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Sprint Clearwire Joint Opposition Document

August 5, 2008 — 11:14am ET | By Mike Dolan

The New Clearwire transaction presents an unparalleled opportunity to accelerate broadband deployment in the United States. Nearly 100 parties, including numerous educational and religious institutions and commercial operators, recognize the significance of this opportunity and have filed comments urging the Commission to approve the transaction expeditiously. These supporting comments confirm the important public interest benefits of the transaction. By combining the 2.5 GHz assets of Sprint Nextel Corporation ("Sprint") and Clearwire Corporation ("Clearwire") (collectively, the "Applicants") New Clearwire will be able to deploy a nationwide mobile WiMAX broadband network in a spectrum band that has long been underutilized. New Clearwire's advanced 4G mobile broadband network, based on open standards and providing wholesale access, will create new broadband competition, stimulate greater choice and innovation, and benefit millions of consumers as well as schools, universities, religious institutions, and businesses throughout the country.

Only three parties opposed the transaction or proposed conditions. Their claims lack merit and provide no basis for denying, delaying, or imposing conditions on the approval of the New Clearwire license transfers. Vonage Holdings Corporation ("Vonage") supports the Applicants' open network proposal and agrees that this approach will spur innovation in applications and devices and greater broadband competition. Nevertheless, Vonage asks the Commission to require New Clearwire to comply with the Commission's Internet Policy Statement and to offer its new WiMAX service unbundled from its VoIP service. These conditions are unwarranted and unnecessary. As a new company in a highly competitive environment, New Clearwire has every incentive to act in full compliance with the principles in the Internet Policy Statement. Moreover, by choosing to deploy WiMAX technology in its nationwide mobile broadband network, New Clearwire has already ensured that consumers using its network can and will enjoy the rights set forth in that Statement. Nor is there any basis for an unbundling condition. The Applicants have consistently stated that customers will have unimpeded access over New Clearwire's network to any service provider, application, or WiMAX-compatible device they desire.

New Clearwire's business depends on expanding the "ecosystem" of WiMAX users and operators. Therefore, New Clearwire has a strong commercial incentive to negotiate reasonable roaming and wholesale arrangements with as many WiMAX operators as possible. Unaffiliated entities that negotiate roaming or wholesale arrangements with New Clearwire will have a unique opportunity to pursue their own innovative marketing of WiMAX devices and services in the 2.5 GHz band. Accordingly, there is no public interest basis for imposing the conditions sought by the Rural Cellular Association.

Finally, AT&T Inc. ("AT&T") filed a "Petition to Deny" but concedes that it "does not fundamentally oppose the underlying transactions." AT&T, the world's largest telecommunications operator, fails to identify a single competitive harm that would result from the proposed New Clearwire transaction. Nonetheless, AT&T argues that the Commission should apply its Commercial Mobile Radio Service ("CMRS") spectrum screen to the proposed transaction. The Commission should reject AT&T's transparent attempt to distort the Commission's public interest analysis to benefit its own competitive self-interest. AT&T proposes an entirely new "spectrum screen" that would include the 2.5 GHz Broadband Radio Service ("BRS") and Educational Broadband Service ("EBS") spectrum, in which AT&T has no holdings, while excluding other bands (such as the Advanced Wireless Service-1 band) where AT&T holds sizeable spectrum rights. AT&T's cherry-picked spectrum screen ignores Commission precedent and important distinctions between 2.5 GHz spectrum and the spectrum bands the Commission has previously included in its initial CMRS spectrum screen.

In several prior orders, including an order released just three days ago, the Commission determined that its CMRS spectrum screen does not apply to the 2.5 GHz BRS spectrum, let alone the 2.5 GHz EBS spectrum. The Commission has just affirmed that the 2.5 GHz band is very different from the CMRS and 700 MHz bands that have been included in the spectrum screen analysis in prior CMRS mergers. The 2.5 GHz band has different propagation characteristics, unusual licensing and leasing restrictions, and a range of technical and licensing challenges that 2.5 GHz operators must overcome to deploy broadband service. As a result, operators require more spectrum at 2.5 GHz to deploy a mobile broadband network than in the CMRS or 700 MHz bands. The Commission has recognized these challenges when it emphasized the "nascent" nature of 2.5 GHz services and the Commission's "longstanding regulatory policies regarding the 2.5 GHz band, including the encouragement of consolidation of spectrum in this band, due to its historical underutilization." The Commission should reject AT&T's transparent attempt to use the Commission's spectrum screen to hamstring prospective competition to AT&T.

Approving the New Clearwire transaction will stimulate broadband deployment in a historically underused portion of the radio spectrum and encourage competition against much larger, vertically integrated Bell Operating incumbents, such as AT&T. New Clearwire will invest billions of dollars in facilities-based wireless broadband infrastructure, services, and applications designed to serve American consumers, businesses, and educational and religious institutions. The Commission should expeditiously approve the Applicants' proposed license transfers.

Table of Contents

INTRODUCTION.............................................................................................................. 1

I. THE OVERWHELMING MAJORITY OF COMMENTERS
UNCONDITIONALLY SUPPORT THE PROPOSED TRANSACTION.......... 4

A. The Proposed Transaction Presents an Unparalleled
Opportunity to Accelerate Broadband Deployment................................. 4

B. The Transaction Will Provide Significant Benefits to Existing
EBS Licensees............................................................................................ 7

II. VONAGE'S PROPOSED NETWORK ACCESS CONDITION IS
UNWARRANTED AND UNNECESSARY....................................................... 10

III. NEW CLEARWIRE'S PROVISION OF WHOLESALE ACCESS TO
ITS NETWORK WILL PROMOTE COMPETITION AND OBVIATES
ANY CONCERNS ABOUT ROAMING............................................................ 14

A. New Clearwire's Commitment to Wholesale Access
Encompasses SouthernLINC and Other Potential
Competitors............................................................................................... 14

B. The Commission Should Reject the Rural Cellular
Association's Ill-defined, Unnecessary, and Unprecedented
Conditions................................................................................................. 15

IV. CONTRARY TO AT&T'S CLAIMS, APPLICANTS HAVE
DEMONSTRATED THAT COMBINING THEIR 2.5 GHz
HOLDINGS WILL PROMOTE COMPETITION............................................ 19

A. AT&T Fails to Rebut Applicants' Showing and Points to No
Competitive Harm that Would Arise from the New Clearwire
Transaction............................................................................................... 19

B. The Commission Should Not Apply Its CMRS Spectrum Screen
to the Proposed Transaction.................................................................... 21

1. The 2.5 GHz Band Is Far Different from CMRS and
700 MHz Spectrum and Should Not Be Subject to the
Commission's CMRS Spectrum Screen...................................... 22

2. AT&T's Proposed Spectrum Screen Ignores the
Commission's Prior Findings Regarding the Aggregation
of 2.5 GHz Spectrum..................................................................... 31

3. New Clearwire's Open Network and Wholesale Access
Will Promote New Entry by Multiple Competitors..................... 36

4. The Proposed Transaction Is Essential to Deploying
Nationwide Broadband Service in a Band that Has Long
Been Underutilized....................................................................... 37

C. AT&T's Proposal to Count BRS and EBS in the Spectrum Screen
Would Distort the Commission's Public Interest Analysis to
Serve AT&T's Competitive Interests..................................................... 38

VI. INCUMBENT LECS ARE AND WILL REMAIN DOMINANT IN
THE PROVISION OF SPECIAL ACCESS........................................................ 41

CONCLUSION................................................................................................................. 42

Before the

FEDERAL COMMUNICATIONS COMMISSION

Washington, DC 20554

In the Matter of )

)

Applications of Sprint Nextel Corporation )

and Clearwire Corporation for Consent to ) WT Docket No. 08-94

Transfer Control of Licenses and )

Authorizations )

)

File Nos. 0003462540, et al. )

JOINT OPPOSITION TO PETITIONS TO DENY AND REPLY TO COMMENTS

Sprint Nextel Corporation ("Sprint") and Clearwire Corporation ("Clearwire") (collectively the "Applicants") hereby submit their Joint Opposition to Petitions to Deny and Reply to Comments in the above-captioned proceeding. The vast majority of commenters strongly support expeditious and unconditional approval of the proposed New Clearwire transaction. As the record demonstrates, the proposed transaction will create a new, vibrant broadband competitor and promote innovation in the U.S. The New Clearwire transaction poses no competitive concerns, and the public interest strongly weighs in favor of quick and unqualified Commission approval.

