizon Wireless may be [REDACTED].

271

However,

these documents do not indicate that Verizon Wireless would need to deploy more than 40 megahertz of

AWS-1 spectrum in any of these markets to meet capacity demands.

272

110. While we do find that the transfers to Verizon Wireless would have some public interest

benefits, we also recognize the serious concerns raised regarding Verizon Wireless’s ability to use the

spectrum it is acquiring and its actual need for the spectrum in the near term. In particular, we recognize

the concerns that capacity-enhancing technical solutions such as small cell deployment should be

adequately considered, given the limited amount of spectrum currently available for 4G mobile network

deployment. If commenters’ concerns are accurate that Verizon Wireless does not need the spectrum it is

acquiring, at least in the near term, and the result is that Verizon Wireless does not in fact put the

spectrum to use, the Applicants’ asserted benefits would be undermined. As we discuss in the following

section, however, in response to these concerns, Verizon Wireless has committed to undertake an

aggressive build-out schedule of the spectrum it is acquiring through these transactions. We therefore

find that we can substantially credit the public interest benefits claimed by the Applicants, as detailed

above.

VIII. REMEDIES

111. The Commission’s review of a proposed transaction entails a thorough examination of

271

VZW-TPK-FCC-034481 [REDACTED] Feb. 7, 2011. See also VZW-TPK-FCC-013485 [REDACTED] Mar.

9, 2011 at 2, 13-14, 28-29 and VZW-TPK-FCC-016151 [REDACTED] Oct. 2010 at 18.

272

See, e.g., VZW-TPK-FCC-013745 [REDACTED] October 31, 2011 at 4; VZW-TPK-FCC-1044703

[REDACTED] April 20, 2012 (last modified 10/26/2011, created 5/9/2011). For Seattle and Minneapolis, post-

transaction Verizon Wireless would hold more than 40 megahertz of AWS-1 spectrum. One document describes for

both of these markets that Verizon Wireless would be able [REDACTED]. See VZW-TPK-FCC-1045058

[REDACTED] Feb. 14, 2012 at 21.

Federal Communications Commission FCC 12-95

the potential public interest harms and any verifiable, transaction-specific benefits, including any

voluntary commitments made by the Applicants to further the public interest. As part of this process, the

Commission may impose additional remedial conditions to address potential harms likely to result from

the proposed transaction or to help ensure the realization of any promised potential benefits.

273

If, on

balance, after taking into consideration any voluntary commitments and additional remedial conditions,

the potential benefits associated with the proposed transaction outweigh any remaining potential harms,

the Commission would find that the proposed transaction as serves the public interest.

112. Below, we apply this balancing approach to the spectrum assignments to Verizon

Wireless from SpectrumCo, Cox, and Leap, as well as the AWS-1 spectrum assignment from T-Mobile to

Verizon Wireless. The balancing approach for these transactions also takes into account the assignment

of AWS-1 spectrum in 125 CMAs to T-Mobile as well as Verizon Wireless’s voluntary buildout and

roaming commitments. We also apply the balancing approach to the proposed assignments from Verizon

Wireless to Leap and T-Mobile.

113. Requested Remedies for Spectrum Concentration. To address concerns arising from

excessive spectrum concentration, several petitioners contend that the Commission, if it approves the

proposed transactions, should require that Verizon Wireless divest portions of its spectrum where it has

not demonstrated a need.

274

Some commenters propose that the Commission require divestitures in any

market where Verizon Wireless exceeds a specified cap. For example, RTG contends that the

Commission should condition approval of the application on divestiture of any acquired spectrum in

excess of 110 megahertz for spectrum below 2.3 GHz

275

and Free Press states that Verizon Wireless

should be required to divest AWS-1 spectrum such that in any CMA its post-transaction holdings do not

exceed 20 megahertz of AWS-1 spectrum.

276

Some parties also argue that the Commission should also

condition approval of the proposed transactions on Verizon Wireless’s proposed auction of its Lower 700

MHz Band A and B frequencies.

277

114. In addition, some parties propose roaming-related conditions. Several parties request

conditions that would establish new limits on the rates that Verizon Wireless can charge for voice and

data roaming

278

or require disclosure of rates being charged.

279

NTCH also asks the Commission to

273

See, e.g., AT&T-Verizon Wireless Order, 25 FCC Rcd at 8718 ¶ 25; AT&T-Centennial Order, 24 FCC Rcd at

13929 ¶ 30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17463 ¶ 29; Sprint Nextel-Clearwire Order, 23 FCC

Rcd at 17582 ¶ 22; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21546 ¶ 43.

274

RCA Petition at 55 (urging divestitures to existing operating carriers in markets where it is clear that Verizon

Wireless’s spectrum inventory unreasonably exceeds the capacity necessary to meet near-term demand); NTCA

Reply at 7 (arguing that the Commission should require “divestiture of any unused or underused spectrum asset”);

ATN Comments, filed July 10, 2012, at 8.

275

RTG Petition, WT Docket 12-175, at 4 n.5.

276

See Free Press Comments, filed July 10, 2012, at 6-7 (arguing that Verizon Wireless has failed to make a case

why it needs more than 20 megahertz of AWS-1 in any market).

277

See IAE Petition, WT Docket No. 12-175, at 8-9 (arguing that the conditions should apply in WT Docket 12-4

and WT Docket 12-175); see also Public Knowledge Comments, filed July 10, 2012, at 1-2.

278

See, e.g., RCA Petition at 35-39, 56-57 (arguing the Commission require roaming rates to be at least as favorable

as reseller rates it is offering to the Cable Companies); MetroPCS Reply at 16, 23 (same); NTCH Petition at 6

(asking for a cap on roaming rates set at “Verizon’s retail or facilitated MVNO rates, assuming reasonable monthly

usage levels”). RCA also contends that the Commission should require the Applicants to disclose the redacted

agreements including the reseller rates being offered to the Cable Companies and to consider the reseller rates

(continued….)

Federal Communications Commission FCC 12-95

require Verizon Wireless to provide seamless “hand-off” of roaming calls between carriers, if technically

feasible.

280

Some commenters recommend that Commission condition the transactions on Verizon

Wireless’s compliance with the roaming obligations imposed by the Data Roaming Order or else require

Verizon Wireless to withdraw its pending court challenge to that Order.

281

Other parties also argue for

performance requirements on Verizon Wireless’s acquisition of AWS-1 spectrum to ensure that the

AWS-1 spectrum is rapidly put to use or sold on the secondary market.

282

Public Knowledge argues that

roaming and build out conditions should be placed on both T-Mobile and Verizon Wireless.

283

115. Commenters differ as to the extent to which the transaction between T-Mobile and

Verizon Wireless addresses the need for these conditions. While some commenters find Verizon

Wireless’s proposed exchange of AWS-1 licenses with T-Mobile addresses their requests for AWS-1

divestitures,

284

others argue that the amount of AWS-1 spectrum Verizon Wireless will hold post-

transaction will still be excessive in some markets and Commission should therefore require further

divestitures.

285

Several parties also argue that the Commission should still impose roaming and buildout

requirements.

286

(Continued from previous page)

negotiated between the Cable Companies and Verizon Wireless to be “commercially reasonable,” as long as they

were negotiated by parties each having bargaining leverage. RCA Petition at 56-57.

279

See NTCH June 15, 2012 Ex Parte at 2.

280

NTCH Petition at 6-7.

281

IAE Petition, WT Docket No. 12-175, at 8-9; Public Knowledge Comments, WT Docket No. 12-175, at 3, 4.

Public Knowledge contends that a roaming condition will “insulate any rules against legal risk.” Id. at 3.

282

See NTCH Petition at 5 (arguing for requirement that acquired spectrum be put in service within 18 months);

Public Knowledge Petition at 7, 49 (asserting that the Commission should require Verizon Wireless to meet the

significant rural build-out requirements contained in the rules for the 700 MHz A and B blocks); IAE Petition, WT

Docket No. 12-175, at 10 (advocating that Verizon Wireless must achieve coverage targets for LTE deployments

within two to three years). Public Knowledge also requests that the Commission adopt “use it or share it”

conditions. Public Knowledge Petition at 7, 49-52.

283

See Public Knowledge Comments, WT Docket No. 12-175, at 3-4 (stating that “[a]fter this transaction, both

Verizon and T-Mobile will be in the position to build stronger networks, which reduces both of their incentives to

cooperate with other carriers on data roaming”), 4 (arguing that “the Commission should take additional steps to

ensure that rural Americans actually benefit from the exclusive licenses Verizon and T-Mobile will have to operate

in their territory, by adopting accelerated build-out schedules backed up by ‘use it or share it’ measures”).

284

See Public Knowledge Comments, filed July 10, 2012, at 1-2 (stating that the transaction between Verizon

Wireless and T-Mobile “does address concerns Public Knowledge has previously expressed with regard to the

problem of spectrum concentration created by this transaction” and will “result in an overall enhancement of

spectrum efficiency for both Verizon Wireless and T-Mobile”).

285

See ATN Comments, filed July 10, 2012, at 3-6; Free Press Comments, filed July 10, 2012, at 2-8 (asserting that

further divestitures are needed because Verizon Wireless would continue to have a “massive spectrum advantage”

that would incentivize anticompetitive behavior such as raising rivals’ costs and because the transaction with T-

Mobile will still leave Verizon Wireless with more than 20 megahertz of AWS-1 spectrum in many markets);

MetroPCS Comments, filed July 10, 2012, at 14 (arguing that Verizon Wireless should be ordered to also divest 20

megahertz of AWS-1 spectrum in every market in which it already holds 20 megahertz of AWS-1 spectrum and is

proposing - taking into consideration the T-Mobile transaction - to acquire an additional 20 megahertz of spectrum

from SpectrumCo or Cox).

286

See Free Press Comments, filed July 10, 2012, at 7 (roaming); Public Knowledge Comments, filed July 10, 2012,

at 2 (roaming and buildout); MetroPCS Comments, filed July 10, 2012, at 20 (roaming).

Federal Communications Commission FCC 12-95

116. The Applicants argue that there is no transaction-specific evidence to support a roaming

or build-out condition and that the licenses are already subject to roaming and buildout obligations.

287

a letter filed August 15, 2012, however, Verizon Wireless has nevertheless made certain voluntary

commitments with regard to both roaming arrangements and the buildout of the AWS-1 spectrum it is

acquiring in the subject transactions.

117. Verizon Wireless/SpectrumCo-Cox-Leap-T-Mobile. We previously concluded that the

acquisition by Verizon Wireless of spectrum from SpectrumCo, Cox, Leap, and T-Mobile is substantially

likely to result in certain public interest harms and that the associated benefits were insufficient to

determine on balance that the transaction as proposed was in the public interest. Specifically, we found

that these transactions raise competitive issues both with respect to Verizon Wireless’s total aggregation

of spectrum and its substantial aggregation within the AWS-1 band. We also determined that the data

roaming market may be further constrained as a result of the transaction. We find, however, that these

potential competitive harms are mitigated by both the proposed transfer of AWS-1 spectrum from

Verizon Wireless to T-Mobile in 125 CMAs and Verizon Wireless’s voluntary roaming and buildout

commitments.

288

118. At the outset, we note that, as a result of this transaction, Verizon Wireless would not

hold more than 40 megahertz of AWS-1 spectrum in any market. Verizon Wireless’s transfer of spectrum

to T-Mobile would thus address concerns raised in the record that Verizon Wireless would warehouse

spectrum because it had no plans to utilize more than 40 megahertz of AWS-1 spectrum in any market.

We also find that the Verizon Wireless-T-Mobile transaction would significantly reduce the likelihood

that the Verizon Wireless-SpectrumCo-Cox-Leap transactions would result in potential foreclosure of

rivals and/or raise rivals’ costs individually or collectively, such that Verizon Wireless would have the

incentive and ability to unilaterally adversely affect national pricing or local quality of service and

coverage. The assignment of spectrum from Verizon Wireless to T-Mobile thus mitigates our concerns of

harms from spectrum concentration, and further this assignment in itself has significant public interest

benefits.

119. As noted above, Verizon Wireless’s asserted public interest benefits were called into

question in the record, as numerous commenters raised serious concerns regarding Verizon Wireless’s

ability to use the spectrum it seeks to acquire and its actual need for the spectrum. If commenters’

concerns are accurate that Verizon Wireless does not need the spectrum it is acquiring, at least in the near

term, and the result is that Verizon Wireless does not in fact put the spectrum to use, the Applicants’

asserted benefits would be undermined. We find, however, that Verizon Wireless’s voluntary buildout

commitments (set forth below) mitigate concerns that some of this spectrum would lie fallow when other

providers would otherwise be using the spectrum to deploy mobile broadband networks in the near term.

We find that Verizon Wireless’s commitment to a buildout schedule for its acquired AWS-1 licenses that

is significantly earlier than the current 2021 buildout deadlines will spur rapid use of the spectrum, and

benefit consumers by facilitating Verizon Wireless’s expansion of capacity on its 4G LTE network

consistent with the public interest benefits that Verizon Wireless asserts will result from the proposed

transactions.

120. Roaming. We also find that the proposed transfer of spectrum to T-Mobile and Verizon

Wireless’s commitment to offer data roaming in the markets where it is acquiring spectrum will have

important benefits by promoting the availability of data roaming arrangements. The Commission has

287

Joint Opposition at 65-67; Joint Opposition, WT Docket No. 12-175, at 14.

288

This transaction involves a net transfer of 10 megahertz of AWS-1 spectrum in 111 CMAs and 20 megahertz of

AWS-1 spectrum in 14 CMAs.

Federal Communications Commission FCC 12-95

noted previously that providers have experienced difficulty in the past negotiating broadband data

roaming arrangements with providers offering the broadest coverage,

289

and the transfer of AWS-1

spectrum to Verizon Wireless necessarily means that the spectrum will not be developed by other

providers that might have greater incentives to provide voluntary roaming arrangements. Verizon

Wireless’s data roaming commitment, discussed below, also helps to address this concern by ensuring

that Verizon Wireless continues to be required to offer data roaming on commercially reasonable terms

and conditions in the areas connected with the transferred spectrum regardless of the outcome of the

pending judicial review of the Data Roaming Order. In addition, the transfer of AWS-1 spectrum to T-

Mobile should promote the deployment of T-Mobile’s LTE network and thus expand the availability of

4G roaming alternatives to the largest two providers.

121. Accordingly, we find that the assignment of spectrum from Verizon Wireless to T-

Mobile combined with Verizon Wireless’s buildout and roaming commitments mitigate the public

interest harms identified above sufficiently to address our concerns. We therefore disagree with parties

arguing that additional conditions, including any voice or additional data roaming conditions, are

necessary. Below are the conditions we impose to remedy potential spectrum concentration public

interest harms:

· T-Mobile-Verizon Wireless Applications: Grant of the Verizon Wireless-Leap (File Nos.

0004952444, 0004949596, 0004949598), Verizon Wireless-SpectrumCo (WT Docket 12-4, File

No. 0004993617), and Verizon Wireless-Cox (WT Docket 12-4, File No. 0004996680)

applications is conditioned upon Verizon Wireless assigning to T-Mobile the licenses at issue in

the T-Mobile-Verizon Wireless Applications (WT Docket 12-175, File Nos. 0005272585,

50000AWAA12, 50001AWAA12) within 45 days of consummating its transactions with Leap,

SpectrumCo and Cox.

290

· Performance Requirements:

o Within three (3) years of the Commission’s Order approving the AWS-1 license

assignments, Verizon Wireless will provide signal coverage and offer service to at least

30 percent of the total population in the Economic Areas or the portions of Economic

Areas in which it is acquiring AWS-1 license authorizations from SpectrumCo, Cox, T-

Mobile or Leap. The total population will be calculated by summing the population for

each of these areas; and

o Within seven (7) years of the Commission’s order approving the AWS-1 license

assignments, Verizon Wireless will provide signal coverage and offer service to at least

70 percent of the population in each Economic Area in which it is acquiring AWS-1

license authorizations from SpectrumCo, Cox, T-Mobile or Leap, or, where a portion of

the Economic Area is acquired, to at least 70 percent of the population of the total

acquired portion of the licensed Economic Area.

o Failure to meet these requirements will result in appropriate enforcement action pursuant

to the Commission’s statutory authority.

291

289

See Data Roaming Order, 26 FCC Rcd at 5424-5427 ¶¶ 24-27.

290

Verizon Wireless will not have the legal authority to assign to T-Mobile 47 of the licenses at issue in its

application until Verizon Wireless has consummated its transactions with Leap, SpectrumCo and Cox acquiring

those licenses.

291

See 47 U.S.C. §§ 303(r), 312, 316, 503.

Federal Communications Commission FCC 12-95

· Roaming:

o In the event the current data roaming rule is not available to requesting providers,

Verizon Wireless will continue to offer roaming arrangements for commercial mobile

data services on any of its spectrum in the areas where it is acquiring AWS-1 spectrum

from SpectrumCo, Cox, T-Mobile, or Leap to other commercial mobile data service

providers on commercially reasonable terms and conditions, and providers may negotiate

the terms of their arrangements on an individualized basis. This is subject to

technological compatibility, technical feasibility, and economic reasonableness, and use

by the requesting provider of a generation of wireless technology comparable to the

technology on which the requesting provider seeks to roam. This commitment will

remain in place for five (5) years following the date of the Commission’s order approving

the AWS-1 license assignments.

122. With respect to T-Mobile’s proposed acquisition of AWS-1 spectrum from Verizon

Wireless, as noted above, we have found that there are no competitive concerns. We conclude that no

conditions are warranted on the proposed transfer of spectrum to T-Mobile. In particular, we find that it

is not necessary to apply buildout and roaming conditions to the licenses that T-Mobile is acquiring from

Verizon Wireless given T-Mobile’s history of deploying its AWS-1 spectrum rapidly and T-Mobile’s

stronger incentives to enter into data roaming arrangements even absent any obligation to do so.

