8. Preliminary Scope of the Proceeding
As required by Rule 7.1(c)15 of the Commission's Rules of Practice and Procedure, this OII includes a Preliminary Scoping Memo. In this Preliminary Scoping Memo, we describe the issues to be considered in this proceeding and the timetable for resolving the proceeding.
8.1. Issues to be Addressed
The scope of this Investigation includes all issues that are relevant to the proposed merger's impacts on California in order to inform this Commission's comments with the FCC, and determine whether any conditions should be placed upon a merged entity.
Bearing in mind the concerns the Legislature has identified in Article 6 of the Public Utilities Code, our limited resources and the FCC's and Department of Justice's concurrent investigations, we intend to focus this investigation on (but do not limit it to) the following issues that have the greatest impact on California:
1. Is this proposed merger in the public interest?
a. Would the merger, which is planned as a nationwide transaction, have specific or different effects in California? For example, would the merger result in less competition in the California marketplace for wireless telephone customers as compared to wireless telephone customers nationally?
b. How should the relevant market(s) be defined? How should the product market(s) be defined, as wireless telephone carriers, as smart phone carriers, or some other way? How should the relevant geographic market(s) be defined? Locally according to carriers available to consumers in a locality, regionally, by the state, or nationally?
c. Would the merger give the resulting entity monopsony power or increase the tendency to monopsony power including market power over equipment suppliers? If yes, then what impact would the merger have on choice and competition in handsets and related equipment?
d. How long, and to what extent, would the lower-priced T-Mobile plans continue to be available after the merger? Would the merger serve Californians who depend on low-priced wireless plans? What merger-specific and verifiable efficiencies would likely be realized by the merger?
2. What merger-specific and verifiable efficiencies would likely be realized by the merger?
3. Would innovation be promoted or constrained by the merger? For example, would the merger increase, maintain or diminish facilities and competition for wireless transmission services such as distributed antenna systems (DAS) and open distributed antenna systems (O-DAS)?
4. What impact would the merger have on the market for special access or backhaul services?
a. What alternatives to incumbents' special access backhaul facilities currently exist, and what alternatives would exist after the merger, for independent, competitive wireless carriers?
b. Would the smaller post-merger pool of independent, competitive wireless carriers purchasing special access backhaul from local exchange carriers affect the market power of those special access backhaul customers? Would the merger increase the market power of the local exchange carriers and/or their wireless affiliates with respect to special access backhaul services?
c. Would the merger increase the ability of the merging parties to impose exclusive or requirements contracts on purchasers of backhaul services? Would the merger increase the ability of the merging parties or their wireline affiliates to require that the entity seeking backhaul services buy a certain percentage of their backhaul services from the wireline affiliates of the merging parties?
5. Would the merger maintain or improve the quality of service to California consumers?
a. Is acquisition of T-Mobile's spectrum necessary to extend AT&T's service area or improve AT&T's existing service? Is AT&T using the spectrum it now has? Does it have concrete plans to build out the spectrum licensed to it? We note that in February 2011, AT&T filed an application with the FCC to acquire the 700 mhz wireless spectrum currently licensed to Qualcom including the licenses to serve Los Angeles and San Francisco. How would these combined spectrum holdings, if approved, affect AT&T's wireless service, competition, and the California market? Is acquisition of both T-Mobile's and Qualcom's California spectrum necessary to achieve the benefits AT&T plans to bring about through these transactions?
b. Is the merger necessary to provide T-Mobile customers with advanced services, such as LTE (Long Term Evolution) services that facilitate data transfers and offer greater speed?
6. What California utility(ies) would operate the merged properties in California? Would the merger preserve the jurisdiction of the Commission and the capacity of the Commission to effectively regulate those utility operations in the state?
7. How does this merger affect the merging companies' employees, shareholders, subscribers, communities in which they operate, and the State as a whole?
8. Would the benefits of the merger likely exceed any detrimental effects of the merger?
9. Should the Commission consider conditions or mitigation measures to prevent significant adverse consequences which may result from the merger? What, if any, should those conditions or measures be?
In reviewing other proposed changes of control, the Commission has found that the proposed transaction is exempt from California Environmental Quality Act (CEQA) review. See , e.g., D.09-10-056, D.09-08-017, D.06-02-033, and D.05-12-007. Respondents should address whether the proposed merger is exempt from CEQA review.
