Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 In the Matter of ) ) Nextel Communications, Inc. and ) WT Docket No. 05-63 Sprint Corporation ) Application to Transfer Control of Licenses and ) Authorizations ) PETITION TO DENY OF COMMUNITY TECHNOLOGY CENTERS’ NETWORK 1436 U Street, NW Suite 104 Washington, DC 20009 March 30, 2005 TABLE OF CONTENTS SUMMARY........................................................................................................................ ii I. Introduction................................................................................................................. 2 II. Standing ...................................................................................................................... 3 III. The Transaction as Presently Proposed Will Not Serve the Public Interest........... 6 A. The Wireless Broadband Industry is a New and Distinct Service Which will Have a Growing Importance in an Increasingly Mobile Society......................... 6 B. Statements Made By the Applicants Regarding The Level Of Control That Will be Exerted By The Combined Entity Post Merger are Highly Misleading. ........ 8 C. The Proposed Merger will Create Disproportionate Market Power in the Post- Merger Company Creating the Potential for Serious Anti-Competitive Activity. ............................................................................................................................ 13 1. The Merged Entity Will Hold Substantially all of the Available Spectrum in Most Major Cities. ....................................................................................... 13 2. The Grant of the Application Will Foreclose the Entry of Other Competitive Wireless Broadband Providers..................................................................... 16 3. Operators no Longer need Substantially all of the Available Spectrum to Offer Competitive Low Power Cellularized Broadband Service ................ 18 4. The Commission Should Condition a Grant of the Application on Spectrum Divestitures in the 2.5 GHz Band in Order to Ensure Competition in the Wireless Broadband Services Industry. ....................................................... 21 IV. Conclusion ............................................................................................................ 22 EXHIBITS 1. CTCNet Membership List 2. Declaration of CTCNet Member YMCA of San Diego County 3. Declaration of CTCNet Member Oklahoma City Community College 4. List of Major Markets in Top 50 BTAs and EBS-BRS GSAs Controlled by Post-Combination Company 5. Chart - All BRS Major Market GSAs Controlled by Post-Combination Company in Top 50 BTAs 6. Chart - All EBS-BRS Major Market GSAs Controlled by Post- Combination Company in Top 50 BTAs i SUMMARY CTCNet, a national network of local community technology centers, dedicated to ensuring the availability of technology and training for underprivileged citizens, on behalf of itself and its members, hereby petitions the Commission either to deny the proposed merger and Transfer of Control Application of Nextel Communications, Inc. and Sprint Corporation, or condition any grant of such application on the divestiture of sufficient spectrum holdings and lease rights so as to ensure availability of sufficient BRS and EBS spectrum for new competitive entrants to the distinct new wireless broadband marketplace. CTCNet and its members would be directly and adversely affected by the excessive degree of market concentration that would result from this combination, the preclusion of competition in the new wireless broadband services marketplace and the combination’s negative inevitable effect on prices and services. Because the Wireless Broadband Service newly authorized for the 2.5 GHz band is portable, mobile, and promises true broadband speeds over a wide area, it is not analogous to xDSL or Cable, or even current cellular and PCS services, and is therefore a distinct market segment, which must not be rolled up by a single service provider. Contrary to the highly misleading statements and data provided by the Applicants, and as clearly demonstrated herein, the merger will create disproportionate market power and the potential for anti-competitive activity by the post merger company, which would control 100% of the available BRS spectrum in 24 major market areas located in the top 50 BTAs, and well over 70 percent of the BRS in 66% of these markets. Further, the post- merger company would control 100% of both the usable BRS and EBS spectrum in 7 major market areas located in the top 50 BTAs and well over 70% of all BRS and EBS ii spectrum in 62% of these markets. Thus, the post-merger company would be in a position to use its market power to foreclose the entry of any other competitive wireless broadband providers into most major market areas located in the top 50 BTAs – and hence the potential for any true service and price competition in the new wireless broadband services market segment on either a regional or national basis. CTCNet therefore requests the Commission either deny the Application, or require the combined entity to divest sufficient ownership or control of BRS spectrum to ensure that it has control over no greater than 5 BRS channels in any Major Market located within any of the top 100 BTAs in the UBS, no more than 12 of the commercially usable channels in any Major Market located within the top 100 BTAs in the BRS and LBS band segments, and no more than 50% of the MBS channels in any Major Market located in the top 100 BTAs. Such divestiture would ensure the availability of sufficient spectrum in these markets to allow for the development of competition within the new wireless broadband services marketplace. iii Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 In the Matter of ) ) Nextel Communications, Inc. and ) WT Docket No. 05-63 Sprint Corporation ) Application to Transfer Control of Licenses and ) Authorizations ) To: The Commission PETITION TO DENY OF COMMUNITY TECHNOLOGY CENTERS’ NETWORK Community Technology Centers’ Network (“CTCNet”), on behalf of itself and its members, hereby submits its Petition to Deny the Application for Transfer of Control (“Application”) filed on February 8, 2005, by Nextel Communications, Inc. (“Nextel”) and Sprint Corporation (“Sprint”) (collectively the “Applicants”).1 CTCNet believes that approval of the transfer of the Nextel licensed GSAs in the 2.5 GHz Band and spectrum leases to additional GSAs held by Nextel, will result in an excessive concentration of market power in the wireless broadband industry, a reduction in the potential for the availability of competitive wireless broadband services, and a resultant negative impact on the cost of such services to consumers. CTCNet therefore requests that the Commission either deny the Application, or specifically condition its grant on the divestiture of sufficient licenses or leases in the 2.5 GHz band to ensure that the combined Sprint/Nextel entity owns or leases no more than five (5) BRS channels located in the upper band segment (“UBS”), and has control through ownership, lease, 1 CTCNet’s petition is timely filed in accordance with the pleading schedule established by the Commission in its Public Notice DA 05-502, released February 28, 2005. letter of intent, right of first refusal or other contractual right, to no greater than 12 of the 26 commercially usable UBS or lower band segment (“LBS”) channels, in any of the urban Major Markets defined by GSAs in the top 100 BTAs in the United States.2 By imposing such a condition on the grant of the Application, the Commission will ensure the availability of sufficient spectrum for new competitive entrants to the wireless broadband marketplace as is required in the public interest. I. Introduction CTCNet is a national non-profit organization, founded in 1990, comprised of more than one thousand local community organizations, and dedicated to improving the educational, economic, cultural and political life in their communities through technology. CTCNet provides resources, in the form of grants and technical support, as well as advocacy, to improve the quality and sustainability of community technology centers around the United States. CTCNet was founded with the understanding that in an increasingly technology-dominated society, people who are economically disadvantaged will be left further behind if they are not provided access to and training on information tools and services. CTCNet and its members are committed to providing technology tools, such as broadband Internet access and computer training, to citizens that may not otherwise have access to information technologies and services. CTCNet offers networking, capacity building, program development, and partnership opportunities as resources to enhance each affiliated center’s capacity to provide technology, communications services access and education to its community. Members of CTCNet 2 All EBS and BRS spectrum occupies 198 MHz, but a minimum of 5% of the 120 MHz of BRS Spectrum must be reserved for educational usage. 2 include local community centers, community service programs or agencies, social action agencies, and alternative education programs. CTCNet uses its resources to promote the interests of community technology centers by identifying key technologies and services and promoting their cost-effective availability to these local technology centers and the underprivileged segments of the communities that they serve. II. Standing CTCNet, a national