Order DECISION by FCC SES-ASG-20080404-00423 Order

Attachment Order

Order

DECISION submitted by FCC

Order

2009-05-12

This document pretains to SES-ASG-20080404-00423 for Assignment on a Satellite Earth Station filing.

IBFS_SESASG2008040400423_711365

Federal Communications Commission DA 09-1054

Before the
Federal Communications Commission
Washington, D.C. 20554

In the Matter of )
)
IT&E OVERSEAS, INC., Transferor, ) WC Docket No. 08-54
)
and )
)
PTI PACIFICA INC., Transferee. )

MEMORANDUM OPINION AND ORDER AND DECLARATORY RULING

Adopted: May 12, 2009 Released: May 12, 2009

By the Acting Chief, Wireline Competition Bureau; Acting Chief, Wireless Telecommunications Bureau;
Acting Chief, International Bureau:

TABLE OF CONTENTS

Heading Paragraph #

I. INTRODUCTION.................................................................................................................................. 1
II. BACKGROUND.................................................................................................................................... 2
A. The Applicants ................................................................................................................................. 2
1. The Transferor........................................................................................................................... 2
2. The Transferee........................................................................................................................... 3
B. The Transaction ............................................................................................................................... 5
C. Filings on the Transfer Application ................................................................................................. 7
III. DISCUSSION ...................................................................................................................................... 11
A. Framework of Analysis.................................................................................................................. 11
B. Qualifications of the Applicants .................................................................................................... 16
C. Effect on Competition.................................................................................................................... 18
1. Analytical Framework ............................................................................................................. 18
2. Wireline Services - Long Distance Market ............................................................................. 20
3. Mobile Telephony/Broadband Services Market...................................................................... 32
4. Issues Related to the Submarine Cable ................................................................................... 52
D. Potential Public Interest Benefits................................................................................................... 55
E. Foreign Ownership ........................................................................................................................ 58
1. Legal Standard for Foreign Ownership of Radio Licensees.................................................... 59
2. Review of Foreign Ownership Issues...................................................................................... 63
F. National Security, Law Enforcement, Foreign Policy, and Trade Concerns ................................. 66
IV. CONCLUSION .................................................................................................................................... 69
V. ORDERING CLAUSES....................................................................................................................... 70
Appendix A: List of Licenses and Authorizations Subject to the Transfer of Assets

Federal Communications Commission DA 09-1054

I. INTRODUCTION
1. In this Memorandum Opinion and Order and Declaratory Ruling, we consider a series of
applications filed by IT&E Overseas, Inc. (IT&E) and PTI Pacifica Inc. (PTI Pacifica, and together with
IT&E, the Applicants) pursuant to sections 214 and 310(d) of the Communications Act of 1934, as
amended (Act).1 In these applications, the Applicants seek Federal Communications Commission
(Commission) approval for the assignment and transfer of domestic and international section 214 assets
and authorizations and Title III licenses from IT&E to PTI Pacifica.2 Pacific Telecom Inc. (PTI), the
indirect parent company of PTI Pacifica, also requests a declaratory ruling under section 310(b)(4) of the
Communications Act that the proposed acquisition by PTI Pacifica of IT&E’s common carrier satellite
earth station and Local Multipoint Distribution Service (LMDS) licenses is consistent with the public
interest.3 Based on the record, we find that Applicants have met their burden and that grant of this
transfer of assets, licenses, and authorizations, and grant of the petition for declaratory ruling will serve
the public interest, convenience, and necessity. We also deny the petition to condition the transaction
filed by Guam Cellular and Paging Inc., GTA TeleGuam, LLC (GTA), Pacific Data Systems, and Choice
Phone, LLC (collectively, Petitioners),4 but condition the grant of the application and associated petition
for declaratory ruling on compliance by PTI Pacifica with the provisions of the agreement between the
Micronesian Telecommunications Corporation (MTC) and PTI, and the Federal Bureau of Investigation
(FBI), the United States Department of Justice (DOJ), the United States Department of Defense (DOD),
and the United States Department of Homeland Security (DHS), dated October 6, 2003 (2003 Executive
Branch Agreement). We further condition the grant of the application on Applicants’ voluntary
commitment not to raise 1+ presubscribed wireline rates for three years from the date of this Order.
II. BACKGROUND
A. The Applicants
1. The Transferor
2. IT&E, a Guam corporation, provides presubscribed and prepaid interstate and

1
47 U.S.C. §§ 214, 310(d).
2
See Application of IT&E Overseas, Inc., Transferor, and PTI Pacifica Inc., Transferee, for Joint International and
Domestic Section 214 Consent to Assignment/Acquisition of Assets and Title III Wireless Licenses, ULS File No.
0003356838; ITC-ASG-20080404-00164, SES-ASG-20080404-00423, ISP-PDR-20080403-00007, WC Docket No.
08-54 (filed Apr. 7, 2008) (together, the Application). The overall Application consists of three separate
applications: an Application for Authority to Transfer Domestic Section 214 Authorizations (Domestic
Authorizations Application), an Application for Authority to Assign International Section 214 Authorizations
(International Authorizations Application), and an Application for Authority to Assign Title III Wireless Licenses
(Wireless Licenses Application). On April 22 and 25, 2008, attorneys for Applicants filed letters submitting
supplemental information on the Domestic Authorizations Application. See Letter from Kenneth D. Patrich and
Timothy J. Cooney, Counsel for PTI Pacifica, and Mary J. Sisak, Counsel for IT&E, to Marlene H. Dortch,
Secretary, Federal Communications Commission, dated April 22, 2008 (PTI Pacifica April 22, 2008 Ex Parte
Letter); Letter from Kenneth D. Patrich and Timothy J. Cooney, Counsel for PTI Pacifica, to Marlene H. Dortch,
Secretary, Federal Communications Commission, dated April 25, 2008 (PTI Pacifica April 25, 2008 Ex Parte
Letter). Appendix A to this Memorandum Opinion and Order and Declaratory Ruling lists the authorizations and
licenses associated with the Application.
3
47 U.S.C. § 310(b)(4). See Petition of Pacific Telecom Inc. for Declaratory Ruling under Section 310(b)(4) of the
Communications Act of 1934, As Amended, File No. ISP-PDR-20080403-00007 (filed Apr. 3, 2008). PTI filed an
updated Petition for Declaratory Ruling on May 2, 2008 (Updated PTI Petition for Declaratory Ruling). All
citations herein are to the Updated PTI Petition for Declaratory Ruling.
4
Petition to Condition, WC Docket No. 08-54 (filed May 12, 2008) (Joint Petition).

2

Federal Communications Commission DA 09-1054

technology on the islands of Saipan, Tinian, and Rota in the CNMI.17
4. PTI Pacifica is a wholly owned subsidiary of MTC, a CNMI corporation that provides
incumbent LEC service in the CNMI.18 MTC, in turn, is wholly owned by PTI, a holding company
incorporated in the CNMI.19 The following entities own at least 10 percent of the equity of PTI:
Prospector Investments Ltd. (Prospector) (75%) and Sumitomo Corporation (Sumitomo) (25%).20
Prospector, a Cayman Islands investment entity, is directly owned by two related individuals, both of
whom are citizens of the Philippines: Ricardo C. Delgado (60%) and Jose Ricardo Delgado (40%).21
Applicants state that Sumitomo, a Japanese holding company, is publicly traded in Japan, and no entity
owns 10 percent or more of the equity of this company.22 Applicants further state that Prospector and
Sumitomo do not hold a greater than 10 percent direct or indirect interest in any other U.S.
telecommunications provider.23
B. The Transaction
5. On February 26, 2008, Applicants reached an agreement by which IT&E would sell to
PTI Pacifica all of its telecommunications assets, including its FCC licenses and authorizations, on CNMI
and Guam. On April 4, 2008, Applicants filed an application to assign wireless24 and international assets
from IT&E to PTI Pacifica.25 Three days later, on April 7, 2008, Applicants filed a joint international and
domestic section 214 application for consent to assign certain authorizations, infrastructure, and
subscriber bases pursuant to sections 63.03, 63.04, 63.12, and 63.24(e) of the Commission’s rules.26
IT&E also notified the Commission that it intends to relinquish its designation as an Eligible
Telecommunications Carrier (ETC) for all of its service areas, pursuant to section 214(e)(4) of the Act.27
PTI Pacifica has stated that it intends to honor IT&E’s existing customer contracts28 and will not raise

17
See PTI, PTI Launches EV-DO in CNMI (Aug. 12, 2008), available at
http://www.pticom.com/global/news_and_info.cfm?vzid=10 (last visited May 12, 2009).
18
Domestic Authorizations Application at 2.
19
Id.
20
Id. Sumitomo Corporation owns 20 percent of PTI, and Sumitomo Corporation’s wholly owned subsidiary,
Sumitomo Corporation of America, owns 5 percent of PTI. See infra para. 65 and note 207.
21
Id.
22
PTI April 25, 2008 Ex Parte Letter.
23
PTI April 25, 2008 Ex Parte Letter; PTI April 22, 2008 Ex Parte Letter at 2.
24
Applicants filed an amendment to their Wireless Licenses Application on May 2, 2008.
25
See supra note 2.
26
47 C.F.R. §§ 63.03, 63.04, 63.12, 63.24(e); see 47 U.S.C. § 214.
27
It states that such relinquishment will take place upon the completion of IT&E’s license transfers to PTI Pacifica.
Letter from Benjamin H. Dickens, Jr. and Mary J. Sisak, Counsel for IT&E, to Marlene H. Dortch, Secretary, FCC
(filed Aug. 4, 2008) (IT&E August 4, 2008 Ex Parte Letter). Pursuant to section 214(e)(4) of the Act, IT&E
provided notice of its intent to relinquish its designation as an eligible telecommunications carrier (ETC) in Guam
upon completion of IT&E's license transfers to PTI Pacifica. 47 U.S.C. § 214(e)(4). IT&E demonstrated that four
other carriers, including PTI Pacifica, are designated as ETCs for the entirety of IT&E's designated area in Guam,
and that PTI Pacifica will continue providing service without interruption to all of IT&E's customers. IT&E August
4, 2008 Ex Parte Letter. Therefore, IT&E is permitted to relinquish its ETC designation in Guam.
28
Domestic Authorizations Application at 3 n.4.

