CCA - Reply - Petiti

REPLY submitted by Competitive Carriers Association

Reply to Joint Opposition to Petition to Condition

2013-10-31

This document pretains to ITC-214-20011011-00527 for International Global Resale Authority on a International Telecommunications filing.

IBFS_ITC2142001101100527_1018495

                                      Before the
                        FEDERAL COMMUNICATIONS COMMISSION
                                 Washington, DC 20554



                                           )
In re Applications of                      )
                                           )
AT&T Inc., Leap Wireless International,    )   WT Docket No. 13-193
Inc., Cricket License Company, LLC and     )
Leap Licenseco, Inc. Seek Consent to the   )   ULS File Nos. 0005860676, 0005860985,
Transfer of Control of AWS-1 Licenses, PCS )   0005861153, 0005879272, ITC-T/C-
Licenses, and Common Carrier Fixed Point   )   20130801-00207, ITC-T/C-20130801-00208
To Point Microwave Licenses, and           )
International 214 Authorizations, and the  )
Assignment of One 700 MHz License          )
                                           )




       REPLY TO JOINT OPPOSITION TO CCA’S PETITION TO CONDITION




                                                    Steven K. Berry
                                                    Rebecca Murphy Thompson
                                                    C. Sean Spivey
                                                    Competitive Carriers Association
                                                    805 15th Street, NW
                                                    Suite 401
                                                    Washington, DC 20005


October 31, 2013


                                              TABLE OF CONTENTS

I.     INTRODUCTION AND SUMMARY ........................................................................... 4
II.    THE COMMISSION SHOULD REQUIRE SPECTRUM DIVESTITURES
       AND IMPOSE ROAMING CONDITIONS TO PROMOTE
       COMPETITION AND THE PUBLIC INTEREST ...................................................... 9
       A.        Spectrum Divestitures Should Be Required Where AT&T Exceeds the
                 Spectrum Threshold .......................................................................................... 10
       B.        AT&T Must Continue To Provide Voice And Data Roaming
                 Arrangements At Least As Favorable As Those Provided To Leap’s
                 Competitors ........................................................................................................ 11
III.   THE COMMISSION SHOULD PRIORITIZE ITS MOBILE SPECTRUM
       HOLDINGS PROCEEDING ........................................................................................ 15
IV.    CONCLUSION .............................................................................................................. 17




                                                                 2


                                      Before the
                        FEDERAL COMMUNICATIONS COMMISSION
                                 Washington, DC 20554



                                           )
In re Applications of                      )
                                           )
AT&T Inc., Leap Wireless International,    )        WT Docket No. 13-193
Inc., Cricket License Company, LLC and     )
Leap Licenseco, Inc. Seek Consent to the   )        ULS File Nos. 0005860676, 0005860985,
Transfer of Control of AWS-1 Licenses, PCS )        0005861153, 0005879272, ITC-T/C-
Licenses, and Common Carrier Fixed Point   )        20130801-00207, ITC-T/C-20130801-00208
To Point Microwave Licenses, and           )
International 214 Authorizations, and the  )
Assignment of One 700 MHz License          )
                                           )

       REPLY TO JOINT OPPOSITION TO CCA’S PETITION TO CONDITION

       Competitive Carriers Association (“CCA”) hereby respectfully replies to AT&T and

Leap Wireless International’s Joint Opposition (the “Joint Opposition”)1 to CCA’s Petition (the

“CCA Petition”) to adopt safeguards to remedy the anti-competitive harms associated with the

proposed license transfers (the “Transaction”) by and among AT&T Inc., (“AT&T”), Leap

Wireless International, Inc. (“Leap”), Cricket License Company, LLC (“Cricket”), and Leap

Licenseco, Inc. (“Leap Licenseco”) (collectively, the “Applicants”) before the Federal

Communications Commission (the “FCC” or “Commission”).2




1
  Joint Opposition of AT&T Inc. and Leap Wireless International, Inc. To Petitions to Deny and
Condition and Reply to Comments, in WT Docket No. 13-193 (filed Oct. 23, 2013) (“Joint
Opposition”).
2
  In the Matter of AT&T Inc., Leap Wireless International, Inc., Cricket License Company, LLC
and Leap Licenseco, Inc. Seek Consent to the Transfer of Control of AWS-1 Licenses, PCS
Licenses, and Common Carrier Fixed Point To Point Microwave Licenses, and International 214
Authorizations, and the Assignment of One 700 MHz License, DA 13-1831, Public Notice, WT
Docket No. 13-193 (rel. Aug. 28, 2013) (“Public Notice”).