292

IX. BACKHAUL AND WI-FI

123. Several petitioners and commenters raise concerns regarding potential anticompetitive

impacts on the Cable Companies’ provision of backhaul services and Wi-Fi access. We note that these

arguments are based on the alleged effects of the Commercial Agreements rather than the license

transactions. Although we generally discuss arguments regarding the impact of the Commercial

Agreements below, because backhaul and Wi-Fi access can potentially reduce mobile wireless providers’

need for additional spectrum to meet their subscribers’ capacity demands, and because of the extensive

public record compiled in this proceeding on these matters, we find that consideration of competitive

harm to the availability of these inputs is necessary to properly assess the impact of the proposed license

transfers, and the resulting spectrum aggregation, on wireless competition.

124. Parties’ Positions: Backhaul. Commenters and petitioners argue that the Commercial

Agreements may lead the cable companies to engage in anticompetitive conduct in their provision of

backhaul services.

293

Backhaul connections are an essential component of a wireless service provider’s

network, linking a mobile provider’s cell sites to the wireline networks, carrying wireless voice and data

traffic.

294

NTCH and Sprint Nextel state that in many markets, wireless providers’ only sources for

backhaul capacity are Verizon and the cable company operating in that market.

295

Therefore, they argue

292

Fifteenth Annual Competition Report, 26 FCC Rcd at 9831 Table 27.

293

See, e.g., NTCH Petition at 12-13; Letter from Tara S. Emory, Skadden, Arps, Slate, Meagher & Flom LLP,

Counsel for Sprint Nextel, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 12, 2012 at 3-5

(“Sprint Nextel July 12, 2012 Ex Parte”).

294

Fifteenth Annual Competition Report, 26 FCC Rcd at 9845 ¶ 319.

295

NTCH Petition at 12; NTCH Reply at 5; Letter from David H. Pawlik, Skadden, Arps, Slate, Meagher & Flom

LLP, Counsel for Sprint Nextel, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 13, 2012 at

2 (“Sprint Nextel July 13, 2012 Ex Parte”).

Federal Communications Commission FCC 12-95

that the Commercial Agreements are creating effective monopolies, which could harm competition.

296

Commenters also contend that the Commercial Agreements provide the ability and incentive for the Cable

Companies to discriminate against Verizon Wireless’s competitors for backhaul services, and might result

in anticompetitive terms and conditions, excessive prices, or impaired quality.

297

RCA asks the

Commission to condition its approval on access to the Applicants’ backhaul capacity.

298

NTCH proposes

that the Commission require the cable companies and Verizon Wireless to offer broadband backhaul to

competitors at a monthly charge not to exceed $150 per month per gigabit between a cell site and a local

switch with one-time connection fees limited to $1,000 per cell site.

299

Sprint Nextel asks the

Commission to require the Applicants to make available their private line, backhaul, and special access

services to other carriers on a nondiscriminatory basis with reasonable terms and conditions.

300

Sprint

Nextel also asks the Commission to provide that Verizon Wireless and the Cable Companies not restrict

the use of their Internet access facilities for connection by femtocells and other small cells.

301

ITTA also

argues that certain provisions of the Commercial Agreements will harm the market for backhaul services

by ensuring that backhaul providers other than the Cable Companies will no longer receive Verizon

Wireless’s backhaul business.

302

ITTA seeks a condition prohibiting any preferential arrangements

between the Applicants.

303

Century Link, Fairpoint, Frontier, Windstream, and ITTA also request a

condition requiring Verizon Wireless to submit, on an annual basis for the next three years and subject to

confidentiality protections, all new and renewed backhaul contracts it has executed with any backhaul

provider in the preceding year. These parties insist that such reports are necessary in order to address

concerns that Verizon Wireless has a strong incentive to engage in unreasonable discrimination in favor

of the Cable Companies in the awarding of backhaul contracts.

304

296

NTCH Petition at 12-13; Letter from David H. Pawlik, Skadden, Arps, Slate, Meagher & Flom LLP, Counsel for

Sprint Nextel, to Marlene H. Dortch, FCC, WT Docket No. 12-4, filed July 13, 2012 at 2 (“Sprint Nextel Pawlik

July 13, 2012 Ex Parte”). See also Level 3 Reply at 7-9 (agreeing with Sprint Nextel, Free Press, and RCA that the

joint marketing agreements are anticompetitive and imbalance the market for backhaul services); Letter from David

H. Pawlik, Skadden, Arps, Slate, Meagher & Flom LLP, Counsel for Alliance for Broadband Competition, to

Marlene H. Dortch, FCC, WT Docket No. 12-4, filed Aug. 2, 2012 at 3 (“Alliance for Broadband Aug. 2, 2012 Ex

Parte”); RCA Petition at 58.

297

RCA Petition at 58; NTCH Petition at 12-13; NTCH Reply at 5; see also Letter from Genevieve Morelli,

President, et al., ITTA, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 10, 2012 at 4 (“ITTA

July 10, 2012 Ex Parte”); Sprint Nextel Reply at 14-15; Letter from Tara S. Emory, Counsel to Sprint Nextel, to

Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed Aug. 10, 2012 (“Sprint Nextel Aug. 10, 2012 Ex

Parte”) at 5-6; Letter from Eric J. Branfman, Bingham McCutchen LLP, Counsel for RCN, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed July 31, 2012 at 8 (“RCN July 31, 2012 Ex Parte”).

298

RCA Petition at 58; RCA Reply at 5.

299

NTCH Petition at 13.

300

Sprint Nextel Reply at 15.

301

See Letter from Tara S. Emory, Sprint Nextel, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-04,

filed July 25, 2012, at 7-8 (“Sprint Nextel July 25, 2012 Ex Parte”)

302

See ITTA July 10, 2012 Ex Parte at 4; see also Letter from Karen Brinkmann et al., Karen Brinkmann PLLC,

Counsel for FairPoint, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 10, 2012 at 2

(“FairPoint July 10, 2012 Ex Parte”); Alliance for Broadband Aug. 2, 2012 Ex Parte at 3.

303

See ITTA July 10, 2012 Ex Parte at 6; FairPoint July 10, 2012 Ex Parte at 2-3.

304

Letter from Genevieve Morelli, Independent Telephone & Telecommunications Alliance, to Marlene H. Dortch,

Secretary, FCC, filed Aug. 21, 2012 (“ITTA Aug. 21, 2012 Ex Parte”).

Federal Communications Commission FCC 12-95

125. The Applicants oppose requests for conditions and argue that access to backhaul facilities

is not a transaction-specific harm, but instead is an industry-wide issue that should be resolved, if at all, in

the context of a rulemaking proceeding.

305

The Applicants also refute the assertion that any provision in

the Commercial Agreements impede backhaul competition or limit the Cable Companies’ ability or

incentive to compete for backhaul business.

306

126. Wi-Fi Access. Some parties raise concerns that Cable Companies may discriminate

against Verizon Wireless’s rivals in the provision of roaming or offload access to their Wi-Fi networks.

Many cable companies have deployed cable-owned Wi-Fi access points or “hotspots” in an increasing

number of public locations, allowing their broadband subscribers to access the Internet through the use of

a Wi-Fi enabled handset or other device.

307

In May 2012, Bright House Networks, Cablevision, Comcast,

Cox Communications, and Time Warner Cable announced an agreement under which the companies will

provide Wi-Fi access to each other’s broadband subscribers.

308

They further agreed to create a unified

and simplified system of Wi-Fi access called CableWiFi.

309

127. Some commenters raise concerns that the Commercial Agreements may provide

incentives to the Cable Companies to permit consumers access to their Wi-Fi networks only when such

consumers are also Verizon Wireless subscribers. For example, Sprint Nextel argues that “[a]s a result of

[the] agreements, the Cable Companies will no longer be independent providers of WiFi who would be

willing to partner with all wireless carriers.”

310

It contends that the integrated marketing of cable and

Verizon Wireless services instead creates an incentive for the Applicants to restrict or encumber access to

WiFi hotspots for customers of wireless providers that compete against Verizon Wireless.

311

Sprint

305

Joint Opposition at 67; Verizon Wireless May 2, 2012 Ex Parte at 13-14.

306

Verizon Wireless May 2, 2012 Ex Parte at 13; Verizon Wireless-Krinsky May 17, 2012 Ex Parte at 1-2 (arguing

that the Cable Companies “will continue to have every economic incentive to offer competitive pricing and to

market their backhaul services to a range of prospective customers, including not only Verizon Wireless, but also

Sprint, AT&T, T-Mobile, and a wide assortment of regional and other mobile providers”); Letter from David Don,

Senior Director, Comcast, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 2, 2012 at 1-2

(“Comcast July 2, 2012 Ex Parte”)(stating that “the commercial agreements do not contain any exclusivity

provisions for Verizon Wireless related to backhaul; and that the MSOs have incentives to attract as many customers

on a backhaul facility as possible”); Letter from Michael H. Hammer, et al., Willkie, Farr & Gallagher LLP, Counsel

to SpectrumCo, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed Aug. 2, 2012 at 2 (“SpectrumCo

Aug. 2, 2012 Ex Parte”).

307

See, e.g., Comcast July 2, 2012 Ex Parte at 2, Attach. at 1; Q: What is Xfinity WiFi?, Xfinity.com,

http://www.comcast.com/wifi/faqs.htm?SCRedirect=true (last visited July 23, 2012). Some of the Cable

Companies, such as Comcast and TWC, also offer non-subscribers access for a charge. Comcast July 2, 2012 Ex

Parte, Attach. at 1; Shalini Ramachandran, Cable Firms to Share Wi-Fi, Wall St. J., May 21, 2012,

http://allthingsd.com/20120521/five-cable-firms-to-share-wi-fi-hot-spots/.

308

Comcast July 2, 2012 Ex Parte, Attach. at 1; Major U.S. Cable Companies Join Forces on WiFi, Business Wire,

May 21, 2012, http://www.businesswire.com/news/home/20120521005484/en/Major-U.S.-Cable-Companies-Join-

Forces-WiFi.

309

Comcast July 2, 2012 Ex Parte, Attach. at 1.

310

See Sprint Nextel Reply at 12.

311

See Sprint Nextel Reply at 12; Sprint Nextel Comments at 5-7; Sprint Nextel July 12, 2012 Ex Parte at 2; RCA

Petition at 31; Letter from Maura Colleton Corbett, Executive Director, Alliance for Broadband Competition, to

Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed May 30, 2012 at 1-2 (“Broadband Alliance May 30,

2012 Ex Parte”)(citing Press Release, Major U.S. Cable Companies Join Forces on WiFi (May 21, 2012), available

(continued….)

Federal Communications Commission FCC 12-95

Nextel proposes that the Commission condition the transaction on the Applicants providing reasonable

WiFi access on nondiscriminatory terms regardless of the consumer’s choice of wireless carrier.

312

128. Public Knowledge argues that the Commission should bar Verizon Wireless from

asserting any right to prohibit the Cable Companies from entering into Wi-Fi agreements with

competitors or potential competitors.

313

Alternatively, Public Knowledge asserts that the Commission

could achieve a similar result by prohibiting Verizon Wireless from obtaining favorable terms and

conditions for Wi-Fi offload from the Cable Companies.

314

To mitigate its concern that the Cable

Companies will offer Verizon Wireless preferential access to their Wi-Fi networks, MetroPCS argues that

the Commission should either (1) clarify that the data roaming rule applies to Cable Companies’ Wi-Fi

networks, or (2) condition the transaction on the Cable Companies offering other wireless providers Wi-

Fi access on commercially reasonable terms and conditions, pursuant to the data roaming rule.

315

129. Comcast responds that it provides its customers with Wi-Fi access without regard to their

wireless provider and “nothing in the commercial agreements will change that[]” or materially affect its

incentives to provide Wi-Fi offloading services to other wireless providers.

316

Comcast also states that

“[t]he sale of WiFi service is an exception to the exclusivity provisions in the agreements through which

the cable companies act as agents for Verizon Wireless” and that the Cable Companies are therefore “free

to sell WiFi offload service to Verizon Wireless’ competitors, provided that the service is not offered

under a non-Verizon Wireless carrier’s brand.”

317

130. Discussion. We find that there is insufficient evidence of a transaction-specific harm in

the foreseeable future involving either the provision of backhaul services or Wi-Fi access to warrant

imposing any conditions in this proceeding. First, the Commercial Agreements do not provide Verizon

Wireless with any advantage in these areas. They do not convey Verizon Wireless any rights to either

Wi-Fi offload or backhaul services, let alone exclusive rights, nor do the agreements prohibit the Cable

(Continued from previous page)

at http://finance.yahoo.com/news/major-u-cable-companies-join-100000756.html (last visited July 24, 2012)); Letter

from Carl W. Northrop, Telecommunications Law Professionals PLLC, Counsel for MetroPCS, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 13, 2012 at 2-3 (“MetroPCS July 13, 2012 Ex Parte”);

RCN July 31, 2012 Ex Parte at 8.

312

Sprint Nextel Reply at 13; see also Sprint Nextel Pawlik July 13, 2012 Ex Parte at 5; Alliance for Broadband

Aug. 2, 2012 Ex Parte at 4. Sprint Nextel also argues that the Cable Companies should be prohibited from

restricting wireless carriers’ access to cable facilities to install microcells. Sprint Nextel July 12, 2012 Ex Parte at 4.

313

Public Knowledge June 14, 2012 Ex Parte at 3; Letter from Harold Feld, Senior Vice President, Public

Knowledge, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed June 20, 2012 at 3 (“Public

Knowledge June 20, 2012 Ex Parte”); Letter from Harold Feld, Senior Vice President, Public Knowledge, to

Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed June 22, 2012 at 2-3 (“Public Knowledge June 22,

2012 Ex Parte”).

314

Public Knowledge June 14, 2012 Ex Parte at 3.

315

MetroPCS Comments, filed July 10, 2012, at 21-22 (citing 47 C.F.R. §§ 20.3 & 20.12(e)); MetroPCS July 13,

2012 Ex Parte at 2-3. See also Letter from Rebecca Murphy Thompson, General Counsel, RCA, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 20, 2012 at 2 (“RCA July 20, 2012 Ex Parte”)(arguing that

the Commission should require both Cable Companies and Verizon to provide Wi-Fi roaming on commercially

reasonable terms and conditions); Alliance for Broadband Aug. 2, 2012 Ex Parte at 4.

316

Letter from Brien C. Bell, Counsel for Comcast Corporation, to Marlene H. Dortch, Secretary, FCC, WT Docket

No. 12-4, filed June 4, 2012 at 2 (“Comcast June 4, 2012 Ex Parte”); Comcast July 2, 2012 Ex Parte at 2.

317

Comcast July 2, 2012 Ex Parte, Attach. at 2; SpectrumCo Aug. 2, 2012 Ex Parte at 8-14.

Federal Communications Commission FCC 12-95

Companies from developing these services or marketing and selling these services to Verizon Wireless’s

rivals.

318

Indeed, as Comcast has stated, the Commercial Agreements include provisions expressly

permitting the Cable Companies to market wholesale Wi-Fi services to other providers.

319

131. Second, we conclude that the record does not support the claim that the Commercial

Agreements significantly increase the ability or incentive to harm wireless providers through wholesale

provision of these inputs in the short term.

320

With regard to backhaul services, the available evidence

does not suggest in any way that the Cable Companies will have the ability in the near term to cause any

significant anticompetitive harm in the mobile telephony/broadband services market. Sprint Nextel

indicates that backhaul costs account for [REDACTED].

321

Thus, even a significant increase in backhaul

costs is unlikely to have a material impact on subscriber rates. We acknowledge that backhaul costs could

consist of a greater percentage of a wireless provider’s costs in the future, particularly if providers

increasingly adopt a small cell architecture, but the impact of the Commercial Agreements on this future

transition is uncertain and speculative and does not justify remedies to govern the provision of these

services in the present. As discussed further below, we believe the modifications to the Commercial

Agreements adopted in the proposed Consent Decree, particularly the limitations on the durations of the

Agreements, will protect the public interest as the markets evolve.

322

132. We find that, even if the Cable Companies had the ability to foreclose access to their

backhaul service or charge significantly higher prices to Verizon Wireless’s competitors (thereby

imposing a competitively significant cost on Verizon Wireless’s competitors), they would not have an

incentive to do so. We find that such an action would reduce their own revenue and carry a very

significant cost to the Cable Companies, given the large and growing nature of the backhaul services

market and the evidence that Cable Companies are both well-positioned to compete in that market and

increasingly successful when they do so.

323

We conclude that any incentives the Commercial Agreements

might create to favor Verizon Wireless or exclude its rivals in the provision of backhaul services are

outweighed by the clear incentives against such behavior.

133. With regard to Wi-Fi access, we have considered the possible impact of the Commercial

Agreements on two different cable business models discussed in the pleadings: the Cable Companies’

318

See, e.g., Comcast July 2, 2012 Ex Parte, Attach. at 1; SpectrumCo Aug. 2, 2012 Ex Parte at 8-14.

319

Comcast July 2, 2012 Ex Parte at 2. See also [REDACTED] Similarly, we are not persuaded by ITTA’s

argument that the provisions of the Commercial Agreements create strong incentives to ensure that competing

backhaul providers no longer receive backhaul business. See ITTA July 10, 2012 Ex Parte at 4. The provision

ITTA points to as “effectively shut[ting] out all competition for backhaul contracts with Verizon Wireless,” as

further explained by the parties, provides that [REDACTED]We do not find evidence before us that this will alter

Verizon Wireless’s incentives to seek and obtain the most competitive backhaul offerings available on the market,

and find it imposes only minimal restrictions on Verizon Wireless’s discretion to choose a backhaul provider.

320

We address the long term competitive impact of the Commercial Agreements below in Section X.

321

See Sprint Nextel July 13, 2012 Ex Parte at 2-3.

322

See supra, Section X.

323

See Sharon Armbrust, Backhaul: The elephant in the HetNet room, SNL KAGAN, WIRELESS INVESTOR,

(Nov. 15, 2011) http://www.snl.com/InteractiveX/ArticleAbstract.aspx?id=13669076; Sean Buckley, Teleco

Backhaul Strategies, Wireline Wholesale Carriers Feed Off the Wireless Backhaul Bonanza, FierceTelecom.com

(Nov. 14, 2011,) http://www.fiercetelecom.com/story/service-providers-take-advantage-emerging-wireless-

backhaul-opportunity/2011-11-14; Jeff Baumgartner, Sprint to Place Big Backhaul Bet, Light Reading Cable (Sept.