4

Federal Communications Commission DA 09-1054

long distance rates for presubscribed customers as part of the transaction.29
6. On April 9, 2008, the Wireless Telecommunications Bureau announced that the
application seeking consent to the assignment of wireless licenses from IT&E Overseas to PTI Pacifica
was accepted for filing and set the pleading cycle.30 On April 28, 2008, the Wireline Competition Bureau
issued a public notice establishing a non-streamlined pleading cycle for this transaction.31 The
International Bureau issued a public notice of the petition for declaratory ruling, applications to assign the
earth station license, and international section 214 authorization on April 29, 2008, May 2, 2008, and May
14, 2008, respectively.32 On April 16, 2009, the Wireless Telecommunications Bureau released a public
notice announcing that the relevant Numbering Resource Utilization and Forecast (NRUF) reports and
local number portability (LNP) data for all wireless telecommunications providers as of June 30, 2008
would be placed into the record and adopted a protective order pursuant to which Applicants and third
parties would be allowed to review the specific NRUF reports and LNP data placed into the record.33
C. Filings on the Transfer Application
7. Executive Branch Agencies. In response to the public notices described above, several
filers have made various requests in regards to this transaction. As described below, the DOJ, FBI, and
DHS (collectively, Executive Branch Agencies) made several filings addressing potential national
security, law enforcement, and public safety issues and stated that they have no objection to grant of the
applications and petition for declaratory ruling.34 The Executive Branch Agencies, however, based their

29
PTI Pacifica April 22, 2008 Ex Parte Letter at 2.
30
See Wireless Telecommunications Bureau Assignment of License Authorization Applications, Transfer of Control
of Licensee Applications, and De Facto Transfer Lease Applications, and Designated Entity Reportable Eligibility
Event Applications Accepted for Filing, Public Notice, Report No. 3974, at 2 (rel. April 9, 2008). Petitions to deny
were due on April 23, 2008. See id.
31
Domestic Section 214 Application Filed for the Transfer of Assets of IT&E Overseas, Inc. to PTI Pacifica Inc.,
WC Docket No. 08-54, Public Notice, 23 FCC Rcd 6942 (WCB 2008).
32
See Non Streamlined International Applications/Petitions Accepted for Filing, Public Notice, Report No. TEL-
01262NS, File No. ISP-PDR-20080403-00007 (rel. Apr. 29, 2008) (petition for declaratory ruling); Satellite
Communications Services Re: Satellite Radio Applications Accepted for Filing, Public Notice, Report No. SES-
01032, File Nos. SES-ASG-20080404-00424, SES-AMD-20080502-00527 (rel. May 14, 2008) (Satellite Earth
Station Application); Streamlined International Applications Accepted for Filing, Public Notice, Report No. TEL-
01270S, File No. ITC-ASG-20080404-00164 (rel. May 16, 2008) (International Authorizations Application).
33
Applications of PTI Pacifica Inc. and IT&E Overseas, Inc. for Consent to Assign Licenses; Numbering Resource
Utilization and Forecast (NRUF) Reports and Local Number Portability Reports Placed into the Record, Subject to
Protective Order, ULS File No. 0003356838, CC Docket No. 99-200, Public Notice, DA 09-844 (rel. Apr. 16,
2009).
34
Letter from John Connors, U.S. Department of Justice, to Marlene H. Dortch, Secretary, FCC, WC Docket No.
08-54, ITC-ASG-20080403-00164, SES-ASG-20080404-00423, ISP-PDR-20080403-00007, ULS 003356838
(filed May 12, 2008) (Executive Branch May 12, 2008 Ex Parte Letter) (requesting that the Commission defer
action on the applications and petition for declaratory ruling regarding the assignment of international and domestic
section 214 authorizations so that DOJ, FBI, and DHS could complete their review for any national security, law
enforcement, and public safety issues); Letter from John Connors, U.S. Department of Justice, to Marlene H.
Dortch, Secretary, FCC, WC Docket No. 08-54, ITC-ASG-20080403-00164, SES-ASG-20080404-00423, ISP-
PDR-20080403-00007, ULS 003356838 (filed June 5, 2008) (Executive Branch June 5, 2008 Ex Parte Letter)
(withdrawing the request of DOJ, including the FBI, with the concurrence of DHS, to defer action on the
applications and petition for declaratory ruling regarding the assignment of international and domestic section 214
authorizations).

5

Federal Communications Commission DA 09-1054

approval on Applicants’ request that the Commission condition its grant subject to compliance with the
terms set forth in the 2003 Executive Branch Agreement.35
8. Joint Petition. On May 12, 2008, Guam Cellular and Paging Inc., GTA TeleGuam, LLC
(GTA), Pacific Data Systems, and Choice Phone, LLC (collectively, Petitioners) filed jointly a Petition to
Condition the Transaction (Joint Petition).36 Applicants filed a Reply on May 19, 2008.37 GTA filed a
supplement to the Joint Petition on June 19, 2008.38
9. The Joint Petition requested that the Commission expressly grant the transaction subject
to safeguards to ensure fair and competitive rates and to prevent competitive harms.39 The Petitioners
argue that the transaction will reduce competition by consolidating market power in the interstate wireline
and wireless telecommunications markets and increase existing barriers to entry.40 They also assert that
“the proposed transaction will increase . . . spectrum concentration for PTI.”41 They also emphasize that
PTI controls the only fiber-optic submarine cable between the CNMI and Guam and argue that the
transaction “raises the potential for competitive harm through further vertical integration.”42 As evidence
of the likely anticompetitive conduct, the Joint Petition states that rates charged for use of PTI’s
submarine cable are exceedingly high.43 To protect against the harms from this new vertical integration,
the Petitioners state that PTI should have to “partially divest a portion of its cable capacity to a competing
provider or providers . . . .”44 Alternatively, they request that the Commission take measures to ensure
access to PTI’s submarine cable at fair and competitive rates.45
10. On May 19, 2008, the Applicants replied to the Joint Petition. The Applicants argue that
the submarine cable is not a part of the current transaction,46 that the interstate long distance market is
competitive,47 and that the vague contention that the transaction would lessen wireless competition is not
supported by evidence.48 The Applicants further argue that the Commission should not impose conditions
or special rates on the submarine cable because the cable at issue in the Joint Petition is not a part of the
current transaction,49 and because the Commission has previously denied what was essentially the same

35
Executive Branch June 5, 2008 Ex Parte Letter at 1-2.
36
Petition to Condition, WC Docket No. 08-54 (filed May 12, 2008).
37
Joint Opposition to Petition to Condition Grant of Domestic Section 214 Application, WC Docket No. 08-54
(filed May 19, 2008) (Applicant Reply).
38
Letter from Andrew D. Lipman and Paul O. Gagnier, Counsel for GTA Telecom, LLC, to Marlene H. Dortch,
Secretary, FCC, WC Docket No. 08-54 (filed June 19, 2008) (GTA June 19, 2008 Ex Parte Letter).
39
Joint Petition at 4–11
40
Id. at iii.
41
Id. at 7.
42
Id. at 8, 10.
43
Id. at iii, 9.
44
Id. at 11.
45
Id.
46
Applicant Reply at 1.
47
See id. at 3.
48
Id. at 5.
49
See id. 1–2, 6–9.

6

Federal Communications Commission DA 09-1054

request for this cable in a prior transaction.50 Finally, the Applicants replied to the assertion that the
transaction would lead to a combined 107 megahertz of spectrum, triggering the FCC’s 95 megahertz
spectrum aggregation screen. The Applicants argue that the Commission has previously approved
spectrum aggregation of 107 MHz in other markets where there is significant competition, as there is in
the CNMI. The Applicants further claim that the Petitioners do not argue that there is a lack of spectrum
in the CNMI, especially given that the Commission recently had a spectrum auction in this market.51
III. DISCUSSION
A. Framework of Analysis
11. Pursuant to sections 214(a) and 310(d) of the Act,52 the Commission must determine
whether the proposed assignment and transfer of assets, licenses, and authorizations held and controlled
by IT&E to PTI Pacifica will serve the public interest, convenience, and necessity.53 In making this
determination, we first assess whether the proposed transaction complies with the specific provisions of
the Act, other applicable statutes, and the Commission’s rules. If the proposed transaction would not
violate a statute or rule, the Commission considers whether it could result in public interest harms by
substantially frustrating or impairing the objectives or implementation of the Act or related statutes. The
Commission then employs a balancing test weighing any potential public interest harms of the proposed
transaction against the potential public interest benefits.54 The Applicants bear the burden of proving, by
a preponderance of the evidence, that the proposed transaction, on balance, serves the public interest.55 If
we are 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 for
hearing.56

50
See id.
51
See id. at 5–6.
52
47 U.S.C. §§ 214(a), 310(d).
53
47 U.S.C. § 310(d) requires that we consider applications for transfer of Title III licenses under the same standard
as if the proposed transferee were applying for the licenses directly under section 308 of the Act, 47 U.S.C. § 308.
See, e.g., 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 & Declaratory Ruling, 23 FCC Rcd
17444, 17460-61, para. 26 (2008) (Verizon/ALLTEL Order); Applications of Guam Cellular and Paging, Inc. and
DoCoMo Guam Holdings, Inc., WT Docket No. 06-96, Memorandum Opinion and Order and Declaratory Ruling,
21 FCC Rcd 13580, 13588, para. 13 (2006) (DoCoMo/Guam Cellular Order); SBC Communications, Inc. and
AT&T Corp. Applications forApproval of Transfer of Control, WC Docket No. 05-65, Memorandum Opinion and
Order, 20 FCC Rcd 18290, 18300, n.60 (2005) (SBC/AT&T Order).
54
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17460-61, para. 26; DoCoMo/Guam Cellular Order, 21 FCC
Rcd at 13589, para. 13; SBC/AT&T Order, 20 FCC Rcd at 18300, para. 16.
55
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17460-61, para. 26; DoCoMo/Guam Cellular Order, 21 FCC
Rcd at 13589, para. 13; SBC/AT&T Order, 20 FCC Rcd at 18300, para. 16.
56
We are not required to designate for hearing applications for the transfer or assignment of Title II authorizations
when we are unable to find that the public interest would be served by granting the applications. See ITT World
Communications, Inc. v. FCC, 595 F.2d 897, 901 (2d Cir. 1979). We may do so if we find that a hearing would be
in the public interest. However, with respect to the applications to transfer licenses subject to Title III of the Act, if
we are unable to find that the proposed transaction serves the public interest, or if the record presents a substantial
and material question of fact, section 309(e) of the Act requires that we designate the application for hearing. 47
(continued….)
7

Federal Communications Commission DA 09-1054

12. Our public interest evaluation necessarily encompasses the “broad aims of the
Communications Act,”57 which include, among other things, a deeply rooted preference for preserving
and enhancing competition in relevant markets, accelerating private sector deployment of advanced
services, ensuring a diversity of license holdings, and generally managing the spectrum in the public
interest.58 Our public interest analysis may also entail assessing whether the proposed transaction will
affect the quality of communications services or will result in the provision of new or additional services
to consumers.59 In conducting this analysis, the Commission may consider technological and market
changes, and the nature, complexity, and speed of change of, as well as trends within, the
communications industry.60
13. Our competitive analysis, which forms an important part of the public interest evaluation,
is informed by, but not limited to, traditional antitrust principles.61 The Commission and DOJ each have
independent authority to examine the competitive impacts of proposed communications mergers and
transactions involving transfers of Commission licenses, but the standards governing the Commission’s
competitive review differ somewhat from those applied by DOJ.62 Like DOJ, the Commission considers
how a transaction will affect competition by defining a relevant market, looking at the market power of
incumbent competitors, and analyzing barriers to entry, potential competition, and the efficiencies, if any,
that may result from the transaction. DOJ, however, reviews telecommunications mergers pursuant to
section 7 of the Clayton Act, and if it wishes to block a merger, it must demonstrate to a court that the
merger may substantially lessen competition or tend to create a monopoly.63 Under the Commission’s
review, the Applicants must show that the transaction will serve the public interest; otherwise the
application is set for hearing. DOJ’s review is also limited solely to an examination of the competitive
effects of the acquisition, without reference to other public interest considerations.64 The Commission’s
(Continued from previous page)
U.S.C. § 309(e); Verizon/ALLTEL Order, 23 FCC Rcd at 17461, para. 26; see DoCoMo/Guam Cellular Order, 21
FCC Rcd at 13589, para. 13.
57
See Verizon/ALLTEL Order, 23 FCC Rcd at 17461, para. 27; DoCoMo/Guam Cellular Order, 21 FCC Rcd at
13591, para. 15; SBC/AT&T Order, 20 FCC Rcd at 18301, para. 17.
58
See 47 U.S.C. §§ 157 nt. (incorporating section 706 of the Telecommunications Act of 1996, Pub. L. No. 104-104,
110 Stat. 56 (1996) (1996 Act)), 254, 332(c)(7); 1996 Act, Preamble; Verizon/ALLTEL Order, 23 FCC Rcd at
17461, para. 27; DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13591, para. 15; SBC/AT&T Order, 20 FCC Rcd at
18301, para. 17; see also Application of WorldCom, Inc. and MCI Communications Corporation for Transfer of
Control of MCI Communications Corporation to WorldCom, Inc., CC Docket No. 97-211, Memorandum Opinion
and Order, 13 FCC Rcd 18025, 18030-31, para. 9 (1998) (WorldCom/MCI Order); 2000 Biennial Regulatory
Review Spectrum Aggregation Limits for Commercial Mobile Radio Services, Report and Order, FCC 01-328, 16
FCC Rcd 22668, 22696, para. 55 (2001) (citing 47 U.S.C. §§ 301, 303, 309(j), 310(d)); cf. 47 U.S.C. §§ 521(4),
532(a)).
59
See Verizon/ALLTEL Order, 23 FCC Rcd at 17461, para. 27; DoCoMo/Guam Cellular Order, 21 FCC Rcd at
13591, para. 15; SBC/AT&T Order, 20 FCC Rcd at 18301, para. 17.
60
See Verizon/ALLTEL Order, 23 FCC Rcd at 17461, para. 27; DoCoMo/Guam Cellular Order, 21 FCC Rcd at
13591, para. 15; SBC/AT&T Order, 20 FCC Rcd at 18301–02, para. 17.
61
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17462, para. 28; DoCoMo/Guam Cellular Order, 21 FCC Rcd
at 13591, para. 16; AT&T Inc. and BellSouth Corporation Application for Transfer of Control, WC Docket No. 06-
74, Memorandum Opinion and Order, 22 FCC Rcd 5662, 5673, para. 21 (2007) (AT&T/BellSouth Order).
62
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17462, para. 28.
63
15 U.S.C. § 18.
64
See Verizon/ALLTELL Order, 23 FCC Rcd. at 17462, para. 28; Applications for Consent to the Transfer of
Control of Licenses XM Satellite Radio Holdings Inc., Transferor, to Sirius Satellite Radio Inc., Transferee, MB
(continued….)
8