                                                3


                         I.      INTRODUCTION AND SUMMARY

       Despite the Applicants’ attempt to demonstrate otherwise, the Transaction, as proposed,

would result in AT&T’s acquisition of scarce spectrum resources and the elimination of both a

nationwide3 wireless service provider to consumers and a roaming partner on which other

wireless carriers rely.4 Both of these results will benefit AT&T as it continues to increase its

market power through ever-larger spectrum holdings and consolidation of the market.

       Additionally, the competitive checks that Leap’s separate existence creates will be lost if

this Transaction is approved as proposed. For instance, AT&T has already announced plans to

shutter its Aio Wireless (“Aio”) prepaid band if the Transaction is approved,5 even after touting

the benefits of targeting the prepaid wireless market with Aio.6 The Joint Opposition attempts to

minimize Aio’s role as a competitor to Leap, despite the fact that Leap provided the spark that

ignited Aio’s creation. Although the Joint Opposition explains that AT&T will still offer prepaid




3
  The Joint Opposition coincidentally deemphasizes the fact that Leap offers wireless service on
a national basis. See Joint Opposition, 19.
4
  Although the Joint Opposition now attempts to portray Leap as a carrier whose “competitive
significance has only declined” (Joint Opposition, 19), Leap is still relevant in the wireless
industry for the reasons discussed herein. However, to the extent Leap’s competitive presence
has declined, it is certainly due in part to the anti-competitive actions that AT&T and Verizon
have undertaken in the past few years. In order to ensure that other regional and smaller carriers’
“competitive significance” is adequately protected, the Commission needs to take actions that
promote competition, rather than actions that result in the elimination of competition.
5
  See Joint Opposition, 31-32; see also Mike Dano, AT&T to Shutter Aio Wireless Prepaid Brand
if Leap Acquisition is Successful, FIERCEWIRELESS, Oct. 18, 2013,
http://www.fiercewireless.com/story/att-shutter-aio-wireless-prepaid-brand-if-leap-acquisition-
successful/2013-10-18;
6
  See Press Release, AT&T, Aio Wireless Announces new Nationwide Voice and Data Service,
May 9, 2013, http://www.att.com/gen/press-
room?pid=24185&cdvn=news&newsarticleid=36421&mapcode= (promising that Aio is “set up
to win over value-conscious customers who are increasingly moving towards smartphones and
mobile broadband.”).


                                                 4


services, the Transaction still clearly eliminates a competitor, the result of which will diminish

innovation, eliminate options for consumers and likely raise prices for customers.

        The United States Department of Justice has highlighted the competitive harms resulting

from the loss of a potential entrant due to a merger. The DOJ Horizontal Merger Guidelines find

that:

        The lessening of competition resulting from [a merger between an incumbent and
        potential entrant] is more likely to be substantial, the larger is the market share of
        the incumbent, the greater is the competitive significance of the potential entrant,
        and the greater is the competitive threat posed by this potential entrant relative to
        others.7

By acquiring Leap, AT&T not only gets to take an independent competitor out of the

marketplace, but at the same time can close down its Aio brand, which—in its words—was

“created to fit an unmet need in the marketplace” and is trying to “differentiate itself from all

other prepaid wireless competitors by attacking the market from all sides.”8 AT&T is

understandably excited about its potential “one-two punch.”9

        A second consequence, which may not be as obvious but is equally detrimental to

consumers if AT&T is permitted to acquire Leap, will be the loss of an important roaming

partner in the wireless marketplace. Although roaming negotiations and agreements occur

7
  DEPARTMENT OF JUSTICE & FEDERAL TRADE COMMISSION, HORIZONTAL MERGER GUIDELINES,
§ 5.3 (Aug. 19, 2010) available at: http://www.justice.gov/atr/public/guidelines/hmg-2010.html
(“DOJ Horizontal Merger Guidelines”).
8
  Molly Ryan, AT&T Goes Big with Aio Investment in Houston, Houston Business Journal
BizBlog, May 22, 2013, http://www.bizjournal.com/Houston/blog/nuts-and-bolts/2013/05/att-
goes-big-with-aio-investment-in.html (emphasis added).
9
  See Seeking Alpha Transcript, AT&T’s Management Discusses Q3 2013 Results - Earnings
Call Transcript at 3, Jan. 24, 2013, http://seekingalpha.com/article/1766162-at-ts-management-
discusses-q3-2013-results-earnings-call-transcript (“While we are positive on smartphone net
adds, we are seeing some pressure with our more price-sensitive subscribers on low-end 2G
feature phones. We continue to be excited about our pending acquisition of Leap Wireless that
allow us to better compete in the prepaid space and we are continuing to move forward to an
expected first quarter 2014 close.”).