INTRODUCTION

On June 24, 2008 the Applicants submitted amended applications seeking FCC approval for a new venture that would combine the resources of their 2.5 GHz assets and businesses to create a nationwide advanced wireless broadband network and, upon approval of the transaction, enable New Clearwire to receive a vital $3.2 billion investment from five of the nation's technology, content and communications leaders: Intel Corporation ("Intel"), Google, Inc. ("Google"), Comcast Corporation ("Comcast"), Time Warner Cable ("Time Warner") and Bright House Networks ("Bright House") (collectively the "Transaction"). As the Applicants explained, New Clearwire seeks to deploy an advanced mobile WiMAX broadband network that will cover up to 140 million people in the U.S. in thirty months and cover additional population shortly thereafter.[1]^/

Only two parties filed Petitions to Deny the applications, and only one other party sought to condition the Transaction. In an ironic maneuver, AT&T, the largest telecommunications company in the world with annualized projected revenues this year of $123 billion and almost $43 billion in wireless revenue, seeks to invoke inapplicable regulatory restraints that would stifle and delay the emergence of New Clearwire.[2]/ AT&T states that it "does not fundamentally oppose the underlying transactions,"[3]^/ but nonetheless attempts to stifle the emergence of a viable wireless broadband competitor by improperly seeking to apply the Commission's Commercial Mobile Radio Service ("CMRS") spectrum screen to Broadband Radio Service ("BRS") and Educational Broadband Service ("EBS") spectrum. Vonage Holdings Corporation ("Vonage") - although it also does not oppose the Transaction - rehashes old and unfounded complaints against Clearwire in an effort to justify imposing unnecessary regulatory conditions on the Transaction, despite Vonage's acknowledgement that the New Clearwire broadband network will be built on the inherently open standards of the WiMAX technology itself. The Rural Cellular Association ("RCA") asks the Commission to impose an ill-defined, unsupported, and unprecedented roaming condition on New Clearwire.[4]^/ Apart from these three parties, nearly 100 other parties, including scores of educational and religious institutions that collectively serve millions of American students, unconditionally support the applications and urge their expeditious approval.

The Commission should reject these requests to hamstring New Clearwire with unnecessary conditions. New Clearwire lacks market power in the provision of any service, and no petitioner or commenter has alleged any merger-specific harm from the Transaction. As the Commission has consistently held, regulation imposes costs on the regulated entities as well as the regulators and is appropriate only in the instance of market failure.[5]^/ There is no evidence here of market failure warranting government intervention. To the contrary, the Transaction will strengthen the marketplace by introducing an exciting new competitor that will deploy a network utilizing the inherently open WiMAX standard and will make capacity on that network available to third parties. The prospect of such a new competitor with an open business model renders government involvement in this instance wholly unnecessary.

I. THE OVERWHELMING MAJORITY OF COMMENTERS UNCONDITIONALLY SUPPORT THE PROPOSED TRANSACTION

A. The Proposed Transaction Presents an Unparalleled Opportunity
to Accelerate Broadband Deployment

Commenters' overwhelming support for the Transaction shows that "combining the assets of the two companies will ignite faster introduction of 2.5 GHz mobile WiMAX service and thus introduce new broadband competition across the country . . . [representing] precisely the sort of accelerated broadband deployment that the Commission hoped to encourage by overhauling the 2.5 GHz bandplan."[6]^/ Commenters note that the New Clearwire will be able to compete with large incumbent local exchange telephone companies and cable operators.[7]^/ As a substantial holder of EBS licenses notes, "New Clearwire will also permit a number of unaffiliated firms to purchase access to its wireless broadband service on a non-exclusive wholesale basis and resell that service directly to consumers in competition with New Clearwire and other wireline and wireless providers."[8]^/

The majority of commenters also note that the proposed Transaction makes the Commission's vision for the 2.5 GHz band a reality.[9]^/ For instance, the George Mason University Instructional Foundation notes that "[i]f the FCC were to reject the request of these two companies to combine their efforts and their 2.5 GHz assets, the Commission would kill any hope for nationwide fixed and mobile broadband services on the 2.5 GHz spectrum."[10]^/ Given the historic underutilization of the 2.5 GHz band, many commenters celebrate the prospect of finally having this spectrum put to efficient use for not only the educational community but the American public at large.[11]^/

Commenters cite the benefits that New Clearwire's proposed WiMAX network will bring in spurring innovation in broadband applications and devices.[12]^/ They note that the Transaction will lower costs for consumers by promoting increased development of new products and services based on WiMAX technology.[13]^/ Others note that authorizing the New Clearwire transaction can help drive the expansion of advanced wireless broadband services to small rural communities.[14]^/ As Digital Bridge states, "New Clearwire's proposal . . . will dramatically increase [Digital Bridge's] ability to achieve its own goal of providing wireless broadband services to small, rural communities using WiMAX technology throughout the United States."[15]/

Commenters also note that New Clearwire is uniquely positioned to bring these new broadband services and products to the public and that the Transaction "is the only feasible means of achieving the synergies, economies of scale and industry-wide benefits inherent in a coast-to-coast mobile WiMAX network."[16]^/ As the commenters recognize, multiple synergies inherent in the proposed Transaction will lead to more efficient and effective spectrum use and reduced operational costs.[17]^/ BRS operators and other wireless service providers confirm that the Transaction is essential for obtaining the capital funding necessary for the deployment of a nationwide advanced wireless broadband network. For instance, Xanadoo states that it is "painfully aware of the capital constraints currently facing entrepreneurial wireless broadband network operators seeking to introduce competitive broadband wireless services to American consumers and businesses."[18]^/ Likewise, IDT Spectrum notes that "as separate companies without access to substantial capital, Clearwire and Sprint would face high hurdles to construct their individual systems in an expeditious manner."[19]^/ As the commenters further observe, by pooling spectrum resources, New Clearwire can secure the capital needed to build a nationwide wireless broadband network that otherwise will not be possible.[20]^/

B. The Transaction Will Provide Significant Benefits to Existing EBS Licensees

The EBS community, represented by its major trade associations as well as individual EBS licensees, strongly supports the Transaction. EBS licensees state that the Transaction will "enable EBS licensees and other educational institutions, as well as their students, faculty and staff, to finally obtain the educational benefits made possible by 2.5 GHz-based advanced wireless broadband services"[21]^/ and "stimulate the deployment of 2.5 GHz wireless broadband services on those licenses, furthering EBS licensees' educational missions as well as economic benefits from their spectrum leases."[22]^/ EBS licensees agree that the Transaction is necessary because combining the Sprint and Clearwire assets and the infusion of the proposed capital is essential to the deployment of this nationwide, advanced wireless network.[23]^/ In all, more than 75 educational and religious institutions with a collective student population of millions stand behind the Transaction as the best way of fulfilling their educational mission to their students, parishioners, and other constituents.[24]/

Many educational institutions believe that granting the applications will further their educational missions as well provide economic benefits.[25]^/ The Indiana Higher Education Telecommunications System cites a recent report by the State Education Technology Directors Association ("SETDA"), stating that access to high-speed broadband in the schools would:

(i) allow teachers and students to take advantage of a wide range of new educational tools and resources available for learning anytime and anywhere; (ii) advance teachers' professional development by allowing them to engage in professional learning communities and to access new educational resources, such as curriculum cadres and education portals; (iii) allow school administrators to conduct online assessments and access data for effective decision making; and (iv) help students to overcome the digital divide in rural and low socio-economic areas.[26]^/

The Source for Learning likewise states that "[a]pproval of the Sprint-Clearwire [transaction] would promote the deployment of a new integrated nationwide broadband network within the very near future, thus expediting the availability of high-speed advanced broadband services to the educational community."[27]^/ Joint EBS, a group of 56 like-minded EBS licensees from around the country, agrees: "[T]he greater speed, mobility, and reach of the network may allow us to expand the educational resources we can deliver to our communities."[28]^/

