Federal Communications Commission
`
`FCC 00-289
`
`Before the
`Federal Communications Commission
`Washington, D.C. 20554
`
`)))))))))
`
`In the Matter of
`
`Implementation of Section 6002(b) of the
`Omnibus Budget Reconciliation Act of 1993
`
`Annual Report and Analysis of Competitive
`Market Conditions With Respect to Commercial
`Mobile Services
`
` Adopted: August 3, 2000
`
`By the Commission:
`
`FIFTH REPORT
`
`Table of Contents
`
`Released: August 18, 2000
`
`Page
`
`I.
`
`II.
`
`INTRODUCTION............................................................................................................................3
`A.
`Overview .............................................................................................................................3
`
`B.
`
`C.
`
`Status of Competition..........................................................................................................4
`
`Industry Development .........................................................................................................5
`
`THE CMRS INDUSTRY.................................................................................................................9
`A.
`Mobile Telephony...............................................................................................................9
`
`1.
`2.
`3.
`4.
`
`Mobile Telephone Overview and Analysis............................................................9
`Cellular Sector Analysis ......................................................................................27
`Broadband PCS Sector Analysis..........................................................................28
`Other Competitors: Nextel Communications, Other Specialized Mobile
`Radio Operators, Resellers, and Satellite Operators............................................30
`
`B.
`
`Mobile Data.......................................................................................................................33
`
`1.
`2.
`3.
`4.
`5.
`
`Introduction..........................................................................................................33
`Data Services to Mobile Telephone Handsets .....................................................36
`Traditional Paging and Messaging Devices.........................................................55
`Other Handheld Devices ......................................................................................63
`Miscellaneous Data Devices ................................................................................66
`
`Ex.1045
`APPLE INC. / Page 1 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`C.
`
`Dispatch ............................................................................................................................69
`
`1.
`2.
`
`Commercial Dispatch Market Structure and Performance ..................................70
`Major Trends and Developments.........................................................................71
`
`III.
`IV.
`
`CONCLUSION ..............................................................................................................................75
`ADMINISTRATIVE MATTERS ..................................................................................................77
`
`APPENDIX A: Spectrum Auctions Tables
`APPENDIX B: Mobile Telephony Tables
`APPENDIX C: Mobile Data Tables
`APPENDIX D: Dispatch Tables
`APPENDIX E: Fixed Wireless Voice and Data
`APPENDIX F: Additional Maps
`APPENDIX G: Cellular License Ownership
`
`2
`
`Ex.1045
`APPLE INC. / Page 2 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`I.
`
`INTRODUCTION
`
`A. Overview
`
`In 1993, Congress created the statutory classification of Commercial Mobile Services1 to promote the
`consistent regulation of mobile radio services that are similar in nature.2 At the same time, Congress
`established the promotion of competition as a fundamental goal for CMRS policy formation and
`regulation. To measure progress toward this goal, Congress required the Federal Communications
`Commission (“Commission”) to submit annual reports that analyze competitive conditions in the
`industry.3 This report is the fifth of the Commission’s annual reports on the state of CMRS competition.4
`
`With one exception discussed below, this report follows the same general structure as the Fourth
`Report.5 This report bases its analysis on a consumer-oriented view of wireless services by focusing on
`specific product categories, regardless of their regulatory classification. In some cases, this includes an
`analysis of offerings outside the umbrella of “services” specifically designated by the Commission as
`CMRS.6 However, because licensees of these other spectrum-based services often compete with CMRS
`providers, as well as with other providers of telecommunications services, the Commission believes that
`it is important to consider them in the analysis.
`
`This report focuses on three categories of wireless services: mobile telephony,7 mobile data, 8 and
`dispatch.9 This is a departure from the report’s two previous editions, in which there was also a separate
`
`1
`Commercial Mobile Services came to be known by the Commission as the Commercial Mobile Radio
`Services, or “CMRS.”
`
`2
`
`The Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, Title VI, § 6002(b), amending the
`Communications Act of 1934 and codified at 47 U.S.C. § 332(c) (“1993 Budget Act”).
`
`3
`
`1993 Budget Act codified at 47 U.S.C. § 332(c)(1)(C).
`
`4 This report, like the others before it, discusses CMRS as a whole because Congress called on the
`Commission to report on “competitive market conditions with respect to commercial mobile services.” 47 U.S.C.