                                                  5


“behind the scenes” to consumers, the ability or inability of a wireless provider to procure

commercially reasonable roaming terms and conditions has a direct impact on consumer pricing.

Leap has been a champion of roaming due in large part to its willingness to enter into

commercially reasonable roaming agreements – including 4G LTE roaming agreements.

       The cooperation exemplified by Leap and its adherence to the Commission’s data

roaming regulations10 directly impacts the prices that customers pay to their home wireless

carriers while roaming. AT&T, on the other hand, is notorious for its lack of participation or

even negotiating when it comes to roaming.11 If AT&T is permitted to acquire Leap, an

important and commercially reasonable roaming partner will be replaced by an uncooperative

market duopolist, exacerbating the roaming challenges for competitive carriers.

       In an effort to gain quick Commission approval, the Joint Opposition attempts to compare

the Transaction to the recent T-Mobile/MetroPCS merger by anticipating that the AT&T/Leap

merged entity will also “further intensify[] competition overall and provid[e] consumers even

greater benefits.”12 This is a misleading comparison. The T-Mobile/MetroPCS was a

combination of two smaller, competitive mavericks, neither of which display an interest in


10
   Indeed, Leap fought vigorously for data roaming rights for years at the Commission, and
helped to successfully defend the Commission’s authority to adopt the data roaming rules when
Verizon challenged those rules at the D.C. Circuit. See, e.g., Comments of Leap Wireless
International, Inc. and Cricket Communications, Inc. in Reexamination of Roaming Obligations
of Commercial Mobile Radio Service Providers, WT Docket No. 05-265 (filed June 14, 2010);
Reply Comments of Leap Wireless International, Inc. and Cricket Communications, Inc. in
Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers, WT
Docket No. 05-265 (filed July 12, 2010); Joint Brief for Intervenors in Support of the Fed.
Commc’ns Comm’n., Cellco P’ship v. FCC, No. 11-1135 (D.C. Cir. Jan. 23, 2013).
11
   See, e.g., Reexamination of Roaming Obligations of Commercial Mobile Radio Service
Providers and Other Providers of Mobile Data Services, Second Report and Order, 26 FCC Rcd
5411, ¶ 12 (2011) (“Data Roaming Order”) (noting that “only AT&T and Verizon Wireless
oppose the Commission’s adoption of a data roaming requirement.”).
12
   Joint Opposition, 5.


                                                 6


turning the wireless industry into a duopoly. In addition, both T-Mobile and MetroPCS were and

are active participants in the roaming market. The T-Mobile/MetroPCS merger allowed T-

Mobile to obtain much needed spectrum to compete against Verizon and AT&T.13

        With the Transaction, AT&T, a carrier that has been described as the “Pac Man of

telecom”,14 is merely gobbling up yet another (soon to be) ghost – the sixth largest facilities-

based carrier, Leap. And unlike the T-Mobile/MetroPCS combination, Leap is being acquired by

a staunch opponent of efforts to promote commercially reasonable data roaming. It is improper

for the Applicants to compare these two transactions when the applicants of each transaction are

in different positions with vastly different interests.

        Instead, the Transaction is yet another maneuver by AT&T in its attempt to reduce

competition and further consolidate its market power. Over the past decade, AT&T has

consistently strengthened its dominance in the wireless market15 through spectrum aggregation