In addition to benefiting schools and other educational institutions, commenters recognize that the proposed Transaction will increase availability of broadband to minorities and underserved areas of the country. HITN's long-term lease agreements with Clearwire create a capacity reservation that provides for mandatory access to New Clearwire's services that will reach underserved educational, minority, and non-profit communities. HITN intends to create a nationwide WiMAX service through this reservation to promote educational opportunities for minorities.[29]^/

Given the historic underuse of the 2.5 GHz band and repeated attempts to change the Commission's rules to facilitate the mission of the educational community and others through this spectrum, EBS licensees convey excitement at the prospect of their spectrum resources becoming "part of a state-of-the-art wireless broadband network that has nationwide reach."[30]^/ Many EBS licensees have mentioned that they "have looked forward to the day when their EBS facilities could be employed to support the provision of . . . 21^st century services for the use of their students, faculty and administration," and note that the Transaction will enable them to incorporate these technologies in the "day-to-day education of their students."[31]^/

II. VONAGE'S PROPOSED NETWORK ACCESS CONDITION IS UNWARRANTED AND UNNECECESSARY

Vonage, a provider of voice over Internet protocol ("VoIP") services, does not oppose FCC consent to the applications, but nevertheless asks the FCC to require New Clearwire to comply with the Commission's Internet Policy Statement[32]^/ and to offer its new WiMAX service unbundled from its VoIP service. The predicate for Vonage's request appears to be unsubstantiated three-year-old claims previously reported by Vonage customers to Vonage about being unable to use its VoIP service over the "old" Clearwire network.[33]^/ Imposing such conditions is unnecessary, contrary to the public interest, and inconsistent with the Commission's long-held reliance on market forces rather than regulation to advance its policy objectives.

In evaluating applications for transfer or assignment, the FCC considers whether grant of the proposed transaction will promote the public interest, convenience and necessity,[34]^/ and "[t]he Commission has held that it will impose conditions only to remedy harms that arise from the transaction (i.e., transaction-specific harms)."[35]^/ In this instance, Vonage has failed to demonstrate any harms that would arise as a result of the proposed transaction.[36]/ To the contrary, Vonage acknowledges and supports the Applicants' open network proposal and "agrees with Sprint and Clearwire that an open network will spur innovation in applications and devices" and that "WiMax network should spur competition in the provision of broadband services to the home."[37]^/

In the face of Vonage's recognition of the openness and consumer benefits of New Clearwire's proposed nationwide WiMAX network, Vonage's request for merger conditions is puzzling. As Vonage itself apparently recognizes, the WiMAX network New Clearwire will deploy is inherently open in nature, obviating the need for mandated conditions that require what WiMAX technology already embraces. By choosing to adopt and deploy WiMAX technology in its nationwide broadband network, New Clearwire has already ensured that consumers using its network can and will enjoy the rights set forth in the Commission's Internet Policy Statement.

In support of its proposed conditions, Vonage cites several merger orders involving Bell companies.[38]^/ But in each of those instances, the Bell entities voluntarily agreed to treat the Internet Policy Statement as an enforceable requirement.[39]^/ The Commission itself concluded that codification of the Internet Policy Statement was unnecessary because there was no evidence that the principles were then being violated by the parties and because, as the Commission explained in the AT&T-BellSouth Merger Order, "the vigorous growth of competition in the high-speed Internet access market further reduces the chances that the transactions are likely to lead to violations of the principles."[40]^/ In the one merger where the Commission was specifically asked to impose the Internet Policy Statement as a merger condition without the consent of the merger parties, as Vonage has done here, the agency declined to do so on similar grounds,[41]^/ noting that if instances of a company willfully blocking or degrading Internet content in the future occurred, the affected parties could file a complaint with the Commission.[42]^/ The same remedy exists here and the Commission should similarly decline to impose a condition on New Clearwire.[43]^/ As a new company in a highly competitive environment, New Clearwire has every incentive to act in full compliance with the principles in the Internet Policy Statement.[44]^/

There is also no basis or need to require as a condition of approval of the Transaction that New Clearwire offer its broadband WiMAX service unbundled from its VoIP service. There is no history of Clearwire or Sprint refusing to provide stand-alone broadband services, in stark contrast to the instances cited by Vonage.[45]^/ Clearwire currently provides its wireless broadband Internet access service on a stand-alone basis, and the Applicants have consistently stated that customers will have unimpaired access over New Clearwire's network to any service provider, application or WiMAX-compatible device they desire. Moreover, New Clearwire lacks market power in any service. Accordingly, imposing an unbundling condition is wholly unnecessary and inappropriate.[46]^/

Finally, the fact that New Clearwire intends to provide service on an open, unbundled basis is not a justification for codifying this intent as a regulatory obligation. As noted above, the Commission has consistently held that regulation imposes costs on the regulated entities as well as the regulators and is appropriate only in the instance of market failure. As demonstrated above and in the Application, there is no evidence of market failure warranting government intervention.

III. NEW CLEARWIRE'S PROVISION OF WHOLESALE ACCESS TO ITS NETWORK WILL PROMOTE COMPETITION AND OBVIATES ANY CONCERNS ABOUT ROAMING

A. New Clearwire's Commitment to Wholesale Access Encompasses SouthernLINC and Other Potential Competitors

In the Application, Sprint and Clearwire indicated that "New Clearwire will permit a number of unaffiliated firms to purchase access to its advanced wireless broadband service on a non-exclusive wholesale basis and resell that service directly to consumers in competition with New Clearwire and other wireline and wireless providers."[47]^/ By providing wholesale access to its nationwide WiMAX network, New Clearwire will be able to generate new forms of competition and further enhance consumer choice in the broadband marketplace.[48]^/ In its comments, SouthernLINC states that it "welcomes the[se] public statements," and observes that these commitments could mean that "the proposed transaction . . . provide[s] significant public benefits, such as greater access to a broader variety of services, service providers, and service options for a greater number of US consumers, including those in rural and underserved areas."[49]^/ At the same time, however, SouthernLINC asks that the Applicants "provide greater clarity and certainty regarding their intentions with respect to wholesale broadband access to the proposed New Clearwire network."[50]^/

In response to SouthernLINC's concerns, the Applicants hereby reiterate their commitment to give unaffiliated entities wholesale access to New Clearwire's nationwide WiMAX network. Specifically, New Clearwire will provide this wholesale access not only to its strategic investors that have already committed to enter into non-exclusive wholesale agreements with New Clearwire,[51]^/ but also to other entities that are willing to negotiate commercially reasonable terms and conditions for this access. This commitment encompasses any provider, including SouthernLINC, that may in the future desire to resell New Clearwire's service in a particular market. Given the unparalleled openness of New Clearwire's network, SouthernLINC and other mobile virtual network operators ("MVNOs") and resellers will have a unique opportunity to pursue their own innovative marketing of WiMAX devices and services in the 2.5 GHz band, resulting in greater competition and wireless broadband options for consumers. This opportunity will only exist, however, if the Transaction is approved and the network can be deployed.

B. The Commission Should Reject the Rural Cellular Association's
Ill-defined, Unnecessary, and Unprecedented Conditions

New Clearwire has a strong commercial incentive to extend roaming rights to any interested party as the best - and perhaps only - means of encouraging the proliferation of WiMAX devices. In its Petition, however, the RCA ignores New Clearwire's commercial incentive to encourage roaming and proposes a number of ill-defined, unprecedented government-mandated merger conditions on New Clearwire.[52]^/ As a threshold matter, New Clearwire does not yet exist, its broadband network is unbuilt, and its mobile broadband services are unavailable. Imposing vague, open-ended government mandates would prove particularly harmful in this case because the restrictions RCA seeks would fall on a nascent business developing vital new broadband competition in the troubled and long-dormant 2.5 GHz band.

