2. The Commission's Authority to Review the Merger

Wireless carriers are "telephone corporations" and therefore public utilities under Public Utilities Code Sections 216, 233 and 234.³ (See, e.g., Decision (D.) 01-07-030, Appendix A, Interim Rules Governing Non-Communications-Related Charges on Telephone Bills, at 1, 6.) This Commission has asserted its jurisdiction to protect consumers of wireless/cellular telephone services:

Finally, we reiterate that our primary focus in the regulation of the cellular industry is the provision of good service, reasonable rates, and customer convenience.

(D.89-07-019, Re Regulation of Cellular Radiotelephone Utilities, 32 CPUC2d 271, 281.)⁴

Before 1993, the Commission had plenary jurisdiction over wireless or Commercial Mobile Radio Service (CMRS) carriers. In 1993, Congress passed the Omnibus Budget Reconciliation Act of 1993 (Budget Act), which amended Section 332(c)(3)(A) of the Communication Act as follows:

. . . no state or local government shall have any authority to regulate the entry of or the rates charged by any Commercial Mobile Service or any Private Mobile Service, except this paragraph shall not prohibit a state from regulating the other terms and conditions of Commercial Mobile Service.⁵

Shortly after passage of the 1993 Budget Act, the Commission instituted an investigation of the cellular industry in order "to develop a comprehensive regulatory framework consistent with the Federal Budget Act and our own statutory responsibilities." (OII 93-12-007, Investigation on the Commission's Own Motion into Mobile Telephone Service and Wireless Communications, 1993 Cal. PUC LEXIS 836.) The Commission's jurisdiction over wireless terms and conditions was subsequently confirmed by the California Court of Appeal. (Pacific Bell Wireless (Cingular) v. CPUC, (2005) 140 Cal.App.4th 718, 738; cf. MetroPCS v. FCC (DC Cir. 2011) 2011 U.S. App. LEXIS 9922 (affirming state jurisdiction to resolve CMRS-wireline interconnection disputes).)

Article 6 of the Public Utilities Code, sections 851-857, requires the Commission to review transfers of utility property. However, pursuant to section 853(b), the Commission may exempt a public utility or class of public utility from the requirements of Article 6. In 1995, the Commission examined its ongoing authority over wireless carriers in light of the 1993 Act.

In D.95-10-032, the Commission concluded that "[t]he transfer of ownership interests in a CMRS entity is not tantamount to [market] entry, and Commission jurisdiction over such transfers is not preempted under the federal legislation." (D.95-10-032, Conclusion of Law (CoL) 9.) However, although the Commission's jurisdiction over transfers of ownership was "not preempted," the Commission decided as a matter of public policy to "forbear from exercising such authority," except where such review or further analysis is "necessary in the public interest." (Id. at CoLs 15, 18; Ordering Paragraph 3; see also id.. at p. 16) (standing merger approval process "could inhibit the growth of competition to impose more restrictive requirements on CMRS providers than is necessary to discharge our responsibilities to protect the public interest"). Thus, the Commission established procedures whereby wireless carriers are required to provide 30-days advance notice to the Director of the Communications Division for certain types of transfers, including any proposed transactions involving a change of ownership in which an entity acquires a larger ownership share than the largest holding of any current owner. (D.95-10-032, Ordering Paragraph (OP) 3.) Further, pursuant to D.95-10-032, no preapproval is required unless the Commission notifies the carrier within the 30-day period that further information is needed or that a formal application is required. (D.95-10-032, OP 3.)

As set forth more fully below, we have concluded that further review and analysis of the AT&T/T-Mobile merger is in the public interest.

³ Public Utilities Code section 216 defines "public utility" to include "telephone corporation"; section 234 defines "telephone corporation" to include any corporation controlling, operating, or managing a "telephone line" for compensation; and section 233 defines "telephone line" to include any "fixtures" or "personal property" operated or managed "in connection with or to facilitate communication by telephone, whether such communication is had with or without the use of transmission wires."

⁴ See also D.01-07-030; D.96-12-071, Investigation on the Commission's Own Motion into Mobile Telephone Service and Wireless Communications (1996) 70 CPUC2d 61, 72-73 [stating that "we still remain concerned that the terms and conditions of service offered by each CMRS provider continue to provide adequate protection to consumers"].

CMRS refers to Commercial Mobile Radio Service, and includes Cellular Services, Personal Communications Services (PCS), Wide-Area Specialized Mobile Radio Services (SMR), Radio Telephone Utilities (RTU or paging) services, and many other wireless services. (D.96-12-071, supra, 70 CPUC2d 61, 65.) The terms "CMRS" and "wireless" are commonly used interchangeably with "cellular."

⁵ Codified at 47 USC § 332(c)(3)(A) (emphasis added). The legislative history of this provision of the Communications Act indicates what Congress meant by the language "other terms and conditions":

It is the intent of the Committee that the State still will be able to regulate the terms and conditions of these services [CMRS]. By "terms and conditions" the Committee intends to include such matters as customer billing information and packaging and billing disputes and other such consumer protection matters; facility siting issues (e.g., zoning); transfers of control; bundling of services and equipment; and the requirement that carriers make capacity available on a wholesale basis and such other matters as fall within the State's lawful authority. This list is intended to be illustrative only and not meant to preclude other matters generally understood to fall under "terms and conditions."

(House Report No. 103-111, at 251. Emphasis added.) The FCC also confirmed the CPUC's jurisdiction over "other terms and conditions" when it stated that it anticipated that the CPUC would continue to conduct appropriate complaint proceedings and to monitor the structure, conduct, and performance of CMRS providers. (See May 19, 1995 FCC Order Denying the CPUC's petition to continue to regulate CMRS rates.)