13
   See, e.g., Matt Egan, Catching Up? T-Mobile Scores 1.1M New Customers in 2Q, Fox
Business News, Aug. 8, 2013, http://www.foxbusiness.com/industires/2013/08/t-mobile-
subscriber-growth-tops-views/ (noting that, in the quarter following its acquisition of MetroPCS
T-Mobile added 1.1 million net subscribers, and revenue “soared 27.5%.”).
14
   Karl Bode, AT&T Continues Acquisition Spree With Long Lines, BROADBAND DSL REPORTS
(July 29, 2013) http://www.dslreports.com/shownews/ATT-Continues-Acquisition-Spree-With-
Long-Lines-125154 (characterizing AT&T “as the Pac Man of telecom [that] continues gobbling
up everything in sight” with regards to its recent spectrum acquisition activities).
15
   Although the Joint Opposition incredibly implies that AT&T does not hold any “dominant
spectrum position,” (Joint Opposition, 16) a few short months prior to the announcement of the
Transaction, AT&T claimed it was in a “satisfactory spectrum position for the next five years.”
See Karl Bode, AT&T CFO: We Have Enough Spectrum But Would Like More, Please,
BROADBAND DSL REPORTS (Feb. 28, 2013) http://www.dslreports.com/shownews/ATT-CFO-
We-Have-Enough-Spectrum-But-Would-Like-More-Please-123337. In addition, the
Commission’s Sixteenth Wireless Competition Report also concluded that specifically, with
respect to the sub-1 GHz spectrum, AT&T and Verizon hold the majority of available Cellular
and 700 MHz spectrum – the spectrum that is most favorable for wireless service, particularly in
rural areas. Annual Report and Analysis of Competitive Market Conditions With Respect To
Mobile Wireless, Including Commercial Mobile Services, WT Docket No. 11-186, Sixteenth
Report, FCC 13-34, ¶ 129 (rel. Mar. 21, 2013) (“Sixteenth Wireless Competition Report”). The
                                                                                      (continued...)

                                                   7


both on the secondary market and at auction, making it difficult for smaller or regional carriers to

acquire the resources that they need to effectively compete.16 As a result, these smaller carriers

are often easy targets for acquisitions by AT&T and Verizon.17 The rapid industry consolidation

and increased concentration is alarming because AT&T and Verizon’s domination of “[m]arket

power can lead directly to consumers paying higher prices, can insulate a carrier from the

competitive pressures to expand service or improve quality, and can diminish innovation.”18

This may very well be the future of the wireless industry if steps are not taken to prevent the

impending duopoly.

       With its review of the Transaction, the Commission has an opportunity to take necessary

steps to remedy transaction-specific, anti-competitive harms and promote a more competitive

market. To do so, CCA first recommends that the Commission condition this Transaction on

two things: (1) a requirement that AT&T divest spectrum in areas where AT&T exceeds the

spectrum screen used to evaluate the Transaction; and (2) a requirement that AT&T honor

existing Leap roaming agreements. The Commission has imposed similar conditions in previous

spectrum acquisition transactions and should to do so here. These conditions will help to ensure

(...continued)
Report also concluded that Verizon and AT&T “each hold significant amounts of 700 MHz,
Cellular, broadband PCS and AWS Spectrum.” Id. at ¶ 117.
16
   The intellectual voracity of the Joint Opposition can be judged by its throwing of the
immaterial brickbat that CCA’s members “collectively hold several times as much spectrum as
AT&T.” Joint Opposition, 16. This argument is without merit as it incorrectly compares a
single carrier’s – AT&T’s – own amount of spectrum holdings to the combined spectrum
holdings of over 100 competitive carriers.
17
   As CCA previously recognized, numerous small or regional carriers have been forced to exit
the market over the past decade, including Dobson, ALLTEL, Centennial, Rural Cellular
Corporation, Aloha Wireless, Edge Wireless, Cal North Wireless, Mohave Wireless, SureWest
Wireless. CCA, Petition to Condition, WT Docket No. 13-193, 10 (filed Sept. 27, 2013) (“CCA
Petition”).
18
   Ex Parte Submission of the U.S. Dep’t of Justice, WT Docket No. 12-269, 7 (filed Apr. 11,
2013) (“DOJ Ex Parte Submission”).


                                                 8


that small and regional carriers have fair access to spectrum on the secondary market and are

provided a fair opportunity to procure commercially reasonable roaming agreements.

       Furthermore, the Commission should prioritize completing its comprehensive review of

its rules regarding mobile spectrum holdings. The wireless market has changed drastically since

the Commission’s last comprehensive review of its spectrum aggregation policies, and most of

the available spectrum has fallen into the hands of Verizon and AT&T at the expense of the

smaller and regional carriers. If the Commission does not act expeditiously in this proceeding,

CCA is concerned that any efforts to fix the broken screen may be futile by the time any revised

regulations are adopted. CCA strongly recommends that the Commission act quickly to adopt a

new spectrum screen – one that takes into consideration the different propagation characteristics

of different bands of spectrum.