29, 2011) http://www.lightreading.com/document.asp?doc_id=212825&site=lr_cable.

Federal Communications Commission FCC 12-95

provision of Wi-Fi access to their own subscribers, and the wholesale provision of Wi-Fi access to

wireless providers. In the first case, we find it extremely unlikely that Cable Companies would deny Wi-

Fi access to a cable subscriber that also subscribes to a Verizon Wireless rival, because it would harm

their own ability to attract and retain subscribers to their high-margin retail broadband services.

134. Regarding the possibility that the Cable Companies may discriminate in their wholesale

provision of Wi-Fi access to wireless providers by favoring Verizon Wireless, we again find insufficient

evidence that in the near term the Commercial Agreements will enhance either the Cable Companies’

ability or incentive to raise the cost of wireless competitors sufficiently to warrant a remedial condition.

If wholesale access to the Cable Companies’ Wi-Fi networks were competitively significant to wireless

providers at this time, we would expect to find evidence in the record that there is a significant demand

for such access. The record indicates, however, that the demand for such services is at best uncertain.

For example, SpectrumCo states that Wi-Fi offload services are not being provided by the Cable

Companies directly to any wireless provider, including Verizon Wireless.

324

Further, although Sprint

Nextel asserts that “WiFi will be particularly critical to address immediate data demands,”

325

[REDACTED]

326

Further, while Sprint Nextel asserts that “Sprint and the smaller mobile carriers cannot

build WiFi networks of their own,”

327

we note that T-Mobile has deployed thousands of its own Wi-Fi

hotspots, marketing access with a range of “HotSpot Network subscription” plans.

328

Therefore, there is

little basis from which to determine the extent if any to which discrimination in the provision of

wholesale access to cable Wi-Fi networks will actually harm wireless competition in the foreseeable

future.

135. With regard to the Cable Companies’ incentives, we find instructive the fact that the

Cable Companies negotiated with Verizon Wireless to ensure that “[t]he sale of WiFi service is an

exception to the exclusivity provisions in the agreements through which the cable companies act as agents

for Verizon Wireless” and that the Cable Companies are therefore “free to sell WiFi offload service to

Verizon Wireless’ competitors, provided that the service is not offered under a non-Verizon Wireless

carrier’s brand.”

329

Indeed, it undermines the assertion that the Cable Companies entered into these

agreements with the intent of exclusively providing wholesale Wi-Fi service to Verizon Wireless.

Further, limiting the wholesale provision of Wi-Fi access to Verizon Wireless would involve a loss of

potential revenues for the Cable Companies.

136. Given the nascent state of the wholesale Wi-Fi market, imposing any remedial action

such as a non-discrimination wholesale Wi-Fi condition on the Cable Companies would be premature and

would carry a high risk of unintended consequences. We find that a better approach is to be vigilant in

monitoring marketplace developments for wholesale Wi-Fi, and to take action only when problems

appear likely to or actually occur. Moreover, as discussed further below, we believe the modifications to

the Commercial Agreements adopted in the proposed Consent Decree will help protect the public interest

324

See SpectrumCo Aug. 2, 2012 Ex Parte at 3.

325

Sprint Nextel July 13, 2012 Ex Parte at 3.

326

Letter from David H. Pawlik, Counsel to Sprint Nextel, to Marlene H. Dortch, Secretary, FCC, WT Docket No.

12-4, filed July 12, 2012, at 1-2.

327

See Sprint Nextel July 25, 2012 Ex Parte at 3.

328

See, e.g., T-Mobile HotSpot, US locations, https://selfcare.hotspot.t-mobile.com/locations/viewLocationMap.do;

T-Mobile HotSpot, Services, https://selfcare.hotspot.t-mobile.com/services_plans.do.

329

Comcast July 2, 2012 Ex Parte Attach at 2.

Federal Communications Commission FCC 12-95

as the markets evolve.

330

137. We also note that the Applicants have made specific representations on the record

regarding the Commercial Agreements and their application to Wi-Fi access, small cells, and backhaul

services. Specifically, the Applicants have represented that the Commercial Agreements, including that

portion of the Commercial Agreements that creates the Joint Operating Entity (“JOE”), will have no

effect on the provision of Wi-Fi services by the Cable Companies.

331

We understand this to mean, among

other things, that the JOE will not impose restrictions on the Wi-Fi-related activities of its members,

including restrictions on Wi-Fi access, or on the offload of commercial mobile traffic by cable

subscribers.

332

We further understand that neither Verizon Wireless nor the JOE will require or induce a

Cable Company to discriminate in the pricing, terms, or conditions of Wi-Fi access based on a cable

subscriber’s choice of wireless provider. This includes login and authentication procedures, capacity,

data limits, and transmission speed.

138. The Applicants have also asserted that the Commercial Agreements will not impede

backhaul competition because the Cable Companies have strong incentives to continue growing this

segment of their businesses and because the Commercial Agreements do not in any way limit or commit

the Cable Companies in the provision of backhaul services between the companies.

333

We understand the

Applicants’ representations to mean that neither Verizon Wireless nor the JOE will impose any

restrictions on the provision of backhaul services by the Cable Companies and that the JOE will not

require or induce its members to discriminate regarding backhaul terms, conditions, or pricing, or

regarding the attachment of femtocells by subscribers (regardless of the subscriber’s choice of wireless

provider). If, in the future, any parties find that Verizon Wireless and the Cable Companies are taking

actions that are inconsistent with these material representations to the Commission, we encourage parties

to bring such actions to the attention of the Commission. We will take appropriate action in the public

interest in such cases. For all the reasons discussed above, we decline to impose any backhaul or Wi-Fi

related conditions in this proceeding.

X. REVIEW OF THE COMMERCIAL AGREEMENTS

139. In addition to the spectrum transactions described above, Verizon Wireless entered into a

series of Commercial Agreements with the Cable Companies, which include, as originally executed: (1) a

series of agreements pursuant to which Verizon Wireless and the Cable Companies will act as sales

agents of one another’s services; (2) a series of agreements providing each of the Cable Companies with

the option, after approximately four years, to become resellers of Verizon Wireless’s services; and (3) a

330

See supra Section X.

331

See SpectrumCo Aug. 2, 2012 Ex Parte at 8-10.

332

As noted above, apart from concerns that the JOE might limit its members ability to develop and provide Wi-Fi

related services to their subscribers, commenters have also argued that the JOE may discriminate in licensing Wi-Fi

related technology that it develops. We address the impact of how the JOE licenses its intellectual property below

as part of our separate examination of the Commercial Agreements. Id. We do emphasize, however, that while the

JOE will be the exclusive vehicle for the development of certain wireless and wireline technology, no provision of

the JOE Agreement requires JOE members to develop Wi-Fi technologies through the JOE, nor does the JOE

otherwise contain any Wi-Fi exclusivity provisions. [REDACTED] Accordingly, we disagree with Public

Knowledge’s assertion that “exclusivity provisions in the agency agreements could prevent TWC from licensing

[Wi-Fi roaming] technology to competitors of Verizon or building on this technology in the future….” Public

Knowledge June 22, 2012 Ex Parte at 3.

333

See SpectrumCo Aug. 2, 2012 Ex Parte at 4-6.

Federal Communications Commission FCC 12-95

Joint Operating Entity (“JOE”) agreement pursuant to which Verizon Wireless, Comcast, Time Warner

Cable, and Bright House plan to develop ways to integrate wireline and wireless services (“JOE

Agreement”).

334

A number of commenters in this proceeding have raised concerns about these

agreements.

335

140. In particular, commenters have expressed concern that the Commercial Agreements may

reduce competition in the provision of video, voice, wireless voice and data, and broadband services, as

well as bundles of such services, including bundles that offer both wireline and wireless services.

336

Commenters further assert that the agreements create commercial relationships that will facilitate

collaboration and decrease competition between Verizon Communications Inc. (“Verizon”) — the parent

company of Verizon Wireless — and the Cable Companies.

337

In this regard, commenters argue that the

Commercial Agreements will reduce Verizon’s incentives to invest in and build out its fiber network, as

well as its incentives to market aggressively its services in competition with those of the Cable

Companies.

338

Commenters assert that, within its wireline footprint, Verizon is a significant competitor to

the Cable Companies in the provision of broadband, video, and voice services, particularly through its

FiOS-branded fiber-to-the-home broadband and video services.

339

They argue that competition from

FiOS has prompted other cable operators to respond with lower prices, higher speeds, and improved

network quality.

340

334

See supra para. 18, note 34.

335

See, e.g., Free Press Petition at 42-52; Hawaiian Telcom Petition at 8-22; NJ Division of Rate Counsel Petition

at 21-23, 34-39; NTCH Petition at 10-13; Public Knowledge Petition at 3-7, 10-21, 24-29, 36-46, A1-A9; RCA

Petition at 31, 37-40, 58; RTG Petition at 20-30; CWA and IBEW Comments at ii, 6-25; DIRECTV Comments at 2-

5; Free State Foundation Comments at 3, 10-11; Hispanic Technology and Telecommunications Partnership

Comments at 2-3; IBEW Local 827 Comments at 1-2, 5-14; Information Technology and Innovation Foundation

Comments at 5; Scott Wallsten with the Technology Policy Institute at 10-19; Sprint Nextel Comments at 1-13;

AFL-CIO Reply at 1-3; City of Boston Reply at 1, 6-7; CCIA Reply at 14-20; Consumers Union Reply at 2-4; CWA

and IBEW Reply at 2-30; Free Press Reply at 25-28; Hawaiian Telcom Reply at 4-16; Level 3 Reply at 3-9;

Massachusetts Community Leaders Reply at 1-3; NJ Division of Rate Counsel Reply at 3-7; NTCA Reply at 4-8;

NTCH Reply at 2-3, 5; Public Knowledge Reply at 2-27, 32-37; RCA Reply at 3, 5, 17; RTG Reply at 13-16; Sprint

Nextel Reply at 5-6, 12-15, 17-19, 22-23; TechFreedom and the International Center for Law and Economics Reply

at 18-21;Consumer Federation of America Ex Parte Comments at 3-9; ITTA July 10, 2012 Ex Parte at 3-6; Letter

from Kathleen Q. Abernathy, Executive Vice President, External Affairs, Frontier Communications, and Eric N.

Einhorn, Senior Vice President of Government Affairs, Windstream Communications, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4 filed July 10, 2012 at 1; Letter from Melissa Newman, Vice President,

Federal Regulatory Affairs, CenturyLink, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed July

13, 2012 at 1-2; Letter from William B. Wilhelm and Frank G. Lamancusa, Counsel for Vonage Holdings Corp., to

Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed July 16, 2012 at 2-4 (“Vonage July 16, 2012 Ex

Parte”).

336

See CWA and IBEW Comments at 12-16; RCN July 31, 2012 Ex Parte at 7-8.

337

See NJ Division of Rate Counsel Petition at 21-22; RCA Petition at 37-38; DIRECTV Comments at 2; AFL-CIO

Reply at 1-2; City of Boston Reply at 7; NJ Division of Rate Counsel Reply at 21-23.

338

See CWA and IBEW Comments at 6-8; AFL-CIO Reply at 2; Citizen Action of New York Reply at 6-7; City of

Boston Reply at 6-7; CWA and IBEW Reply at 6-10; Don’t Bypass Buffalo Coalition Reply at 4-5; Don’t Bypass

Syracuse Coalition Reply at 4-5; Massachusetts Community Leaders Reply at 2.

339

See NTCH Petition at 10-11; CWA and IBEW Comments at 7; DIRECTV Comments at 2. Verizon also

provides wireline voice and DSL broadband services outside of its FiOS footprint.

340

See CWA and IBEW Comments at 6-9.

Federal Communications Commission FCC 12-95

141. Commenters also argue that providers that are not parties to the agreements will be

unable to compete effectively with the service bundles and products that Verizon Wireless and the Cable

Companies now will be able to offer.

341

For example, commenters contend that the parties to the JOE no

longer will be free to innovate individually or to partner with third parties.

342

Commenters also argue that

the JOE members will have the ability and incentive to develop technologies that are not interoperable

with other video or wireless providers and that they will restrict access by competitors, or their

competitors’ customers, to new platforms or technologies that are developed through the venture.

343

142. Verizon Wireless and the Cable Companies respond that the Commission should not

review the Commercial Agreements because the agreements are subject to a separate review by the

Antitrust Division of the U.S. Department of Justice (“DOJ Antitrust Division”),

344

and that the

Commission does not have authority to review the agreements.

345

They also contend that only Verizon

Wireless and the Cable Companies are parties to the agreements, and that Verizon’s separate wireline

businesses will continue to compete vigorously against the Cable Companies.

346

Verizon Wireless and

the Cable Companies state that the Commercial Agreements are typical of other such agreements in the

industry and will promote greater consumer choice, competition, and innovation.

347

143. The Commission has authority to review the Commercial Agreements and to impose

conditions to protect the public interest. After thoroughly reviewing the Commercial Agreements, we

agree with commenters that, though nascent, the Commercial Agreements as originally drafted had the

potential to reduce competition and harm consumers in a manner that would render the transaction as a

whole, including the spectrum transfers between SpectrumCo and Cox and Verizon Wireless, inconsistent

with the public interest. This is not to assert, however, that there are no potential benefits arising from the

Commercial Agreements. Indeed, we note that the transaction has the potential to offer important

consumer benefits. Combining the expertise and technical resources of cable and wireless providers

presents the potential for new wireless-wireline bundles that may be attractive to consumers. In addition,

the JOE Agreement may create incentives for important innovations and integrated offerings — both by

the parties to the JOE and by their competitors in response — that might not be developed, or developed

as quickly, in the absence of such focused collaboration. On balance, however, we conclude that the

Commercial Agreements, as originally drafted, were contrary to the public interest.

341

See Hawaiian Telcom Petition at 18-20; Public Knowledge Petition at 37-40; CWA and IBEW Comments at 12-

15.

342

See Public Knowledge Petition at 3-4, 20-21, 40-41; Hawaiian Telcom Petition at 18-20.

343

See Public Knowledge Petition at 3-4, 20-21, 40-41; Hawaiian Telcom Petition at 18-20; CWA and IBEW Reply

at 14-17; Public Knowledge Reply at 8-21; ITTA July 10, 2012 Ex Parte at 4-5; Public Knowledge July 10, 2012

Comments Attach. at 4-29; Vonage July 16, 2012 Ex Parte at 2-3.

344

Joint Opposition at 75-76.

345

Id. at 75-79.

346

Letter from John T. Scott, III and Katharine R. Saunders, Verizon, and Michael E. Glover, Of Counsel, Attorneys

for Verizon Wireless, Michael H. Hammer, Willkie Farr & Gallagher LLP, Attorney for SpectrumCo, and J.G.

Harrington, Christina H. Burrow, and Michael Pryor, Attorneys for Cox Wireless, to Marlene H. Dortch, Secretary,

FCC, WT Docket No. 12-4, filed June 11, 2012 at 3; Letter from Tamara Preiss, Vice President, Federal Regulatory

Affairs, Verizon, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed June 19, 2012, Attach. at 5

(“Verizon Wireless June 19, 2012 Ex Parte”).

347

Verizon June 19, 2012 Ex Parte at 1, Attach. at 5-8.

Federal Communications Commission FCC 12-95

144. The Commission staff coordinated closely with the DOJ Antitrust Division, which

conducted its own independent and comprehensive investigation of these agreements. The DOJ Antitrust

Division, working with Commission staff, has negotiated a proposed Consent Decree with Verizon

Wireless and the Cable Companies.

348

The Consent Decree requires that the parties to the agreements

alter them in multiple, fundamental ways that address the key potential harms to consumers and

competition. Having reviewed the agreements and worked with the DOJ Antitrust Division to require

significant changes that protect competition and consumers, as reflected in the Consent Decree, we

conclude that we do not need to impose further conditions at this time, except as discussed below.

145. Because these agreements are in the early stages of implementation and relate to evolving

markets, it is inherently difficult to predict their effects. Accordingly, it is important that Verizon has

agreed to comply with a number of monitoring and reporting conditions. In addition, we will continue to

monitor closely any effects the Commercial Agreements have on the marketplace, and on the

development of emerging product markets. To assist in that monitoring, we direct the Wireline

Competition Bureau to take all actions necessary to open a docket for the public to file complaints or

petitions alleging that the parties are acting in violation of the conditions imposed by this order or

engaging in anticompetitive conduct relating to this transaction that implicates the public interest or

otherwise violates the Act or Commission rules.

349

146. We discuss below the ways in which the proposed Consent Decree alleviates potential

competitive concerns with respect to (1) wireline broadband, video, and voice services; (2) wireless home

broadband services; (3) wireless/wireline integration services; and (4) mobile wireless services.

147. Wireline Broadband, Video, and Voice Competition. Verizon sells wireline video,

broadband, and voice services that compete directly with the Cable Companies’ products. Verizon’s

majority ownership of Verizon Wireless raises concerns regarding the impact of the agreements on

Verizon’s incentive to compete against the Cable Companies. As noted above, Verizon Wireless has

entered into agency agreements with each of the Cable Companies, pursuant to which it is permitted to

sell the services of the Cable Companies and to receive commission payments for such sales.

350

originally executed, the Cable Agent Agreements would have curtailed Verizon Wireless’s ability to

348

Stipulation and Order and Proposed Final Judgment, United States and State of New York v. Verizon

Communications Inc., Cellco Partnership d/b/a Verizon Wireless, Comcast Corp., Time Warner Cable Inc., Cox

Communications, Inc. and Bright House Networks, LLC, No. 1:12-cv-02354 (D.D.C. filed Aug. 16, 2012)

(“Consent Decree”). The Consent Decree and other related documents are available at

http://www.justice.gov/atr/cases/verizoncable.html. We note that the term consent decree, as generally used, refers

to both a proposed final judgment agreed to by the parties before it is approved by the court, and a final judgment

once it has been approved by the court, as the case may be. Proposed settlements in civil antitrust cases brought by

the United States are subject to judicial approval pursuant to the Tunney Act, 15 U.S.C. §16.