`§332 (c)(1)(C). An individual proceeding in which the Commission defines relevant product and geographic
`markets, such as a proposed license transfer, may present facts pointing to narrower or broader product markets than
`any used, suggested, or implied in this report.
`
`5
`
`Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and
`Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Fourth Report, 14 FCC
`Rcd 10145 (1999) (“Fourth Report”). A copy of the Fourth Report that includes color versions of the maps may be
`found on the Commission's Internet site: <http://www.fcc.gov/wtb/reports/fc99136.pdf>.
`
`6
`
`See, e.g., Section II.C, infra.
`
`7
`
`This report defines the mobile telephone segment to include cellular, broadband Personal Communications
`Services (“broadband PCS”), and digital Specialized Mobile Radio (“SMR”) operators.
`
`8
`
`The mobile data industry encompasses a wide array of services ranging from data transmitted over one-way
`pagers to vehicle tracking from satellites to wireless Internet connections via portable computers or Personal Digital
`Assistants (“PDAs”). Participants include both CMRS and non-CMRS providers, many of whom also offer mobile
`telephone and dispatch services.
`
`3
`
`Ex.1045
`APPLE INC. / Page 3 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`section for paging/messaging. The Commission believes that mobile data services warrant a more
`extensive treatment in this year’s report. While there are still only a limited number of mobile data
`services available in the United States beyond paging/messaging, that number is growing rapidly, and it
`seems clear that a larger mobile data sector is in the process of emerging. In the context of this
`developing sector, paging/messaging services can be viewed as a part of the larger landscape. In fact,
`some paging/messaging operators have begun to market themselves as competitors in the emerging
`mobile data world.10 Therefore, in this year’s report, the paging/messaging section has become a
`subsection of a larger discussion of mobile data services.11
`
`The three consumer-oriented service categories discussed in this report are not as clearly delineated when
`viewed from the carriers’ perspective. For example, some dispatch operators also offer mobile telephone
`services. In addition, many mobile telephone, paging/messaging, and dispatch operators are leveraging
`their core assets to enter the growing market for mobile data services.12 Therefore, while these service
`categories are used to provide structure for this CMRS competition report, the Commission’s view of
`operators is not limited by the categories in which this report places them.
`
`B. Status of Competition
`
`In the year 2000, the CMRS industry continues to benefit from the effects of increased competition as
`evidenced by lower prices to consumers and increased diversity of service offerings. For example, by
`year-end 1999, the number of mobile telephone subscribers had reached 86.0 million or 32 percent of the
`country’s population.13 In addition, according to the U.S. Department of Labor’s Bureau of Labor
`Statistics, the price of mobile telephone service declined by 11.3 percent between the end of January
`
`(Continued from previous page)
`9
`This report’s discussion of the dispatch market includes several different segments of that market,
`including: interconnected commercial dispatch carriers, which operate primarily in the 800 MHz, 900 MHz, and 220
`MHz bands and are referred to as “trunked dispatch;” and non-interconnected, non-CMRS, commercial dispatch
`service carriers, which are referred to as “traditional dispatch.” See Application of Various Subsidiaries of Geotek
`Communications, Inc., Memorandum Opinion and Order, DA 99-1027 (rel. Jan. 14, 2000).
`
`10 For example, the paging/messaging operator Pagemart Wireless, Inc. recently changed its name to Weblink
`Wireless, Inc., stating that the change was made to reflect the company’s change “from selling simple alert,
`telephone-centric services to wireless data Internet-based products and services.” PageMart Wireless Officially
`Becomes WebLink Wireless, News Release, Weblink Wireless, Inc., Dec. 1, 1999.
`
`11 This report defines the paging/messaging segment to include paging and narrowband Personal
`Communications Services (“narrowband PCS”) operators.
`
`12 See Section II.B, infra.
`
`13 The nationwide penetration rate is calculated by dividing total mobile telephone subscribers by the total
`U.S. population. The 32 percent figure is based on a 1999 U.S. population estimate of 271.0 million. See Dennis
`Leibowitz et al, The Global Wireless Communications Industry, Donaldson, Lufkin & Jenrette, Winter 1999/2000, at
`15 (“DLJ Report”).