II.    THE COMMISSION SHOULD REQUIRE SPECTRUM DIVESTITURES AND
       IMPOSE ROAMING CONDITIONS TO PROMOTE COMPETITION AND THE
       PUBLIC INTEREST
       CCA requests that the Commission impose appropriate conditions on AT&T to mitigate

the anti-competitive harms caused by the Transaction in its current form. Specifically, the

Commission should require AT&T to divest spectrum in markets where it exceeds the spectrum

screen, and the Commission should also impose conditions that require AT&T to provide voice

and data roaming arrangements at least as favorable as those provided by Leap to its roaming

partners.




                                                9


       A. Spectrum Divestitures Should Be Required Where AT&T Exceeds the Spectrum
          Threshold

       The Commission has long recognized that “[c]ompetition is the lifeblood of [the] free

market economy.”19 However, the future of competition is currently being threatened in the

wireless industry. This acquisition exceeds the thresholds of the current spectrum screen in 38

CMAs – a fact already acknowledged by AT&T.20 The Applicants nonchalantly downplay the

38 CMAs21 that will be triggered under the screen, noting that “only” seven million people are

covered by these CMAs and will be affected by AT&T’s anti-competitive actions.22 But the

Commission should not fall for AT&T’s cavalier attitude towards spectrum aggregation. Such

aggregation of spectrum in these areas is excessive. Post-Transaction, the areas that exceed the

spectrum screen pose a threat to the very “lifeblood of [the] free market economy.”



19
   In the Matter of Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269,
Notice of Proposed Rulemaking, 27 FCC Rcd 11710, Attached Statement of Chairman Julius
Genachowski (2012).
20
   AT&T Inc. – Leap Wireless International, Inc. Application, ULS File Nos. 0005860676,
0005860985, 0005861153, 0005879272, ITC-T/C-20130801-00207, ITC-T/C-20130801-00208
Exhibit 1, at 35-36 (“AT&T/Leap Public Interest Statement”). For example, Youghiogheny
Communications, LLC recognized that post-Transaction AT&T would have a significant
regional spectrum concentration in the south Texas region. “From San Antonio south, the
combined AT&T operation would have from as little as 140 MHz of spectrum in San Antonio to
as much as 170 MHz in Corpus Christi and 180 MHz in McAllen and Brownsville. . . [which]
pushes the aggregation level well over the brink.” Youghiogheny Communications, LLC,
Petition to Deny, WT Docket No. 13-193, 6 (filed Sept. 27, 2013).
21
   The Joint Opposition also tries to offer the upcoming H Block and Incentive Auctions as
additional spectrum acquisition opportunities in these CMAs (and across the nation), but, as the
Applicants are fully aware, these spectrum opportunities will not be put to immediate use and
certainly should not be included in this Transaction’s review.
22
   Public Interest Statement, 35. Seven million people is nearly twice the population of Los
Angeles and nearly equal to the population of New York City. If this Transaction were to trigger
the spectrum screen in either of those markets, AT&T would no doubt be singing a far different
tune. Instead, the markets that are covered are largely rural areas, suggesting that AT&T
believes 7 million rural Americans are somehow less deserving of competitive protections than
are urban Manahttanites. CCA respectfully disagrees.


                                                10


        Requiring spectrum divestitures is a tool that the Commission can use – and has used

many times in the past – to preserve competition in spectrum transactions. CCA continues to

urge the Commission to require AT&T to divest spectrum comparable to that which it is

acquiring.23 At the very least, the Commission must require divestitures to existing operating

carriers that are seeking to enhance their current offerings or expand their current operations in

markets where it is clear that AT&T’s aggregate spectrum inventory unreasonably exceeds the

capacity necessary to meet near-term demand.

        B.     AT&T Must Continue To Provide Voice And Data Roaming Arrangements
               At Least As Favorable As Those Provided To Leap’s Competitors

        Given the nationwide scope of the Transaction, and in particular the “spectrum

concentration that raises the potential for competitive harm,” the Commission “must carefully

consider whether to impose a roaming condition in the context of this transaction.”24 If the

Transaction is approved as proposed, the roaming market will suffer from the loss of a

reasonable roaming partner, which will likely result in increased roaming costs passed through to

consumers. Therefore, the Commission should require that AT&T honor existing Leap roaming

agreements for the full term of the agreement or four years from the date of this Transaction’s

closing (whichever is longer) and commit to offer 3G and 4G LTE roaming services to any

requesting carrier under the same terms and conditions negotiated by AT&T’s competitors with

Leap.

        The Joint Opposition incorrectly argues that “Leap is simply not a significant provider of

roaming services.”25 In fact, Leap has a significant impact in the roaming market because Leap is


23
   See CCA Petition, 14-15.
24
   AT&T/Qualcomm Order ¶ 56.
25
   Joint Opposition, 39. Leap also provided an affidavit confirming this point.