In any event, RCA does not appear to appreciate the degree to which the unprecedented openness of the New Clearwire network resolves RCA's professed concerns about "interoperability."[53]/ Openness here means that any WiMAX-compliant device that does not harm the network will be able to operate on New Clearwire's network. As the Applicants have explained (and other commenters have recognized), New Clearwire's business model depends upon encouraging the proliferation of WiMAX devices and operations as a means of achieving the economies of scale necessary to produce highly affordable WiMAX chipsets. Sprint has already demonstrated its ability to work with ecosystem partners to incorporate WiMAX technology in a range of computing, portable multimedia, interactive and other consumer electronic devices, and New Clearwire intends to extend the same level of aggressive outreach to other prospective WiMAX operators. In the United States and around the globe, New Clearwire fully anticipates that other wireless operators will want to take advantage of the growing ecosystem of WiMAX devices and applications.

RCA, however, brushes aside New Clearwire's commercial incentives to cooperate with other WiMAX operators and demands a loosely defined "interoperability" merger condition that appears unprecedented in the wireless industry for even the largest, most entrenched wireless operators. The Commission is already examining the issue of wireless broadband roaming in an ongoing rulemaking proceeding.[54]^/ Therefore, given the lack of any transaction-specific harm, any consideration of roaming obligations for mobile WiMAX services in the 2.5 GHz band belongs in that proceeding.[55]^/ The petitioners provide no defensible reason for the Commission to depart from its past practice and consider an automatic roaming condition in this merger proceeding, where New Clearwire, a new wireless broadband competitor with no market power and that does not yet exist, would alone be subject to a regulatory obligation that would not be imposed on any of the incumbent wireless broadband service providers with which it would compete. By interceding only where there is evidence of marketplace failure, the Commission will foster the innovative and efficient development of mobile broadband services at 2.5 GHz.

RCA's requested prohibition on exclusive handset agreements between wireless operators and equipment manufacturers would be better addressed in a rulemaking proceeding that studied the entire marketplace for wireless broadband services. The petition for rulemaking that RCA filed with the Commission on exclusive handset agreements in May 2008 is the appropriate vehicle for the requested relief.[56]^/ There is no basis for adopting any condition related to this issue in conjunction with the instant Transaction; RCA provides no evidence regarding the Applicants' equipment procurement plans or potential harms in the 2.5 GHz band. Notably, RCA's petition itself asks that as a first step the Commission investigate the use and effects of any exclusivity arrangements, and any factual findings by the Commission on this issue are a long way off.[57]^/ In any case, as described in the Application, the formation of New Clearwire will promote more rapid development of the worldwide ecosystem of equipment and chipset manufacturers already supporting the open, non-proprietary WiMAX standard.[58]^/ These manufacturers will deliver an ever-increasing volume of standard WiMAX-enabled equipment and interoperable network and consumer devices and chipsets. This highly competitive landscape of WiMAX vendors should eliminate any concerns regarding exclusive equipment arrangements.

The Commission should reject RCA's call for singling out New Clearwire for government regulation and allow wireless broadband to evolve freely within a competitive market. With its open network, New Clearwire has every commercial incentive to expand roaming to the greatest degree possible. Imposition of unnecessary conditions on New Clearwire would upend commercial incentives to expand open network architectures and frustrate the chance of achieving new broadband competition in the United States.

IV. CONTRARY TO AT&T's CLAIMS, APPLICANTS HAVE DEMONSTRATED THAT COMBINING THEIR 2.5 GHz HOLDINGS WILL PROMOTE COMPETITION

Authorizing the Applicants to create New Clearwire will further invigorate broadband competition in the United States. AT&T - the largest telecommunications operator in the world with a market capitalization of $179 billion and an asset value of $278 billion - demands that the Commission deny this Transaction to create a new wireless broadband competitor.[59]^/ The Commission should dismiss AT&T's anti-competitive petition.

A. AT&T Fails to Rebut Applicants' Showing and Points to No Competitive Harm that Would Arise from the New Clearwire Transaction

In their detailed, 312-page public interest statement, Sprint and Clearwire fully documented all of their spectrum holdings in commercially useful bands below 2700 MHz on a county-by-county basis and demonstrated that the proposed Transaction will significantly enhance competition in the provision of fixed and mobile broadband services.[60]^/ The combination of Applicants' 2.5 GHz assets and the infusion of capital provided by the Transaction will enable New Clearwire to become a new, viable broadband competitor, offering consumers greater choice in service providers, broadband technology, and innovative services and applications. Applicants further showed that without the efficiencies and capital created by the proposed Transaction, the 2.5 GHz band is unlikely to develop as a viable broadband platform capable of competing against established broadband competitors, at least for the foreseeable future.

In its petition to deny, AT&T ignores the Applicants' comprehensive public interest analysis and claims that the Applicants did not address the competitive effects associated with combining their 2.5 GHz assets.[61]^/ Yet AT&T fails to point to a single competitive harm that would arise from the New Clearwire transaction. To the contrary, AT&T states that it "does not fundamentally oppose the underlying transactions."[62]^/ In any event, New Clearwire's 2.5 GHz spectrum holdings do not raise any competitive concerns and, as set forth in its Public Interest Statement, the Transaction provides numerous and substantial public interest benefits.

Spectrum in the 2.5 GHz band is only an input, not a service or a product itself, and the New Clearwire transaction will in no way undermine competition in the broadband marketplace; on the contrary, it will stimulate competition. Today, Sprint and Clearwire together have approximately 450,000 2.5 GHz broadband subscribers, with most of these subscribers served by fixed, pre-WiMAX networks. If this small base of largely fixed and portable subscribers were classified as mobile, it would be a mere 1.3 percent of the total number of mobile wireless high-speed connections (35,305,253) in the nation and an even smaller share (0.4 percent) of the total number of wireline and wireless broadband lines nationally (100,921,647).[63]^/ Even with the combination of the Sprint and Clearwire 2.5 GHz assets, New Clearwire will be a new entrant to the mobile 4G broadband marketplace and a comparatively small one at that.

B. The Commission Should Not Apply Its CMRS Spectrum Screen to the Proposed Transaction

AT&T also argues that the "spectrum screen" the Commission has previously applied in assessing the competitive effects of major CMRS mergers should be applied to the proposed New Clearwire transaction. In these major CMRS mergers, the Commission applied an initial spectrum screen to determine which geographic markets warranted closer scrutiny to determine the impact of the merger on the provision of mobile telephony services in that area. In markets where the applicants' spectrum holdings fell below the screen, the Commission deemed that the merger would have no adverse competitive effect on the mobile telephony spectrum input market and eliminated those markets from further review. In markets that exceeded the screen, the Commission conducted a further, case-by-case analysis of the prospective major merger's potential effect on competition in each such market.[64]^/ The Commission consequently used the screen as a sorting mechanism to help guide and channel its review of major CMRS mergers. The screen is not a spectrum cap, has only been applied in CMRS mergers, and does not determine the Commission's ultimate conclusion about whether to approve a proposed merger, particularly one involving a new independent company deploying a new broadband technology.

The Commission should reject AT&T's demand to apply the CMRS spectrum screen to the proposed New Clearwire transaction. AT&T's argument ignores Commission precedent, the important distinctions between CMRS spectrum and the 2.5 GHz band, and the 2.5 GHz band's long history of challenges and underutilization. It is also totally circular for AT&T to argue that this Transaction renders the BRS and EBS spectrum usable on a nationwide basis,[65]/ and from that to argue that the spectrum should be counted toward the screen in such a way as to defeat the Transaction.

1. The 2.5 GHz Band Is Far Different From CMRS and 700 MHz Spectrum and Should Not Be Subject to the Commission's CMRS Spectrum Screen

The 2.5 GHz band is not in the same category of spectrum as the PCS, cellular, SMR and 700 MHz bands that have been subject to the Commission's CMRS spectrum screen in prior CMRS mergers. As an initial matter, the transition to the reconfigured 2.5 GHz band is not yet complete,[66]^/ and the Commission determined less than nine months ago that this fact precluded application of the screen to BRS spectrum.[67]^/ The Commission reaffirmed this determination only three days ago, reiterating its prior conclusion that it is not appropriate to include BRS spectrum (let alone EBS spectrum) in the initial spectrum screen analysis it has applied in reviewing CMRS mergers.[68]^/ While the Commission may consider including BRS spectrum in some future CMRS screen applicable to evaluating CMRS transactions, applying the CMRS spectrum screen to the instant Transaction would send the Commission on an inappropriate, unnecessary and burdensome detour and delay the competitive entry of a new wireless broadband competitor to the market.