Federal Communications Commission DA 09-1054

competitive analysis under the public interest standard is somewhat broader, for example, considering
whether a transaction will enhance, rather than merely preserve, existing competition, and takes a more
extensive view of potential and future competition and its impact on the relevant market.65
14. Our analysis recognizes that a proposed transaction may lead to both beneficial and
harmful consequences.66 For instance, combining assets may allow a firm to reduce transaction costs and
offer new products, but it may also create market power, create or enhance barriers to entry by potential
competitors, and create opportunities to disadvantage rivals in anticompetitive ways.67 Our public interest
authority enables us, where appropriate, to impose and enforce narrowly tailored, transaction-specific
conditions that ensure that the public interest is served by the transaction.68 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 Act.69 Similarly, section 214(c) of the
Act authorizes the Commission to attach to the certificate “such terms and conditions as in its judgment
the public convenience and necessity may require.”70 Indeed, unlike the role of antitrust enforcement
agencies, our public interest authority enables us to rely upon our extensive regulatory and enforcement
experience to impose and enforce conditions to ensure that the transaction will yield overall public
interest benefits.71 Despite this broad authority, the Commission has held that it will impose conditions
only to remedy harms that arise from the transaction (i.e., transaction-specific harms) and that are related
to the Commission’s responsibilities under the Communications Act and related statutes.72 Thus, we
generally will not impose conditions to remedy pre-existing harms or harms that are unrelated to the
(Continued from previous page)
Docket No. 07-57, Memorandum Opinion and Order and Report and Order, 23 FCC Rcd 12348, 12365-66, para. 32
(2008) (XM/Sirius Order).
65
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17462, para. 28; XM/Sirius Order, 23 FCC Rcd at 12365-66,
para. 32.
66
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17462, para. 29; XM/Sirius Order, 23 FCC Rcd at 12366, para.
33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 21; DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13592,
para. 16.
67
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17462, para. 29; XM/Sirius Order, 23 FCC Rcd at 12366, para.
33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 21; DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13592,
para. 16.
68
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17463, para. 29; XM/Sirius Order, 23 FCC Rcd at 12366, para.
33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 22; DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13592,
para. 16.
69
47 U.S.C. § 303(r); see also Verizon/ALLTEL Order, 23 FCC Rcd. at 17463, para. 29; XM/Sirius Order, 23 FCC
Rcd at 12366, para. 33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 22; DoCoMo/Guam Cellular Order, 21
FCC Rcd at 13592, para. 17.
70
47 U.S.C. § 214(c); see also Verizon/ALLTEL Order, 23 FCC Rcd. at 17463, para. 29; XM/Sirius Order, 23 FCC
Rcd at 12366, para. 33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 22; DoCoMo/Guam Cellular Order, 21
FCC Rcd at 13592, para. 17.
71
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17463, para. 29; XM/Sirius Order, 23 FCC Rcd at 12366, para.
33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 22; DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13592,
para. 17. See also Schurz Communications, Inc. v. FCC, 982 F.2d 1043, 1049 (7th Cir. 1992) (discussing
Commission’s authority to trade off reduction in competition for increase in diversity in enforcing public interest
standard).
72
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17463, para. 29; XM/Sirius Order, 23 FCC Rcd at 12366, para.
33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 22; DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13592,
para. 17.

9

Federal Communications Commission DA 09-1054

transaction.73
15. Our analysis starts with an examination of whether the Applicants are qualified to hold
and assign licenses.74 Next, we consider the arguments raised by commenters regarding the potential
harms and benefits of the proposed transaction, as well as its effects on competition. We then consider
foreign ownership issues. Finally, we consider issues related to national security, law enforcement,
foreign policy, and trade policy.
B. Qualifications of the Applicants
16. As a threshold matter, we must determine whether the Applicants meet the requisite
qualifications to hold and assign and transfer licenses under section 310(d) of the Act and the
Commission’s rules. In general, when evaluating assignments under section 310(d), we do not re-
evaluate the qualifications of the transferor.75 The exception to this rule occurs where issues related to
basic qualifications have been designated for hearing by the Commission or have been sufficiently raised
in petitions to warrant the designation of a hearing.76 This is not the case here, so we need not re-evaluate
IT&E’s basic qualifications.
17. Section 310(d) also requires that the Commission consider the qualifications of the
proposed transferee as if the transferee were applying for the license directly under section 308 of the

73
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd. at 17463, para. 29; XM/Sirius Order, 23 FCC Rcd at 12366, para.
33; AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 22; DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13592,
para. 17.
74
See 47 U.S.C. §§ 214(a), 310(d).
75
See DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13590, para. 14; Applications of Midwest Wireless Holdings,
L.L.C. and Alltel Communications, Inc., WT Docket No. 05-339, Memorandum Opinion and Order, 21 FCC Rcd
11526, 11536, para. 17 (2006) (Alltel/Midwest Wireless Order); Applications of Nextel Partners, Inc., Transferor,
And Nextel Wip Corp. and Sprint Nextel Corporation, Transferees, Memorandum Opinion and Order, 21 FCC Rcd
7358, 7362, para. 10 (Sprint Nextel/Nextel Partners Order); SBC/AT&T Order, 20 FCC Rcd at 18379, para. 171;
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, 18526, para. 183 (2005) (Verizon/MCI Order);
Applications of Nextel Communications, Inc. and Sprint Corporation for Consent to Transfer Control of Licenses
and Authorizations, WT Docket No. 05-63, Memorandum Opinion and Order, 20 FCC Rcd 13967, 13979, para. 24
(2005) (Sprint/Nextel Order); Applications of Western Wireless Corporation and Alltel Corporation for Consent to
Transfer Control of Licenses and Authorizations, WT Docket No. 05-50, Memorandum Opinion and Order, 20 FCC
Rcd 13053, 13063-64, para. 18 (2005) (Alltel/Western Wireless Order); Applications of AT&T Wireless Services,
Inc. and Cingular Wireless Corporation, WT Docket 04-70, Memorandum Opinion and Order, 19 FCC Rcd 21522,
21546, para. 44 (2004) (Cingular/AT&T Wireless Order); Applications of VoiceStream Wireless Corporation and
Powertel, Inc., Transferors, and Deutsche Telekom AG, Transferee, IB Docket No. 00-187, Memorandum Opinion
and Order, 16 FCC Rcd 9779, 9790, para. 19 (2001) (Deutsche Telekom/VoiceStream Order); Verizon/ALLTEL
Order, 23 FCC Rcd at 17464, para. 31; Applications of Sprint Nextel Corporation and Clearwire Corporation For
Consent to Transfer Control of Licenses, Leases and Authorizations, WT Docket No. 08-94, Memorandum Opinion
and Order and Declaratory Ruling, 23 FCC Rcd 17570, 17582-82, para. 23 (2008) (Sprint Nextel/Clearwire Order).
76
See DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13590, para. 14; Alltel/Midwest Wireless Order, 21 FCC Rcd
11536, para. 17; Sprint Nextel/Nextel Partners Order, 21 FCC Rcd at 7362, para. 10; SBC/AT&T Order, 20 FCC
Rcd at 18379, para. 171; Verizon/MCI Order, 20 FCC Rcd at 18526, para. 183; Sprint/Nextel Order, 20 FCC Rcd at
13979, para. 24; Alltel/Western Wireless Order, 20 FCC Rcd at 13063–64, para. 18; Cingular/AT&T Wireless
Order, 19 FCC Rcd at 21546, para. 44; Deutsche Telekom/VoiceStream Order, 16 FCC Rcd at 9790, para. 19;
Verizon/ALLTEL Order, 23 FCC Rcd at 17464, para. 31; Sprint Nextel/Clearwire Order, 23 FCC Rcd 17582-83,
para. 23.

10

Federal Communications Commission DA 09-1054

Act.77 In this proceeding, no issues have been raised with respect to the basic qualifications of PTI
Pacifica or IT&E, both of which previously have been found qualified to hold FCC licenses and
authorizations in the past. Thus, we find that, at this time, there is no reason to re-evaluate the
qualifications of these entities.
C. Effect on Competition
1. Analytical Framework
18. In this section, we consider the potential public interest harms, including potential harms
to competition, arising from this assignment and transfer of assets. Consistent with Commission
precedent, in addition to considering whether the transaction will reduce existing competition, we also
focus on its likely effect on future competition.78 We consider the potential public interest harms,
including potential harms to competition, arising from the merger. Because IT&E and PTI Pacifica
currently compete in some of the same product markets and for some of the same groups of customers,
we must consider the potential horizontal effects of this merger.79
19. With respect to the horizontal effects, consistent with Commission precedent, we first
perform a structural analysis of the merger to examine whether it is likely to result in anticompetitive
effects.80 We begin by defining the relevant product markets81 and relevant geographic markets. 82 We
next identify market participants and examine market concentration and how concentration will change as
a result of the merger. If our structural analysis suggests that the merger may have anticompetitive
effects, we must then examine, in more detail, whether and how the merger might affect competitive

77
Section 308 requires that applicants for Commission licenses set forth such facts as the Commission may require
as to citizenship, character, and financial, technical, and other qualifications. See 47 U.S.C. § 308. Our rules
implementing the provisions of section 308 regarding an applicant’s qualifications to hold the Commission licenses
involved in this transfer are set forth in Parts 5, 25, and 63 of the Commission’s rules. See 47 C.F.R. Parts 5, 25, 63.
See also DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13590, para. 14; Alltel/Midwest Wireless Order, 21 FCC
Rcd at 11536, para. 17; Sprint Nextel/Nextel Partners Order, 21 FCC Rcd at 7362, para. 10; SBC/AT&T Order, 20
FCC Rcd at 18379, para. 171; Verizon/MCI Order, 20 FCC Rcd at 18526, para. 183; Alltel/Western Wireless Order,
20 FCC Rcd at 13063–64, para. 18; Cingular/AT&T Wireless Order, 19 FCC Rcd at 21546, para. 44.
78
See AT&T/BellSouth Order, 22 FCC Rcd at 5674, para. 21; SBC/AT&T Order, 20 FCC Rcd at 18302, para. 18.
79
A transaction is said to be horizontal when the firms in the transaction sell products that are in the same relevant
markets and are therefore viewed as reasonable substitutes by purchasers of the products. AT&T/BellSouth Order,
22 FCC Rcd at 5675, para. 23 n.82.
80
Structural merger analysis, as the name suggests, considers structural characteristics of the merging firms and the
relevant markets, such as market shares and entry conditions, to make predictions about the likely competitive
effects of a proposed merger.
81
A relevant product market has been defined as the smallest group of competing products for which a hypothetical
monopoly provider of the products would profitably impose at least a “‘small but significant and nontransitory’
increase in price.” Horizontal Merger Guidelines, issued by the U.S. Department of Justice and the Federal Trade
Commission, (Apr. 2, 1992, revised Apr. 8, 1997) §§ 1.11, 1.12 (DOJ/FTC Guidelines); see also AT&T/BellSouth
Order, 22 FCC Rcd at 5675, para. 24 n.85.
82
A relevant geographic market has been defined “as the region where a hypothetical monopolist that is the only
producer of the relevant product in the region would profitably impose at least a ‘small but significant and
nontransitory’ increase in the price of the relevant product, assuming that the prices of all products provided
elsewhere do not change.” AT&T/BellSouth Order, 22 FCC Rcd at 5675, para. 24 n.86 (citing DOJ/FTC Guidelines
§ 1.21).