                                                 11


a reasonable roaming partner. According to its website, Cricket offers 4G LTE data coverage

over its own facilities in major metropolitan cities such as Houston, Austin, San Antonio,

Philadelphia, Las Vegas, Phoenix and Tucson, and in several other areas (including Dallas/Fort

Worth, Los Angeles and Atlanta) through service partnerships.26 The Joint Opposition also

asserts that “relatively few carriers have customers who roam on Leap’s network extensively,”27

but it fails to recognize that Leap actually offers commercially reasonable roaming terms and

conditions to these carriers that competitive carriers likely are unable to obtain from AT&T. To

that effect, Leap acts as a market constraint and competitive check on roaming prices.

       AT&T has demonstrated the exact opposite behavior. Due to its large national footprint,

AT&T rarely, if ever, needs smaller carriers’ networks to fill coverage gaps. Thus, despite the

FCC’s Data Roaming Order, roaming negotiations continue to remain very one-sided, with larger

carriers like AT&T having significant bargaining advantages over the smaller carriers. AT&T

largely has refused to offer commercially reasonable rates to competitive carriers. Even Leap

has previously shown frustration by the fact that “AT&T has resisted roaming arrangements at

every opportunity.”28 Removing Leap from this market will eliminate an important market

constraint and further weaken the competitive forces in an already challenging roaming market.

Although the Joint Opposition attempts to offer a solution in that “[p]ost-closing, roaming

alternatives will continue to exist throughout Leap’s network footprint for CDMA carriers” it

conspicuously fails to state that these “alternatives” will be comparable.



26
   Cell Phone Coverage Map | Cricket Wireless,
http://www.mycricket.com/coverage/maps/wireless (last visited Oct. 30, 2013).
27
   Joint Opposition, Strickland Decl. ¶ 3.
28
   Leap Wireless International, Inc. and Cricket Communications, Inc., Petition to Deny, WT
Docket No. 11-65, 21 (filed May 31, 2011).


                                                 12


       As recently as last January, Leap complained to the Commission of “the continuing

challenges [it] has encountered in attempting to enter into 4G data roaming agreements with

other wireless carriers.”29 And the Commission has expressed concern by correctly predicting

AT&T would be unlikely to offer 4G LTE roaming agreements in the near future.30 If AT&T

refuses to offer the roaming services, market dynamics dictate that a competitor like Leap will

step in to fill the void. Indeed, that is precisely what has happened to date, and precisely what is

in danger of being lost if the Transaction proceeds unconditioned. With AT&T and Verizon

refusing to negotiate commercially reasonable 4G LTE roaming agreements, carriers will be

significantly hindered in their attempts to reach nationwide 4G LTE coverage.

       To mitigate the anti-competitive harms caused by the loss of Leap as an important

roaming market participant, the Commission should require that AT&T honor existing Leap

roaming agreements the later of the full term of the agreement or four years after the closing of

the Transaction, and commit to offer 3G and 4G LTE roaming services to any requesting carrier

under terms and conditions at least as favorable as those negotiated with Leap. Similar to

Verizon’s commitments in the ALLTEL transaction, the Commission should require AT&T to

offer “each regional small and/or rural carrier that has a roaming agreement with [Leap] the

option to keep the rates set forth in that roaming agreement in force for the full term of the

agreement [at a minimum of four years], notwithstanding any change of control or termination

for convenience provisions that would give [AT&T] the right to accelerate the termination of




29
   Ex Parte Submission of Leap Wireless International, Inc. and Cricket Communications, Inc.,
WT Docket No. 05-265 (filed Jan. 23, 2013).
30
   Data Roaming Order, ¶ 27.


                                                 13


such agreement.”31 In addition, in this instance, AT&T should be required to offer such terms to

carriers for 4G LTE services even if its agreements with such carriers are only for 3G services,

and to offer substantially similar terms and conditions to other requesting carriers. It is common

knowledge that 4G LTE services are more efficient and cost effective than 3G wireless services,

so a 4G commitment is actually less costly for AT&T to abide by than a roaming obligation that

simply encompasses 3G services. Finally, AT&T should be barred from claiming that it will not

honor Leap’s existing roaming agreements because of any plans AT&T may have to re-farm

Leap’s spectrum.32 Leap has previously noted that it has “kept spectrum unused so that [it] ha[s]

a clear path to 4G,”33 providing AT&T with additional leeway to offer reasonable roaming while

moving forward with re-farming plans. Doing so is an AT&T business decision, and Leap’s

current roaming partners – and the consumers who receive services from these partners – should

not be made to suffer for AT&T’s internal decisions.