Moreover, neither the 2.5 GHz transition nor the New Clearwire transaction alter the basic physical characteristics of the band: the 2.5 GHz band has much less favorable propagation characteristics for wireless broadband coverage than the 700 MHz broadband spectrum that AT&T eventually intends to use to offer services that will compete with New Clearwire. Achieving the same geographic coverage as AT&T's lower-frequency bands will require New Clearwire to deploy significantly more transmitters than AT&T and other, lower-frequency competitors. In addition, the 2.5 GHz band remains subject to a number of licensing and regulatory challenges that make spectrum in this band significantly different than CMRS spectrum. These restrictions make it impossible to compare Applicants' 2.5 GHz holdings on a megahertz-to-megahertz basis with spectrum in other bands, including the CMRS bands, thereby making it impractical and contrary to the public interest to apply the CMRS screen to the proposed Transaction.[69]^/

In addition, BRS spectrum generally trades at prices that are a fraction of CMRS and 700 MHz spectrum.[70] The disparity provides evidence that the marketplace recognizes the unique characteristics and challenges of the 2.5 GHz band and has adjusted 2.5 GHz valuations accordingly. This marketplace data is far more telling, and far less biased, than the self-serving statements in AT&T's petition to deny.

AT&T's attempts to minimize the inherent differences of the 2.5 GHz band vis-à-vis CMRS and 700 MHz spectrum are contradicted not only by marketplace spectrum valuations, but also by the record in this proceeding and the prior statements of BellSouth, one of AT&T's subsumed companies.

BRS-1 Channel. In its petition to deny, AT&T tries to downplay the encumbrances created by the requirement that BRS-1 channel licensees share spectrum on a co-primary basis with MSS, BAS and ISM licensees. Yet, in 2006, AT&T's predecessor company expressed alarm about this sharing and stated its belief that "BRS-1 should not be relegated to co-primary status and that the threat of harmful interference persists."[71]^/ The 2006 statements of AT&T's predecessor are correct and support Applicants' view that it is inappropriate to include this encumbered channel under the Commission's CMRS spectrum screen.

EBS Spectrum. AT&T asserts that there are "no material distinctions between EBS leases and other commercial mobile leases."[72]^/ Not only is AT&T wrong, but BellSouth's prior statements prove just the opposite. AT&T's predecessor urged the Commission to abolish the Commission's "artificial" EBS lease term limits because they are "inconsistent with the secondary market rules, which impose no limitation and encourage flexibility and spectrum use."[73]^/ The Commission rejected this request and now limits EBS leases entered into after July 2006 to thirty-year terms with a mandatory lessor "right of review" at 15 years into the term and every five years thereafter.[74]^/ These term limits and rights of review create significant business uncertainty for EBS lessees that lessees of commercial spectrum do not face. Indeed, New Clearwire is not even eligible under the Commission's rules to be an EBS licensee;[75]^/ AT&T can become the licensee of commercial spectrum it leases - whether it does so or not is a matter of business choice. New Clearwire will not be able to hold EBS licenses, but must instead enter into EBS lease agreements that are subject to a wide range of restrictions that do not apply to CMRS spectrum leases. No doubt because of these many restrictions and the unique interests of the EBS licensees whose interests would be adversely affected, although the Commission has considered but declined to apply its spectrum screen to BRS spectrum, it has never raised even the possibility of applying the screen to EBS lease rights.

In its prior incarnation as BellSouth, AT&T proposed elimination of the prohibition against a commercial operator acquiring EBS spectrum, warning that "[c]hanging the technical rules [of the 2.5 GHz band] alone may not be enough to stimulate the capital investment necessary" to "develop a viable product attractive to customers."[76]^/ This prohibition and other lease restrictions remain, however, undermining AT&T's assertion that "no basis exists to exclude the 112.5 MHz of EBS spectrum lease rights" from the spectrum screen.[77]^/

In addition, EBS lease obligations and restrictions affect the operational usability of this spectrum in ways simply not required or existent with other secondary market leases. As AT&T's predecessor BellSouth itself noted when considering proposals to give EBS licensees a regulatory right to recapture additional capacity for educational use during the lifetime of an EBS lease, this right would result in making excess capacity EBS leases "‘inherently less valuable to the [commercial] operator than unencumbered capacity, whether or not the [EBS] licensee ever exercises its recapture rights.'"[78]^/

The value of EBS channels is also reduced by the Commission's requirement of a mandatory minimum five percent capacity reservation for educational use. A significant number of EBS licensees negotiate lease agreements that reserve an even greater percentage of their spectrum capacity to educational use or allow them to recapture their EBS spectrum at any time during the lease term to meet their educational needs. These arrangements may devote one-fourth or more of an EBS licensee's available spectrum to high-site, high-power educational video programming or may require the commercial operator to construct and operate educational facilities on the licensee's behalf. Moreover, EBS leases often contain carefully negotiated provisions and means of consideration designed to meet an EBS licensee's educational needs. The consideration is often not just monetary, but may include equipment, facilities or special services tailored specifically to that EBS lessor's educational objectives. EBS licensees carefully choose their lessee to ensure that their particular requirements are satisfied. In some cases, lessees provide programming or have a position on the EBS licensee's board of directors, making the EBS lease relationship significantly different than those in other secondary market transactions. Including EBS spectrum in any spectrum screen for any purpose would disrupt these carefully tailored relationships, to the detriment of the EBS community, by forcing the divestiture of EBS spectrum or by limiting the pool of potential EBS lessees due to spectrum aggregation considerations.

In short, EBS spectrum and leased commercial spectrum are not fungible as parts of a commercial network. AT&T's arguments for equating EBS channels and leased commercial channels for spectrum screen purposes fail on the facts.[79]^/ EBS licensees serve non-profit educational objectives that create far different incentives than the profit motive that typically drives lessors of commercial licenses and are mandated under FCC rules to use their licenses to "further their educational mission."[80]^/

MBS Spectrum. AT&T argues that the 42 MHz of the Middle Band Segment (MBS) of the 2.5 GHz band should be subject to the spectrum screen, suggesting that Applicants can "coordinate their spectrum operations" so that they can somehow render this spectrum, which is reserved for high-site, high-powered operations, usable in a low-site, low-powered cellular network. Aside from making little sense, AT&T's argument ignores the fact that a majority of the MBS will be used by EBS licensees to transmit their educational programming via high-site, high-powered systems. AT&T understood this restriction previously, stating that the Commission established the MBS to "preserve existing high-power operations, including distance-learning and other educational video programming."[81]^/ The MBS will not support mobile telephony and should not be subject to the CMRS spectrum screen.

Guard Bands. AT&T concedes that "it is clear that spectrum not used or available to licensees should not be attributed for purposes of any spectrum screen."[82]^/ Guard bands, by definition, fit this description and should be excluded from the screen, since their purpose is to create a buffer zone of spectrum that provides limited or no service in order to protect adjacent operations from interference. Although AT&T suggests that the guard bands should be included in the spectrum screen because they are "available to adjacent licensees," the fact that spectrum may be "available" does not mean it can be used to provide broadband services to customers, let alone mobile telephony.[83]^/ AT&T further suggests that New Clearwire could deploy broadband service in the guard bands if the proposed Transaction results in New Clearwire holding rights to both the MBS and adjacent spectrum; however, the guard bands are assigned in small, interleaved increments, and operations in the guard band are explicitly made secondary to adjacent operations.[84]^/ AT&T ignores these facts and ignores the high-power operations by BRS and EBS licensees in the MBS. The Commission should reject AT&T's assertions and exclude the guard bands from the CMRS spectrum screen.