To assist in addressing these issues in this Investigation, the Respondents and Interested Parties are ordered to file responses to the Data Requests appended hereto as Appendix A.16 The obligation to respond to these Data Requests is an independent statutory obligation under Public Utilities Code Sections 311, 314, 581, 582, and 584, and is not dependent on the results of any motion practice initiated by Respondents or Interested Parties. AT&T should file its application submitted to the FCC in WT Docket No. 11-65, and the Respondents and Interested Parties should file in this proceeding full responses to all Commission staff data requests regarding the proposed merger. (The Commission staff data requests issued to date are appended hereto as Appendix B; any subsequent staff data requests will include deadlines for filing responses in this proceeding.) Section 9 below addresses the treatment of information and documents that the entities view as proprietary or confidential.
8.2. Schedule
We plan to substantially complete this inquiry in a manner sufficiently timely to provide comment to the FCC. With this goal in mind, we set the following schedule:
June 20, 2011 Deadline for parties to suggest additional data requests in letters to the Director of Communications Division, with service on all parties.
June 24, 2011 Deadline for AT&T to file in this proceeding its application filed at the FCC in WT Docket No. 11-65 and for Respondents and Interested Parties to file responses already provided to Commission staff data requests regarding the proposed merger.
June 24, 2011 Deadline to file responses to Data Requests in Appendix A and any remaining responses to staff Data Requests in Appendix B.
July 1, 2011 Deadline to file Opening Comments and factual showings in Declarations. Comments may include legal analyses and must be limited to 50 pages. Each Declaration must be verified, consistent with Rule 1.11, by a representative knowledgeable about its contents.
July 7 or 8, 2011 Public Workshop in San Francisco re: facilities-based competition issues, with a particular focus on special access backhaul, lease and other contract arrangements, interconnection, and related issues. A public participation hearing will also be held in San Francisco.
July 15 or 29, 2011 Public Workshop in Silicon Valley re: innovation issues. This shall include, but is not limited to, handsets; distributed antenna systems, broadband, data transfer, etc.
July 20 or 21, 2011 Public Workshop in Los Angeles re: customer issues, including, but not limited to, price, service quality, customer service - small/individual, small business, and large enterprise customer representatives. A public participation hearing will also be held in Los Angeles.
July (dates TBD) Public participation hearings in Orange County and the Central Valley
August 5, 2011 Deadline for filing Reply Comments (limited in scope to matters raised in Opening Comments and workshops, and limited to 25 pages), and supplemental factual showings in verified Declarations.
August 10-30, 2011 Staff may submit the Investigation's record to the FCC.
September 2, 2011 Target date for proposed decision, with subsequent comments (limited to 25 pages) and reply comments (limited to 5 pages) consistent with Rule 14.3.
October 6, 2011 Target date for Commission vote on a proposed decision.
For the public workshops, Respondents are directed to designate and provide as participants their employee or employees most knowledgeable regarding these subjects. Interested persons or organizations may also be invited to participate in the workshops. Workshop participants will be required to identify themselves, their relationship, if any, to the parties to the proposed transaction (including those filing Petitions to Deny at the FCC, e.g., Sprint Nextel), and whether the organization they represent has received funding in the past twelve months or has been promised funding from AT&T and/or T-Mobile, Sprint, or any other wireless or wireline telephone company or their foundation. Commenters and workshop participants are reminded that their statements are subject to Commission Rule 1.1, and must be true, correct, and complete to the best of the participant's knowledge.
Workshops and public participation hearings will be transcribed by a court reporter. The workshops shall be noticed as a public meeting per the Bagley-Keene requirements, with 10 days notice. If needed, the assigned Commissioner or Administrative Law Judge (ALJ) may modify the dates and locations of the workshops and public participation hearings, as long as all three workshops and four public participation hearings are completed no later than July 29, 2011.
Because of the expedited nature of this proceeding, there will be no Prehearing Conference, but rather the assigned ALJ shall convene an informal telephonic conference with parties as soon as possible after issuance of the OII, to address questions of the parties and procedural issues beyond the schedule set forth above, such as dates for discovery.
15 Rule 7.1(c) provides: "Investigations. An order instituting investigation shall determine the category of the proceeding, preliminarily determine the need for hearing, and attach a preliminary scoping memo. The order, only as to the category, is appealable under the procedures in Rule 7.6."
16 We emphasize that, while staff has the authority to issue data requests without a Commission decision, we attach data requests to this OII to streamline and expedite the process. Staff has the discretion to clarify and add any additional data request it finds appropriate.