`
`4
`
`Ex.1045
`APPLE INC. / Page 4 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`1999 and the end of January 2000.14 Another analyst estimates that mobile telephone prices fell 20
`percent between 1998 and 1999.15
`
`The process of carriers building nationwide footprints16 continues to be a significant trend in the mobile
`telephone sector. The two most prominent mobile telephone mergers announced during 1999 involved
`large regional operators seeking to create nationwide footprints in order to compete effectively with
`existing operators offering attractive nationwide pricing plans.17 In parallel with the process of footprint
`building, mobile telephone operators continue to deploy their networks in an increasing number of
`markets, expand their digital footprints, and develop innovative pricing plans.
`
`In the mobile data sector, the ongoing transition from paging/messaging to more advanced mobile data
`services makes it difficult to generalize about the status of competition. The paging/messaging subsector
`has long been highly competitive, but there has been little change in the demand for paging services.18 At
`the same time, virtually all wireless providers – from existing mobile telephone operators to numerous
`new entrepreneurs – have announced plans to offer consumers an impressive variety of mobile data
`services. However, many of the providers currently offer mobile data as an add-on to existing mobile
`voice services. Further, the services currently offered by a variety of carriers are diverse in a number of
`characteristics including different levels of geographic coverage and various target markets.
`
`In the dispatch sector, 220 MHz licensees are beginning to deploy their networks. In addition, some
`mobile telephone operators are beginning to offer services that cater to the needs of the dispatch sector,
`creating the potential for inter-service competition.
`
`C. Industry Development
`
`Mobile Telephony. Since the release of the Fourth Report, the mobile telephony sector of CMRS has
`experienced another year of strong growth and competitive development.19 In the twelve months ending
`December 1999, the mobile telephony sector generated over $40 billion in revenues,20 increased
`
`14 U.S. Department of Labor, Bureau of Labor Statistics databases, Bureau of Labor Statistics’ Internet site at
`<http://www.bls.gov/sahome.html> (“BLS Database”).
`
`15 The Strategis Group, Inc., 2000; see Section II.A.1.d, infra, for a detailed discussion of price competition.
`
`16 “Footprint” is an industry term of art referring to the total geographic area in which a wireless provider can
`offer services over its own facilities.
`
`17 For a further discussion of nationwide pricing plans, see Fourth Report, 14 FCC Rcd at 10159-10160.
`
`18 See Section II.B.3, infra.
`
`19 All of the data in this report are taken from publicly available sources. These sources include: trade
`associations, securities analysts, company releases and Web sites, filings with the Securities and Exchange
`Commission (“SEC”), newspaper and periodical articles, and certain materials made available to the Commission
`that were prepared by research companies and consultants that study various aspects of the wireless industry. The
`accuracy of the data from these materials, however, was not independently verified by the Commission. The
`inclusion of these data in this report does not constitute a representation or warranty by the Commission of their
`accuracy or completeness.
`
`20
`
`See Appendix B, Table 1, p. B-2.
`
`5
`
`Ex.1045
`APPLE INC. / Page 5 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`subscribership from 69.2 million to 86.0 million,21 and produced a nationwide penetration rate of roughly
`32 percent.22 Broadband PCS carriers and Nextel Communications, Inc. (“Nextel”) continue to deploy
`their networks.23 To date, 222 million people, or 88 percent of the total U.S. population, have three or
`more different operators (cellular, broadband PCS, and/or Nextel) offering mobile telephone service in
`the counties in which they live. Over 172 million people, or 69 percent of the U.S. population, live in
`areas with five or more mobile telephone operators competing to offer service. And 11 million people, or
`4 percent of the population, can choose from among seven different mobile telephone operators.