       The Joint Opposition’s argument that the roaming issues identified by CCA are an

industry-wide concern is misguided.34 The Commission has previously considered transaction-

specific roaming issues similar to the ones identified in CCA’s Petition and this Reply, and, as a

31
   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, 24 FCC Rcd 17444, 17524 ¶ 178 (rel.
Nov. 10, 2008).
32
   AT&T has previously voluntarily committed to operating and maintaining a CDMA network
for a defined period of time in order to allow other providers to continue roaming on the merged
entity’s network while the transition to GSM was completed. See e.g., 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, FCC 09-97, ¶¶ 136-138 (rel. Nov. 5, 2009).
33
   Innovating Value for a Data Driven World, http://www.leapwireless.com/brands/nationwide-
wireless.
34
   Joint Opposition, 41.


                                                14


result, has previously applied roaming conditions similar to those that CCA requests to remedy

these problems.35 The Joint Opposition’s related argument, that, to the extent commenters are

dissatisfied with the roaming negotiation process or the terms and conditions for roaming, they

may file a complaint with the Commission, is similarly unavailing.36 The Commission

previously has properly ruled that the adoption of its roaming rules “does not . . . obviate the

need to consider whether there is any potential roaming-related harm that might arise” from a

transaction.37 This is particularly true in this instance, where the Transaction would result in the

exit of a reasonable roaming partner, whose willingness to negotiate voice, 3G and 4G LTE

roaming agreements has provided important competitive constraints on the roaming market.

III.   THE COMMISSION SHOULD PRIORITIZE ITS MOBILE SPECTRUM
       HOLDINGS PROCEEDING
       It comes as no surprise that AT&T is seeking to acquire Leap now, in light of the

Commission’s pending proposal to reform its policies regarding mobile spectrum holdings. The

Commission has expressed the need for a new screen that takes into account that “the number of

spectrum bands used for mobile wireless services has expanded; new, innovative service

offerings have been rolled out; increasingly sophisticated devices have been introduced into the

marketplace; and consumers have adopted these devices to access a wide array of bandwidth-

intensive applications.”38 When the Commission announced its decision to review and reform its

spectrum holdings policies, AT&T and Verizon rushed to acquire smaller carriers before the


35
   In the Matter of Applications of AT&T, Inc. and Atlantic Tele-Network, Inc. For Consent To
Assign or Transfer Control of Licenses and Authorizations, WT Docket No. 13-54,
Memorandum Opinion and Order, ¶ 95 (Sept. 20, 2013).
36
   Joint Opposition,41.
37
   AT&T/Qualcomm Order ¶ 57.
38
   In the Matter of Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269,
Notice of Proposed Rulemaking, 27 FCC Rcd 11710, ¶ 2 (2012).


                                                 15


Commission imposed new regulations on spectrum holdings. Since the release of its Mobile

Spectrum Holding Notice of Proposed Rulemaking in September 2012, there have been over 160

spectrum transfer and assignment transactions filed with the Commission by AT&T.39 The

Transaction is one of the many transactions that AT&T has sought out over the past year, hoping

to “beat the clock” before the Commission modifies its approach and creates a rational spectrum

aggregation review process.

       To effectively combat the continuing consolidation of the industry and promote

competition, CCA urges the Commission to promptly complete its mobile spectrum holdings

proceeding. Outlining its approach to evaluating spectrum aggregation in the wireless industry

will allow the Commission to meet its “goals of promoting competition yet make [its] policies

regarding mobile spectrum holdings more clear, transparent, and predictable.”40 As the DOJ has

reasoned, “a set of well-defined, competition-focused rules for spectrum acquisition . . . would

best serve the dual goals of putting spectrum to use quickly and promoting consumer welfare in

wireless markets.”41

       CCA has recommended that the Commission strengthen its spectrum screen by replacing

its current approach with the following three separate thresholds for identifying competitive

harms in the current wireless landscape:42 (1) a new threshold for spectrum below 1 GHz in local




39
   Figure compiled using the FCC’s Universal Licensing System Database.
40
   In the Matter of Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269,
Notice of Proposed Rulemaking, 27 FCC Rcd 11710, ¶ 45 (2012).
41
   DOJ Ex Parte Submission, 1.
42
   Comments of CCA in Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269
(filed Nov. 28, 2012) (“CCA Mobile Spectrum Holdings Comments”). CCA also recommended
that the Commission establish a rebuttable presumption that the transactions exceeding the
screen thresholds are contrary to the public interest. Id. at 16-18. See also CCA Petition, 12-13.


