In re Applications of TeleCorp PCS, Inc.

• Decision Date: 03 November 2000
• Docket Number: 00-130
• Court: Federal Communications Commission Decisions
• Parties: In re Applications of TeleCorp PCS, Inc., Tritel, Inc., and Indus, Inc. and TeleCorp Holding Corp. II, L.L.C., TeleCorp PCS, L.L.C., ABC Wireless, L.L.C., PolyCell Communications, Inc., Clinton Communications, Inc., and AT&T Wireless PCS, LLC For Consent to Transfer of Control and Assignment of Licenses and Authorizations and Royal Wireless, L.L.C. and Zuma PCS, L.L.C. For Consent to Transfer of Control Licenses and Authorizations and Southwest Wireless, L.L.C., Poka Lambro File Ventures, Inc., Poka Lambro PCS, Inc., Poka Lambro/PVT Wireless, L.P., and Denton County Electric Cooperative, Inc. For Consent to Assignment of Licenses And Authorizations No. DA 00-1589 File Nos. 0000163408, 0000163410, 0000177844, 0000178897, 0000179413, 0000178796 WTB Report No. 578

and and Royal Wireless, L.L.C. and Zuma PCS, L.L.C. and No. DA 00-1589 WTB Report No. 578

No. 00-130

Federal Communications Commission

November 3, 2000

Adopted: October 27, 2000

MEMORANDUM OPINION AND ORDER

Thomas J. Sugrue, Chief, Wireless Telecommunications Bureau

Table of Contents Paragraph

I. INTRODUCTION 1

II. BACKGROUND 3

A. TeleCorp and Tritel ................................................................................................................. 3

B. Royal and Southwest ............................................................................................................... 8

II.DISCUSSION ...................................................................................................................... 11

A. Statutory Authority ................................................................................................................. 11

B. Qualifications and Eligibility ..................................................................................................... 13

1. Eligibility of Commonly Controlled Affiliates .............................................................................. 19

2. Permissible Growth ................................................................................................................... 24

3. Qualifying Investors' Equity Requirements .................................................................................. 30

4. Unjust Enrichment ..................................................................................................................... 42

a. TeleCorp's Licenses ............................................................................................................... 43

b. Other C Block Licenses .......................................................................................................... 44

c. Other F Block Licenses ........................................................................................................... 45

d. Section 1.2111(a) Disclosure Requirements .............................................................................. 51

5. Reversionary interest .................................................................................................................. 54

C. Public Interest Analysis ............................................................................................................. 58

1. Competitive Framework ............................................................................................................ 59

2. Analysis of Potential Adverse Effects .......................................................................................... 59

a. Domestic Mobile Voice Telephone Services ............................................................................. 60

i. Overlapping Interests ................................................................................................................. 61

ii. Spectrum Cap Issues ................................................................................................................. 63

3. Public Interest Benefits ................................................................................................................. 66

III.CONCLUSION .......................................................................................................................... 68

IV.ORDERING CLAUSES ............................................................................................................. 69

APPENDIX A – Parties Filing Comments

I. INTRODUCTION

1. In this Order, we grant the applications underlying the proposed merger of TeleCorp PCS, Inc. ("TeleCorp"), Tritel, Inc. ("Tritel"), and Indus, Inc. ("Indus"), as well as a number of related applications involving affiliates of TeleCorp, affiliates of PolyCell Communications, Inc. ("PolyCell"), and/or AT&T Wireless PCS, LLC ("AT&T Wireless"). Specifically, in connection with the proposed merger, we grant: (1) the applications filed by TeleCorp, Tritel, and Indus for consent to transfer control of, or assign, various broadband Personal Communications Services ("PCS") and Local Multipoint Distribution Service ("LMDS") licenses from Tritel or Indus to TeleCorp; and (2) applications to assign various PCS licenses in a series of license swaps between affiliates of TeleCorp, affiliates of PolyCell, and/or AT&T Wireless. We deny the petition to deny filed by Nextel Communications, Inc. ("Nextel") with respect to the applications underlying the proposed merger of TeleCorp, Tritel, and Indus. Further, we deny TeleCorp and Tritel's request for waiver of the unjust enrichment payment owed in connection with TeleCorp's acquisition of Tritel's licenses.

