Pacific Telesis Group poised to bid on PCS spectrum

Mobile Phone News, Jan 31, 1994

The FCC recently granted temporary waivers to Pacific Telesis Group (PTG), which contains the "Bell" subsidiaries Pacific Bell and Nevada Bell, and PacTel Corp., PTG's cellular subsidiary and soon-to-be an independent cellular company. Thanks to the waiver, the companies, both poised to enter the personal communications services (PCS) market, will be able to bid on PCS spectrum separately.

The FCC waived section 99.204 of its Gen. Docket No. 90-314, FCC 93-451 new ownership rules that would have restricted PTG's eligibility in filing for Pcs licenses. The waiver is valid until PTG spins-off PacTel Corp., its cellular subsidiary. The estimated spin-off completion date is June 9. Additionally, the waiver enables PTG and PacTel to bid for the same spectrum in some geographic areas.

The FCC's action waives the cross-ownership rule that states: "Entities that have an attributable interest of 20 percent or more in an entity that is a licensee in the domestic public cellular radio telecommunications service shall not be eligible for assignment of more than one 10 MHz frequency block in any PCS service area where its cellular geographic service area (CGSA) includes 10 or more percent of the population of the PCS services area."

The waiver allows PacTel to pursue plans to bid on 10 MHz spectrum blocks within its cellular service areas, and PTG, or its Bell subsidiaries, to bid against PacTel and other interested parties in areas outside PacTel's serving areas in the event the FCC broadband PCS spectrum auctions begin before June 9.

...PTG Takes Spin-Off One Hurdle at a Time

The spin-off of PTG's cellular company PacTel Corp. has been clearing regulatory hurdles systematically. The California Public Utilities Commission approved the separation of PacTel from PTG in November, and PTG completed an initial public offering (IPO) of 68.5 million PacTel stock shares-- representing approximately 14 percent of PacTel's now outstanding shares--in December 1993 (MPN, Dec. 20, 1993, p. 8).

PTG stated that, subject to final board of director's approval, it plans to complete the spin-off process by distributing the remaining 424 million PacTel stock shares to PTG's existing shareholders no later than June 9.

Section 6002(d)(2)(B) of Pub. L. 103-66 requires the FCC to commence issuing PCS licenses and permits on or before May 7. In that case, PTG and PacTel assume that those licenses, accompanied by eligibility certifications, might have to be filed as early as March 1994, and PTG will not be able to meet the eligibility qualifications.

...PacTel Concerned With Accelerated Filing Schedule

According to FCC documentation, PTG and PacTel aired concerns that the cellular-eligibility restrictions contained in Section 99.204, combined with the operation of the proposed auction-application rules, could preclude PTG and PacTel from being eligible to apply for licenses that they would have been eligible to hold upon spin-off completion.

PTG believed it was in a unique position and qualified for a waiver. Citing a precedent set in the Northeast Cellular Telephone Co., L.P. vs. FCC 897 F.2d 1164, 1166 (D.C. Cir. 1990) proceeding, "A waiver of the commission's rules is appropriate `only if special circumstances warrant a deviation from the general rule and such deviation will service the public interest.'" PacTel stated: "We believe that PTG and PacTel have satisfied that burden in this case, so as to justify a limited-partial waiver of Section 99.204. The circumstances giving rise to this waiver request were unique, unforeseeable and beyond the control of PTG and PacTel...Indeed, if (auctioning) legislation had been enacted a few months later, the requested waiver likely would not have been needed."