349

Aside from Section 310(d), 47 U.S.C. § 310(d), the Commission’s authority is provided by several sections of the

Communications Act, including, but not limited to, Section 2, providing the Commission with jurisdiction over all

interstate communications by wire or radio, 47 U.S.C. §152; Section 201(b), requiring all charges and practices

relating to communication services to be just and reasonable, 47 U.S.C. §201(b); Section 316, permitting the

Commission to modify a license at any time during its term if doing so “will promote the public interest,

convenience, and necessity or the provisions of this Act”, 47 U.S.C. §316; and Section 628(b), making it illegal for a

cable operator to engage in unfair methods of competition or other unfair practices that hinder significantly or

prevent any video operator from providing programming to its subscribers, such as by entering into exclusive

arrangements, 47 U.S.C. §458(b).

350

See BHN Agent Agreement; Comcast Agent Agreement; Cox Agent Agreement; TWC Agent Agreement

(collectively, “Cable Agent Agreements”).

Federal Communications Commission FCC 12-95

market and sell FiOS services effectively and raised potential concerns regarding Verizon’s incentives to

compete with the Cable Companies in providing DSL service. These agreements would have had the

effect of reducing competition, causing consumer confusion, and potentially undermining incentives for

Verizon to resume its FiOS buildout.

148. In particular, the Cable Agent Agreements would have allowed Verizon Wireless to sell

the Cable Companies’ services through its stores and other sales channels in geographic areas that overlap

with Verizon’s FiOS-branded offerings, among other places.

351

Moreover, as executed, the Cable Agent

Agreements also stipulated that, if Verizon Wireless elected to sell FiOS services within the FiOS

footprint, it would be required to sell both sets of products on “an equivalent basis,” effectively

remaining neutral between FiOS products owned by its parent company and competing cable services.

352

149. Verizon Wireless has the potential to serve as a marketing and sales outlet for FiOS and

for service bundles that include both Verizon Wireless and FiOS video and broadband services.

Verizon’s prior decision to market FiOS in some Verizon Wireless stores indicates its understanding that

there is a market for bundles of wireless services together with video and other services.

353

Moreover, as

noted above, under the Cable Agent Agreements as executed, Verizon Wireless was required to sell FiOS

and the products of the Cable Companies on “an equivalent basis.” We are concerned that these

contractual provisions would diminish Verizon Wireless’s incentives to sell bundles including FiOS video

and broadband services, cause substantial confusion among consumers, dilute the value of the FiOS

brand, and ultimately reduce competition in the marketplace. In addition, because of the sales

commissions that Verizon Wireless would have received from selling Cable Company services within the

FiOS footprint, the Cable Agent Agreements also could reduce Verizon’s incentive to aggressively

market or continue to build out FiOS.

150. In addition, commenters raised concerns that another aspect of the Cable Agent

Agreements would restrict Verizon’s ability to market FiOS effectively in areas in which the FiOS

network is built out in the future.

354

As originally executed, the Cable Agent Agreements prohibited

Verizon Wireless from selling FiOS services outside its currently planned FiOS footprint.

355

This

territory was defined as of the date the agreements were signed and therefore precluded Verizon Wireless

from selling FiOS services in any future franchise areas. In evaluating the significance of this provision,

we take account of Verizon’s repeated public statements, in congressional testimony and elsewhere, that it

351

As noted above, Verizon Wireless and the Cable Companies have begun selling each other’s services in various

markets throughout the country, but have not yet started cross-marketing in FiOS territories. See Steve Donohue,

“Comcast Expands Promotion with Verizon Wireless; Offers Free DVR, Streampix Subscriptions,” FIERCECABLE

(June 21, 2012), http://www.fiercecable.com/story/comcast-expands-promotions-verizon-wireless-offers-free-dvr-

streampix-subsc/2012-06-21.

352

See BHN Agent Agreement at § 2.6; Comcast Agent Agreement at § 2.6; Cox Agent Agreement at § 2.6; TWC

Agent Agreement at § 2.6.

353

See U.S. Senate Judiciary Committee, Hearing of the Subcommittee on Antitrust, Competition Policy and

Consumer Rights, Verizon Communications’ Response to Questions for the Record From Senator Herb Kohl: “The

Verizon/Cable Deals: Harmless Collaboration or a Threat to Competition and Consumers?” (Apr. 19,

2012)(explaining that there are FiOS kiosks in 96 Verizon Wireless Stores).

354

See CWA and IBEW Comments at 6-8; AFL-CIO Reply at 2; Citizen Action of New York Reply at 6-7; City of

Boston Reply at 6-7; CWA and IBEW Reply at 6-10; Don’t Bypass Buffalo Coalition Reply at 4-5; Don’t Bypass

Syracuse Coalition Reply at 4-5; Massachusetts Community Leaders Reply at 2.

355

See BHN Agent Agreement at § 2.4.2(a); Comcast Agent Agreement at § 2.4.2(a); Cox Agent Agreement at §

2.4.2(a); TWC Agent Agreement at § 2.4.2(a) [REDACTED]

Federal Communications Commission FCC 12-95

has no intention to expand FiOS beyond its current buildout commitments at this time.

356

Nevertheless,

to the extent that Verizon otherwise would reassess that decision at some point in the future, the original

Cable Agent Agreements would have reduced Verizon’s economic incentives to expand FiOS.

151. The proposed Consent Decree requires Verizon Wireless and the Cable Companies to

modify the Cable Agent Agreements in a manner that directly addresses these concerns. The parties have

agreed that Verizon Wireless will not sell the Cable Companies’ services in any stores that are located in,

or to any customers that reside in, geographic areas where FiOS is available, either now or in the future.

357

The parties also have agreed that Verizon Wireless will not sell Cable Company services in areas where

Verizon is currently, or in the future becomes, obligated or authorized to provide FiOS service.

358

believe that, by eliminating the ability of Verizon Wireless to market the services of the Cable Companies

within the current and future FiOS footprint, the proposed Consent Decree protects against the potential

harms to competition and consumers described above that otherwise could have resulted from the

Commercial Agreements in these areas.

152. Additionally, as a result of the proposed Consent Decree, the Commercial Agreements

will allow Verizon Wireless to sell Verizon services, including FiOS services, anywhere without

restriction, including areas where FiOS is offered in the future.

359

Moreover, the parties have agreed that

Verizon Wireless will not sell the Cable Companies’ services for any service address, or through a

Verizon store, in Verizon’s DSL Footprint after December 2, 2016, without first obtaining DOJ

356

For example, in an interview with UBS analyst John Hodulik, Lowell McAdam, Verizon President & CEO,

stated, “With FiOS we are about 16 million POPs at this point and we want to get to about 18 million. If we built out

the whole footprint, we would be more in the 21 million, maybe a little bit more, range . . . But for now the bottom

line is we are going to build out what we said and not any more.” See VZ-Verizon Communications Inc at UBS

Media and Communications Conference, Final Transcript, THOMSON STREETEVENTS, Dec. 7, 2011,

http://www22.verizon.com/idc/groups/public/documents/adacct/event_1012_trans.pdf (visited Aug. 3, 2012). See

also, e.g., U.S. Senate Judiciary Committee, Hearing of the Subcommittee on Antitrust, Competition Policy and

Consumer Rights, Verizon Communications’ Response to Sen. Kohl’s Follow-Up Questions for the Record for

Hearing On “The Verizon/Cable Deals: Harmless Collaboration or a Threat to Competition and Consumers?”

(Apr. 19, 2012), http://www.judiciary.senate.gov/resources/transcripts/upload/032112QFRs-Milch.pdf (visited Aug.

9, 2012)(Verizon Communications’ General Counsel Randal Milch, responded “Well before the companies began

negotiating the arrangements at issue, Verizon decided to continue building out FiOS only where its franchise

agreements require it to do so…Verizon has no plans to expand FiOS into new franchise areas.”); U.S. Senate

Judiciary Committee, Hearing of the Subcommittee on Antitrust, Competition Policy and Consumer Rights, Verizon

Communications’ Response to Questions for the Record From Senator Charles E. Schumer: “The Verizon/Cable

Deals: Harmless Collaboration or a Threat to Competition and Consumers?” (Apr. 19, 2012); Tim Knauss, “Some

CNY Communities Won’t Get FiOS as Verizon Halts Expansion,” The Post-Standard, (Apr. 6, 2010),

http://www.syracuse.com/news/index.ssf/2010/04/some_cny_communities_wont_get.html (visited Aug. 10,

2012)(Verizon announced the end of its five year project to build a high speed fiber optic network to compete with

cable TV companies; will continue to string fiber in communities where it has already signed franchises, but will not

expand into new areas).

357

Consent Decree Sec. V.A.

358

The applicable FiOS Footprint for this restriction is defined as any territory in which Verizon now or in the

future: “(i) has built out the capability to deliver FiOS Services, (ii) has a legally binding commitment in effect to

build out the capability to deliver FiOS Services, (iii) has a non-statewide franchise agreement or similar grant in

effect authorizing Verizon to build out the capability to deliver FiOS Services, or (iv) has delivered notice of an

intention to build out the capability to deliver FiOS Services pursuant to a statewide franchise agreement.” Consent

Decree, Sec. II.

359

Consent Decree, Sec. IV. B.

Federal Communications Commission FCC 12-95

permission to do so.

360

Given the extensive lead time that any further buildout of FiOS necessarily would

entail, it may not be feasible for Verizon to obtain the necessary approvals, build out its FiOS network,

and begin offering service before 2016 – the year of the termination date set forth in the Consent Decree –

in significant areas beyond existing franchise areas. Thus, to the extent that Verizon reconsiders its FiOS

strategy in the future, the Consent Decree ensures that the Cable Agent Agreements will not provide a

substantial disincentive to expand FiOS.

153. The proposed Consent Decree also addresses concerns about potential harm from the

original Commercial Agreements to Verizon’s offering of DSL services. As compared to FiOS areas,

potential harms within the Verizon footprint where Verizon currently offers only DSL services are

reduced to the extent that DSL services are less similar than FiOS to the services of the Cable Companies.

As currently deployed by Verizon, its DSL service is less similar to Cable Company services due in part

to the lack of a Verizon video service in DSL-only territories and the lower broadband speeds available

with DSL compared to FiOS.

361

In any event, because the Consent Decree precludes Verizon Wireless

from offering the services of the Cable Companies not only to homes to which Verizon currently offers

FiOS, but also those to which it is authorized or obligated to do so in the future, it covers a significant part

of the area where DSL, and not FiOS, is currently offered. This change substantially counteracts

incentives Verizon might have had to stop or reduce its DSL offerings. Even beyond that, under the

Consent Decree, the Commercial Agreements will be modified so that Verizon retains the ability to

bundle its services, including DSL services, with Verizon Wireless services,

362

and Verizon Wireless may

sell Verizon services without restriction, including Verizon’s DSL services.

363

We believe these

modifications relating to the bundling of Verizon’s DSL services may enhance the attractiveness of DSL

to some consumers and therefore may create a more level playing field between DSL and cable

broadband services than would have existed under the original agreements. Moreover, the Consent

Decree limits the duration of the Cable Agent Agreements in the DSL footprint and provides regulators

with an opportunity to reassess any effects the Commercial Agreements may have on the broadband

marketplace as it continues to evolve.

154. In addition, during the reduced term in which Verizon Wireless will be permitted to sell

the Cable Companies’ services in Verizon’s DSL footprint, Verizon has agreed to provide substantial

information to the Commission regarding the effect of the agreements on DSL/cable broadband

competition.

364

Those reports, which we adopt as a compliance condition for Verizon, are consistent

with, and support, the Commission’s central goal of advancing broadband to all Americans. They will

360

Consent Decree, Sec. V.B. Specifically, the proposed Consent Decree provides that Verizon may petition DOJ

to allow Verizon Wireless to continue selling the Cable Companies’ services in some or all of its DSL Footprint, in

which case DOJ will expeditiously examine existing market conditions to determine whether such sales will

adversely impact competition. Id. The Consent Decree defines Verizon’s “DSL Footprint” as “any territory that is,

as of the date of entry of this Final Judgment, served by a wire center that provides Digital Subscriber Line (‘DSL’)

service to more than a de minimis number of customers over copper telephone lines owned and operated by

[Verizon], but excluding any territory in the FiOS Footprint.” Consent Decree, Sec. II.

361

Verizon’s maximum advertised DSL speed is 15Mbps whereas FiOS offers up to 300MBps and the Cable

Companies offer maximum speeds up to 105Mbps. We note, however, that DSL technology can be deployed to

achieve higher maximum speeds than those currently offered by Verizon.

362

Consent Decree, Sec. IV.C.

363

Consent Decree, Sec. IV.B.

364

See Letter from Kathleen Grillo, Senior Vice President, Federal Regulatory Affairs, Verizon, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed Aug. 15, 2012.

Federal Communications Commission FCC 12-95

allow us to monitor the impact of the Commercial Agreements — especially the Cable Agent Agreements

— on Verizon’s DSL offerings. They will thereby enable the Commission to take any additional

remedial actions that prove necessary. Moreover, as noted, we will open a new docket so that members

of the public and other stakeholders may file complaints or petitions if they believe the parties are acting

in violation of the conditions imposed by this order or engaging in anticompetitive conduct relating to this

transaction that implicates the public interest or otherwise violates the Act or Commission rules.

155. As set forth in the Reporting Requirements appendix to this Order, Verizon commits over

the next five years to provide the Commission with more than two years of historical data, and on a semi-

annual basis going forward, monthly data showing how many households Verizon offers DSL services to

and how many DSL subscribers Verizon has, the average revenue per DSL account, how many DSL

subscribers Verizon has acquired and lost during each month, the number of DSL lines by speed tier, and

the number of sales of FiOS services to former Verizon DSL customers. These data will be reported in a

manner that will allow us to distinguish between DSL customers located inside and outside the footprint

of the Cable Companies, so that we can assess the impact of the agreements on DSL by comparing trends

in the two areas.

156. Commenters also expressed concerns that Verizon and third-party providers will not have

access to, and will find it difficult to compete with, the bundles of wireline and wireless services that the

Cable Companies will be able to offer pursuant to the agreements.

365

The Commercial Agreements, as

initially executed, [REDACTED].

366

[REDACTED].

367

This provision could have been interpreted as

limiting Verizon Wireless’s ability to participate in and support a service bundle with providers who are

not parties to the agreements, including Verizon and other video programming competitors to the Cable

Companies.

157. Pursuant to the terms of the proposed Consent Decree, the parties will amend the

Commercial Agreements to ensure that there is no restriction on Verizon Wireless’s sale of any Verizon

service.

368

The Commercial Agreements also will be modified to ensure there is no restriction on Verizon

Wireless’s ability to authorize, permit, or enable Verizon to sell Verizon Wireless services in

combination with any broadband, telephony, or video programming distribution service.

369

We believe

that these modifications will help ensure that consumers have options to receive robust service bundles

from multiple competitors. In particular, the ability for Verizon to partner with Verizon Wireless and a

third-party video provider in areas where Verizon does not offer a FiOS video service allows Verizon to

offer service bundles to consumers that compete with those offered pursuant to the Commercial

Agreements. Moreover, the ability for third-party video providers to participate in such bundles allows

their customers to have access to the same types of service bundles that are available to customers of the

365

See Public Knowledge Petition at 39-40; CWA and IBEW Comments at 12-16; RCN July 31, 2012 Ex Parte at

7-8.

366

See BHN Agent Agreement at § 2.4.1; Comcast Agent Agreement at § 2.4.1; Cox Agent Agreement at § 2.4.1;

TWC Agent Agreement at § 2.4.1.

367

See BHN Agent Agreement at §§ 2.4.1, 2.4.2(b); Comcast Agent Agreement at §§ 2.4.1, 2.4.2(b); Cox Agent

Agreement at §§ 2.4.1, 2.4.2(b); TWC Agent Agreement at §§ 2.4.1, 2.4.2(b).

368

Consent Decree, Sec. IV.B.

369

Consent Decree, Sec. IV.C. We note that, under the terms of the Consent Decree, the amended Commercial

Agreements may prohibit Verizon Wireless from marketing or initiating the sale of a Verizon bundle that includes a

third-party broadband, telephony, or video service. Id. This restriction, however, in no way limits the ability of

Verizon to offer such a bundle or the ability of third-party providers to participate in it.

Federal Communications Commission FCC 12-95

Cable Companies.

158. Some commenters assert that we should require Verizon, as a condition of the

transaction, to continue to provide DSL service on a stand-alone basis.

370

Although we recognize the

potential value of such an offering to some subscribers, evidence submitted by Verizon convinces us that

the decision to stop offering stand-alone DSL to new subscribers was made independently of this

transaction.

371

Therefore, while we do not discount the value of stand-alone DSL service, we do not

believe that it is necessary or appropriate to condition our approval on a commitment by Verizon to revive

a service offering that it already has stopped making available to new subscribers. Moreover, nothing in

the agreements would preclude Verizon from offering unbundled DSL service in the future or allowing

DSL service to be offered by competitors to the Cable Companies in their own service bundles. In

addition, our reporting requirements will help us ensure that Verizon and Verizon Wireless are not

favoring MSO offerings at the expense of its DSL service.

159. Wireless Home Broadband Services. We are also persuaded that the modifications set

forth in the proposed Consent Decree adequately address concerns regarding potential harms to home

broadband competition from wireless technologies. The Commercial Agreements, as originally executed,

could have been interpreted to preclude Verizon Wireless from marketing various wireless broadband

services that subscribers use mostly in their homes, such as HomeFusion or Home Phone Connect.

372

HomeFusion relies on Verizon Wireless’s LTE network to provide residential subscribers with a

broadband service advertised as capable of providing 5–12 Mbps download and 2–5 Mbps upload

speeds.

373

This service, and others like it, could increase broadband competition and expand broadband

availability, especially in rural areas and other areas where consumers currently have few choices among

broadband providers.

374

Under the terms of the Consent Decree, the parties must amend the Commercial

Agreements so that they unambiguously do not restrict Verizon Wireless’s ability to sell any wireless

service provided over any wireless spectrum licensed by the FCC and to clarify that Verizon Wireless

retains the ability to sell HomeFusion and Home Phone Connect.

375

Accordingly, the Commercial

Agreements, as modified, should have no material impact on the ability of Verizon Wireless to market

HomeFusion, Home Phone Connect, or similar services.