11

Federal Communications Commission DA 09-1054

behavior.83
2. Wireline Services - Long Distance Market
20. Relevant Product Market: The relevant wireline product markets involved in this
transaction concern long distance service. As the Commission previously explained, in defining the
relevant market for long distance service, it is necessary to consider both the demand for access and the
demand for usage because both types of demand affect whether consumers view products as reasonable
substitutes.84
21. The Commission previously has found that long distance service purchased on a stand-
alone basis is becoming a fringe market.85 The Commission also has found that focusing on
presubscribed long distance by itself is overly narrow and can overstate market position, because it
ignores the fact that all presubscribed interexchange customers can also make long distance calls using
transaction services (e.g., prepaid calling cards, dial around services, calling centers) and mobile voice
services.86 Evidence adduced by the Applicants convinces us that, in the case of Guam and the CNMI,
long distance customers rely primarily on transaction services and mobile voice services in making long
distance calls, and that they only infrequently use a presubscribed interexchange carrier.87 For example,
the Applicants point out that calls made using a presubscribed interexchange carrier make up less than 11
percent of overall wireline switched access long distance calls.88 More generally, the Applicants assert
that the unique demographics of the CNMI and Guam play a significant role in customers choosing not to
use presubscribed long distance services. They contend that a large segment of consumers, including low
income, foreign itinerant workers, and military personnel, use services other than presubscribed
interexchange service to make long distance calls and that they will likely continue to do so after the
transaction.89 They explain that non-resident workers and military personnel living in barrack housing
often rely on calling cards and calling centers, and that callers whose home countries are accessible only
by satellite service and are therefore more expensive to call, prefer to use pre-paid calling cards to
monitor their usage.90 The Applicants also point out that many extended families live in one home with
one residential line and that because payment responsibility issues may arise, households choose not to
83
Id. at 5676, para. 25. The Commission has explained that competition may be harmed either through unilateral
actions by a merged entity or through coordinated interaction among firms competing in the relevant market. See
Verizon/ALLTEL Order, 23 FCC Rcd at 17484, para. 82. Unilateral effects “are those that result when a merged
firm finds it profitable to alter its behavior by increasing prices or reducing output.” See id. n.298 (citing DOJ/FTC
Horizontal Merger Guidelines § 2.2) Coordinated intereaction consists of actions by a group of firms that are
profitable for each of the firms involved only because the other firms react by accommodating these actions rather
than attempting to undercut them. See id. n.299 (citing DOJ/FTC Horizontal Merger Guidelines § 2.1).
84
Verizon/MCI Order, 20 FCC Rcd at 18336-37, paras. 83-84.
85
See id. at 18483, para. 92.
86
SBC/AT&T Order, 20 FCC Rcd at 18342-44, paras. 92-99; Verizon/MCI Order, 20 FCC Rcd at 18484-85, paras.
93-95; Petition of Qwest Communications International Inc. for Forbearance from Enforcement of the
Commission’s Dominant Carrier Rules as They Apply After Section 272 Sunsets, WC Docket No. 05-333,
Memorandum Opinion and Order, 22 FCC Rcd 5207, 5218-19, paras. 17-18 (2007).
87
PTI Pacifica April 22, 2008 Ex Parte Letter at 1-2; Applicant Reply at 4; Letter from Kenneth D. Patrich and
Timothy J. Cooney, Counsel for PTI Pacifica, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 08-54, at 2, 4
(filed Apr. 27, 2009) (PTI Pacifica April 27, 2009 Ex Parte Letter).
88
PTI Pacifica April 27, 2009 Ex Parte Letter at 3.
89
Applicant Reply at 4.
90
PTI Pacifica April 27, 2009 Ex Parte Letter at 4, n.13.

12

Federal Communications Commission DA 09-1054

proposed transaction is unlikely to have anticompetitive effects on long distance services. We are further
assured by the fact that the Applicants have also voluntarily committed not to raise 1+ presubscribed
wireline rates for three years from the date of this Order, 118 and we adopt this commitment as a binding
condition of our approval of this transaction.
3. Mobile Telephony/Broadband Services Market
32. Consistent with the Commission’s practice when reviewing proposed wireless
transactions affecting the mobile telephony/broadband services market, we consider the potential
competitive harms associated with this assignment application.119 First, we establish the appropriate
market definitions for our evaluation of the proposed transaction. We define the relevant product and
geographic markets, the input market for spectrum, and identify market participants that would compete
with the combined firm in the provision of mobile telephony/broadband services.
33. Product Market. In reviewing this proposed spectrum transfer application, we apply the
same product market definition for mobile telephony/broadband services as applied by the Commission in
recent transactions.120 Although the Commission has determined that there are separate relevant product
markets for interconnected mobile voice services and mobile data services, and also for residential
services and enterprise services,121 it nevertheless analyzes all of these product markets under the
combined market for mobile telephony/broadband services.122 Based on consideration of various factors,
including the nature of these services and their relationship with each other, the Commission has
determined that this approach provides a reasonable assessment of any potential competitive harm
resulting from transactions.123
34. Geographic Market. The Commission applies the “hypothetical monopolist test” to relevant
geographic markets and has found that they are local, larger than counties, may encompass multiple
counties, and, depending on the consumer’s location, may even include parts of more than one state.124
118
PTI Pacifica April 27, 2009 Ex Parte Letter at 6; PTI Pacifica April 22, 2008 Ex Parte Letter at 2.
119
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17468-94, paras. 40-113; Sprint Nextel/Clearwire Order, 23
FCC Rcd at 17583-604, paras. 24-84.
120
Verizon/ALLTEL Order, 23 FCC Rcd at 17469-70, paras. 45-47; Sprint Nextel/Clearwire Order, 23 FCC Rcd at
17586-89, paras. 38-45.
121
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17470, para. 45 n.198; Sprint Nextel/Clearwire Order, 23 FCC
Rcd at 17586, para. 38 n.106; Applications of Cellco Partnership d/b/a Verizon Wireless and Rural Cellular
Corporation for Consent to Transfer Control of Licenses, Authorizations, and Spectrum Manager Leases and
Petitions for Declaratory Ruling that the Transaction is Consistent with Section 310(b)(4) of the Communications
Act, WT Docket No. 07-208, Memorandum Opinion and Order and Declaratory Ruling, 23 FCC Rcd 12463, 12483-
84, para. 37 (Verizon/RCC Order); Applications of AT&T Inc. and Dobson Communications Corporation For
Consent to Transfer Control of Licenses and Authorizations, WT Docket No. 07-153, Memorandum Opinion and
Order, 22 FCC Rcd 20295, 20308, para. 21 (2007) (AT&T/Dobson Order).
122
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17469-70, paras. 45-47; Sprint Nextel/Clearwire Order, 23
FCC Rcd at 17579, para. 19 n.69; Verizon/RCC Order, 23 FCC Rcd at 12483-84, para. 37; AT&T/Dobson Order, 22
FCC Rcd at 20308, para. 21.
123
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17469-70, paras. 45-47; Sprint Nextel/Clearwire Order, 23
FCC Rcd at 17579, para.19 n.69; Verizon/RCC Order, 23 FCC Rcd at 12483-84, para. 37; AT&T/Dobson Order, 22
FCC Rcd at 20308, para. 21.
124
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17470-71, para. 49; Sprint Nextel/Clearwire Order, 23 FCC
Rcd at 17579, para. 19 n.69; Verizon/RCC Order, 23 FCC Rcd at 12484, para. 38; AT&T/Dobson Order, 22 FCC
Rcd at 20309, para. 23.

16

Federal Communications Commission DA 09-1054

The Commission uses two sets of geographic areas that effectively may be used to define local markets –
Component Economic Areas (CEAs) and Cellular Market Areas (CMAs).125 Because these two sets of
geographic areas come separately from the demand and supply sides – demand in the case of CEAs,
supply in the case of CMAs – the Commission finds them to be useful cross-checks on each other and,
together, they help ensure that the Commission’s analysis does not overlook local areas that require more
detailed analysis.126

35. Input Market for Spectrum. Consistent with the Commission’s recent wireless
transaction orders, we also examine this transaction in light of the input market for spectrum associated
with the provision of mobile telephony/broadband services in the affected markets. In the
Verizon/ALLTEL Order and the Sprint Nextel/Clearwire Order adopted in November 2008, the
Commission determined that the input market would vary depending on the “suitable” spectrum available
in the particular market affected by the transaction. Specifically, the Commission found that spectrum
suitable for the provision of mobile telephony/broadband services includes approximately 280 megahertz
of cellular, broadband PCS, Specialized Mobile Radio (SMR), and 700 MHz band spectrum that is
available for the provision of mobile telephony/broadband services on a nationwide basis,127 as well as the
90 megahertz of Advanced Wireless Service spectrum in the 1.7/2.1 GHz band (AWS-1) and the 55.5
megahertz of contiguous Broadband Radio Service (BRS) spectrum in the 2.5 GHz band to the extent
such spectrum also is available for the provision of mobile telephony/broadband services.128
36. Market Participants. Consistent with recent wireless transaction orders, when computing
initial measures of market concentration, we limit our analysis of transactions involving mobile
telephony/broadband services to cellular, PCS, and SMR facilities-based service providers, and exclude
satellite service providers, nomadic wireless VoIP providers, mobile virtual network operators (MVNOs),
and resellers from consideration.129 We find that mobile telephony/broadband services offered by