Other Significant Distinctions Between 2.5 GHz and CMRS/700 MHz Bands. AT&T completely ignores other unique aspects of the 2.5 GHz band that make this band very different from CMRS and other spectrum bands the Commission has previously included in its spectrum screen. Much of the 2.5 GHz band has also been licensed using irregular geographic areas that can result in different geographic license areas on each six-megahertz channel in the band and do not correspond to customary commercial and population patterns.[85]^/ This "crazy quilt" licensing scheme is the result of the Commission's decision to overlay Basic Trading Area licenses awarded by auction over hundreds of incumbent site-specific licenses awarded many years ago, with many of these site-specific license areas overlapping each other. The Commission, in contrast, established the PCS and cellular bands without these site-based licensee encumbrances, giving these CMRS licensees far greater flexibility in deploying their services.

In addition, CMRS licensees generally deploy the same type of services in providing mobile telephony to customers, with these services deployed nationwide in CMRS bands. On the other hand, deployment in the 2.5 GHz band has been sporadic, with an incompatible mixture of high-power educational programming, commercial "wireless cable" video services, low power wireless services, and other services. The licensing and technical rules governing the CMRS bands have tended to be clear and consistently enforced. Because of the many different types of services and licensees in the 2.5 GHz band, however, 2.5 GHz licensees face more uncertainty, from complex "split the football" rules used to define the geographic services areas of licensees with overlapping service areas, to "height-benchmarking" that create vaguely defined interference protection obligations, to uncertain standards for accepting late-filed license renewal applications. On top of these differences, the in-building and distance propagation characteristics of the 2.5 GHz band require 2.5 GHz broadband operators to deploy significantly more cell sites than licensees in the CMRS and 700 MHz bands, and lowers the value of 2.5 GHz band relative to lower frequency bands.[86]^/

As described above, the 2.5 GHz spectrum band is very different from the spectrum bands previously included in the FCC's spectrum screen for identifying spectrum concentrations that could inhibit wireless competition. Height benchmarking limitations, protecting the irregular service areas of unaffiliated incumbents, the unsuitability of the mid-band segment, and the limitations of the EBS channels for commercial use can all be overcome so long as New Clearwire has sufficient alternative channels from which to select in deploying its 4G high-bandwidth WiMax network. Simply put, it takes more spectrum at 2.5 GHz to deploy a broadband network than is required in the lower commercial bands. AT&T's attempts to equate 2.5 GHz and other commercial channels under the spectrum screen is a blatant attempt to deny New Clearwire the spectrum access necessary to introduce new 4G wireless broadband competition. The combination of Sprint and Clearwire's 2.5 GHz assets make this new mobile broadband network possible despite the inherent complications of the 2.5 GHz band; AT&T's attempt to frustrate competition by urging the Commission to misapply the CMRS merger spectrum screen can and should be disregarded.

2. AT&T's Proposed Spectrum Screen Ignores the Commission's Prior Findings Regarding the Aggregation of 2.5 GHz Spectrum

AT&T's argument that the screen should apply in the instant proceeding also ignores the Commission's findings in the Sprint Nextel Merger Order. In that order, the Commission reviewed the Sprint Nextel 2.5 GHz holdings, including in markets where the merger resulted in Sprint Nextel holding nearly all 2.5 GHz spectrum, and found that these holdings "will not cause any competitive harm in the BRS band in any specific local market."[87]^/ The Commission further stated that "by the time [Sprint's 2.5 GHz] spectrum capacity is put to use, sufficient other spectrum should be available so that no undue market power will be conferred on" Sprint.[88]^/ The Commission's conclusion there applies with equal strength to New Clearwire - perhaps even more given that New Clearwire is a new entrant in the mobile 4G broadband marketplace whereas Sprint and Nextel were both established wireless providers at the time of their merger.

AT&T also ignores the 2.5 GHz spectrum holdings of its predecessor-in-interest, BellSouth. Prior to AT&T's purchase of one of the last remaining Bell Operating Companies, BellSouth held nearly all of the BRS spectrum and EBS lease rights in several counties in the Southeast. The Commission never found that the spectrum holdings of AT&T's predecessor-in-interest raised a competitive concern, notwithstanding the very large CMRS holdings of BellSouth's affiliated company, Cingular. In approving the AT&T-BellSouth merger, the Commission stated that "significant blocks of spectrum are available, or soon will be available, to competitors wishing to provide competing wireless mobile broadband services."[89]^/ The Commission further found that the merged company's combined BRS and WCS assets "will be just one of several broadband services" and that "no competitive harm is likely" in the provision of fixed broadband services.[90]^/ The Commission also raised no concern when AT&T transferred these spectrum rights to Clearwire in 2007, which the Commission approved by public notice.[91]^/

The Commission has consequently already determined that holding a high concentration of BRS and EBS spectrum in a market does not raise competitive concerns. The Commission based this conclusion on findings that the broadband marketplace is competitive and growing, and its intent to make a large amount of spectrum in other bands available to broadband competitors. In addition, the Commission emphasized in these prior orders the "nascent" nature of 2.5 GHz services and "the Commission's long-standing regulatory policies regarding the 2.5 GHz band, including the encouragement of consolidation of spectrum in this band, due to its historical underutilization."[92]^/

These findings and longstanding regulatory policies continue to apply today, obviating any need to apply a spectrum screen to the proposed Transaction. The New Clearwire transaction will serve the Commission's policies by overcoming the many challenges described in the preceding section that have led to the underutilization of the 2.5 GHz band, and finally unlocking the value of this band for the benefit of consumers. Moreover, as the Commission recognized in these prior orders, the consolidation of 2.5 GHz spectrum does not present a competitive risk because broadband competition remains robust and there continues to be significant broadband spectrum available in alternative bands.

In addition, as the Commission found in its Sprint Nextel Merger Order and BellSouth orders, the 2.5 GHz band continues to represent only a portion of the spectrum that can be used to provide fixed and mobile broadband services. As described in the Application, competitors will have access to more than 500 MHz of spectrum in other licensed bands that could be used to provide wireless broadband services, including:

84 MHz of commercial 700 MHz spectrum - The Commission completed its 700 MHz auction earlier this year. This band has superb propagation characteristics and is very well suited for wireless broadband. Verizon Wireless and AT&T were the two biggest winners, with Verizon Wireless acquiring the 22 MHz C-Block covering 8.5 billion MHz-pops and AT&T acquiring 12 MHz B-Block licenses covering 2.1 billion MHz-pops.[93]^/

130 MHz of AWS Spectrum - In 2006, the Commission auctioned off 90 MHz of Advanced Wireless Service ("AWS") spectrum. Once again, Verizon Wireless and AT&T were among the big auction winners. The Commission has allocated an additional 40 MHz of spectrum to AWS in bands below 2.2 GHz.[94]^/

· 170 MHz of Cellular and Broadband PCS Spectrum - Verizon and AT&T are largest holders of CMRS spectrum. These and other CMRS licensees provide mobile data services on this spectrum, with many carriers deploying 3G and eventually 4G services.

30 MHz of WCS Spectrum - AT&T holds almost half of the total number of active Wireless Communications Service licenses, and has committed to offer significant mobile or fixed wireless broadband services on this spectrum within two years.

Approximately130 MHz of MSS ATC Spectrum - The Commission has authorized Mobile Satellite Service ("MSS") licensees to provide Ancillary Terrestrial Component ("ATC") services on their spectrum. Several MSS operators are licensed to deploy services and have ambitious broadband and wireless communications deployment plans in the L-Band, Big LEO and 2 GHz MSS bands.

In addition to these licensed bands, more than 150 MHz of unlicensed spectrum is available at 900 MHz, 2400 MHz, and 3650 MHz. A number of these bands are used to provide wireless Internet access. The Commission also is examining permitting low power wireless devices to use up to 300 megahertz of TV broadcast spectrum in the spectrum bands below 700 MHz.[95]^/

In a 2007 order declining to impose eligibility restrictions in the 700 MHz commercial spectrum auction, the Commission stated that "[g]iven the number and diversity of available licenses, it is unlikely" that any broadband provider "would be able to acquire enough spectrum to foreclose the broadband market to potential competitors, even if it should attempt to do so."[96]^/ This recent Commission finding remains true today and will remain true after approval of the New Clearwire transaction.[97]^/ New Clearwire will deploy a new 4G broadband service in a spectrum band with a number of unique operational and technical challenges and will be competing against both large incumbents and new entrants using a variety of technologies, wireline services, and spectrum bands to provide broadband service to American consumers. AT&T has offered no facts that support any competitive concerns stemming from the proposed Transaction or to justify applying the CMRS spectrum screen to the Transaction.