160. Wireless/Wireline Integration and the Joint Operating Entity. We also share

commenters’ concerns that the JOE agreement, as originally executed, could have provided the parties to

the agreement with the ability and incentives to restrict their competitors’ access to any new technologies

370

See, e.g., Vonage July 16, 2012 Ex Parte at 1-2, 4, Attach. at 1-4.

371

See Letter from Ian Dillner, Vice President, Federal Regulatory Affairs, Verizon, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4 (June 12, 2012).

372

See, e.g., Comcast Agent Agreement with VZW, § 2.4.1. Home Phone Connect enables consumers to use their

legacy telephones to make phone calls over Verizon Wireless’s mobile wireless network. Because Home Phone

Connect is marketed as a replacement for legacy telephone service, it fosters local telephone service competition,

particularly outside Verizon’s wireline service territory. It does not currently include a data service.

373

See http://www.verizonwireless.com/b2c/splash/homefusion.jsp.

374

Although Verizon Wireless advertises its HomeFusion service as being available nationwide, the price and usage

capacity limitations of the service suggest that it likely will be of the greatest value to consumers in rural areas and

other underserved areas. See http://www.verizonwireless.com/b2c/splash/homefusion.jsp (offering as of August 1,

2012, 10 GB/month plans for $60 per month; 20 GB/month plans for $90 per month, and 30 GB/month plans for

$120 per month; all with a 2 year contract and $199.99 equipment and installation fee).

375

Consent Decree, Sec. IV.A.

Federal Communications Commission FCC 12-95

that the JOE may develop.

376

According to the JOE Agreement, the primary purpose of the JOE is to

serve as the exclusive vehicle for its members to develop integrated wireless and wireline products,

services, and devices.

377

[REDACTED].

378

[REDACTED].

379

The JOE Agreement precludes members

from developing integrated wireless/wireline products and services independently with other non-member

wireless, broadband, and video competitors. [REDACTED].

380

161. While we share commenters’ concerns that the exclusive nature of the JOE potentially

creates the opportunity for JOE members to foreclose access to any new integrated wireless/wireline

products and services the JOE develops, we also recognize that exclusivity creates incentives for JOE

members to invest in the development of new and innovative products and services to the benefit of

consumers. Absent exclusivity and the ability to gain a market advantage through innovative new

products and services developed through the JOE collaboration, the parties to that agreement may have

less incentive to create such products in the first place. Moreover, the existence of the JOE may spur

alternative industry collaborations to develop integrated wireless and wireline products. We must balance

the potential for innovation against the potential for exclusive or anticompetitive conduct. We are also

mindful that the JOE is a recent creation, and any effects it may have on the marketplace are necessarily

speculative at this time.

381

Nonetheless, the JOE Agreement, as originally executed, could have created

an ongoing collaboration of competitors with the potential to affect competition adversely over the long

term.

162. The modifications to the Commercial Agreements set forth in the proposed Consent

Decree alleviate our concerns about preserving the incentives to invest in new integrated products and

services, while ensuring that the risk that competitors are foreclosed from such integrated products and

services is circumscribed. The Consent Decree provides that the members of the JOE must exit the

venture no later than December 2, 2016 absent a successful petition to the DOJ to extend their

membership.

382

If any member petitions DOJ to extend its membership, DOJ will examine market

376

See Public Knowledge Petition at 3-4, 20-21, 40-41; Hawaiian Telcom Petition at 18-20; CWA and IBEW Reply

at 14-17; Public Knowledge Reply at 8-21; ITTA July 10, 2012 Ex Parte at 4-5; Public Knowledge July 10, 2012

Comments Attach. at 4-29; Vonage July 16, 2012 Ex Parte at 2-3.

377

See Limited Liability Company Agreement of Joint Operating Entity, LLC, at § 10.02. The JOE agreement

includes a number of activities that are specifically designated as outside the scope of the exclusive relationship,

including, among others, activities related to Wi-Fi, backhaul, and [REDACTED] Id.

378

See Limited Liability Company Agreement of Joint Operating Entity, LLC, at § 10.03.

379

[REDACTED]

380

See Limited Liability Company Agreement of Joint Operating Entity, LLC, at § 7.07.

381

For example, both what existing technology might be contributed to the JOE and what “new” products it might

be uniquely able to produce remain unclear, leaving uncertain both potential harms (potential contribution of

existing competing technologies) and benefits (what the venture will add to existing efforts). The uncertainty

surrounding the JOE is further compounded by the fact that the field of integrative technologies and products is not a

blank slate. See, e.g., Verizon Annual Report 2011 (pre-agreement) at 11 (“Verizon’s high-capacity fiber and 4G

LTE networks make us a leading player in this multi-screen universe, and we are developing innovative new

services to address customers’ expectations for anywhere, anytime content. For example, our Flex View video

service gives FiOS customers the ability to view their content on-demand on a TV, PC, laptop, tablet or smartphone.

They also have access to thousands of on-demand titles, which are stored in the cloud and can move seamlessly

between devices.”)

382

Consent Decree, Sec. V. F.

Federal Communications Commission FCC 12-95

conditions to determine, in its sole discretion, whether the continuation of such membership will

adversely impact competition.

383

The proposed Consent Decree also requires the parties to provide

annual reports regarding the activities of the JOE, which will include, among other information, a

description of its technology and product development and a summary of its IP licensing activities.

384

addition, the Consent Decree clarifies that, immediately exiting the JOE, a JOE member may use the

technology developed via the venture to partner or collaborate with other parties, including competitors of

Verizon Wireless and the Cable Companies.

385

163. The limited duration of the JOE, along with the other targeted amendments to the JOE

Agreement, collectively will preclude the current members of the JOE from foreclosing access in the

future to integrated wireless/wireline technologies and other products or services resulting from the JOE.

By limiting the term of this agreement, the Consent Decree increases opportunities for more wireless,

broadband, and video providers to have access to the products and services that may be developed by the

JOE and, therefore, potentially increases the options consumers will have to access any such technologies.

Because the members will have the ability to use JOE products with other providers after exiting the

JOE,

386

and because each of the members will earn profits if the JOE licenses technology to others, the

members of the JOE have an increased incentive to create products and services that other providers will

be able to use and provide to consumers. Moreover, by requiring DOJ approval for the continuation of

membership in the JOE beyond the date set forth in the Consent Decree, the Consent Decree creates

incentives for the parties to avoid engaging in anticompetitive behavior for the duration of the JOE. In

addition, the reporting requirement implemented in the proposed Consent Decree will provide regulators

with an opportunity to monitor any effects, particularly any anticompetitive effects, of the JOE on the

evolving market for integrated wireless/wireline technologies, including availability, prices, terms, and

conditions of offers of technology or services to third parties.

164. A number of commenters have argued that the JOE also constitutes a threat to

competition in the market for licensing of video programming content and the market for over-the-top

Internet video services and have requested conditions to address those alleged threats.

387

We note that the

JOE is the exclusive vehicle for its members for the research and development of integrated wireline and

wireless products. Specifically, the JOE defines “Exclusive Field” to mean [REDACTED].

388

Comcast

has stated, however, that the “commercial agreements in no way address or affect the MSOs’ licensing of

383

Consent Decree, Sec. V. F.

384

Consent Decree, Appendix A.

385

Consent Decree, Sec. IV.E. The Consent Decree further provides that if the JOE dissolves, JOE members at the

time of the dissolution may receive joint ownership of intellectual property rights owned by the venture at the time

of the dissolution, instead of a license. Id. The Consent Decree also limits the exclusive nature of the JOE by

providing that Time Warner Cable and Bright House are free to develop technology covered by the scope of the JOE

if the JOE declines to exercise its right of first refusal to develop that technology itself. Consent Decree, Sec. IV.D.

386

Specifically, Comcast, Bright House, and Time Warner will be able to partner with other wireless providers, and

Verizon Wireless will be able to partner with other video and wireline voice and broadband providers.

387

See, e.g., RCN July 31, 2012 Ex Parte at 5; ITTA July 10, 2012 Ex Parte at 6; Letter from Ellen Stutzman,

Director of Research & Public Policy, WGAW, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, filed

July 13, 2012 at 4; Letter from Jodie Griffin, Public Knowledge, to Marlene H. Dortch, Secretary, FCC, WT Docket

No. 12-4, filed Aug. 2, 2012 at 2; Letter from Karen Brinkman, Counsel for FairPoint and Frontier, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed Aug. 2, 2012 at 5-7.

388

JOE Agreement, Article I.

Federal Communications Commission FCC 12-95

affiliated programming to any distributor, regardless of whether the distributor is a traditional

multichannel video programming distributor (“MVPD”), online video distributor (“OVD”), or wireless

provider.”

389

In addition, [REDACTED], all parties to the JOE have affirmed that the focus of the JOE is

on the “technical capabilities for the delivery of services to consumers, and not on the acquisition,

ownership or control of video or other programming content.”

390

We accept these representations and

have no reason to conclude that they were not made in accordance with the Commission’s candor and

truthfulness requirements. We note that our reliance on these representations is consistent with the

Commission’s reliance on the representations of parties in prior transactions.

391

165. In addition, the Consent Decree provides that the members of the JOE cannot amend the

JOE Agreement without the prior consent of DOJ.

392

Therefore, if the parties to the JOE were to modify

the terms of the JOE Agreement to include the licensing of video programming or over-the-top Internet

video programming, or in a manner that otherwise would impact the video programming market, DOJ

would have authority to prohibit such modification. Moreover, because the members of the JOE are

required to provide periodic reports to DOJ and the Commission regarding the activities of the JOE,

393

both the Commission and DOJ will have the ability to monitor any impact that the venture may have on

the video programming market and to take any action to the extent that such activity may implicate the

Commission’s rules or policies or the antitrust laws. For these reasons, we do not see the need to impose

conditions to address these concerns.

394

389

See Letter from Michael H. Hammer, Willkie Farr & Gallagher LLP, Counsel for Comcast, to Marlene H.

Dortch, Secretary, FCC, WT Docket No. 12-4, filed Aug. 16, 2012 at 2. Furthermore, as Comcast notes, the

Commission’s program access rules prohibit the Cable Companies from discriminating against, or withholding

affiliated programming from, other multichannel video programming distributors (“MVPDs”). Id. at 4 (citing 47

U.S.C. § 548(c)(5)). In addition, Comcast notes that the Comcast/NBCUniversal Order imposed conditions that

give MVPDs and online video distributors certain rights to access Comcast-affiliated programming. Id. (citing

Applications of Comcast Corporation, General Electric Company and NBC Universal, Inc. For Consent to Assign

Licenses and Transfer Control of Licensees, Memorandum Opinion and Order, 26 FCC Rcd 4238, App. A, §§ II,

IV.A, and VII (2011)).

390

See Letter from Kathy Grillo, Senior Vice President, Federal Regulatory Affairs, Verizon, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Aug. 17, 2012 at 2 (“Verizon Aug. 17, 2012 Ex Parte”) (discussing the

responses of the representatives of Verizon, Comcast, and Time Warner); see also Letter from Michael H. Hammer,

Willkie Farr & Gallagher LLP, Counsel for SpectrumCo, to Marlene H. Dortch, Secretary, FCC, WT Docket No.

12-4, filed Aug. 20, 2012 (“SpectrumCo Aug. 20, 2012 Ex Parte”) (discussing the response of Bright House).

391

See, e.g., Applications of Comcast Corporation, General Electric Company and NBC Universal, Inc. For

Consent to Assign Licenses and Transfer Control of Licenses, Memorandum Opinion and Order, 26 FCC Rcd 4238,

4330, ¶ 224 (2011); Applications for Consent to the Assignment and/or Transfer of Control of Licenses Adelphia

Communications Corporation (and Subsidiaries, Debtors-In-Possession), Assignors, to Time Warner Cable Inc.

(Subsidiaries), Assignees, Adelphia Communications Corporation, (and Subsidiaries, Debtors-In-Possession),

Assignors and Transferors, to Comcast Corporation (Subsidiaries), Assignees and Transferees, Memorandum

Opinion and Order, 21 FCC Rcd 8203, 8306, 8315, ¶¶ 239, 263 (2006).

392

Consent Decree, Sec. V.G.

393

Consent Decree, Appendix A.

394

In addition, Public Knowledge argues that the Commercial Agreements violate Section 652 of the

Communications Act, or in any event would lead to the harm that section is intended to prevent. Public Knowledge

Petition at 41-44; Letter from Harold Feld, Senior Vice President, Public Knowledge, to Marlene H. Dortch,

Secretary, FCC, WT Docket No. 12-4, filed Aug. 16, 2012 at 3. See 47 U.S.C. § 572. We disagree that Section 652

applies to the agreements. Sections 652(a) and (b) prohibit a local exchange carrier (LEC) and a cable company that

(continued….)

Federal Communications Commission FCC 12-95

166. Limit on Mobile Wireless Exclusivity. We share commenters’ concerns that, as

originally executed, the Commercial Agreements may have hindered increased wireless competition by

prohibiting indefinitely the Cable Companies from marketing mobile wireless services other than those of

Verizon Wireless. Allowing the Cable Companies to market Verizon Wireless’s service exclusively,

without limits and for an indefinite period of time, potentially could reduce competition in the wireless

market by preventing the Cable Companies from reaching similar bundling arrangements with other

carriers. Some commenters are concerned that other wireless carriers will need to offer a bundle of video,

broadband, and wireless services (a “triple play,” or, with wireline voice, a “quad play”) in order to

compete and that Verizon Wireless’s exclusivity arrangement with Cable Companies will prevent them

from doing so, or from offering a competitive bundle.

395

Currently, there appears to be little market

demand for bundles of video, broadband, and wireless services, although one of the purposes of the

Commercial Agreements is to stimulate that demand, in part by developing JOE products.

167. To address these concerns, the parties agreed in the Consent Decree to limit the period

during which the Cable Companies may exclusively market Verizon Wireless’s mobile wireless services

absent DOJ approval to extend. We find that this condition addresses several potential concerns we had

related to possible evolution of this market. In particular, this condition avoids creating a long-term

exclusive arrangement between leading providers of the relevant services—arrangements that potentially

could diminish competition in their respective service offerings of wireless and fixed broadband, as well

as in the increasingly integrated service offerings of the future.

168. The parties also have agreed to remove the waiting period in the Agreements before the

Cable Companies can choose to become resellers of Verizon Wireless’s services (purchasing wireless

wholesale services from Verizon Wireless and reselling these services under their own brand names to

consumers). The Cable Companies will be able to make that election at any time, and may begin

(Continued from previous page)

overlap from having a 10% ownership or any management interest in one another, either directly or through an

affiliate. Although both the Cable Companies and Verizon Wireless, an affiliate of a LEC, have interests in the JOE,

neither has any ownership or management interest in the other, nor is the JOE either a cable company or a LEC.

Further, while section 652(c) prohibits a cable company and a LEC from entering into a joint venture to provide

video programming directly to subscribers or to provide telecommunications services in any overlap area, Section

652(c) does not apply to affiliates of LECs, only to LECs themselves, and the JOE is neither providing video

programming directly to subscribers nor providing telecommunications services. See, e.g., Verizon Aug. 17, 2012

Ex Parte at 2; SpectrumCo Aug. 20, 2012 Ex Parte at 1 (“focus is on technologies” related to the delivery of these

services, not the services themselves). Nor has Public Knowledge provided a sufficient basis for us to conclude that

any of the other Commercial Agreements constitute a joint venture or partnership prohibited under section 652(c).

To the extent that Public Knowledge is concerned about the potential use of the JOE as a vehicle for collusion

among competitors, we share that concern, but believe the proposed Consent Decree adequately addresses it. The

Decree prohibits all parties to the Decree from participating in, encouraging, or facilitating any agreement or

understanding between any Verizon consumer wireline services entity (e.g., FiOS) and a Cable Company relating to

the price, terms, availability, expansion, or non-expansion of their services (with certain limited exceptions) or that

would violate the antitrust laws. Consent Decree Sec. V.J. We intend to review carefully the detailed reports

concerning the activities of the JOE required to be submitted pursuant to the proposed Consent Decree to ensure that

the JOE does not engage in the provision of services that would result in a violation of Section 652, our rules, or the

provisions of the Consent Decree, and we reserve the right to seek additional information to ensure against any such

violation or inconsistency with the parties’ representations. As noted herein, we are opening a separate docket to

allow the public to file complaints or petitions if they believe the parties are acting in violation of the conditions

imposed by this order or engaging in anticompetitive conduct relating to this transaction that implicates the public

interest or otherwise violates the Act or Commission rules.

395

See NTCH Petition at 11.

Federal Communications Commission FCC 12-95

providing service six months after making such an election.

396

This modification addresses the concerns

we had about this provision and maintains the potential competition between Verizon Wireless and the

Cable Companies that previously existed in this market. Eliminating this provision will allow the Cable

Companies to be able to develop and differentiate their own integrated service offerings from competing

Verizon Wireless services at any point that would be advantageous to themselves and their customers.

397

169. Monitoring. As described above, several of the concerns parties have raised about the

impact of the Commercial Agreements are speculative at this point. We believe that the modifications

adopted pursuant to the proposed Consent Decree adequately restrict the parties’ ability to engage in

anticompetitive conduct at this time and with respect to current service offerings. As explained above,

however, we cannot know for certain how relevant products and services will develop in the future; nor

do we know how the Commercial Agreements will affect such competitive developments. Both the

agreements and many of the products and services at issue are nascent, including in particular integrated

wireline and wireless broadband services. Nevertheless, we take potential risks to the public interest very

seriously and will monitor marketplace developments closely. Further, as stated above, we are opening a

separate docket to allow the public to file complaints or petitions if they believe the parties are acting in

violation of the conditions imposed by this order or engaging in anticompetitive conduct relating to this

transaction that implicates the public interest or otherwise violates the Act or Commission rules. We

intend to exercise Commission jurisdiction fully and take corrective action whenever necessary in the

public interest.

398

XI. FOREIGN OWNERSHIP AND DECLARATORY RULING

170. In this section, we review the applications under the foreign ownership provisions of

Section 310(b) of the Communications Act.