125
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17471 n.200; Sprint Nextel/Clearwire Order, 23 FCC Rcd at
17591 n.136; Verizon/RCC Order, 23 FCC Rcd at 12484 n.151; AT&T/Dobson Order, 22 FCC Rcd at 20309, para.
23.
126
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17470-7, para. 49; Sprint Nextel/Clearwire Order, 23 FCC Rcd
at 17579, para. 19 n.69; Verizon/RCC Order, 23 FCC Rcd at 12484-85, para. 39; AT&T/Dobson Order, 22 FCC Rcd
at 20309, para. 23.
127
Verizon/ALLTEL Order, 23 FCC Rcd at 17473, para. 53; Sprint Nextel/Clearwire Order, 23 FCC Rcd at 17591-
92, para.53.
128
Verizon/ALLTEL Order, 23 FCC Rcd at 17473-74, paras. 53-55; Sprint Nextel/Clearwire Order, 23 FCC Rcd at
17591-92, paras. 53-55.
129
See , e.g.,Verizon/ALLTEL Order, 23 FCC Rcd at 17480-81, para. 71; Sprint/Clearwire Order, 22 FCC Rcd at
17600, para. 75; AT&T/Dobson Order, 22 FCC Rcd at 20316, para. 36. Although satellite providers offer facilities-
based mobile voice and data services, the price of these services is, at present, significantly higher than for services
offered by cellular, PCS, or SMR providers. Therefore, most consumers would not view satellite phones as
substitutes for mobile communications services. See Global Com, Iridium Satellite Phone Service Plans, at
http://www.globalcomsatphone.com/satellite/services/iridium_service_plans.html (last visited My 12, 2009);
GlobalStar, Airtime Pricing, Voice Pricing, at http://www.globalcomsatphone.com/satellite/services/globalstar.html
(last visited May 12, 2009). See also Verizon/ALLTEL Order, 23 FCC Rcd at 17480 n.274; Sprint/Clearwire Order,
22 FCC Rcd at 17600 n.204; AT&T/Dobson Order, 22 FCC Rcd at 20316 n.130. We also do not consider wireless
VoIP providers as providing the same functionality as mobile communications services providers because the
service they provide now is nomadic rather than mobile. See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17480
n.274; Sprint/Clearwire Order, 22 FCC Rcd at 17600 n.204; AT&T/Dobson Order, 22 FCC Rcd at 20316 n.130.
Wireless VoIP services are nomadic in the sense that one can use them from a number of different locations (for
example, by using a laptop at different Internet cafes all over a town). See, e.g., Verizon/ALLTEL Order, 23 FCC
(continued….)
17

Federal Communications Commission DA 09-1054

facilities-based providers using cellular, PCS, and SMR spectrum and employing various technologies
offer similar voice and data functionalities and are indistinguishable to the consumer.130 In addition, to
the extent that entities provide facilities-based mobile telephony/broadband services using 700 MHz,
AWS-1, and BRS spectrum, we also consider them to be market participants.131
37. The Applicants propose that providers of WiMAX services at 2.5 GHz, resellers, wireless
VoIP providers, and satellite carriers should be considered market participants because of the evolving
competitive mobile services market in Guam and the CNMI.132
38. Under Commission precedent, we generally limit our analysis to facilities-based service
providers, either nationwide or regional, excluding MVNOs and resellers from consideration when
computing initial concentration measures. While the Commission has acknowledged that non-facilities
based service options have an impact in the marketplace and in some instances may provide additional
constraints against anticompetitive behavior, to date, in evaluating proposed transactions involving
mergers of wireless service providers, the Commission has not included resellers or MVNOs in its initial
screen.133 Accordingly, we will consider facilities-based entities providing mobile telephony/broadband
services using cellular, PCS, SMR, 700 MHz, AWS-1, and BRS spectrum to be market participants.
39. Initial Screen. When examining the effect of proposed transactions, the Commission
applies a two-part initial “screen,” followed by a further case-by-case review of the markets identified by
that screen. As discussed in previous wireless transaction orders, the purpose of this initial screen is to
eliminate from further review those markets in which there is clearly no competitive harm in today’s
generally competitive marketplace.134 For those markets that are not eliminated by the initial screen, we
then conduct, on a market-by-market basis, an analysis of other market factors that pertain to competitive
effects, including the incentive and ability of other existing firms to react and of new firms to enter the
market, in response to attempted exercises of market power by the merged entity. Ultimately, we must
assess whether the combined firm could likely exercise market power in any particular market.135
40. The first part of this screen examines changes in the measures of the HHI of market
concentration in each affected market, which is calculated based on providers’ subscriber market

(Continued from previous page)
Rcd at 17480 n.274; Sprint/Clearwire Order, 22 FCC Rcd at 17600 n.204; AT&T/Dobson Order, 22 FCC Rcd at
20316 n.130.
130
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17480-81, para. 71; Sprint/Clearwire Order, 22 FCC Rcd at
17600, para. 75; AT&T/Dobson Order, 22 FCC Rcd at 20316, para. 36.
131
See Verizon/ALLTEL Order, 23 FCC Rcd at 17480-81, para. 71; Sprint/Clearwire Order, 22 FCC Rcd at 17600-
0, para. 75; AT&T/Dobson Order, 22 FCC Rcd at 20316, para. 36.
132
Wireless Licenses Application, Description of Transaction and Public Interest Statement at 4.
133
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17481, para. 74; Verizon Wireless/RCC Order, 22 FC Rcd at
12488-89, para. 50; AT&T/Dobson Order, 22 FCC Rcd at 20317, para. 38.
134
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17481-82, para. 75; Sprint Nextel/Clearwire Order, 23 FCC
Rcd at 17601, para. 76; Verizon Wireless/RCC Order, 22 FCC Rcd at 12489, para. 51; AT&T/Dobson Order, 22
FCC Rcd at 20317, para. 39.
135
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17468-69, para. 41; Sprint Nextel/Clearwire Order, 23 FCC
Rcd at 17583, para. 24; Verizon Wireless/RCC Order, 23 FCC Rcd at 12482, para. 32; AT&T/Dobson Order, 22
FCC Rcd at 20307, para. 16.

18

Federal Communications Commission DA 09-1054

shares.136 Our initial HHI screen identifies, for further case-by-case analysis, those markets in which,
post-transaction: (1) the HHI would be greater than 2800 and the change in HHI would be 100 or greater
or (2) the change in HHI would be 250 or greater, regardless of the level of the HHI.137
41. The Petitioners claim that both PTI Pacifica and IT&E provide mobile
telephony/broadband services in Guam and the CNMI, and therefore market concentration would increase
and competition would be reduced because IT&E would no longer be competing against PTI Pacifica.138
The Petitioners conclude that the proposed assignment of wireless licenses will create “significant anti-
competitive effects for the wireless markets in the CNMI and Guam.”139 However, the Applicants argue
that the HHI screen is not triggered in either Guam or the CNMI.140 Specifically, the Applicants claim
that PTI Pacifica does not provide facilities-based mobile telephony service in Guam, and that the HHI
screen is not implicated in the CNMI based on IT&E’s subscriber data submitted on a confidential basis
in the DoCoMo/Guam Cellular proceeding in September and October of 2006.141 According to the
Applicants, the subscriber data IT&E submitted in that proceeding has not changed in the CNMI CMA.142
42. In evaluating market concentration in the Guam CMA, we note that only IT&E, and not
PTI Pacifica, is providing facilities-based mobile telephony/broadband services in Guam. Thus, the
proposed transaction will not result in a change in market concentration. In the CNMI CMA, both PTI
Pacifica and IT&E are facilities-based providers of mobile telephony/broadband services; therefore we
apply the initial HHI screen. In applying the initial HHI screen, we use NRUF data for June 2008
supplied by wireless service providers in the CNMI CMA (CMA734).143 Based on this data, we find that
the HHI screen does not indicate that this proposed transaction is likely to result in competitive harm.
Although the NRUF data have been a reliable indicator of the number of subscribers in a given relevant
geographic market in past transactions, we have concerns regarding the accuracy of the HHIs in the
CNMI CMA. In evaluating the NRUF data in the CNMI, we are concerned that some of the wireless
service providers in the CNMI may not have reported their numbering information consistently. Thus,
out of an abundance of caution, we will analyze the CNMI CMA as if the initial HHI screen was triggered
and perform an in-depth analysis to evaluate whether competitive harm could occur as a result of the
proposed transaction.
43. The second part of the two-part initial screen examines the input market for spectrum
available for the provision of mobile telephony/broadband services in each of the affected markets.144

136
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17468-69, para. 41; Sprint Nextel/Clearwire Order, 23 FCC
Rcd at 17601, para. 76; Verizon/RCC Order, 23 FCC Rcd at 12482, para. 32; AT&T/Dobson Order, 22 FCC Rcd at
20306, para. 15.
137
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17482-83, para. 78; Sprint Nextel/Clearwire Order, 23 FCC
Rcd at 17601, para. 76; Verizon/RCC Order, 23 FCC Rcd at 12489-90, para. 52; AT&T/Dobson Order, 22 FCC Rcd
at 20317-18, para. 40.
138
Joint Petition at 7.
139
Id. at 7.
140
Wireless Licenses Application, Description of the Transaction and Public Interest Statement at 3.
141
DoCoMo/Guam Cellular Order, 21 FCC Rcd at 13599, paras. 12, 30, n.58.
142
Wireless Licenses Application, Description of Transaction and Public Interest Statement at 3, n.9.
143
We decline to use the data submitted in the DoCoMo/Guam Cellular proceeding, because it is over two years old.
Although the applicants state that the IT&E subscriber data has not changed, we do not know whether the subscriber
data is accurate for the other wireless service providers in the Guam and CNMI CMAs.
144
See, e.g., Verizon/ALLTEL Order, 23 FCC Rcd at 17468-69, para. 41; Sprint Nextel/Clearwire Order, 23 FCC
(continued….)
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Federal Communications Commission DA 09-1054

This spectrum aggregation screen varies depending on whether, in addition to the 280 megahertz of
cellular, broadband PCS, SMR, and 700 MHz spectrum, there also is AWS-1 and/or BRS spectrum
available locally in the affected market.145 In markets in which neither AWS-1 nor BRS spectrum is
available, the spectrum screen identifies for further competitive review each market in which the
proposed spectrum aggregation would amount to 95 megahertz or more of spectrum.146 In other markets
where AWS-1 and/or BRS spectrum is in fact available, the Commission applies a higher spectrum
screen.147
44. With regard to AWS-1 spectrum, it appears that there is no required relocation of
transmitters or receivers by government users in the Guam or CNMI CMAs.148 As a result, AWS-1
spectrum in these CMAs is available for deployment by commercial licensees and is included in the
analysis of the competitive effects of this transaction.149 With regard to BRS spectrum, no BRS licenses
have been issued in the Guam or CNMI BTAs that coincide with these CMAs;150 therefore, BRS
spectrum is not included in the analysis of the competitive effects for the Guam and CNMI CMAs. In the
Guam and CNMI CMAs, the total amount of spectrum suitable for the provision of mobile
telephony/broadband service is 370 megahertz, which includes approximately 200 megahertz of cellular,
PCS, and SMR spectrum, 80 megahertz of 700 MHz spectrum, and 90 megahertz of AWS-1 spectrum.
This translates to a spectrum aggregation screen of 125 megahertz.151