`
`The rise of digital technology in the mobile telephone sector continues unabated. The combined effect of
`increasing digital and declining analog customers has been that, at the end of 1999, digital subscribers
`made up 51 percent of the industry total, up from 30 percent at the end of 1998.24 Finally, in part because
`of growing competition in the marketplace, it appears that the average price of mobile telephone service
`has fallen substantially during the year since the Fourth Report, continuing the trend of the last several
`years.25 According to the U.S. Department of Labor Bureau of Labor Statistics, the price of mobile
`telephone service declined by 11.3 percent between the end of January 1999 and the end of January
`2000.26 Another analyst estimates that mobile telephone prices fell 20 percent between 1998 and 1999.27
`
`Mobile Data. While analysts estimate that only 2 percent of mobile traffic currently carries data,28 many
`analysts believe that the mobile data sector has turned a corner and that it is finally beginning to bring
`long-promised growth to mobile telephone and other wireless operators.29 The development of a number
`of new technologies has contributed to this turn of events. One of the most discussed technological
`transitions for the industry is the coming migration of mobile telephone networks to third generation (or
`“3G”) technologies with service offerings such as high speed Internet access and video conferencing. In
`addition, new protocols and technologies are being developed that facilitate the ability of mobile
`telephones and other handheld devices to access the Internet, as well as laptop computers and printers
`without cables.
`
`
`21
`Id.
`
`22
`
`See supra note 13.
`
`23 Nextel is included in the areas where it has launched its digital SMR-based mobile telephone service.
`
`24 See Section II.A.1.b, infra, for a detailed discussion.
`
`25
`
`Id.
`
`26 BLS Database.
`
`27 The Strategis Group, Inc., 2000; see Section II.A.1.d, infra, for a detailed discussion of price competition.
`
`28
`
`Jonathan Collins, Sprint’s Aggressive Ad Campaign Could Fire Up Demand For Wireless Net Access Or
`Give It A Bum WAP, TELE.COM, Feb. 21, 2000, available in WL 10907294.
`
`29
`
`Joe McGarvey, Wireless Access Set to Explode, INTER@CTIVE WEEK, Sept. 22, 1999.
`
`6
`
`Ex.1045
`APPLE INC. / Page 6 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`Dispatch. One analyst finds that in 1999 the commercial dispatch industry’s total subscribership
`increased by 30 percent from 4.6 million in 1998 to 6.0 million.30 While Nextel is the largest provider,
`its services include both mobile telephone and dispatch. Focusing on SMR providers without regard to
`the particular service markets involved, Nextel possesses by far the largest subscriber base. Using its
`iDEN technology, Nextel provided service to roughly 4.5 million digital subscribers at the end of 1999,
`62 percent more than the 2.8 million it served at the end of 1998.31 However, a number of mobile
`telephony providers now offer plans that allow unlimited calling among members of a defined group,
`such as a family, or among all of an operator’s subscribers in a defined area.
`
`
`30
`See The Strategis Group, Inc., “Dispatch Service in a Competitive Market,” Presentation at AMTEX’98
`Conference & Exposition, Nov. 13, 1998: THE STRATEGIS GROUP, INC., US DISPATCH MARKETS (January 2000)
`(“Strategis Dispatch Report”).
`
`31 See Appendix D, Table 1, p. D-3.
`
`7
`
`Ex.1045
`APPLE INC. / Page 7 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`8
`
`Ex.1045
`APPLE INC. / Page 8 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`II.
`
`THE CMRS INDUSTRY
`
`A. Mobile Telephony
`
`This report defines the mobile telephone sector to include all operators that offer commercially available
`interconnected mobile phone services. These operators provide access to the public switched telephone
`network (“PSTN”) via mobile communication devices employing radiowave technology to transmit calls.
`As discussed in last year’s report,32 providers using cellular radiotelephone, broadband PCS, and SMR
`licenses dominate this sector.33 Because these licensees offer mobile telephone services that are
`essentially interchangeable for most consumers, they are discussed in this report as a cohesive industry
`sector. Mobile telephone services are also offered by resellers and operators using satellite systems.
`
`The discussion below begins with an overview of the mobile telephone market as a whole. This is
`followed by subsections for cellular operators; broadband PCS operators; the digital SMR provider,
`Nextel; other SMR operators; resellers; and satellite providers.
`
`1.
`
`Mobile Telephone Overview and Analysis
`
`a. Mobile Telephone Sector Structure and Performance
`
`In 1999, the mobile telephone sector experienced another record year. As of December 1999, the sector
`had over 86.0 million subscribers,34 which translates into a nationwide penetration rate of roughly 32
`percent.35 It represents a 24 percent increase over the 69.2 million subscribers reported for December
`1998 and is the largest twelve-month increase in total number of subscribers in the history of the sector.