399

Pursuant to the Section 310(b)(3) forbearance approach

for common carrier licensees that we recently adopted in the First Report and Order in IB Docket No. 11-

133,

400

we find that Vodafone’s general partnership interest in Verizon Wireless is in the public interest.

396

Consent Decree, Sec. IV.F The Consent Decree further notes that the amended Commercial Agreements may

condition a particular Cable Company’s election to become a reseller of Verizon Wireless services on another Cable

Company making such an election first. Id.

397

While we have found resellers to be not as effective competitors as facilities-based providers, we have also

recognized that they may have an impact in the marketplace, including increasing competition and consumer welfare

by serving underserved areas or populations. See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13926 ¶ 45;

Fifteenth Annual Competition Report, 26 FCC Rcd at 9700-01 ¶ 36 (2011).

398

See, e.g., SBC Communications, Inc. and AT&T Corp. Applications for Approval of Transfer of Control, WC

Docket No. 05-65, Memorandum Opinion and Order, 20 FCC Rcd 18290, 18391-92 ¶¶ 206-07 (2005)(stating that

“[T]he Commission retains its historical discretion to monitor the market and take corrective action if necessary in

the public interest” and will revisit the merger conditions if it determines that the applicants are acting to exclude

competitors); Verizon Communications, Inc. and MCI, Inc. Applications for Approval of Transfer of Control, WC

Docket No. 05-75, Memorandum Opinion and Order, 20 FCC Rcd 18433, 18537 ¶¶ 216-17 (2005)(same).

399

47 U.S.C. § 310(b). In this section, we address the foreign ownership of Verizon Wireless and T-Mobile, two of

the three assignees. We find that the application to assign a common carrier license to Leap, the third assignee, does

not raise any foreign ownership issues. Leap has certified that it is in compliance with the foreign ownership

provisions of Section 310(a)-(b). See Application of Cellco Partnership d/b/a Verizon Wireless and Cricket License

Company, LLC, ULS File No. 0004952444 (filed Nov. 23, 2011) (FCC Form 603, Questions 95-99).

400

See Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees under Section

310(b)(4) of the Communications Act of 1934, as Amended, IB Docket No. 11-133, First Report and Order, FCC

12-93 (rel. Aug. 17, 2012) (First Report and Order).

Federal Communications Commission FCC 12-95

We also find that T-Mobile is qualified under the foreign ownership provisions of Section 310(b)(4) to

hold the AWS-1 licenses being assigned to it by Verizon Wireless.

1. Verizon Wireless

171. Background. As explained in the First Report and Order, Commission precedent applies

Section 310(b)(4) of the Communications Act where a foreign government, individual, or entity holds

interests in a U.S.-organized entity that itself controls broadcast, common carrier or aeronautical radio

licensees, and applies Section 310(b)(3) where a foreign government, individual, or entity holds interests

in a licensee through a U.S.-organized entity that does not control the licensee.

401

In the First Report and

Order, we forbore from applying Section 310(b)(3)’s strict 20 percent foreign equity and voting limits to

the class of common carrier licensees in which foreign interests in the licensee are held through U.S.-

organized entities that do not control the licensee, to the extent we determine such foreign ownership is

consistent with the public interest under the policies and procedures the Commission has adopted for its

public interest review of foreign ownership in a licensee’s controlling U.S. parent under Section

310(b)(4).

172. Section 310(b)(4) authorizes the Commission, in its discretion, to allow foreign

ownership of a common carrier licensee’s controlling U.S. parent to exceed 25 percent of the parent’s

equity and/or voting interests.

402

In the Vodafone-Bell Atlantic Order issued in 2000, the Wireless

Telecommunications Bureau and International Bureau, on delegated authority, authorized Verizon

Wireless “to be indirectly owned by Vodafone in an amount up to 65.1 percent” pursuant to Section

310(b)(4) of the Communications Act.

403

The Vodafone-Bell Atlantic Order stated that Verizon Wireless

“would need additional Commission authority under section 310(b)(4) before Vodafone could increase its

investment above authorized levels,” and that “[a]dditional authority also would be required before any

other foreign entity or entities acquire, in the aggregate, a greater-than-25 percent indirect interest” in

Verizon Wireless.

404

For purposes of calculating the additional, aggregate 25 percent amount, the

Vodafone-Bell Atlantic Order required Verizon Wireless to include foreign ownership of Verizon and

foreign ownership of Vodafone, other than ownership of Vodafone from the United States and the United

Kingdom.

405

401

First Report and Order at ¶ 7. We recognize that several commenters in IB Docket No. 11-133 asserted that

Section 310(b)(4) applies to all “indirect” foreign interests in a common carrier licensee, whether held through a

controlling U.S. parent or a non-controlling intervening U.S.-organized entity. Id. at ¶ 6.

402

Section 310(b)(4) states that no broadcast, common carrier, aeronautical en route, or aeronautical fixed radio

station license shall be granted to or held by “any corporation directly or indirectly controlled by any other

corporation of which more than one-fourth of the capital stock is owned of record or voted by aliens, their

representatives, or by a foreign government or representative thereof, or by any corporation organized under the

laws of a foreign country, if the Commission finds that the public interest will be served by the refusal or revocation

of such license.” 47 U.S.C. § 310(b)(4) (italics added).

403

Applications of Vodafone AirTouch, Plc and Bell Atlantic Corporation for Consent to Transfer of Control or

Assignment of Licenses and Authorizations, Memorandum Opinion and Order, DA No. 00-721, 15 FCC Rcd

16507, 16514, ¶ 19 (WTB & Int’l Bur., 2000) (“Vodafone-Bell Atlantic Order”). At that time, Vodafone, through

its intermediate subsidiaries, held 65 percent of the general partnership interests in Verizon Wireless, but planned to

reduce its interests to 45 percent. Id. at 16510, ¶ 8.

404

Id. at 16514, ¶ 19. See also International Authorizations Granted, File No. ISP-PDR-20060619-00015, Public

Notice, DA 06-2366, 21 FCC Rcd 13575 (Int’l Bur., 2006) (extending the ruling in the Vodafone-Bell Atlantic

Order to cover AWS licenses).

405

See id. at 16514, ¶ 19 n.34.

Federal Communications Commission FCC 12-95

173. Verizon Wireless is a Delaware general partnership of which 55 percent is indirectly

owned by Verizon, and the remaining 45 percent is indirectly owned by Vodafone, a U.K. entity.

406

All

of the Verizon and Vodafone subsidiaries that hold partnership interests in Verizon Wireless itself are

organized in the United States.

407

Verizon Wireless holds common carrier wireless licenses in its own

right, and it has controlling and non-controlling ownership interests in numerous other common carrier

wireless licensees.

408

174. Discussion and Declaratory Ruling. As the proposed assignee, Verizon Wireless would

itself hold the common carrier licenses to be assigned by SpectrumCo, Cox, Leap, and T-Mobile,

409

rather

than holding the licenses in a subsidiary that Verizon Wireless controls. Under this structure, Vodafone’s

ownership interest does not fall within Commission precedent under Section 310(b)(4) because Vodafone,

through its U.S.-organized subsidiaries, holds its 45 percent non-controlling general partnership interest in

Verizon Wireless itself, and not in a U.S.-organized entity that controls Verizon Wireless.

410

Verizon

Wireless has stated in prior applications that Verizon (a general partner of Verizon Wireless, as is

Vodafone) has sole affirmative control of Verizon Wireless through its right to designate four of the seven

members of the board of representatives in which control of the partnership is vested.

411

Moreover,

Vodafone holds its ownership interests in Verizon Wireless through Vodafone’s own U.S.-organized

subsidiaries, not through Verizon or a U.S.-organized entity that Verizon controls. We note, however,

that Verizon Wireless has maintained that its foreign ownership is consistent with our foreign ownership

406

See Application at 3; Cellco Partnership, Form 602, ULS File No. 0005022336 (filed Jan. 9, 2012). Verizon and

Vodafone hold their partnership interests in Verizon Wireless through numerous intermediate subsidiaries organized

under the laws of Luxembourg, the Netherlands, the United Kingdom, and the United States. See id.

407

See id.

408

Cellco Partnership, Form 602, ULS File No. 0005022336 (filed Jan. 9, 2012).

409

See supra Section II.B, Description of Transactions.

410

Because Vodafone’s interests are not held through a U.S.-organized entity that controls Verizon Wireless, those

interests do not fall under the express language of Section 310(b)(4), which states that it applies to foreign interests

in a U.S.-organized entity that “directly or indirectly controls” a licensee. 47 U.S.C. § 310(b)(4).

411

See, e.g., Cellco Partnership, Form 601, ULS File Nos. 0003382444, 0003382435, Amended Exhibit B at 4 (filed

Apr. 14, 2008) (“Control of the partnership is vested in a Board of Representatives, controlled by Verizon. Thus,

Verizon is the majority owner and possesses sole affirmative control of Verizon Wireless.”); Cellco Partnership,

Form 603, ULS File No. 0003286009, Exhibit 2 (filed Jan. 15, 2008) (same); Cellco Partnership, Form 603, ULS

File No. 0002962269, Exhibit 4 (filed Mar. 30, 2007) (same); Cellco Partnership, Form 601, ULS File No.

0002773715, Exhibit B at 3 (filed Oct. 4, 2006) (same); see also Cellco Partnership Amended and Restated

Partnership Agreement, Section 1.11, Capacity of the Partners (“No Partner shall have any authority to act for, or to

assume any obligation or responsibility on behalf of, any other Partner or the Company, except as expressly

provided in this Agreement”), Section 3.2, Power and Authority of Representatives (“The Board of Representatives

shall have the power on behalf and in the name of the Company to carry out any and all objects and purposes of the

Company contemplated by this Partnership Agreement….”), Section 3.3, Composition of Board of Representatives

(“The Board of Representatives shall consist of seven (7) Representatives…. [F]or so long as Vodafone holds,

directly or through one or more Included Affiliates, a Partnership Interest of at least 20%, the Vodafone Designated

Partner shall have the right to designate three (3) Representatives….”), available at

http://www.sec.gov/Archives/edgar/data/1120994/000095010300000976/0000950103-00-000976-0003.txt (last

visited Aug. 2, 2012).

Federal Communications Commission FCC 12-95

policies for common carrier licensees under Section 310(b)(4).

412

175. Under the forbearance approach we adopted in the First Report and Order, we find

Vodafone’s current interests in Verizon Wireless to be in the public interest. As discussed above, in the

First Report and Order, we forbore from applying Section 310(b)(3)’s 20 percent foreign equity and

voting limits to the class of common carrier licensees in which the foreign interests in the licensee are

held through U.S.-organized entities that do not control the licensee, to the extent we determine such

foreign ownership is consistent with the public interest under the policies and procedures we use for

assessing foreign ownership under Section 310(b)(4).

413

On August 3, 2012, Verizon filed a letter stating

that Verizon Wireless is not aware of any changes to the aggregate foreign ownership of Verizon and

Vodafone that are inconsistent with the requirements set forth in the Vodafone-Bell Atlantic Order.

414

commenters have identified any basis for rebutting the Vodafone-Bell Atlantic analysis, which identified

no competitive concerns with respect to foreign ownership of Verizon Wireless.

176. We also note that Verizon Wireless is a party to an agreement dated December 14, 1999

(“1999 Agreement”), as amended March 27, 2008, between Verizon (formerly, Bell Atlantic

Corporation), Vodafone, and Verizon Wireless, on the one hand, and the U.S. Department of Defense, the

U.S. Department of Justice, the Federal Bureau of Investigation, and the U.S. Department of Homeland

Security, on the other.

415

We condition the grant of our ruling below on continued compliance by Verizon

Wireless with the terms contained in the March 27, 2008 Letter to Stewart Baker, Assistant Secretary of

Policy, U.S. Department of Homeland Security (which incorporates by reference the terms of the 1999

Agreement).

416

177. Accordingly, subject to the limitations set forth below, we find that Vodafone’s interests

in Verizon Wireless are in the public interest under the Section 310(b)(3) forbearance approach adopted

in our recent First Report and Order. We note that our action today removes any uncertainty as to

whether the current foreign ownership of Verizon Wireless, as a common carrier licensee, complies with

412

See, e.g., Cellco Partnership, Form 603, Exhibit 2, ULS File No. 0004993617 (filed Dec. 16, 2011). See also

Letter from Tamara Preiss, Vice President, Federal Regulatory Affairs, Verizon, to Secretary, FCC, WT Docket

Nos. 12-4 and 12-175 (filed Aug. 3, 2012) (“Verizon Letter”); Comments of Verizon, IB Docket No. 11-133 (filed

Dec. 5, 2011), at 18-19 (asserting that Section 310(b)(3) applies only to “direct” foreign ownership interests in

common carrier licensees, and that Section 310(b)(4), not Section 310(b)(3), applies to “indirect” foreign ownership

interests).

413

See First Report and Order at ¶ 10. Section 310(b)(3) states that no broadcast, common carrier, aeronautical en

route, or aeronautical fixed radio station license shall be granted to or held by “any corporation of which more than

one-fifth of the capital stock is owned of record or voted by aliens or their representatives or by a foreign

government or representative thereof or by any corporation organized under the laws of a foreign country.” 47

U.S.C. § 310(b)(3).

414

See Verizon Letter at 1. See also id. (stating that, in addition, no more than 25 percent of Verizon’s outstanding

stock is owned by shareholders that the company’s records identify as non-U.S. citizens, and attaching a chart

depicting the entities through which Vodafone holds its indirect ownership interest in Verizon Wireless).

415

See Applications of Cellco Partnership d/b/a Verizon Wireless and Rural Cellular Corporation, WT Docket No.

07-208 , Memorandum Opinion and Order and Declaratory Ruling, FCC 08-181, 23 FCC Rcd 12463, 12526-28, ¶¶

152-154 (2008) (“Verizon Wireless-RCC Order”). In assessing the public interest, we take into account the record

and accord deference to Executive Branch expertise on national security and law enforcement issues. See id. at

12527-28, ¶ 154. See also First Report and Order at ¶ 20.

416

See Verizon Wireless-RCC Order, 23 FCC Rcd at 12555, Appendix C, Exhibit 1 (“March 27, 2008 Letter”). The

1999 Agreement is appended to the Vodafone-Bell Atlantic Order, 15 FCC Rcd at 16523, Appendix A.

Federal Communications Commission FCC 12-95

our foreign ownership policies. We find that Verizon Wireless is qualified under the foreign ownership

provisions of Section 310(b) of the Communications Act to hold, in its own right, its current common

carrier licenses and the common carrier licenses it is being assigned in the applications being approved

today.

178. Specifically, we permit Vodafone and its foreign-organized subsidiaries named in the

record to hold, through intervening U.S.-organized subsidiaries, a non-controlling, 45 percent general

partnership interest in Verizon Wireless.

417

We require, as a condition of this ruling, that Verizon

Wireless seek and obtain additional Commission approval before Vodafone increases its investment

above this authorized level. We also require that Verizon Wireless seek and obtain additional

Commission approval before any other foreign entity or entities acquire, individually or in the aggregate,

any greater-than-20 percent interest in Verizon Wireless beyond that authorized in this order, whether the

foreign interests are held in Verizon Wireless directly or through U.S.-organized entities that do not

control Verizon Wireless (i.e., other than through Verizon).

418

For purposes of calculating the additional,

aggregate 20 percent amount, Verizon Wireless is required to include foreign interests held in it directly

or through U.S.-organized entities that do not control Verizon Wireless, including foreign ownership of

Vodafone other than its ownership from the United States and the United Kingdom.

419

And, as stated

above, we require Verizon Wireless to comply with its commitments set forth in the March 27, 2008

Letter to the U.S. Department of Homeland Security.

420

2. T-Mobile

179. As discussed in Section II.A.5 above, T-Mobile License is a wholly-owned subsidiary of

T-Mobile, which, in turn, is ultimately wholly owned by DT, a publicly-traded German corporation.

Pursuant to the discretionary authority in Section 310(b)(4) of the Communications Act, the Commission

has previously authorized, in the DT-VoiceStream Order, up to 100 percent foreign ownership of T-

Mobile and its licensed subsidiaries by DT and its German shareholders, including the interests held by

417

We take this action on our own motion pursuant to Section 1.2 of the rules, 47 C.F.R. § 1.2.

418

In authorizing foreign ownership of common carrier licensees’ controlling U.S. parents under Section 310(b)(4),

the Commission as a general rule will authorize specific foreign ownership interests identified in the record as well

as an additional, aggregate 25 percent amount for future changes in foreign ownership of the U.S. parent. See

Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees under Section

310(b)(4) of the Communications Act of 1934, as Amended, IB Docket No. 11-133, Notice of Proposed

Rulemaking, FCC 11-121, 26 FCC Rcd 11703, 11713-14, ¶¶ 16-17 (2011). Consistent with that general policy, this

ruling authorizes Verizon Wireless to accept an additional amount of foreign ownership from investors other than

Vodafone and its U.S. and U.K. shareholders beyond that authorized in this order, not to exceed an aggregate 20

percent of the equity and/or voting interests held in Verizon Wireless directly or through U.S.-organized entities that

do not control Verizon Wireless. We limit the allowance to 20 percent consistent with the 20 percent amount in

Section 310(b)(3).

419

Under this ruling, foreign interests held in Verizon, the controlling U.S. parent of Verizon Wireless, are

calculated separately from, and not added to, the calculation of foreign interests held in Verizon Wireless either

directly or through U.S.-organized entities that do not control Verizon Wireless, such as Vodafone. Cf. Datran II,

Declaratory Ruling, FCC 75-312, 52 F.C.C. 2d 439 (1975). We note that Verizon Wireless would also need

Commission approval before foreign ownership of Verizon, as the controlling U.S. parent of Verizon Wireless,

exceeds the 25 percent benchmark in Section 310(b)(4) of the Act. We also note that the foreign ownership ruling

issued to Verizon Wireless in the Vodafone-Bell Atlantic Order, 15 FCC Rcd at 16514, ¶ 19, will continue to apply

to licensed subsidiaries of Verizon Wireless in which it holds a controlling interest, pursuant to Section 310(b)(4).

420

See infra Section XIII, Ordering Clauses.

Federal Communications Commission FCC 12-95

the Federal Republic of Germany (“FRG”) through its investment in DT.