(Continued from previous page)
Rcd at 17591-92, 17607, paras. 53-55, 77.
145
See Verizon/ALLTEL Order, 23 FCC Rcd at 17468-69, para. 41; Sprint Nextel/Clearwire Order, 23 FCC Rcd at
17591-92, para. 53. For markets in which only cellular, PCS, SMR, and 700 MHz spectrum is available, and neither
AWS-1 nor BRS spectrum is available, the Commission applies a 95 megahertz spectrum screen. For markets in
which AWS-1 and BRS spectrum is available, the applicable screen is 145 megahertz. For markets in which AWS-
1 is available but BRS is not available, the Commission applies a spectrum screen of 125 megahertz. Finally, for
markets in which BRS is available but AWS-1 is not available, the Commission applies a spectrum screen of 115
megahertz. Verizon/ALLTEL Order, 23 FCC Rcd at 17477-78, para. 64; Sprint Nextel/Clearwire Order, 23 FCC
Rcd at 17600, para. 74.
146
Verizon/ALLTEL Order, 23 FCC Rcd at 17477-78, para. 64; Sprint Nextel/Clearwire Order, 23 FCC Rcd at
17600, para. 74.
147
See supra note 145.
148
See http://www.ntia.doc.gov/osmhome/reports/specrelo/index.htm (providing information on AWS-1 relocation,
including a relocation schedule and cost summary for AWS-1 relocation) (last visited May 12, 2009). See also
Wireless Licenses Application, Description of the Transaction and Public Interest Benefits at 4 n.15.
149
AWS-1 spectrum is considered available if the relocation schedule provided by the National
Telecommunications and Information Administration is 24 months or less. See Verizon/ALLTEL Order, 23 FCC
Rcd at 17478-79, para. 66; Sprint Nextel/Clearwire Order, 23 FCC Rcd at 17599, para. 72; Verizon/RCC Order, 23
FCC Rcd at 12486-87, para. 44; AT&T/Dobson Order, 22 FCC Rcd at 20314-15, para. 33. We note the DOJ/FTC
Merger Guidelines state that a significant market impact from entry must result within two years for the entry to be
considered “timely,” and thus potentially a factor ameliorating the enhancement of market power or hindering its
exercise. DOJ/FTC Guidelines § 3.2.
150
The Guam BTA (BTA490) and the Guam CMA (CMA732) are coterminous, and the CNMI BTA (BTA493) and
the CNMI CMA (CMA734) are also coterminous.
151
Both the Applicants and the Petitioners make arguments regarding the application of an initial spectrum screen.
See Joint Petition at 8 (citing BANZHI/PTI Order, 21 FCC Rcd at 12087, para. 23 (stating that, post transaction, PTI
Pacifica’s spectrum holdings would exceed the 70 megahertz spectrum aggregation threshold used by the
Commission in the BANZHI-PTI Order that permitted PTI Pacifica to offer mobile telephone service in both Guam
and the CNMI.); Applicant Reply at 5, n.21 (acknowledging that they will exceed the 95 megahertz spectrum
(continued….)
20

Federal Communications Commission DA 09-1054

45. After applying the initial spectrum screen, we find it indicates that neither the Guam nor
the CNMI CMAs warrant further competitive analysis because of spectrum aggregation. Upon
consummation of the proposed transaction, PTI Pacifica would hold attributable interests in 82 megahertz
of spectrum in Guam and 107 megahertz in the CNMI.152 Thus, PTI Pacifica will not hold or exceed 125
megahertz of spectrum in either market.
46. With respect to the Guam CMA, since neither the HHI nor the initial spectrum
aggregation screen indicate that this transaction is likely to result in significant competitive harm to the
mobile telephony/broadband services market, we conclude that further analysis is not necessary for this
market. We will, however, conduct a further analysis of the CNMI market, for the reasons discussed
above, to evaluate whether competitive harm could occur as a result of the proposed transaction.
47. In-Depth Analysis. We determine that a detailed competitive analysis of the CNMI CMA
is appropriate based on the unique circumstances, as discussed above, and characteristics of the market.
Our determination of whether there is competitive harm in a market is not based on our initial market
concentration measures. Instead, we apply a multi-factor, market-specific analysis, which draws
competitive conclusions based on the totality of the circumstances present in a given market, including
market shares, carrier launch and coverage information, spectrum holdings, and any unique characteristics
of the market of concern.
48. The Petitioners assert that the proposed transaction would reduce competition because of
the increase in the amount of spectrum to be controlled by PTI Pacifica post transaction.153 The
Applicants argue that the Petitioners make no specific showing to indicate how the proposed transaction
would lessen wireless competition, nor do they claim that, post-transaction, insufficient spectrum would
be available for other competitors to serve this market.154 The Applicants contend that there is significant
competition in the CNMI and that the Commission has approved spectrum aggregation of 107 megahertz
in larger markets where, as in the CNMI, there is significant competition.155 Further, the Applicants argue
that there is 114 megahertz of unclaimed spectrum in the CNMI156 and that the recently concluded auction
of PCS and AWS-1 spectrum (Auction 78) would make 90 of the 114 megahertz of spectrum available to
current and potential wireless competitors.157 Therefore, the Applicants argue that, post transaction, there

(Continued from previous page)
aggregation limit in the CNMI and arguing that the 95 megahertz screen as established in the AT&T/Dobson Order
is too strict because it does not take into account the 80 megahertz of AWS-1 spectrum that the Commission is
auctioning.). We note that these pleadings were filed prior to the revisions to the spectrum screen in the
Verizon/ALLTEL Order and the Sprint Nextel/Clearwire Order.
152
In the Guam CMA, PTI Pacifica holds the PCS A-block (30 megahertz) and 700 MHz A-block (12 megahertz)
licenses, and IT&E holds the PCS C-block (30 megahertz) and the PCS D-block (10 megahertz) licenses. In the
CNMI CMA, PTI Pacifica holds the Cellular B-block (25 megahertz), PCS A-block (30 megahertz), and 700 MHz
A-block (12 megahertz) licenses, while IT&E holds the PCS C-block (30 megahertz) and PCS D-block (10
megahertz) licenses.
153
Joint Petition at 7.
154
Applicant Reply at 5-6.
155
Wireless Licenses Application, Description of Transaction and Public Interest Benefit at 3; Applicant Reply at 5.
156
The 114 megahertz of spectrum includes 10 megahertz of PCS, 24 megahertz of 700 MHz, and 80 megahertz of
AWS-1 spectrum. Wireless Licenses Application, Description of Transaction and Public Interest Benefit at 4.
157
See Applicant Reply at 6. On August 20, 2008, the Commission completed its auction of Broadband PCS and
AWS-1 licenses (Auction 78) including the 10 MHz of PCS spectrum and 80 MHz of AWS-1 spectrum that cover
the CNMI. Winning bids were placed for all of the licenses covering the CNMI by wireless service providers other
than PTI, including Club 42 CM Limited Partnership (Club 42), Pulse Mobile LLC (Pulse Mobile), and Choice
(continued….)
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Federal Communications Commission DA 09-1054

would be sufficient spectrum available to new entrants or to a service provider that may be capacity
constrained.158 The Applicants assert that the CNMI market is small, and therefore capacity demands are
less than for more populated markets making it less likely that mobile telephony/broadband service
providers would be capacity constrained.159
49. The relevant area of the CNMI consists of limited geography, with three major inhabited
islands (Saipan, Tinian, and Rota) and eleven other islands.160 The fourteen islands of the CNMI have a
total geographic area of 176.5 square miles.161 Saipan, Tinian, and Rota alone have a combined total
geographic area of 118.5 square miles,162 while the other eleven islands have a total geographic area of 58
square miles and are either uninhabited or have extremely small populations.163 The 2000 Census
reported that the CNMI had a population of 69,221 and estimates that the population in 2008 would be
approximately 86,616 people.164 IT&E and PTI Pacifica provide service only on the island of Saipan, and
therefore the service overlap in this market is limited to Saipan. Additionally, upon consummation of the
transaction, there will remain three facilities-based competitors165 – Guamcell/Saipancell (a DoCoMo
subsidiary), Wave Runner/Choice Phone, and PTI Pacifica – operating on the island of Saipan in the
CNMI CMA.
50. We find that, in the CNMI market, there is sufficient spectrum and comparable coverage
from other competitive providers in the market. The total combined spectrum available in the market is
370 MHz166; therefore, the amount of spectrum held by the merged company would constitute 28.9
percent of the spectrum available in the market.167 With the recently completed auction of PCS and
AWS-1 spectrum, an additional 90 megahertz of “new spectrum” became available in the market for
(Continued from previous page)
Phone LLC (Choice Phone). See Auction of AWS-1 and Broadband PCS Licenses Closes, Winning Bidders
Announced for Auction 78, Public Notice, 23 FCC Rcd 12749 ( 2008).
158
Wireless Licenses Application, Description of Transaction and Public Interest Benefit at 4. We note that Club 42
was also the high bidder for the C-block license in the 700 MHz Band Auction 73. See Wireless Licenses
Application, Description of Transaction and Public Interest Benefit at 4; Auction of 700 MHz Band Closes, Winning
Bidders Announced for Auction 73, Public Notice, 23 FCC Rcd 2574 (2008) (Auction 73 Winning Bidders PN).
Choice Phone also won the B-block license and Thomas K. Kurian won the E-block license in Auction 73. Auction
73 Winning Bidders PN, 23 FCC Rcd at 2574.
159
Wireless Licenses Application, Description of Transaction and Public Interest Benefit at 4; Applicant Reply at 5-
6.
160
The CNMI Guide, Islands Information, http://www.cnmi-guide.com/info/ (last visited May 12, 2009) (CNMI
Guide); CIA World Factbook, available at https://www.cia.gov/library/publications/the-world-factbook/ (last visited
May 12, 2009).
161
See CNMI Guide; see also CIA World Factbook (stating it has a total land area of 477 square kilometers).
162
Saipan, Rota, and Tinian have total land areas of 46.5, 32.8, and 39.2 square miles, respectively. See CNMI
Guide.
163
See CNMI Guide.
164
U.S. Census Bureau, 2000.
165
As noted above, Club 42 purchased the Upper 700 MHz C-Block license for the Guam-Northern Mariana Islands
REAG making it a potential fourth competitor in the market. See also discussion supra notes 157-58 (discussing
Club 42 and other spectrum winners in Auctions 73 and 78).
166
See supra para. 44.
167
See supra para. 45 (stating that, upon consummation of the transaction, PTI Pacifica would hold 107 megahertz
of spectrum).

22

Federal Communications Commission DA 09-1054

areas like Guam and the CNMI.174 We agree that the Petitioners have not shown that the costs of
providing terrestrial service are comparable to those for providing service over a submarine cable nor is
there any evidence of the costs associated with the building and maintenance of a submarine cable system
in an area like Guam and the CNMI. Consequently, there is no evidence in this proceeding that the rates
are unjust or unreasonable. In any event, this is not the proper forum for contesting the reasonableness of
the rates for the MTC Interisland Cable System.
54. Because the MTC Interisland Cable System is a common carrier facility,175 Petitioners
can raise a claim that the rates for DS3 capacity are unjust and unreasonable through a section 208
complaint alleging a violation of section 201(b) of the Act.176 Such a remedy will adequately protect the
public interest from any anti-competitive concerns without denying the public the benefits of this
transaction.
D. Potential Public Interest Benefits
55. In addition to assessing the competitive harms of the proposed transaction, we also
consider whether the merger between the Applicants is likely to generate verifiable, transaction-specific
public interest benefits.177 In doing so, we ask whether the combined entity will be able to, and is likely
to, pursue business strategies resulting in demonstrable and verifiable benefits that they could not pursue
but for the combination.178 In examining benefits, the FCC applies a “sliding scale approach” to
evaluating benefit claims. Where potential harms appear “both substantial and likely, a demonstration of
claimed benefits also must reveal a higher degree of magnitude and likelihood than we would otherwise
demand.” On the other hand, where potential harms appear less likely and less substantial, the FCC will
accept a lesser showing.179 As shown below, we find that the proposed transaction is likely to generate
transaction-specific public interest benefits, although it is difficult to precisely quantify them.
56. Applicants assert that PTI Pacifica’s acquisition of IT&E’s wireless assets will yield
significant public interest benefits.180 Specifically, the Applicants state that PTI Pacifica will deploy
seamless voice and data roaming amongst Guam and the three main CNMI islands. 181 They also state
that the combined infrastructure and assets will allow PTI Pacifica to offer the latest technology as well as
a wider range of products and services to its customers both in Gaum and the CNMI.182 Further, the
Applicants state that PTI Pacifica plans to invest several million dollars into IT&E’s wireless network in

174
Applicant Reply at 7.
175
See MTC Interisland Cable Landing License Order, 8 FCC Rcd 748; Micronesian Telecommunications
Corporation Application For Authority Under Section 214 of the Communications Act of 1934, As Amended, To
Construct And Operate the MTC Interisland Cable Between the Commonwealth of the Northern Mariana Islands
and Guam, File No. I-T-C-92-140, Memorandum Opinion, Order and Authorization, 8 FCC Rcd 750 (CCB 1993).
176
See 47 U.S.C. §§ 201(b), 208.
177
See, e.g., SBC/AT&T Order, 20 FCC Rcd at 18384, para. 182; Application of GTE Corporation and Bell Atlantic
Corporation, CC Docket No. 98-184, Memorandum Opinion and Order, 15 FCC Rcd 14032, 14130, para. 209
(2000) (Bell Atlantic/GTE Order).
178
See Bell Atlantic/GTE Order, 15 FCC Rcd at 14130, para. 209.
179
See, e.g., Verizon-Alltel Order, 23 FCC Rcd. at 17497 para. 118; AT&T/BellSouth Order, 22 FCC Rcd at 5761–
62, para. 203.
180
Wireless Licenses Application, Description of Transaction and Public Interest Statement at 2.
181
Id.
182
PTI Press Release at 1-2.