`In addition to the penetration rate rising to 32 percent, a recent study concluded that 43 percent of all
`households had service at the end of 1999, up from 35 percent in 1998.36 The financial performance of
`the mobile telephone sector also continued to be strong. In 1999, the sector’s annual total service
`revenue was over $40 billion,37 an increase of 21 percent over the year ending December 1998.
`
`The past year also has seen rapid changes in the structure of the mobile telephone sector. The most
`dramatic change has been the emergence of two new nationwide38 operators. At the time of the Fourth
`
`
`32
`See Fourth Report, 14 FCC Rcd at 10151-10152.
`
`33 As codified at 47 C.F.R. §§ 22.900, 24.200, 90.601.
`
`34
`
`35
`
`See Appendix B, Table 1, p. B-2.
`
`See supra note 13.
`
`36 Wireless Telephone Penetration in U.S. Soars to Unprecedented Levels, News Release, J.D. Power and
`Associates, Feb. 29, 2000.
`
`37
`
`See Appendix B, Table 1, p. B-2.
`
`38 When an operator is described as being “nationwide,” it does not necessarily mean that the operator’s
`license areas, service areas, or pricing plans cover the entire land area of the United States. The six mobile
`telephony carriers that analyst reports and this report often describe as nationwide all offer service in at least some
`(continued….)
`
`9
`
`Ex.1045
`APPLE INC. / Page 9 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`Report, there were only three operators with nationwide footprints: AT&T Services (“AT&T”), Sprint
`PCS Group (“Sprint PCS”), and Nextel. Since then, Bell Atlantic Corp. (“Bell Atlantic,” now known as
`Verizon)39 and VoiceStream Wireless Corp. (“VoiceStream”) have used joint ventures and mergers to
`join the ranks of the nationwide operators. These mergers are discussed below.
`
`b. Major Operational Trends
`
`Building Nationwide Footprints. A significant trend in the mobile telephone sector during 1999, as in
`previous years, was the continued effort of carriers to build nationwide footprints. As shown in Table 3
`in Appendix B,40 between December 1998 and December 1999, five of the top 25 operators by
`subscribership combined with other carriers. Furthermore, since the end of 1999, five operators in the
`year-end 1999 top 25 have merged with other carriers, and the joint venture between BellSouth
`Corporation (“BellSouth”) and SBC Communications, Inc. (“SBC”), announced in April 2000, is
`currently pending before the Commission.41 As noted in last year’s report, one of the driving forces
`behind many of these transactions has been the desire of large regional carriers to enhance their ability to
`compete with nationwide operators such as AT&T, Sprint PCS, and Nextel that are offering attractive
`nationwide pricing plans.42
`
`The Commission previously concluded that operators with larger footprints can achieve economies of
`scale and increased efficiencies compared to operators with smaller footprints.43 Such benefits permit
`companies to introduce and expand innovative pricing plans such as digital-one-rate type (“DOR”)
`plans,44 reducing prices to consumers. Analysts have drawn similar conclusions, predicting that the
`current consolidation will intensify competition among nationwide wireless providers.45
`
`(Continued from previous page)
`portion of the western, middle, and eastern United States. See Colette Fleming, Mark Kinarney, and Rohit Sharma,
`The Urge to Merge – 2000, Morgan Stanley Dean Witter, May 22, 2000, at 4-5 (“The Urge to Merge”).
`
`39 This reports sometimes discusses information and events from the period prior to the merger of Bell
`Atlantic and GTE Corp. (“GTE”) creating Verizon Communications (“Verizon”), and the Bell Atlantic-Vodafone
`AirTouch PLC (“Vodafone”) joint venture creating Verizon Wireless; therefore, the names “Bell Atlantic” and
`“Vodafone” will be used in those instances.
`
`40
`
`See Appendix B, Table 3, p. B-5.
`
`41 BellSouth, SBC Create 2nd Largest Wireless Company With $10.2 Billion in Revenues, News Release,
`BellSouth Corp., Apr. 5, 2000.
`
`42 For a more complete discussion of the motivations for this phenomenon, see Fourth Report, 14 FCC Rcd at
`10159-10160.
`
`43 See Fourth Report, 14 FCC Rcd at 10159; Third Report, 13 FCC Rcd at 19766; Second Report, 12 FCC
`Rcd at 11281.
`
`44 See Innovative Pricing Plans, supra and Fourth Report, 14 FCC Rcd at 10155-10156 for a discussion of
`DOR plans.
