WASHINGTON-Western Wireless Corp., parent company of personal communications services provider Western PCS Corp., was granted permission by the Federal Communications Commission to boost its foreign ownership to a possible 39.9 percent.
The FCC’s International Bureau ruled it “would serve the public interest” if an indirectly owned subsidiary of Hong Kong-based Hutchison Whampoa Limited, which is an indirect holder of several wireless communications licenses and companies in the Pacific Rim, gained a 19.9-percent indirect stake in the company. Hutchison Telecommunications PCS (USA), the British Virgin Islands, plans to pay $248 million for its share of Western Wireless.
In the course of its effective competitive opportunities analysis of Western Wireless’ petition, the commission found that:
Hong Kong was an appropriate home market for comparison;
even though Hong Kong now is part of the People’s Republic of China, its laws are such that they are “one country-two systems,” thus allowing Hong Kong to participate in the World Trade Organization and the General Agreement on Tariff and Trade agreements, both of which exclude China;
Hong Kong has a thriving competitive wireless environment, with six PCS licenses coupled with numerous other wireless services;
Hong Kong doesn’t limit foreign competition or foreign investment in wireless ventures, and there is no current restriction on U.S. participation in that market;
there apparently are no problems regarding interconnection or barriers to entry; and
Hong Kong has committed to establish an independent regulator as part of the WTO agreement, and if this does not happen, the United States can solve any regulatory problems through the WTO dispute settlement process.
“Even if we had concerns that Hong Kong may not fully satisfy the requirements of the ECO test for wireless telecommunications services, we would nevertheless be inclined to grant the petitioner’s request,” the International Bureau wrote in its decision. “The WTO agreement and the opening commitments by most WTO member countries represent a major change in the global telecommunications market and therefore are an important public-interest consideration in our … analysis.
“Approving petitioner’s request under our public standard is consistent with this new market environment. We also note that no party raised concerns with respect to anticompetitive conduct in the context of this application as may arise in the case of a carrier which can leverage a foreign bottleneck to gain competitive advantage over its competitors in the United States.”
In addition, the bureau reiterated its position that “foreign investment provides capital that can fuel investment in state-of-the-art infrastructure that leads to economic growth and job formation in the economy, and facilitates competition among U.S. carriers both at home and abroad.”
What this waiver means to other wireless carriers cannot be gauged at this time, although PCS licensee NextWave Telecom Inc. spokeswoman Jennifer Walsh told RCR that her company chose to wait for World Telecommunications Organization rules to define ownership rather than to pursue FCC action.
Dan Phythyon, chief of the commission’s Wireless Telecommunications Bureau, believes carriers will view this decision as “an interim or transitional benchmark” on the way to full WTO implementation.