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Federal Communications Commission DA 09-1054

the next year to supplement IT&E’s CDMA and GSM networks with EVDO Rev A on the CDMA
network and expanded GPRS coverage on the GSM network.183 The Applicants argue that this upgrade
will “constitute Guam’s most advanced wireless network, with the fastest wireless broadband speeds.”184
The Applicants also assert that PTI Pacifica’s acquisition of IT&E’s spectrum will strengthen PTI
Pacifica’s ability to roll-out spectrum intensive advanced wireless services and allow it to compete more
vigorously in the Guam and CNMI markets.185 Finally, they argue that the proposed transaction would
result in PTI Pacifica realizing significant economies of scale allowing it greater flexibility to respond
quickly to changing market conditions in order to better service its customer base.186
57. The Applicants further assert that approval of the proposed transfer will further the public
interest in the domestic and international wireline markets in Guam and CNMI by allowing them to
respond quickly to competitive offers and by ensuring a seamless transition for customers.187 We agree
with the Applicants that PTI Pacifica, an established and qualified carrier that is accustomed to providing
service in the unique markets of Guam and the CNMI, will be able to make substantial investments in
IT&E’s telecommunications business and infrastructure, as well as realize economies of scale from the
transaction so that consumers in both territories will have access to a strong, viable competitor in all the
markets in which it provides service.188
E. Foreign Ownership
58. PTI requests a declaratory ruling under section 310(b)(4) of the Communications Act that
PTI Pacifica’s acquisition of IT&E’s common carrier earth station for Guam and LMDS licenses for
Guam and the CNMI is consistent with the public interest.189 In support of its request, PTI notes that the
International Bureau, under delegated authority, previously approved the indirect foreign ownership of
PTI Pacifica in two decisions issued in 2003 and 2006.190 According to PTI, PTI Pacifica’s ultimate
ownership is substantively the same as it was in 2006, and the proposed transaction raises no new foreign
ownership issues. PTI therefore requests that the Commission extend the previous section 310(b)(4)
findings to permit PTI’s proposed acquisition of IT&E’s common carrier earth station license for Guam

183
Wireless Licenses Application, Description of Transaction and Public Interest Statement at 2. See also PTI Press
Release at 1, 2 (stating that PTI Pacifica plans to invest over $10 million in Guam in the next two years).
184
Wireless Licenses Application, Description of Transaction and Public Interest Statement at 2.
185
Id.
186
Id.
187
Domestic Authorizations Application at 3-4; PTI Pacifica April 22, 2008 Ex Parte Letter at 1-2.
188
Domestic Authorizations Application at 3–4.
189
See Updated PTI Petition for Declaratory Ruling at 1. PTI Pacifica will also acquire IT&E’s common carrier
PCS licenses for Guam and the CNMI. PTI Pacifica states that, because it has already received approval under
section 310(b)(4) to hold PCS licenses for Guam and the CNMI in the 2006 Assignment Order (Application of Bell
Atlantic New Zealand Holdings, Inc., Assignor, and GTE Pacifica, Inc., Assignee, for the Assignment of Personal
Communications Service (PCS) License WQCV808 (MTA 050), Order, DA 06-2197, 21 FCC Rcd 12079 (WTB/IB
2006) (2006 Assignment Order)), it has not requested a specific section 310(b)(4) ruling with respect to the PCS
licenses it will acquire from IT&E. See Updated Pacific Telecom Petition for Declaratory Ruling at 4 n.5.
190
See Updated PTI Petition for Declaratory Ruling at 3 (citing BANZHI-PTI Order, 18 FCC Rcd at 23140 and 2006
Assignment Order, 21 FCC Rcd at 12079). PTI Pacifica was named GTE Pacifica, Inc. at the time of the BANZHI-
PTI Order. It notified the Commission of the name change during the course of the 2006 Assignment proceeding.
See BANZHI-PTI Order, 18 FCC Rcd at 12079, para. 1 n.1.

25

Federal Communications Commission DA 09-1054

and LMDS licenses for Guam and the CNMI.191
1. Legal Standard for Foreign Ownership of Radio Licensees
59. We review the foreign ownership of PTI Pacifica under sections 310(b)(4) of the Act and
the Commission’s foreign ownership policies established in the Foreign Participation Order.192 As part
of that analysis, we consider any national security, law enforcement, foreign policy, or trade policy
concerns raised by the proposed assignment of licenses.193 Relying on Commission precedent, we find
that the proposed assignments do not raise any issues under section 310(a) or 310(b)(1)–(b)(3) of the
Act.194 Our analysis focuses on issues raised under section 310(b)(4) of the Act. Based on the record
before us, we conclude for the reasons stated below that it would not serve the public interest to deny
consent to the proposed transaction because of the foreign equity and voting interests that are held
indirectly in PTI Pacifica as a result of foreign investment in its U.S.-organized parent, PTI.
60. Section 310(b)(4) of the Act establishes a 25 percent benchmark for investment by
foreign individuals, corporations, and governments in U.S.-organized entities that control U.S. common
carrier radio licensees. This section also grants the Commission discretion to allow higher levels of
foreign ownership if it determines that such ownership is not inconsistent with the public interest.195 The
presence of aggregated alien equity or voting interests in a common carrier licensee’s parent in excess of

191
See Updated PTI Petition for Declaratory Ruling at 4.
192
See Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, IB Docket Nos. 97-142
and 95-22, Report and Order and Order on Reconsideration, 12 FCC Rcd 23891 (1997) (Foreign Participation
Order), Order on Reconsideration, 15 FCC Rcd 18158 (2000).
193
The Commission considers national security, law enforcement, foreign policy, and trade policy concerns when
analyzing foreign investment pursuant to sections 310(b)(4) and 310(d). Foreign Participation Order, 12 FCC Rcd
at 23918–21 paras. 59–66. See also infra Section III.F. (National Security, Law Enforcement, Foreign Policy, and
Trade Concerns).
194
Section 310(a) of the Communications Act prohibits any radio license from being “granted to or held by” a
foreign government or its representative. 47 U.S.C. § 310(a). In this case, no foreign government or its
representative will hold any of the radio licenses. Section 310(b)(1)–(2) of the Communications Act prohibits
common carrier, broadcast, and aeronautical fixed or aeronautical en route radio licenses from being “granted to or
held by” aliens, or their representatives, or foreign corporations. 47 U.S.C. § 310(b)(1)–(2). We find that no alien,
representative, or foreign corporation will hold any of the common carrier licenses in this case. Accordingly, we
find that the proposed assignments are not inconsistent with the foreign ownership provisions of section 310(a) or
310(b)(1)–(2) of the Communications Act. See Applications of VoiceStream Wireless Corp., Powertel, Inc.,
Transferors, and Deutsche Telekom AG, Transferee, IB Docket No. 00-187, Memorandum Opinion and Order, 16
FCC Rcd 9779, 9804–9809 paras. 38–48 (2001). Additionally, because the foreign investment in PTI Pacifica is
held through a controlling U.S. parent company, PTI, the proposed assignments do not trigger section 310(b)(3) of
the Communications Act, which places a 20% limit on alien, foreign corporate, or foreign government ownership of
entities that themselves hold common carrier, broadcast, and aeronautical fixed or aeronautical en route Title III
licenses. Compare 47 U.S.C. § 310(b)(3) with § 310(b)(4). See Request for Declaratory Ruling Concerning the
Citizenship Requirements of Sections 310(b)(3) and (4) of the Communications Act of 1934, as amended,
Declaratory Ruling, 103 F.C.C. 2d 511 (1985) (Wilner & Scheiner I), recon. in part, 1 FCC Rcd 12 (1986).
195
See 47 U.S.C. § 310(b)(4) (“No broadcast or common carrier or 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 would be served by the refusal or
revocation of such license.”).

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Federal Communications Commission DA 09-1054

25 percent triggers the applicability of section 310(b)(4)’s statutory benchmark.196 Once the benchmark is
triggered, section 310(b)(4) directs the Commission to determine whether the “public interest will be
served by the refusal or revocation of such license.”197
61. In the Foreign Participation Order, the Commission concluded that the public interest
would be served by permitting greater investment by individuals or entities from World Trade
Organization (WTO) Member countries in U.S. common carrier and aeronautical fixed and aeronautical
en route radio licensees.198 Therefore, with respect to indirect foreign investment from WTO Members,
the Commission adopted a rebuttable presumption that such investment generally raises no competitive
concerns.199
62. Because PTI requests that we extend our previous section 310(b)(4) findings to permit
PTI Pacifica’s proposed acquisition of IT&E’s common carrier licenses, we consider in this proceeding
whether it remains in compliance with the foreign ownership ruling issued in the 2003 BANZHI-PTI
Order and, if so, whether it is appropriate to extend that ruling to encompass the common carrier wireless
licenses that will be assigned to PTI Pacifica.200 We examine these issues below.
2. Review of Foreign Ownership Issues
63. As discussed in Section II.A.2., PTI Pacifica is wholly owned by MTC, which is, in turn,
wholly owned by PTI. Each of these companies is organized under the laws of the CNMI.201 PTI is
majority-owned (75%) by Prospector, a company organized under the laws of the Cayman Islands, British

196
The calculation of foreign ownership interests under section 310(b)(4) is a two-pronged analysis in which the
Commission examines separately the equity interests and the voting interests in the licensee’s direct or indirect
parent. See BBC License Subsidiary L.P., Memorandum Opinion and Order, 10 FCC Rcd 10968, 10973 para. 22
(1995) (BBC License Subsidiary). The Commission calculates the equity interest of each foreign investor in the
parent and then aggregates these interests to determine whether the sum of the foreign equity interests exceeds the
statutory benchmark. Similarly, the Commission calculates the voting interest of each foreign investor in the parent
and aggregates these voting interests. Id. at 10972 para. 20, 10973–74 paras. 22–25.
197
47 U.S.C. § 310(b)(4).
198
Foreign Participation Order, 12 FCC Rcd at 23896, para. 9, 23913, para. 50, 23940, paras. 111–112. In
evaluating an applicant’s request for approval of foreign ownership interests under section 310(b)(4), the
Commission uses a “principal place of business” test to determine the nationality or “home market” of foreign
investors. See Foreign Participation Order, 12 FCC Rcd at 23941, para. 116 (citing Market Entry and Regulation
of Foreign-Affiliated Entities, Report and Order, 11 FCC Rcd 3873, 3951 para. 207 (1995)).
199
Foreign Participation Order, 12 FCC Rcd at 23913, para. 50, 23940, paras. 111–112. The Commission stated, in
the Foreign Participation Order, that it will deny an application if it finds that more than 25 percent of the
ownership of an entity that controls a common carrier radio licensee is attributable to parties whose principal
place(s) of business are in non-WTO Member countries that do not offer effective competitive opportunities to U.S.
investors in the particular service sector in which the applicant seeks to compete in the U.S. market, unless other
public interest considerations outweigh that finding. See id. at 23946 para. 131.
200
The Applicants have also applied for the assignment to PTI Pacifica of IT&E’s private microwave licenses. See
Updated PTI Petition for Declaratory Ruling at 4 n.5. We note that section 310(b)(4) governs only common carrier,
broadcast, aeronautical en route, and aeronautical fixed radio licenses. Therefore, we do not consider under section
310(b)(4) the foreign ownership of PTI Pacifica as it relates to the private microwave licenses. Our findings in this
Memorandum Opinion and Order and Declaratory Ruling with respect to competitive effects, our public interest
determination for the common carrier licenses, and the Executive Branch’s resolution of any national security and
law enforcement concerns, collectively suffice to resolve any other public interest implications, outside of our
review under section 310(b)(4), to the extent there are any, for the non-common carrier licenses.
201
See Updated PTI Petition for Declaratory Ruling at 2.

