Federal Communications Commission da 14-349 Before the Federal Communications Commission

Table of Contents

Heading Paragraph #

I. introduction 1

II. background 5

A. Description of the Applicants 5

1. AT&T 5

2. Leap Wireless 6

B. Description of the Transaction 7

C. Transaction Review Process 11

III. standard of review 13

IV. QUALIFICATIONS OF APPLICANTS 17

V. POTENTIAL public interest harms 20

A. Competitive Overview and Market Definitions 21

1. Competitive Overview 21

2. Market Definitions 22

B. Competitive Effects of the Proposed Transaction 38

1. Initial Screen 41

2. Competitive Analysis 49

a. General Arguments Regarding Loss of Leap as an Independent Facilities-Based Provider 51

(i) Record 51

(ii) Discussion 66

b. Market-by-Market Analysis 75

(i) San Diego and the California Central Valley 77

(ii) South Texas Markets 84

(iii) Other Markets 99

3. Roaming 103

C. Other Issues 109

VI. potential public interest benefits 130

A. Analytical Framework 131

B. Potential Benefits 133

C. Discussion 144

VII.REMEDIES 155

A. Introduction 155

B. Spectrum Divestitures 161

C. Spectrum Deployment Commitments 164

D. LTE Network Deployment in South Texas 166

E. Rate Plan Commitments 168

F. Feature Phone Trade-In Program, iPhone SIM Card Replacement Program, and Device Trade-In Credits Program 172

G. Roaming Commitments 178

H. Flat Wireless Commitments 183

I. Progress Reports 186

VIII.Balancing The Public Interest BeNEFITS and the HArms 188

IX. ordering clauses 190

APPENDIX A – List of Applications

APPENDIX B – List of Filings

APPENDIX C – Markets Identified by the Initial Screen

APPENDIX D – Spectrum Divestitures by AT&T

1. introduction

1. 
   In this Memorandum Opinion and Order, we approve, subject to conditions, the applications of AT&T Inc. (“AT&T”) and Leap Wireless International, Inc. (“Leap”) (together, the “Applicants”) for Commission consent to the transfer of control of, and assignment of, a number of AWS-1, PCS, and associated microwave licenses and international section 214 authorizations from Leap’s subsidiaries, Cricket License Company, LLC and STX Wireless License, LLC, to AT&T.
   
2. 
   As a result of the proposed transaction, approximately 4.6 million customers, as well as spectrum, network equipment, and other assets, will be transferred from Leap to AT&T. Based on our analysis, we find that the proposed transaction has the potential to cause some competitive and other public interest harms in several local markets, as well as to value-conscious consumers. The possibility of public interest harms resulting from the proposed transaction would likely be counterbalanced to some degree by certain claimed public interest benefits. Even taking into consideration those benefits, however, we remain concerned about the potential for the proposed transaction to result in certain public interest harms.
   
3. 
   AT&T has made certain voluntary commitments, however, that will ameliorate the potential public interest harms and that will help to ensure the achievement of the asserted public interest benefits. Those commitments include spectrum divestitures in certain markets, which will help ensure that AT&T’s competitors have access to spectrum. AT&T has also made commitments to deploy LTE service using unused Leap spectrum within 90 days or 12 months of closing, which will ensure that that spectrum is being deployed and that consumers in the current Leap service areas will benefit from network improvements to AT&T’s advanced 4G network technologies. AT&T has also made commitments to build out LTE service in six specific markets in south Texas within 18 months, which will ensure that consumers in those markets have access to advanced 4G services. In addition, AT&T has committed to offer certain rate plans targeted to help value-conscious and Lifeline customers. AT&T also has agreed to offer a device trade-in credit program and a feature phone device trade-in program to certain Leap customers prior to discontinuing CDMA service in a particular area in order to ensure that Leap customers have future access to wireless service. The commitments providing for spectrum divestitures, the deployment of unused spectrum, the build out of LTE service, rate plans, and customer migration will all apply to south Texas markets. They will ameliorate the potential harms and ensure public interest benefits in those markets by, among other things, ensuring that AT&T has every incentive to provide higher quality service, and minimizing customer dislocations that might result from the proposed transaction. In addition, in order to ensure that CDMA roaming services remain available while AT&T transitions Leap’s CDMA network, AT&T has made a commitment to honor existing CDMA roaming agreements that AT&T is assuming from Leap so long as it operates the CDMA network. Finally, AT&T has offered a commitment to dispose of Leap’s interests in a competitive wireless telecommunications provider if they are not sold prior to closing as well as certain other commitments to protect against possible anticompetitive effects before those interests are sold.
   
4. 
   Based on our review of the record and in light of these commitments, which become conditions to our approval, we find that the public interest benefits of the proposed transaction outweigh the likelihood of significant public interest harms, such that overall, the proposed transaction is in the public interest.
   

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