421

T-Mobile is also authorized

to accept an additional, aggregate 25 percent equity and/or voting interest from other foreign individuals

and entities, provided that no single foreign individual or entity acquires an equity and/or voting interest

in excess of 25 percent.

180. DT currently holds its interests in T-Mobile through two wholly owned, direct and

indirect subsidiaries that are organized in Germany.

422

The FRG has reduced its ownership interest in DT

to approximately 31.98 percent. The FRG holds an approximately 14.96 percent interest in DT directly

and approximately 17.02 percent indirectly, through the FRG’s ownership interest in Kreditanstalt fur

Wiederaufbau (“KfW”), a bank organized in Germany and controlled by the FRG.

423

181. On August 2, 2012, T-Mobile submitted a letter supplementing its applications with

respect to foreign ownership.

424

T-Mobile states that there have been no changes in its foreign ownership

inconsistent with the authority the Commission has granted to T-Mobile and its licensed subsidiaries

under Section 310(b)(4) of the Communications Act.

425

We find, based on the record, that T-Mobile

License is qualified under the foreign ownership provisions of Section 310(b)(4) to hold the AWS-1

licenses being assigned to it by Verizon Wireless as part of the proposed transaction. Consistent with its

request,

426

we condition grant of the assignment applications to T-Mobile License on its compliance with

the provisions of the National Security Agreement (“NSA”) entered into on January 12, 2001, as

amended, between DT and the U.S. Department of Justice, the Federal Bureau of Investigation and the

U.S. Department of Homeland Security, which is appended to the DT-VoiceStream Order.

427

421

DT-VoiceStream Order, 16 FCC Rcd 9779. See also T-Mobile-Verizon Wireless Public Interest Statement at 7.

The foreign ownership ruling was issued in the DT-VoiceStream Order to T-Mobile’s predecessor in interest,

VoiceStream Wireless Corporation. The Commission extended that ruling in 2006 to cover licenses in the

Advanced Wireless Services. See International Authorizations Granted, File No. ISP-PDR-20060510-00013, Public

Notice, DA 06-2441, 21 FCC Rcd 14062 (Int’l Bur., 2006). The Commission has also authorized, under Section

310(b)(4), T-Mobile’s acquisition of interests in other common carrier licensees. See, e.g., T-Mobile-SunCom

Order, 23 FCC Rcd 2515.

422

See T-Mobile USA, Inc., Form 602, ULS File No. 0005279018 (filed June 26, 2012). The Commission approved

the current holding company structure of T-Mobile USA and its wholly-owned subsidiaries, including T-Mobile, in

2010. See International Authorizations Granted, File No. ISP-PDR-20081001-00020, Public Notice, DA 10-2200,

25 FCC Rcd 16030 (Int’l Bur., 2010).

423

The FRG directly holds approximately 80 percent of the ownership interests in KfW, which, in turn, holds

approximately 17.02 percent of the ownership interests in DT. See T-Mobile USA, Inc., Form 602, ULS File No.

0005279018 (filed June 26, 2012).

424

Letter from Kathleen O’Brien Ham, Vice President, Federal Regulatory Affairs, T-Mobile USA, Inc., to

Secretary, FCC, WT Docket No. 12-175 (filed Aug. 2, 2012).

425

Id. (noting that the Commission recently approved, in November 2010, DT’s foreign investment in connection

with the transfer of control of Cook Inlet GSM IV PCS Holdings, LLC to T-Mobile USA, and stating that, since that

time, no changes inconsistent with the authority granted by the Commission have taken place with respect to T-

Mobile USA’s foreign ownership).

426

See T-Mobile-Verizon Wireless Public Interest Statement at 8-9.

427

See infra Section XIII, Ordering Clauses. The NSA may be viewed in the Commission’s Electronic Comment

Filing System at http://apps.fcc.gov/ecfs/document/view?id=6512567463 (last visited Aug. 2, 2012). See also T-

Mobile-SunCom Order, 23 FCC Rcd at 2532 (appending the NSA amendment).

Federal Communications Commission FCC 12-95

XII. CONCLUSION

182. Accordingly, we conclude that approval of these transactions as conditioned will serve

the public interest. The transactions will result in an expeditious transfer of valuable spectrum into the

hands of service providers that will actively put this spectrum to use in providing the latest generation

mobile broadband services well in advance of the Commission’s current deadlines. Moreover, taking the

Consent Decree and Verizon’s reporting requirements into account, we conclude that the Commercial

Agreements do not alter our conclusion that the transactions as a whole are consistent with the public

interest.

XIII. ORDERING CLAUSES

183. ACCORDINGLY, having reviewed the Applications, the petitions, and the record in

these matters, IT IS ORDERED that, pursuant to Sections 4(i) and (j), 303(r), 309, 310(b), and 310(d) of

the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309, 310(b), 310(d),

the applications for the assignment of the AWS-1 licenses from SpectrumCo and Cox to Verizon Wireless

are GRANTED, to the extent specified in this Memorandum Opinion and Order and Declaratory Ruling

and subject to the conditions specified herein.

184. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and (j), 303(r), 309, 310(b),

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), the applications for the assignment of the Lower 700 MHz Band license to Leap and the

AWS-1 and PCS licenses to Verizon Wireless are GRANTED, to the extent specified in this

Memorandum Opinion and Order and Declaratory Ruling and subject to the conditions specified herein.

185. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and (j), 303(r), 309, 310(b),

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), the applications for the assignment of the AWS-1 licenses from T-Mobile License to

Verizon Wireless are GRANTED, to the extent specified in this Memorandum Opinion and Order and

Declaratory Ruling and subject to the conditions specified herein.

186. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and (j), 303(r), 309, 310(b),

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), the applications for the assignment of the AWS-1 licenses from Verizon Wireless to T-

Mobile License are GRANTED, to the extent specified in this Memorandum Opinion and Order and

Declaratory Ruling and subject to the conditions specified herein.

187. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and (j), 303(r), 309, 310(b),

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), the Petition to Deny the assignment of licenses from SpectrumCo and Cox to Verizon

Wireless filed by The Diogenes Telecommunications Project is DISMISSED, OR ALTERNATIVELY

DENIED, and the remaining Petitions to Deny such assignment are DENIED, except to the extent and

pursuant to the conditions specified herein, for the reasons stated herein.

188. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and (j), 303(r), 309, 310(b),

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), the Petitions to Deny the assignment of the Lower 700 MHz Band license to Leap and the

AWS-1 and PCS licenses to Verizon Wireless are DENIED, except to the extent and pursuant to the

conditions specified herein, for the reasons stated herein.

189. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and (j), 303(r), 309, 310(b),

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), the Petition to Deny the assignment of licenses between T-Mobile License and Verizon

Wireless filed by The Diogenes Telecommunications Project is DISMISSED, OR ALTERNATIVELY

Federal Communications Commission FCC 12-95

DENIED, and the remaining Petitions to Deny such assignment are DENIED, except to the extent and

pursuant to the conditions specified herein, for the reasons stated herein.

190. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and (j), 309, 310(b), and

310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 309, 310(b), 310(d),

the Request for Withdrawal of pleadings filed by T-Mobile in Docket 12-4 is GRANTED for the reasons

stated herein.

191. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and 4(j), 303(r), 309, 310(b),

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), grant of the applications to assign licenses to Verizon Wireless and grant of the

declaratory ruling set forth in Section XI of this Memorandum Opinion and Order and Declaratory Ruling

ARE CONDITIONED UPON compliance by Verizon Wireless with the terms contained in the March 27,

2008 Letter to Stewart Baker, Assistant Secretary of Policy, U.S. Department of Homeland Security.

192. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and 4(j), 303(r), 309, 310(b)

and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309,

310(b), 310(d), grant of the applications to assign licenses to T-Mobile License IS CONDITIONED

UPON compliance by T-Mobile License with the terms contained in the National Security Agreement

entered into on January 12, 2001, as amended as of January 4, 2008, between DT and the U.S.

Department of Justice, the Federal Bureau of Investigation, and the U.S. Department of Homeland

Security.

193. IT IS FURTHER ORDERED that this Memorandum Opinion and Order and Declaratory

Ruling shall be effective upon release. Petitions for reconsideration under Section 1.106 of the

Commission’s rules, 47 C.F.R. § 1.106, may be filed within thirty days of the date of public notice of this

Memorandum Opinion and Order and Declaratory Ruling.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

Federal Communications Commission FCC 12-95

APPENDIX A

Pleadings in ULS File No. 0004942973

Petitions:

NTCH, Inc.

Rural Telecommunications Group, Inc.

Opposition:

Verizon Wireless, Leap Wireless International Inc., Cricket Communications, Inc., Cricket License

Company, LLC, Savary Island A, LLC, and Savary Island B, LLC

Replies:

NTCH, Inc.

Rural Telecommunications Group, Inc.

Federal Communications Commission FCC 12-95

APPENDIX B

Pleadings in WT Docket No. 12-4

Petitions:

The Diogenes Telecommunications Project

Free Press

Hawaiian Telcom Communications, Inc.

MetroPCS Communications, Inc.

The New Jersey Division of Rate counsel

NTCH, Inc.

Public Knowledge, Media Access Project, New America Foundation Open Technology Initiative, Benton

Foundation, Access Humboldt, Center for Rural Strategies, Future of Music Coalition, National

Consumer Law Center, on Behalf of Its Low-Income Clients, and Writers Guild of America, West

RCA – The Competitive Carriers Association

Rural Broadband Policy Group

Rural Cellular Association

Rural Telecommunications Group, Inc.

T-Mobile, USA, Inc. (request to withdraw filed June 25, 2012)

Comments:

Atlantic Tele-Network, Inc.

Citizens Action of New York

Communications Workers of America and International Brotherhood of Electrical Workers

Competitive Enterprise Institute

Consumer Federation of America

Consumers Union

Curt Anderson, Maryland House of Delegates

DIRECTV, LLC

Elbridge James, NAACP Maryland State Conference

Frank Stella on behalf of the Maryland/DC Alliance for Retired Americans

The Free State Foundation

The Greenlining Institute

Hawaiian Telcom Communications

The Hispanic Technology and Telecommunications Partnership

Information Technology and Innovation Foundation

International Brotherhood of Electrical Workers, Local 827 and System Council T-6

Joseph Molinero, Teamsters Local Union No. 211

Lane Metro Partnership

Latinos in Information Sciences and Technology Association

Level 3 Communications, LLC

Maneesh Pangasa

Maryland Consumer Rights Coalition

MetroPCS Communications, Inc.

National Association of Manufacturers

National Organization of Black Elected Legislative Women

Progressive Policy Institute

Federal Communications Commission FCC 12-95

Public Knowledge

Regis Ryan, Steamfitters Local Union #449

Roger Mano, Maryland State Senate

San Mateo County Hispanic Chamber of Commerce

Scott Wallsten with the Technology Policy Institute

Simone Baer, SPB Strategies

Sprint Nextel Corporation

TechFreedom and the International Center for Law and Economics

Telecommunications Industry Association

William H. Cole IV, Baltimore City Council

YaknChat

Opposition:

Verizon Wireless, SpectrumCo, LLC, and Cox TMI Wireless, LLC

Replies:

AFL-CIO

City of Boston, Massachusetts

Comcast Corporation

Communications Workers of America and International Brotherhood of Electrical Workers

The Competitive Enterprise Institute

Computer and Communications Industry Association

Cox TMI Wireless, LLC

The Diogenes Telecommunications Project

Don’t Bypass Buffalo Coalition

Don’t Bypass Syracuse Coalition

The Greenlining Institute

Hawaiian Telcom Communications, Inc.

International Brotherhood of Electrical Workers

Level 3 Communications, LLC

Massachusetts Community Leaders

MetroPCS Communications, Inc.

Montgomery Country, Maryland

NTCH, Inc.

Public Knowledge, Media Access Project, New America Foundation Open Technology Initiative, Access

Humboldt, Benton Foundation, and National Consumer Law Center, on Behalf of Its Low-Income

Clients

RCA – The Competitive Carriers Association

Sprint-Nextel Corporation

T-Mobile USA, Inc. (request to withdraw filed June 25, 2012)

U.S. Chamber of Commerce

Federal Communications Commission FCC 12-95

APPENDIX C

Petitioners and Commenters in WT Docket No. 12-175

Petitions:

The Diogenes Telecommunications Project

Free Press

Information Age Economics

Rural Telecommunications Group, Inc.

Comments:

Colum McDermott

Maneesh Pangasa

Public Knowledge

Opposition:

T-Mobile License LLC and Cellco Partnership d/b/a Verizon Wireless

Replies:

The Diogenes Telecommunications Project

Free Press

Information Age Economics

Public Knowledge

Rural Telecommunications Group, Inc.

Federal Communications Commission FCC 12-95

APPENDIX D

Reporting Requirements

Verizon agrees to provide, subject to an appropriate protective order, the following reports retroactively to

January 2010 where available, and on a semi-annual basis from the date of this order going forward:

(1) The number of DSL qualified households, exclusive of households where FiOS is

available for sale (to be determined by a method agreed to by Verizon and the Commission), by wire

center, by month.

(2) The number of DSL lines, by wire center, by month.

(3) The number of gross adds of DSL lines, by wire center, by month.

(4) The number of disconnects of DSL lines, by wire center, by month.

(5) The number of DSL lines by speed tier, by state, by month.

(6) The number of DSL lines identified in Verizon’s systems as disconnecting Verizon

DSL service and subscribing to a FiOS service, by state, by month.

(7) Average data revenue, as maintained in the ordinary course, per consumer DSL account by wire

center, by month.

Federal Communications Commission FCC 12-95

STATEMENT OF

CHAIRMAN JULIUS GENACHOWSKI

Re: Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC

For Consent To Assign AWS-1 Licenses, WT Docket No. 12-4; Applications of Verizon Wireless and Leap

for Consent To Exchange Lower 700 MHz, AWS-1, and PCS Licenses, ULS File Nos. 0004942973,

0004942992, 0004952444, 0004949596, and 0004949598; and Applications of T-Mobile License LLC and

Cellco Partnership d/b/a Verizon Wireless for Consent to Assign Licenses, WT Docket 12-175

After a rigorous review, the Commission has approved with conditions a substantially modified

transaction between Verizon Wireless and the cable company owners of SpectrumCo, as well as

important spectrum transactions involving T-Mobile and Leap. Together, these actions put valuable

wireless spectrum to use while preserving broadband competition, to the benefit of consumers and our

economy.

Our review revealed that the Verizon-SpectrumCo deal, as initially proposed, posed serious

anticompetitive concerns and would not serve the public interest. In response to objections by FCC and

Justice Department staff, the parties made fundamental changes to their agreements and a number of

binding pro-competitive commitments. I commend the companies for working with the Commission to

resolve concerns.

In particular, Verizon Wireless has committed to offering data roaming to its competitors and

consumers. Roaming obligations have helped fuel competition, investment, and consumer choice in

America’s wireless marketplace since the first cellular voice service in 1981. Consistent with the

Commission’s 2011 Order extending the basic roaming framework to mobile broadband, Verizon’s

enhanced roaming commitments will help ensure that consumers, particularly in rural areas, have more

choices and are not denied access to affordable mobile broadband services.

In connection with the FCC’s review, Verizon Wireless has also undertaken an unprecedented

divestiture of spectrum to one of its competitors, T-Mobile, and has committed to significantly accelerate

the build-out of its new spectrum.

The companies’ commercial agreements were also substantially modified to, among other things,

preserve Verizon's incentives to build out FiOS, increase wireless competition, and ensure that the

proposed Verizon Wireless-cable company technology joint venture is pro-consumer and that its products

cannot be used in anticompetitive ways.

Two of my colleagues disagree with important elements of the Commission’s order. Although a

large number of businesses and public interest groups raised strong concerns and urged Commission

action, my colleagues would not have adopted conditions relating to broadband roaming, they would not

have reviewed or worked to revise the commercial agreements, and it is unclear whether they would have

sought any spectrum divestitures. But protecting competition and incentives to build out wired and

wireless broadband is core to the FCC’s statutory responsibilities. Competition is at the heart of our free-

market economy, and broadband infrastructure deployment is key to economic growth, job creation, and

our global competitiveness. The Commission makes the right choice today in exercising our

responsibilities and taking strong action based on a rigorous review.

Approval of the substantially modified transaction will benefit consumers in several ways. By

advancing U.S. leadership in 4G LTE deployment, the transaction marks another step in our effort to

Federal Communications Commission FCC 12-95

promote the U.S. innovation economy and make state-of-the-art broadband available to more people in

more places. The transaction will preserve incentives for deployment and spur innovation while guarding

against anti-competitive conduct. And vitally, it will put more than 20 megahertz of prime spectrum –

spectrum that has gone unused for too long – quickly to work across the country, benefiting consumers

and the marketplace.

I commend the FCC staff for their excellent and diligent work throughout this review. I also want

to thank our talented and dedicated colleagues at the Justice Department.

Federal Communications Commission FCC 12-95

STATEMENT OF

COMMISSIONER ROBERT M. McDOWELL

APPROVING IN PART AND CONCURRING IN PART

Re: Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC

For Consent To Assign AWS-1 Licenses, WT Docket No. 12-4; Applications of Verizon Wireless and Leap

for Consent To Exchange Lower 700 MHz, AWS-1, and PCS Licenses, ULS File Nos. 0004942973,

0004942992, 0004952444, 0004949596, and 0004949598; and Applications of T-Mobile License LLC and

Cellco Partnership d/b/a Verizon Wireless for Consent to Assign Licenses, WT Docket 12-175

The Verizon Wireless-SpectrumCo transaction is procompetitive and will benefit American

consumers. Our action today will pave the way for Verizon Wireless to bring 20 megahertz of fallow

spectrum into the mobile broadband marketplace quickly. The arrangement between the companies will

also introduce convenient new service offerings and spur innovation due to their ability to jointly develop

new technologies, products and services. I am pleased to vote to approve today’s order.