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Federal Communications Commission DA 09-1054

West Indies. Prospector is owned by two related individuals: (1) Ricardo C. Delgado, a citizen of the
Philippines, holds a 60 percent equity and voting interest in Prospector; and (2) Jose Ricardo Delgado,
also a citizen of the Philippines, holds a 40 percent equity and voting interest in Prospector.202 The
remaining ownership interest in PTI is held by Sumitomo Corporation, a company organized under the
laws of Japan (20%) and its wholly-owned, U.S.-incorporated subsidiary, Sumitomo Corporation of
America (5%).203
64. At the time of the BANZHI-PTI Order, Prospector owned 100 percent of the equity and
voting interests in PTI.204 We found in the BANZHI-PTI Order that Prospector is entitled to a rebuttable
presumption that its ownership of PTI Pacifica does not pose competition concerns because Prospector’s
principal place of business is in the Philippines, a WTO Member country.205 The foreign ownership
ruling issued in that proceeding permits PTI Pacifica to be owned indirectly by “Prospector (up to and
including 100 percent of the equity and voting interests) and by Prospector’s shareholders Ricardo C.
Delgado (up to and including 60 percent of the equity and voting interests) and Jose R. Delgado (up to
and including 40 percent of the equity and voting interests).”206 Thus, Prospector’s current 75 percent
equity and voting interests in PTI, and the respective equity and voting interests held in Prospector by the
Delgado’s, which remain unchanged, fall within the parameters of PTI Pacifica’s existing foreign
ownership ruling.
65. The 25 percent equity and voting interests acquired directly and indirectly in Pacific
Telecom by Sumitomo Corporation also complies with the terms of PTI Pacifica’s foreign ownership
ruling.207 In accordance with our usual policy, the ruling permits PTI Pacifica “to accept up to and
including an aggregate 25 percent indirect equity and/or voting interest from other foreign investors
without obtaining prior Commission approval under section 310(b)(4) of the Act.”208 Because Sumitomo
Corporation’s aggregate direct (20%) and indirect (5%) equity and voting interests in PTI do not exceed
25 percent, and no other foreign individual or entity holds a direct or indirect equity or voting interest in
PTI, we find that PTI Pacifica’s current foreign ownership complies with its existing foreign ownership
ruling. Accordingly, we find that PTI Pacifica continues to be entitled to a rebuttable presumption that its
indirect foreign ownership does not pose a risk to competition in the U.S. market. We find no evidence in
the record of this proceeding that rebuts this presumption and, as we explain above, we find no basis to
conclude that the assignment of IT&E’s common carrier earth station license and LMDS licenses to PTI
Pacifica is likely to harm competition.209 In addition, the Executive Branch has reviewed the transaction.
As we discuss below, the Executive Branch Agencies advise that they do not object to grant of the
petition for declaratory ruling and applications, provided, as Applicants request, that we condition our

202
See id. at 2–3.
203
See id. at 1–2.
204
See BANZHI-PTI Order, 18 FCC Rcd at 23143 para. 4.
205
Id. at 23152–53 para. 25.
206
Id. at 23153 para. 28.
207
Sumitomo Corporation acquired a direct 25 percent equity and voting interest in PTI effective July 31, 2006. See
2006 Assignment Order, 21 FCC Rcd 12084, para. 15, 12085–86, para. 19; see also id. at 12085–86, para. 19
(finding Sumitomo Corporation’s direct investment in Pacific Telecom to be in compliance with the terms of the
foreign ownership ruling issued to PTI Pacifica in the BANZHI-PTI Order). Sumitomo Corporation subsequently
assigned to its wholly-owned U.S.-incorporated subsidiary, Sumitomo Corporation of America, a 5 percent equity
and voting interest in PTI. See Updated PTI Petition for Declaratory Ruling at 4.
208
See BANZHI-PTI Order, 18 FCC Rcd at 23153, para. 28.
209
See infra paras. 32-51.

28

Federal Communications Commission DA 09-1054

to ensure that the proposed foreign ownership does not threaten national security. Specifically, GTA
submits that “the combined IT&E/PTI should be required to divest any business that it does with the U.S.
Armed Forces and should be prevented from providing services to the military in the future.”218
68. In assessing the public interest, we take into the account the record and accord deference
to Executive Branch expertise on national security and law enforcement issues.219 As the Commission
stated in the Foreign Participation Order, foreign participation in the U.S. telecommunications market
may implicate significant national security or law enforcement issues uniquely within the expertise of the
Executive Branch.220 Although the Commission presumes, subject to rebuttal, that an application from a
WTO Member applicant does not pose a risk of anticompetitive harm that would justify denial of the
application, the Commission does not presume that an application poses no national security, law
enforcement, foreign policy, or trade concerns.221 In the context of this particular proceeding, we
considered these concerns independent of our competition analysis and, at the request of the Executive
Branch Agencies, we deferred action on the applications and petition until resolution of their concerns.
As explained above, the Executive Branch Agencies now state that, based on information provided to the
Agencies by the Applicants, they do not object to grant of the applications and petition for declaratory
ruling based on the Applicants’ request that the Commission condition its grant on compliance by PTI
Pacifica with the terms of the 2003 Executive Branch Agreement. In view of the Executive Branch’s
scrutiny of the transaction, and the resolution of its concerns, we find no basis in the arguments raised by
GTA to adopt the condition it requests. Given the discussion above, and in accordance with the request of
the Applicants, we condition our grant of the applications and petition for declaratory ruling on
compliance by PTI Pacifica with the commitments set forth in the 2003 Executive Branch Agreement. 222
IV. CONCLUSION
69. Upon review of the Application and the record in this proceeding, we conclude that
approval of this transaction, as limited by the conditions, is in the public interest. We find that
competitive harm is unlikely in markets for wireline and mobile telephony in Guam as a result of this
transaction. Accordingly, we deny the Joint Petition’s request for conditions, except for the condition
relating to long distance prices in CNMI. Moreover, based on the Executive Branch’s review of the
transaction and the resolution of its concerns, we deny any action sought by GTA in the GTA June 19,
2008 Ex Parte Letter. However, as requested by the Executive Branch Agencies, we condition our grant
of the Application on PTI Pacifica’s compliance with the 2003 Executive Branch Agreement.223

(Continued from previous page)
new base for the Marine Corps, expanding Guam’s naval facilities to accommodate aircraft carriers, and building
missile defense facilities for the Army. Id. at 1–2 (citing Pacific Daily News, “Gates arrives on Guam: Governor
talks buildup with Secretary of Defense,” available at
http://www.guampdn.com/apps/pbcs.dll/article?AID=/20080530/NEWS01/805300306/1002 (May 30, 2008)). It
states that nearly 40,000 military personnel, contractors, and dependents are expected to be transferred to the
territory from other military facilities between now and 2014. Id. (citing Washington Post, “Guam Braces for
Peaceful Military Incursion,” available at http://www.washingtonpost.com/wp-
dyn/content/article/2008/01/24/AR2008012403509.html (Jan. 25, 2008)).
218
GTA June 19, 2008 Ex Parte Letter at 2.
219
See Foreign Participation Order, 12 FCC Rcd at 23919–21 paras. 61–66.
220
Id. at 23919 para. 62.
221
Id. at 23920–21 para. 65.
222
See infra para. 66.
223
See BANZHI-PTI Order, 18 FCC Rcd at app. B.

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Federal Communications Commission DA 09-1054

V. ORDERING CLAUSES
70. ACCORDINGLY, IT IS ORDERED that, pursuant to sections 4(i)–(j), 214, 309, and
310(b) and (d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i)–(j), 214, 309,
310(b), 310(d), the applications and associated petition for declaratory ruling set forth in Appendix A
ARE GRANTED.
71. IT IS FURTHER ORDERED that, pursuant to sections 4(i)–(j), 214, 309, and 310(b) and
(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i)–(j), 214, 309, 310(b), 310(d),
that grant of the applications and associated petition for declaratory ruling IS CONDITIONED UPON
compliance by PTI Pacifica with the provisions of the Agreement between the Micronesian
Telecommunications Corporation and Pacific Telecom Inc., and the Federal Bureau of Investigation, the
U.S. Department of Justice, the U.S. Department of Defense, and the U.S. Department of Homeland
Security, dated October 6, 2003, which is appended to the Order and Authorization adopted in IB Docket
No. 03-115, 18 FCC Rcd 23140, Appendix B (IB, WCB, WTB 2003).224
72. IT IS FURTHER ORDERED that, pursuant to sections 1, 4(i), 4(j), 5(c), 214, and 254 of
the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 155(c), 214, and 254,
and pursuant to the authority delegated in sections 0.91, 0.291, and 63.03 of the Commission's rules, 47
C.F.R. §§ 0.91, 0.291, and 63.03, and sections 0.51 and 0.261 of the Commission’s rules, 47 C.F.R. §§
0.51, 0.261, grant of the applications is conditioned upon Applicants’ compliance with the commitment
that PTI Pacifica will not raise its 1+ presubscribed wireline rates for three years from the date of this
Order.225
73. IT IS FURTHER ORDERED that, pursuant to sections 4(i)–(j), 214, 309, and 310(b) and
(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i)–(j), 214, 309, 310(b), 310(d),
that the Petition to Condition and the GTA June 19, 2008 Ex Parte Letter ARE DENIED.
74. This action is taken pursuant to delegated authority under Sections 0.204, 0.261, 0.291,
and 0.331, of the Commission’s Rules, 47 C.F.R. §§ 0.204, 0.261, 0.291, 0.331.

FEDERAL COMMUNICATIONS COMMISSION

Julie A. Veach
Acting Chief, Wireline Competition Bureau

James D. Schlichting
Acting Chief, Wireless Telecommunications Bureau

John V. Giusti
Acting Chief, International Bureau

224
See id.
225
See PTI Pacifica April 27 Ex Parte Letter at 6.

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Federal Communications Commission DA 09-1054

APPENDIX A

SECTION 214 AUTHORIZATIONS

A. International

File No. Authorization Holder Authorization Number

ITC-ASG-20080404-00164 PTI Pacifica, Inc. ITC-214-19970326-00172

B. Domestic

Docket No. Authorization Holder

WC Docket No. 08-54 IT&E Overseas, Inc.

SECTION 310(b)(4) PETITION FOR DECLARATORY RULING

File No. Applicant

ISP-PDR-20080403-00007 Pacific Telecom, Inc.

SECTION 310(D) AUTHORIZATIONS

File No. Licensee Call Signs

0003356838 IT&E Overseas, Inc. KNLF923
KNLG849
WPLM240
WPLM241
WPLM242
WPLM243
WPOK677
WPOK678
WPYQ892
WPYQ894
WQAZ587
WQCY611
WQDH227

32

Document Created: 2009-05-12 18:24:51
Document Modified: 2009-05-12 18:24:51

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