2. We also grant herein the following related applications, each of which involves a proposed license acquisition by a TeleCorp affiliate: (1) the transfer of control of various PCS licenses of Zuma PCS, L.L.C. ("Zuma") to Royal Wireless, L.L.C. ("Royal"), a TeleCorp affiliate; and (2) the assignment of various PCS authorizations from Poka Lambro Ventures, Inc., Poka Lambro PCS, Inc., Poka Lambro/PVT Wireless, L.P. (collectively, "Poka Lambro"), and Denton County Electric Cooperative, Inc. ("Denton County") to Southwest Wireless, L.L.C. ("Southwest"), another TeleCorp affiliate. We deny petitions to deny these transfer and assignment applications filed by Leaco Rural Telephone Cooperative, Inc. ("Leaco") and Comanche County Telephone Company, Inc. ("Comanche County").

II. BACKGROUND

A. TeleCorp and Tritel

3. TeleCorp, a publicly traded Delaware corporation headquartered in Arlington, Virginia, indirectly holds A, B, C, D, E, and F block PCS licenses, LMDS licenses, and common carrier point-to-point microwave licenses. TeleCorp is controlled by Gerald Vento and Thomas Sullivan.^[1] Through wholly-owned subsidiaries, TeleCorp holds a number of entrepreneurs' block licenses (C and F block PCS licenses).^[2] TeleCorp has designed its corporate structure so that the entrepreneurs' block licenses are held through a different wholly-owned subsidiary of the parent public company than the A, B, D, and E block PCS licenses. The qualifying investors for purposes of the entrepreneur's block rules governing eligibility for the C and F block PCS licenses are several individuals (most notably, Messrs. Vento and Sullivan) who, collectively: (1) hold 50.1 percent of the voting rights in the parent company; (2) hold 11.8 percent of the total number of shares issued by the parent; and (3) control the board of directors.^[3] Two of TeleCorp's classes of stock, however, are tracked to the assets of the subsidiary holding entrepreneurs' block licenses. The qualifying investors hold just over fifteen percent of the tracking shares in the entrepreneurs' block licensee subsidiary.

4. Tritel, a publicly traded Delaware corporation headquartered in Jackson, Mississippi, currently holds, through its subsidiaries, A, B, C, and F block PCS licenses. Tritel holds licenses to provide PCS to approximately fourteen million people in the south-central United States.^[4] William M. Mounger, II and E.B. Martin Jr. together hold shares that constitute a majority of the total voting power of Tritel capital stock.^[5] Both TeleCorp and Tritel offer service using the AT&T Wireless brand name, marketing as a "Member, AT&T Wireless Services Network."^[6]

5. On May 9, 2000, pursuant to section 310(d) of the Communications Act of 1934, as amended ("the Act"), ^[7] TeleCorp, Tritel, and Indus filed applications for (1) the pro forma transfer of control or assignment of TeleCorp's C and F block PCS and LMDS licenses to newly formed subsidiaries of a new TeleCorp parent holding corporation that will assume the name TeleCorp PCS, Inc. ("TPI"); (2) the transfer of control of authorizations currently held by Tritel subsidiaries to TPI; and (3) the assignment of the one broadband PCS licenses of Indus to Wisconsin Acquisition Corp. ("Wisconsin Acquisition"), an indirect subsidiary of TPI.^[8] In addition, as part of the same transaction, TeleCorp affiliates, PolyCell affiliates, and AT&T Wireless filed applications for the cross-assignments involved in various license swaps.

6. The essence of the merger is that, in simultaneous transactions, TeleCorp and Tritel stockholders will become stockholders in the new parent holding company, TPI, through the exchange of their current capital stock for stock in TPI.^[9] Thus, both TeleCorp and Tritel will become wholly-owned subsidiaries of TPI. Simultaneous to these conversions, TPI will assume the TeleCorp name and trading symbol, and TeleCorp will be renamed TeleCorp Wireless, Inc ("TWI").^[10] The proposed merger will effect a transfer of control of Tritel from Messrs. Mounger and Martin, the controlling shareholders of Tritel, to Messrs. Vento and Sullivan, the controlling shareholders of TeleCorp.^[11]

7. On July 17, 2000, by delegated authority, the Wireless Telecommunications Bureau (the “Bureau”) issued a Public Notice to announce that all of the applications had been accepted for filing and to establish a pleading cycle to enable interested parties to comment on the applications involved in the TeleCorp/Tritel merger and the license swaps.^[12] In response to the Acceptance Public Notice, Nextel filed a petition to deny the applications raising questions regarding TeleCorp’s current eligibility to hold C and F block PCS licenses and its eligibility to acquire additional C and F block licenses.^[13]Leaco and Comanche jointly filed reply...