`
`45 Mary Mosquera, Wireless Footprint Required For Competition, TECHWEB (visited Oct. 8, 1999)
`<http://www.techweb.com/wire/story/TWB19990930S0006>.
`
`10
`
`Ex.1045
`APPLE INC. / Page 10 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`Indeed, as discussed in Section II.A.1.d, infra, there is some evidence that the addition of new nationwide
`operators already may be contributing to decreasing prices. Moreover, it is important to emphasize that,
`along with the process of consolidation, the mobile telephone sector continues to experience heightened
`competition as a result of the expansion by broadband PCS carriers and Nextel.46
`
`Voicestream/Omnipoint/Aerial - The broadband PCS operator VoiceStream, the largest U.S. carrier using
`GSM technology, merged with Omnipoint Corp. (“Omnipoint”) and Aerial Communications, Inc.
`(“Aerial”), which were two of the other largest independent GSM-based operators in the country.47 The
`new combined company controls PCS licenses covering 220 million POPs48 and serves approximately 2.2
`million customers.49
`
`Verizon Wireless - Bell Atlantic, GTE, and Vodafone have combined their cellular and broadband PCS
`licenses into a single company, Verizon Wireless.50 In April 2000, Bell Atlantic and Vodafone joined the
`assets of Bell Atlantic Mobile, AirTouch Communications, Inc. (“AirTouch”), and PrimeCo Personal
`Communications (formerly a joint Bell Atlantic – AirTouch broadband PCS venture) to create Verizon
`Wireless. On June 30, 2000, Bell Atlantic completed its merger with GTE, and the new company
`became Verizon.51 At that time, GTE’s cellular and broadband PCS assets were merged into Verizon
`Wireless.52 Verizon Wireless has a footprint covering 232 million POPs (more than 90 percent of the
`U.S. population),53 and is the largest mobile telephony provider with approximately 25 million
`subscribers.54 Verizon owns 55 percent of Verizon Wireless, and Vodafone owns 45 percent.
`
`
`46 See Section II.A.1.c, infra.
`
`47
`
`See VoiceStream Wireless Closes Omnipoint Merger, News Release, VoiceStream Wireless Corporation,
`Feb. 28, 2000; VoiceStream Wireless Closes Aerial Merger, News Release, VoiceStream Wireless Corporation ,
`May 5, 2000.
`
`48
`
`Id. POPs is an industry term referring to population, usually the number of people covered by a given
`wireless license or footprint. One “POP” equals one person.
`
`49 See Appendix B, Table 3, p. B-5.
`
`50 Bell Atlantic and Vodafone AirTouch to Form New U.S National Wireless Competitor, News Release, Bell
`Atlantic Corp., Sept. 21, 1999; Bell Atlantic and Vodafone AirTouch Launch Verizon Wireless, News Release,
`Verizon Wireless, Apr. 4, 2000; Bell Atlantic and GTE to Create Verizon, The Next Great Brand in
`Communications, News Release, Bell Atlantic Corp., June 16, 2000.
`
`51 Bell Atlantic, GTE Complete Merger, News Release, Bell Atlantic Corp. and GTE Corp., June 30, 2000.
`
`52
`In the areas where GTE’s cellular licenses overlapped those of Verizon Wireless, one of the cellular
`licenses was sold off. In the areas where the two companies’ cellular licenses overlapped their 30 MHz broadband
`PCS licenses, Verizon Wireless is divesting 20 MHz of broadband PCS spectrum. See United States of America v.
`Bell Atlantic Corporation, GTE Corporation, and Vodafone AirTouch PLC, Civil No. 1-99CV01119 (LFO) (D.D.C.
`April 18, 2000) (Final Judgment).
`
`53 Bell Atlantic and Vodafone AirTouch to Form New U.S. National Wireless Competitor, News Release, Bell
`Atlantic Corp., Sept. 21, 1999.
`
`54 See Appendix B, Table 3, p. B-5.