                                                16


markets of one-quarter of the useable spectrum in a given market;43 (2) the current one-third

threshold for evaluating an entity’s aggregated spectrum holdings (including holdings both

below 1 GHz and above 1 GHz in each local market);44 and (3) a new national threshold set

“somewhat below the level that would correspond to one-third of the spectrum deemed ‘suitable

and available’ for mobile broadband.”45 CCA’s proposal takes into account the descent of the

wireless marketplace towards a duopoly since the last comprehensive review of these issues – a

descent that has been spearheaded by AT&T (along with Verizon). This consideration will help

provide a more accurate representation of carriers’ competitive positions and assist the

Commission in its review of spectrum acquisitions.46

IV.    CONCLUSION

       For the foregoing reasons, the Commission should condition any order approving the

above-captioned Transaction on the spectrum divestitures and roaming commitments from

AT&T recommended by CCA herein, and revise its mobile spectrum holdings policies with all

deliberate speed.




43
   CCA Mobile Spectrum Holdings Comments, 11-12.
44
   CCA Mobile Spectrum Holdings Comments, 12.
45
   CCA Mobile Spectrum Holdings Comments, 13.
46
   See e.g., DOJ Ex Parte Submission, 9 (“[T]he Department believes it is important to consider
the differing characteristics of spectrum in determining its contribution to a carrier’s competitive
position.”).


                                                 17


                        Respectfully Submitted,

                        /s/ Rebecca Murphy Thompson

                        Steven K. Berry
                        Rebecca Murphy Thompson
                        C. Sean Spivey
                        Competitive Carriers Association
                        805 15th Street, NW
                        Suite 401
                        Washington, DC 20005

October 31, 2013




                   18


                                 CERTIFICATE OF SERVICE

I, C. Sean Spivey, hereby certify that on the 31st day of October, 2013, I caused a true and correct
copy of the foregoing Reply to Joint Opposition to Petition to Condition to be sent by electronic
mail to:

John O’Connor*                                          Michael P. Goggin*
SVP & Assistant General Counsel                         Gary L. Phillips
AT&T, Inc.                                              M.E. Garber
208 South Akard Street, Room 3301                       AT&T, Inc.
Dallas, TX 75202                                        1120 Twentieth Street, NW Suite 1000
joconnor@att.com                                        Washington, DC 20036
                                                        Michael.P.Goggin@att.com
                                                        Gary.L.Phillips@att.com

William E. Cook, Jr.*                                   Robert J. Irving Jr.*
Arnold & Porter                                         Cricket License Company, LLC
555 Twelfth Street, NW                                  5887 Copley Drive
Washington, DC 20004                                    San Diego, CA 92111
William.Cook@aporter.com                                rirving@cricketcommunications.com
Counsel for AT&T, Inc.
James H. Barker, Esq.*                                  Kathy Harris
Latham & Watkins LLP                                    Mobility Division
555 Eleventh Street, NW Suite 1000                      Wireless Telecommunications Bureau
Washington, DC 20004                                    Federal Communications Commission
james.barker@lw.com                                     kathy.harris@fcc.gov
Counsel for Cricket License Company, LLC,
Leap Wireless International, Inc., Leap
Licenseco Inc.
Linda Ray                                               John Schauble
Broadband Division                                      Broadband Division
Wireless Telecommunications Bureau                      Wireless Telecommunications Bureau
Federal Communications Commission                       Federal Communications Commission
linda.ray@fcc.gov                                       john.schauble@fcc.gov
David Krech                                             Kate Matraves
Policy Division                                         Spectrum and Competition Policy Division
International Bureau                                    Wireless Telecommunications Bureau
Federal Communications Commission                       Federal Communications Commission
david.krech@fcc.gov                                     catherine.matraves@fcc.gov
Jim Bird                                                Best Copy and Printing, Inc.
Office of General Counsel                               fcc@bcpiweb.com
Federal Communications Commission
TransactionTeam@fcc.gov

* To receive one copy of Filing via                                     /s/ C. Sean Spivey
  First-class mail, pursuant to 47 C.F.R. § 1.47                        C. Sean Spivey


                                                   19



Document Created: 2013-10-31 18:15:29
Document Modified: 2013-10-31 18:15:29

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