3. New Clearwire's Open Network and Wholesale Access Will Promote New Entry by Multiple Competitors

In trying to shoehorn the New Clearwire transaction into a CMRS spectrum screen analysis, AT&T ignores another fundamental difference between New Clearwire's business model and traditional CMRS services. Unlike these services, New Clearwire is committed to a business plan based on an open platform and providing wholesale access to its network to unaffiliated parties. Far from foreclosing new entry into spectrum-based broadband services, New Clearwire will create a dynamic, nationwide platform from which new competitors aside from New Clearwire can launch retail service.[98]^/ Sprint, Comcast, Time Warner, and Bright Newhouse Networks have already committed to enter into non-exclusive wholesale agreements with New Clearwire, and Intel and Google have the option of entering into similar agreements. New Clearwire expects to enter into wholesale arrangements with other unaffiliated entrepreneurs on a commercially reasonable basis, allowing them to pursue their own innovative retail marketing of WiMAX devices and services. In addition, as described in section II, New Clearwire will permit consumers to use any lawful device so long as it is compatible with and not harmful to the network, and to download any applications or content subject only to reasonable network management practices and law enforcement and public safety considerations.

New Clearwire's wholesale access and open network offerings are unique. Certainly no parties to a CMRS merger subject to a spectrum screen have made similar offerings. In these mergers the Commission reviewed the impact of the applicants' spectrum holdings on the spectrum input "market" to ensure that the merged company did not aggregate so much spectrum as to foreclose entry by other competitors. New Clearwire presents no such risk in any relevant market not only because competitors will have access to a large amount of spectrum in alternative bands, but also because unaffiliated parties will have wholesale access to New Clearwire's spectrum and customers will have flexibility to use devices and applications provided by other parties. New Clearwire will thus promote new competition in broadband retail services, devices, and applications.

4. The Proposed Transaction Is Essential to Deploying Nationwide Broadband Service in a Band that Has Long Been Underutilized

In its petition to deny, AT&T strains to treat the 2.5 GHz band like any other CMRS band even though there are substantial differences and challenges that set the 2.5 GHz band apart. AT&T pretends that the 2.5 GHz band has already settled into well-defined "mobile telephony" product and geographic markets, yet the Commission has expressly declined to precisely define 2.5 GHz markets because the band is still developing.[99]^/ AT&T is engaging in the same sort of self-serving attempt to "artificially manipulate a nascent product market and geographic markets that have not yet emerged" for which it has faulted others.[100]^/

The transition to the new 2.5 GHz band is still underway, and proposed services that ultimately will be deployed are still in development. New Clearwire cannot exercise any sort of "market power" where its proposed WiMAX service has yet to be commercially launched in a band not yet completely reconfigured. Indeed, without the proposed Transaction, neither Sprint nor Clearwire individually will be able to deploy a nationwide wireless broadband network in the 2.5 GHz band, which is the best explanation for why AT&T has filed its petition. As explained in the Application, the capital funding and aggregation of assets created by the proposed Transaction are essential to deploying a nationwide broadband network in the 2.5 GHz band.[101]^/

The proposed New Clearwire transaction represents an important crossroad in the development of the 2.5 GHz band. With Commission approval, New Clearwire will have the spectrum assets and financing essential to deploying a new advanced broadband network that will promote broadband competition. Without unconditional approval, the Applicants will lack the financing and spectrum assets they need to be a viable nationwide competitor, and the 2.5 GHz band will continue its long history of underutilization.

C. AT&T's Proposal to Count BRS and EBS in the Spectrum Screen Would Distort the Commission's Public Interest Analysis Serving Only AT&T's Anti-Competitive Interests

As explained in the preceding sections, AT&T provides no public interest basis for applying the CMRS spectrum screen to the New Clearwire transaction. AT&T's argument, of course, serves its own interests in stifling emerging competition. Given that AT&T currently holds no 2.5 GHz spectrum rights itself, increasing the total pool of spectrum subject to the screen by including all 186 MHz of non-guardband 2.5 GHz spectrum would facilitate future attempts by AT&T to add to its already very large spectrum holdings. Under AT&T's proposal, the total pool of spectrum subject to the screen would increase to 475 MHz (including cellular, PCS, SMR, 700 MHz, and 2.5 GHz spectrum), with the new screen becoming 158 MHz (one-third of the new pool total).[102]^/

AT&T's new "screen" would lead to absurd results and a spectrum screen that is both underinclusive and overinclusive. For example, AT&T could enhance its already large CMRS spectrum position to the point of acquiring 92 percent of all PCS and cellular spectrum in a market, yet still fall below its proposed screen and avoid any scrutiny of the competitive effects of such a dominant share of CMRS spectrum. At the same time, transactions such as New Clearwire, which pose no competitive risk whatsoever, would be subject to a laborious spectrum screen analysis that only serves to slow Commission review and delay the introduction of new, more advanced, broadband services that may compete with AT&T and other incumbents.[103]^/

In the spectrum screen proposed in its petition to deny, AT&T cherry-picks a set of bands for the screen that inflates the post-merger share of New Clearwire and downplays AT&T's large spectrum holdings, which are excluded from the count. Specifically, AT&T proposes that the Commission exclude those broadband-capable bands where AT&T has significant spectrum - namely, the AWS and WCS bands - but include the BRS-EBS band where AT&T no longer holds any spectrum rights. If the rationale of supply-side substitution has any appeal, of course, then an intellectually honest approach would need to include all bands capable of supporting broadband services in its analytical screen, including AWS-1, AWS-2, AWS-3, MSS ATC, and WCS. By finding competition wanting in situations where it is abundant and competition present in situations where it may be lacking, AT&T's proposal to cherry-pick bands to include within the screen on an ad hoc basis has no analytical merit. Indeed, the selective inclusion of BRS-EBS spectrum within the screen serves no rational purpose other than AT&T's parochial interest in overstating other operators' spectrum holdings for the purpose of delaying or denying new wireless broadband competition.

The Commission should reject AT&T's efforts to game the license transfer review process to serve its own competitive interests.[104]^/ AT&T's fear of new broadband competition provides no basis for applying the CMRS spectrum screen to the New Clearwire transaction. As established in its prior orders and in the Application, the proposed Transaction will not create any competitive harm but will instead stimulate competition and innovation.

VI. INCUMBENT LECS ARE AND WILL REMAIN DOMINANT IN THE PROVISION OF SPECIAL ACCESS

AT&T's unfounded assertions regarding the availability of alternatives to its special access service warrant brief mention. AT&T alleges in a footnote that "even apart from this transaction, Applicants have numerous options for their special access needs."[105]^/ In fact, the record in the Commission's special access rulemaking proceeding fully documents the stranglehold that the incumbents wield over the dedicated transmission links that wireless companies require to interconnect tens of thousands of cell sites with their networks.[106]^/ In addition, the Commission's own data exposes as fiction AT&T's contention that there are "plenty" of alternatives to the incumbents' special access services. Incumbent LECs' share of the special access marketplace was 94.1 percent in 2005, and was trending in the direction of increasing, not decreasing, market share.[107]^/ The incumbents are able to entrench their dominant position through the enforcement of restrictive service provisions that effectively prevent operators from using alternative providers along the few routes where such alternatives are available.[108] Although this Transaction may permit New Clearwire to reduce reliance on incumbent LEC special access services, it would represent merely a small step in a long march towards the goal of having "plenty of affordable facilities-based alternatives."

CONCLUSION

Sprint and Clearwire demonstrated in their Application and in this Joint Opposition that the proposed Transaction will result in significant public interest benefits and raises no anticompetitive concerns. As numerous EBS and other parties pointed out in their comments, New Clearwire will stimulate broadband competition and innovation for American consumers, businesses, and educational and religious institutions. The

Commission should expeditiously and unconditionally approve the Applicants' proposed license transfers.