`
`11
`
`Ex.1045
`APPLE INC. / Page 11 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`SBC/BellSouth – In April, SBC and BellSouth announced they would combine their U.S. wireless
`operations into a joint venture, Alloy LLC.55 If the proposed joint venture is approved by the
`Commission and consummated, the new venture would cover 175 million POPs and serve 16.2 million
`subscribers, making it the second largest wireless carrier.56
`
`While the most high profile transactions have been on a national stage, there have been several smaller
`mergers that have been completed or announced since the release of the Fourth Report. Many of these
`have involved existing nationwide or regional operators purchasing smaller companies in order to expand
`or enhance their existing footprints.57 Smaller operators have also made acquisitions in an attempt to
`increase the size of their footprints.58
`
`International Alliances/Expansion. In addition to the domestic transactional activities that have taken
`place since the release of the Fourth Report, there also has been international activity in the form of both
`foreign operators investing in U.S. companies and U.S. companies seeking to expand their access to
`foreign markets.
`
`The most notable entry into the U.S. market was Vodafone’s merger with AirTouch.59 With this
`acquisition, Vodafone, which was already the largest mobile telephone operator in the world, acquired
`what was, at the time, the largest carrier in the United States by number of subscribers. In addition, in
`July, Deutsche Telekom announced it would acquire VoiceStream.60 Other examples of foreign
`operators investing in U.S. carriers include the Finnish company Sonera acquiring a 9 percent stake in the
`broadband PCS operator PowerTel Inc. (“PowerTel”),61 and Hong Kong company, Hutchison
`
`
`55 BellSouth, SBC Create 2nd Largest Wireless Company With $10.2 Billion in Revenues, News Release,
`BellSouth Corp., Apr. 5, 2000; See SBC Communications Inc. and BellSouth Corporation Seek FCC Consent To
`Transfer Control of, or Assign Licenses to Joint Venture, WT Docket No. 00-81, Public Notice, DA 00-1581 (rel.
`May 19, 2000).
`
`56 BellSouth, SBC Create 2nd Largest Wireless Company With $10.2 Billion in Revenues, News Release,
`BellSouth Corp., Apr. 5, 2000.
`
`57 For example, AT&T’s acquisition of Wireless One Network, LP, and its joint venture to acquire American
`Cellular Corp. (See AT&T Announces Acquisition of Wireless One, News Release, AT&T, Corp., Feb. 7, 2000;
`AT&T and Dobson Communications Form Joint Venture To Purchase American Cellular, News Release, AT&T
`Corp., Oct. 6, 1999); SBC Communications’ acquisitions of Radiofone, Inc. and Cellular Communications of Puerto
`Rico (See SBC Communications Completes Acquisition of Radiofone, Inc., News Release, SBC Communications,
`Inc., Mar. 2, 1999; Cellular Communications of P.R. Acquisition Complete, News Release, SBC Communications,
`Inc., Aug. 24, 1999); ALLTEL Corp.’s mergers with Aliant Communications Inc. and Liberty Cellular, Inc. (See
`ALLTEL, Aliant Complete $1.8 Billion Merger, News Release, ALLTEL Corp., July 2, 1999; ALLTEL, Liberty
`Cellular Complete $600 Million Merger, News Release, ALLTEL Corp., Sept. 30, 1999).
`
`58 For example, Rural Cellular Corp.’s acquisition of Triton Cellular Partners, LP (See Rural Cellular
`Corporation Agrees to Acquire Assets of Triton Cellular, News Release, Rural Cellular Corp., Nov. 8, 1999).
`
`59 Vodafone and AirTouch to Complete Merger, News Release, Vodafone Group PLC, June 25, 1999.
`
`60 Deutsche Telekom to Acquire VoiceStream For $50.7 Billion, Creating First Wireless Operator Using
`GSM Standard Worldwide, New Release, VoiceStream Wireless Corporation, July 23, 2000.
`
`61
`
`See Sonera Expands Presence in U.S. Wireless Market, News Release, Powertel, Inc., Aug. 19, 1999.
`Sonera also acquired an 8.6 percent interest in VoiceStream through VoiceStream’s merger with Aerial. See Aerial
`(continued….)
`
`12
`
`Ex.1045
`APPLE INC. / Page 12 of 183
`
`

`

`Federal Communications Commission FCC 00-289
`
`Telecommunications Limited, owning a 23 percent stake in VoiceStream after VoiceStream completed
`its acquisitions of Omnipoint and Aerial.62
`
`A number of U.S. mobile telephone operators have been investing in foreign mobile telephone busine