On the other hand, there are two issues to which I must concur. First, I disagree with the data

roaming obligation undertaken by Verizon Wireless. As an initial matter, I cast a dissenting vote when

the mandatory data roaming rule was adopted in 2010, citing primarily the Commission’s lack of

authority over broadband information services such as data roaming. Moreover, the record in the instant

proceeding neither cites nor discusses any concrete examples where Verizon Wireless has failed to offer

data roaming. On the other hand, today’s order does nothing to disturb the appeal of the 2010 data

roaming order, which is currently pending with the D.C. Circuit. For these reasons, I concur to the

mandatory data roaming commitment.

Second, I cannot support the assertion that the Commission has jurisdiction over the commercial

agreements at issue in this transaction. In this case, review of these documents should have fallen

exclusively to the Department of Justice because the tasks pertain solely to antitrust matters. A simple

reference to, rather than an exhaustive discussion of, the Department of Justice’s conclusions would be

more appropriate in the Commission’s order. On the other hand, the parties explained in our record and

publicly that the spectrum transfer would not go forward without the accompanying commercial

agreements, thus linking the Commission’s and the DOJ’s joint role. Given the circumstances, I concur

with the Commission’s role in reviewing the commercial transactions.

In that same vein, I have concerns regarding possible attempts to revisit these agreements in the

future. Any potential future proceedings related to such agreements may result in unintended

consequences, market uncertainty and actions that exceed the Commission’s authority.

Finally, I thank the Chairman for his willingness to incorporate edits. And many thanks to the

dedicated staff for their hard work on this matter.

Federal Communications Commission FCC 12-95

STATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re: Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC

For Consent To Assign AWS-1 Licenses, WT Docket No. 12-4; Applications of Verizon Wireless and Leap

for Consent To Exchange Lower 700 MHz, AWS-1, and PCS Licenses, ULS File Nos. 0004942973,

0004942992, 0004952444, 0004949596, and 0004949598; and Applications of T-Mobile License LLC and

Cellco Partnership d/b/a Verizon Wireless for Consent to Assign Licenses, WT Docket 12-175

This transaction presented the Commission with one of the most challenging reviews in recent

memory. First, Verizon Wireless, with over 94.2 million retail subscribers and $70.2 billion in annual

revenue,

and whose network already covers more of the country’s population than any other wireless

service provider, sought to acquire 152 licenses of valuable AWS-1 licenses covering 94 percent of the

U.S. population (for approximately $4 billion). Second, the parties had negotiated related commercial

agreements that, on their face, would have turned former fierce competitors not only into “frenemies”, but

collaborators, for as long as these companies found it to be in their mutual financial interests. Although

DOJ and FTC guidelines state that temporary collaborations between competitors can have public interest

benefits, they do not endorse permanent collaborations between entities with the kind of market power

these companies possess. Let me be clear: As initially proposed, no FCC could have found the

transaction to be in the public interest. However, over the course of several months, Verizon Wireless,

the cable company members of SpectrumCo, and Cox worked diligently with the staffs of the Antitrust

Division of the U.S. Department of Justice (DOJ) and the FCC. In the end, the parties stipulated to a

proposed Final Judgment with DOJ. Together, with the conditions adopted in this Order, this transaction

has substantially changed in several critical respects and is now ripe for approval.

For one, the transaction no longer simply involves the transfer of more wireless spectrum to one

of the most, if not the most, dominant carriers in the industry. Because of the innovative thinking on the

part of the applicant and the flexibility of Commission staff, now the transaction also provides for the

transfer of a significant amount of spectrum from Verizon Wireless to one of its competitors, T-Mobile.

This will enable T-Mobile to compete more effectively because it will gain spectrum in 125 local markets

covering approximately 60 million people, increasing its AWS-1 holdings in order to deploy and expand

LTE services. The Order also includes a 700 MHz license transfer to another carrier, Leap Wireless,

which offers service though Cricket. The spectrum transfer to Leap will help it to continue offering low-

cost, unlimited digital services at flat monthly rates without fixed-term contracts, in 13 CMAs. The Order

also forces Verizon Wireless to deploy the AWS-1 licenses on a faster timetable than initially imposed. It

must build out its AWS-1 network to 30 percent of the population covered by the licenses within three

years from today and to 70 percent of that population within seven years.

Second, with this approval, the Commission is imposing the most robust roaming condition in a

transaction in our history. Roaming is essential to competition in the wireless arena, as consumers

demand coverage wherever they live, work, or travel. By obligating Verizon Wireless to live by the

Commission’s data roaming rules regardless of the outcome of its pending litigation to upend those rules,

http://aboutus.verizonwireless.com/ataglance.html

Federal Communications Commission FCC 12-95

we have taken an important stand for competitive carriers across the nation. The specific condition we

adopt here should provide a considerable benefit to smaller carriers and their subscribers. It does not

simply require that Verizon Wireless offer roaming arrangements for commercial mobile data services on

the AWS-1 spectrum it is acquiring in this transaction. It also requires Verizon Wireless to offer data

roaming on any of the spectrum licenses it holds in the geographic areas where it is acquiring AWS-1

spectrum as a result of this transaction. That is 671 Cellular Market Areas (CMAs) out of the 716 CMAs

in which Verizon holds spectrum. There are a total of 734 CMAs nationwide. This data roaming

condition takes effect today and lasts for five years. That duration for a roaming condition is the longest

the Commission has ever imposed.

Third, the commercial agreements, which had required Verizon Wireless and the cable companies

to collaborate as long as they had desired, have also been modified in important ways. For example, the

Joint Operating Entity agreement (JOE), which likely would have prevented non-members of the JOE in

perpetuity from having access to the technologies the JOE developed, has been severely limited to a

duration of just over four years from now. After that time, it is far more likely that these companies will

be free to license to competitors any technologies or services developed under the JOE. It is also

significant that the proposed Final Judgment forbids Verizon Wireless from marketing cable products and

services where FiOS service exists, as well as where Verizon is authorized and/or obligated to roll out this

competitive service. This represents approximately 70 percent of Verizon’s broadband footprint. This

should help preserve Verizon’s incentives to compete vigorously with FiOS against the cable companies,

to ensure lower prices and better services for consumers. As far as wireless competition goes, the

proposed Final Judgment limits Verizon Wireless’s exclusive agreement with the cable companies so that

after a little more than four years, the cable companies can choose other wireless partners. And rather

than requiring the cable companies to wait four years to elect whether they want to be a reseller of and

competitor to Verizon Wireless, the proposed Final Judgment permits them to make that election

immediately, should they so choose.

It is also important that the proposed Final Judgment and this Order permit monitoring of the

parties’ future activities to ensure that those technologies and services are being made available to other

parties and on terms and conditions that are not anti-competitive. In addition, Verizon is obligated to

periodically report to the Commission about the impact of the commercial agreements on deployment of

FiOS and on the market for DSL services. If those reports indicate that this transaction is leading to

anticompetitive harm in these markets, the DOJ and the Commission could take steps to remedy any harm

in the market for DSL services.

Given the amount of video programming content that Comcast and Time Warner control, I would

have preferred a condition that prevented any of the agreements to impact the market for licensed video

programming and the market for over-the-top Internet video programming. That is because the definition

for a term in the JOE that establishes the purpose of the research and development to be performed under

the JOE was broad enough, in my opinion, to include video programming and over-the-top video

programming. Therefore, a condition would have been appropriate to ensure that the JOE, or any of the

commercial agreements, could not include video programming and over-the-top Internet video

programming. But, the parties have said that the commercial agreements do not involve these services.

In addition, the DOJ Final Judgment says that DOJ must review and approve any future modifications to

the agreements. Therefore, if in the future, the parties switch their position on the proper interpretation of

the agreements and try to include video programming, then DOJ would have authority to prevent that

from happening. I thank my colleagues for agreeing with my request to include language making this

clear in the Order.

Federal Communications Commission FCC 12-95

I believe that a concern raised by Communications Workers of America deserves special mention.

CWA asserted that Verizon’s decision not to build FiOS in certain areas within Albany, Baltimore,

Boston, Buffalo, and Syracuse, does not serve the public interest. According to CWA, at least twenty

percent of the households in these areas where Verizon did not build FiOS were below the poverty line.

For these reasons, CWA believes the Commission should adopt a condition requiring some buildout of

FiOS in those areas.

While this proceeding may not be the appropriate forum to address CWA’s

concerns, I believe that the Commission, area governments and private industry must do everything in

their power to deploy advanced communications services to low income communities. I pledge to

continue to work with CWA and my colleagues to ensure that we are doing all we can to encourage

increased competition and build-out in the wireline broadband arena.

It is crystal clear that a very big swath of the American communications landscape—that

involving the wireless and wireline data, voice, and video—is rapidly converging. We are moving from

silos to blended services, and in our oversight of these tectonic shifts, we must apply careful need to strike

the right balance between too much consolidation and just enough in order to provide better and faster

services. The hard-working members of the FCC’s Wireline, Media, Wireless, and International bureaus,

as well as our offices of Strategic Planning and General Counsel and my Wireless Advisor, Louis

Peraertz, keep this in the front of their minds each and every day. They are to be commended for their

hard work, the long hours, and their ability and openness to collaborate with DOJ.

I vote to approve this transaction.

CWA/IBEW Reply Comments at 10-14.

Federal Communications Commission FCC 12-95

STATEMENT OF

COMMISSIONER JESSICA ROSENWORCEL

Re: Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC

For Consent To Assign AWS-1 Licenses, WT Docket No. 12-4; Applications of Verizon Wireless and

Leap for Consent To Exchange Lower 700 MHz, AWS-1, and PCS Licenses, ULS File Nos. 0004942973,

0004942992, 0004952444, 0004949596, and 0004949598; and Applications of T-Mobile License LLC

and Cellco Partnership d/b/a Verizon Wireless for Consent to Assign Licenses, WT Docket 12-175

Simply put, this transaction is complex. As filed, it raised serious questions about its power to

diminish competition in the wired and wireless broadband and video markets. But through the work of

the applicants, the Commission, and the Department of Justice, this is a different transaction than the one

that was first delivered to our doorstep at the tail end of last year. Fundamental changes have been made

that substantially improve this complicated composite of wireless licenses and commercial agreements.

In critical ways, this will create clear benefits for consumers and real possibilities for innovation. In

others, however, continued attention is required to make sure that infrastructure investment advances, that

competition proceeds, and that consumers can emerge as the beneficiaries of markets with more

innovative services at lower cost.

On the spectrum side of the equation, the wireless license transfers that result from this

transaction will mean more mobile broadband. It puts a swath of AWS-1 spectrum to use that for too

long had sat on the sidelines, untapped and undeveloped. With the extraordinary demand on our airwaves

and supply of unencumbered spectrum limited, putting this resource to work is a good thing. Moreover,

in order to make sure that the benefits of this transfer flow fast to consumers, the Commission now has

this spectrum on track for an accelerated build-out, with key milestones in as little as three years. In

addition, the related AWS-1 divestitures and coordinated sale of 700 MHz A and B blocks will better

rationalize spectrum holdings. This has real potential to strengthen wireless competition. Finally, the

applicants have committed to data roaming, facilitating interconnection among networks and furthering

competition as other carriers build out their own facilities. These are clear positives, meaning more

infrastructure investment and more next-generation wireless broadband services for consumers across the

country.

The series of commercial agreements constructed around this spectrum transfer are arguably the

most difficult aspects of this transaction. Our record is crowded with commenters fearful that their

collaboration will harm competition, hurting workers, consumers, and communities. At the same time,

the applicants point out that the combination of cable and wireless expertise and technical resources can

mean new and innovative service bundles with new opportunities for consumers.

It is on this aspect of the transaction that the Department of Justice has taken the lead.

Consequently, I appreciate their efforts through the Consent Decree to include geographic and temporal

restrictions that limit the applicants from cross-marketing each other’s services in order to preserve

competition. The Consent Decree also bolsters competition by limiting the duration of the exclusivity

provisions in the arrangements. I trust that these commitments secured by the Department of Justice will

address harms to competition and consumers that would have arisen had the transaction proceeded

without adjustment and review.

Federal Communications Commission FCC 12-95

Yet none of us has a crystal ball. Today’s action is best viewed as a series of predictive

judgments that the adjustments made in the Consent Decree, in conjunction with a series of wireless

transfers, will lead to a bright broadband future. It is here where we will need to test our clairvoyance.

In the four plus years before these agreements come to an end, the Department of Justice has

committed to reviewing any petition for extension. As a result, I believe it is incumbent on the

Department of Justice—and the Commission—to honestly assess the state of the wired and wireless

broadband and video markets and to ask and answer some fundamental questions before any extension

occurs. Have these arrangements spurred the deployment of infrastructure? Do joint activities mean

innovation? Or do they harm the incentives to compete? Have they led to more job creation? What are

the consequences for consumers? Have they benefited from new services with higher quality at lower

rates? Have they meant more competitive opportunities for broadband access for everyone, in rural

communities, urban centers, and everything in between? The honest answers to these questions are

important. Not just for the future prospects of these agreements, but for the future of the networks that

are essential to our ability to compete in a global economy.

Thank you to the Commission staff and the Department of Justice for their extensive review and

the commitments they secured that are designed to foster innovation while guarding against anti-

competitive conduct.

Federal Communications Commission FCC 12-95

STATEMENT OF

COMMISSIONER AJIT PAI

APPROVING IN PART AND CONCURRING IN PART

Re: Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC

For Consent To Assign AWS-1 Licenses, WT Docket No. 12-4; Applications of Verizon Wireless and

Leap for Consent To Exchange Lower 700 MHz, AWS-1, and PCS Licenses, ULS File Nos. 0004942973,

0004942992, 0004952444, 0004949596, and 0004949598; and Applications of T-Mobile License LLC

and Cellco Partnership d/b/a Verizon Wireless for Consent to Assign Licenses, WT Docket 12-175

As Americans’ reliance on data-intensive wireless devices and services is increasing, so too is the

need for more spectrum on which to run them. Auctioning additional spectrum for commercial use is, of

course, the Commission’s best-known tool for dealing with the spectrum crunch. But that’s not enough.

We also must ensure that the spectrum already available is put to its highest and best use. Approving the

transactions before us brings fallow spectrum into mobile broadband service; lets wireless providers

better harmonize their spectrum holdings to improve efficiency; and signals to the private sector that

facilitating a secondary market for spectrum will be an agency priority. Swift, yet thorough, review and

approval of transactions will enable this market to function well, which is why I am pleased to support

this order.

The order capably lays out the many benefits of these particular transactions, but let me add one

more. We cannot understate the societal benefit of private, voluntary agreements to transfer spectrum for

lawful consideration. We should welcome such contracts between and among private parties; after all,

mutual consent implies mutual benefit, and it is accordingly in the public interest for freely-negotiated

contracts to be allowed and enforced so long as no third parties are harmed (or any such harms can be

mitigated with narrowly tailored, legally permissible conditions).

In addition, I wish to highlight a significant achievement of this order: the remedying of concerns

about spectrum concentration within the Advanced Wireless Service (AWS-1) band through the voluntary

transfer of licenses between T-Mobile and Verizon Wireless. Government-managed divestitures can let

valuable spectrum languish for years, whereas the timely approval of this private-sector solution will

resolve the Commission’s competitive concerns and immediately put the spectrum to good use. I hope

this portends a future norm in spectrum transactions.

I would be remiss if I did not mention the aspects of the order with which I only concur. First,

the order should not and need not assert authority over the Commercial Agreements, which the Antitrust

Division of the Department of Justice (DOJ) ably analyzed. It is a shibboleth that the Commission’s

authority to review mergers or transactions is broad, but we must be mindful that broad is not boundless.

For example, Section 310(d) of the Communications Act—the primary authority for today’s order—

directs the Commission to examine spectrum license transfers.

If the parties to such a transfer

incorporate other provisions into the same agreement—a land sale, a conveyance of patents, a commercial

marketing agreement, and so on—the Commission’s authority does not automatically expand to

encompass those extraneous provisions. Congress limited the scope of our review to the proposed

transfer of spectrum licenses, not to other business agreements that may involve the same parties. And in

any case, the assertion is unnecessary. If DOJ “conducted its own independent and comprehensive

47 U.S.C. § 310(d). Similarly, section 214 directs the Commission to assess a transfer of lines between two

wireline operators. 47 U.S.C. § 214.

Federal Communications Commission FCC 12-95

investigation of these agreements,” and if the Consent Decree it negotiated “address[es] the key potential

harms to consumers and competition,”

then any pronouncement about our authority is just dicta.

Second, I respectfully disagree with the imposition of a “voluntary” data roaming commitment

upon Verizon. First, such a condition is not voluntary in any meaningful sense of the word, insofar as the

parties would not agree to it independently but know that its acceptance is a predicate for regulatory

approval of these transactions. Moreover, the Commission’s authority to impose such a condition

generally is doubtful. Although the Communications Act affords us broad jurisdiction over

telecommunications services, we have extremely limited authority over information services like mobile

broadband. This discrepancy will come into even sharper relief should the U.S. Court of Appeals for the

D.C. Circuit strike down the Commission’s Data Roaming Order

as exceeding the Commission’s

jurisdiction. For then, Verizon Wireless will have been compelled to abide by an otherwise unlawful

mandate for five years—an eternity in this dynamic industry. Just as we should not impose transactional

conditions that are more appropriately considered in the context of an industry-wide rulemaking process,

so too should we refrain from extracting commitments that we could not legally enforce otherwise.

Notwithstanding my disagreements, my review of the record suggests that on balance, this item

will increase consumer welfare, will mitigate any potential harms to competition, and will signal the

speedier resolution of secondary market transactions. For these reasons, I vote to approve in part and

concur in part.

In conclusion, I would like to thank the Commission staff whose hard work (including close

collaboration with the Department of Justice) yielded such thoughtful consideration of these complex

transactions. Led by Rick Kaplan, whom we were fortunate to retain during this process, the superb staff

of the Wireless Telecommunications Bureau, International Bureau, Media Bureau, Wireline Competition

Bureau, Office of Strategic Planning & Policy Analysis, and Office of General Counsel materially aided

our deliberations. This intra-agency collaboration, culminating in the fine product we adopt today,

exhibits the Commission at its best. I appreciate all of your efforts and applaud your public service.

Memorandum Opinion and Order, para. 144.

Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers of

Mobile Data Services, WT Docket No. 05-265, Second Report and Order, 26 FCC Rcd 5411 (2011).