Respectfully submitted,

Sprint Nextel Corporation

/s/ Lawrence R. Krevor

Lawrence R. Krevor

Vice President, Government Affairs - Spectrum

Trey Hanbury

Director, Government Affairs

Sprint Nextel Corporation

2001 Edmund Halley Drive

Reston, VA 20191

703-433-4141

Clearwire Corporation

/s/ Terri B. Natoli

Terri B. Natoli

Vice President, Regulatory Affairs and Public Policy

Nadja S. Sodos-Wallace

Regulatory Counsel, Assistant Secretary

Erin Boone

Corporate Counsel, Regulatory Affairs

Clearwire Corporation

815 Connecticut Ave. NW, Suite 610

Washington, DC 20036

202-330-4011

Regina M. Keeney

Charles W. Logan

Stephen J. Berman

A. Renée Callahan

Lawler, Metzger, Milkman & Keeney, LLC

2001 K Street NW, Suite 802

Washington, DC 20006

202-777-7700

Attorneys for Sprint Nextel Corporation

Howard J. Symons

Russell H. Fox

Stefanie A. Zalewski

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

701 Pennsylvania Ave. NW, Suite 900

Washington, DC 20004

202-434-7300

Attorneys for Clearwire Corporation

August 4, 2008

Certificate of Service

I, Ruth E. Holder, hereby certify that on this 4th day of August, 2008, I caused true and correct copies of the foregoing Joint Opposition to Petitions to Deny and Reply to Comments to be served by first class U.S. mail, postage prepaid (except where otherwise indicated), addressed to:

Best Copy and Printing, Inc.*

445 12th Street SW, Room CY-B402

Washington, DC 20554

fcc@bcpiweb.com

B. Lynn F. Ratnavale*

Broadband Division

Wireless Telecommunications Bureau

Federal Communications Commission

445 12th Street SW

Washington, DC 20554

lynn.ratnavale@fcc.gov

Susan Singer*

Spectrum and Competition Policy Division

Wireless Telecommunications Bureau

Federal Communications Commission

445 12th Street SW

Washington, DC 20554

susan.singer@fcc.gov

Neil Dellar*

Office of General Counsel

Federal Communications Commission

445 12th Street SW

Washington, DC 20554

neil.dellar@fcc.gov

Gloria Conway*

Media Bureau

Federal Communications Commission

445 12th Street SW

Washington, DC 20554

gloria.conway@fcc.gov

Paul K. Mancini

Gary L. Phillips

Michael P. Goggin

AT&T Inc.

1120 20th Street, NW

Washington, DC 20036

David L. Nace

Lukas, Nace, Gutierrez & Sachs, Chartered

1650 Tysons Blvd., Suite 1500

McLean, VA 22102

Counsel for Rural Cellular Association

Christine M. Gill

David D. Rines

McDermott Will & Emery LLP

600 Thirteenth St. NW

Washington, DC 20005-3096

Counsel for SouthernLINC Wireless

Holly Henderson

External Affairs Manager

SouthernLINC Wireless

5555 Glenridge Connector, Suite 500

Atlanta, GA 30342

Michael D. Rosenthal

Director of Legal and External Affairs

SouthernLINC Wireless

5555 Glenridge Connector, Suite 500

Atlanta, GA 30342

Brendan Kasper

Senior Regulatory Counsel

Stephen Seitz

Vice President Regulatory Affairs

Vonage Holdings Corp.

23 Main Street

Holmdel, NJ 07733

William B. Wilhelm

Tamar E. Finn

Bingham McCutchen LLP

2020 K Street, N.W.

Washington, DC 20006

Counsel for Vonage Holdings Corp.

Patricia Skinner, President

North Carolina Association of Community College Presidents

Michael Taylor, Chair

EBS Community College Consortium

200 West Jones Street

5006 Mail Service Center

Raleigh, NC 27699-5006

Matthew A. Leibowitz

Joseph A. Belisle

Leibowitz & Associates

One SE Third Avenue, Suite 1450

Miami, FL 33131

Counsel for The School Board of Miami-Dade County, Florida

Patrick J. Burns

Vice President for IT and
Interim Dean of Libraries

Morgan Library - Dept. 1019

Colorado State University

Fort Collins, CO 80523-1018

William K. Keane

Duane Morris LLP

505 9th Street NW, Suite 1000

Washington, DC 20004-2166

Counsel for The Northern Arizona University Foundation, Inc.

University of Central Florida

4000 Central Florida Blvd.

MH 338K

Orlando, FL 32816

Mason Gerety, President

The Northern Arizona University Foundation, Inc.

P.O. Box 4094

Flagstaff, AZ 86011-4094

Larry Cochran

Oklahoma Distance Learning Association

P.O. Box 1125

Norman, OK 73069-1125

Willard D. Rowland, Jr., President & CEO

Colorado Public Television, KBDI/Ch. 12

2900 Welton Street

Denver, CO 80218

Anthony D. D'Amato

Ophir Trigalo, Chief Information Officer

Illinois Institute of Technology

10 West 33rd Street, Room 224

Chicago, IL 60616

Richard P. West

Executive Vice Chancellor & Chief Financial Officer

The California State University

401 Golden Shore, 5th Floor

Long Beach, CA 90802-4210

James H. Johnson, Attorney

Atlanta Interfaith Broadcasters, Inc.

1155 Connecticut Ave. NW, Suite 1100

Washington, DC 20036

Frank T. Brogan, President

Florida Atlantic University

777 Glades Road, P.O. Box 3091

Boca Raton, FL 33431-0991

Henry S. Smith, Supervisor, St. Bernard Parish Public Schools

St. Bernard Parish School Board

200 East St. Bernard Highway

Chalmette, LA 70043

Russell W. Cook, Ed.D.

Executive Director

Northeast Georgia RESA

375 Winter Street

Winterville, GA 30683-1408

Kemp R. Harshman, President

Clarendon Foundation

5836 South Pecos Road

Las Vegas, NV 89120-3418

Monsignor John P. Caulfield, Pastor

St. Joseph's Church/Diocese of Orlando

P.O. Box 30

Lakeland, FL 33802-0030

Mike Wooten, Director of Public Relations & Communications

Clarke County School District

Clarke Central High School

240 Mitchell Bridge Road

Athens, GA 30606

His Eminence

Cardinal Roger Mahoney

Archbishop of Los Angeles

Archdiocese of Los Angeles

3424 Wilshire Boulevard

Los Angeles, CA 90010-2202

Dr. Andy DiPaolo

Executive Director/Senior Associate Dean

Stanford Center for Professional Development/Stanford School
of Engineering

Stanford University

496 Lomita Mall

Durand Bldg., Room 313

Stanford, CA 94305-4036

Edwin N. Lavergne

Fish & Richardson P.C.

1425 K St. NW, 11th Floor

Washington, DC 20005

Counsel for Archdiocese of Los Angeles, The Board of Trustees of the Leland Stanford Junior University (Stanford), Caritas Telecommunications, and Catholic Television Network

Wilfred C. Lemann

Director and Corporate Counsel

Caritas Telecommunications

Diocese of San Bernardino

1201 East Highland Avenue

San Bernardino, CA 92404

Monsignor Michael J. Dempsey

President

Catholic Television Network

Trans Video Communications, Inc.

1712 Tenth Avenue

Brooklyn, NY 11215-6215

Gary B. Schuster, Interim President

Georgia Institute of Technology

Atlanta, GA 30332-0325

Terry Holmes, President

Fortitude Ventures, LLC

720 Caribou Drive West

Monument, CO 80132

Todd D. Gray

Dow Lohnes pllc

1200 New Hampshhire Ave. NW, Ste. 800

Washington, DC 20036

Counsel for Georgia Institute of Technology and National Educational Broadband Services Association

Lynn Rejniak, Chair

National Educational Broadband Services Association

P.O. Box 121475

Clermont, FL 34712-1475

Dr. Shannon Adams, Superintendent

Jackson County School System

Board of Education

1660 Winder Highway

Jefferson, GA 30549

Dr. Michael R. Kelley

MS 1D2

George Mason University Instructional Foundation, Inc.

Fairfax, VA 22030-4444

Leigh Ann Spellman, CEO

Gryphon Wireless, LLC

P.O. Box 1782

Kearney, NE 68848

The Michael Kelley Revocable Trust d/b/a Shannondale Wi

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