Metro PCS 2009 Annual Report Download - page 29

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may disapprove the transfer of control or assignment, impose conditions, or otherwise require divestitures of some
or all of our spectrum, licenses, or other assets.
Disaggregation, Partitioning and Spectrum Leasing
The FCC allows spectrum and service areas to be subdivided, partitioned, or disaggregated, geographically or by
bandwidth, with each resulting license covering a smaller service area and/or including less spectrum. Any such
partition or disaggregation is subject to FCC approval, which generally is received, but cannot be guaranteed. The
FCC also has adopted policies to facilitate development of a secondary market for unused or underused wireless
spectrum by permitting the leasing of spectrum to third parties. These policies provide us, new entrants, and our
competitors with alternative means to obtain additional spectrum and allow us to dispose of excess spectrum, subject
to FCC approval and applicable FCC conditions.
Spectrum and Market Concentration Limits
The FCC has certain policies intended to prevent undue concentration of the terrestrial wireless broadband mobile
services market. For example, the FCC conducts a case-by-case review of all transactions where wireless spectrum
is being assigned or a transfer of control is occurring where both parties to the transaction hold CMRS spectrum in
the same or in an overlapping area. The FCC will screen a transaction for competitive concerns if, upon
consummation, the acquirer and any affiliated group is attributed to hold the following amount of spectrum in a
single market, or if there was a material change in the post-transaction market share concentrations as measured by
the Herfindahl-Hirschman Index as follows:
• For geographic areas in which AWS-1 and certain BRS spectrum is available, 145 MHz.
• For geographic areas in which AWS-1 is available but certain BRS is not available, 125 MHz.
• For geographic areas in which certain BRS spectrum is available but AWS-1 is not available, 115 MHz.
• For geographic areas in which neither BRS spectrum or AWS-1 is available, 95 MHz.
This screen also applies to spectrum acquired via auction. These benchmarks are subject to pending
reconsideration proceedings at the FCC. The FCC also is considering whether to initiate a proceeding to eliminate
case-by-case application of a spectrum screen entirely in favor of a bright-line spectrum cap.
We are well below the spectrum aggregation screen in the geographic areas in which we hold or have access to
licenses which means we may be able to acquire additional spectrum either by auction or in private transactions and
we may be able to be acquired by certain other carriers. However, the FCC’s retention of a case-by-case approach to
spectrum acquisition and the continuing revision upward of the spectrum screen may allow our competitors to make
additional acquisitions of spectrum and further consolidate the industry.
Foreign Ownership Restrictions
The Communications Act authorizes the FCC to restrict the ownership levels held by foreign nationals or their
representatives, a foreign government or its representative, or any corporation organized under the laws of a foreign
country. Generally, the law prohibits indirect foreign ownership of over 25% of our common stock. Our stock is
freely tradable on the NYSE and foreign ownership of our common stock could exceed this 25% threshold without
our knowledge. If ownership of our common stock by non-United States citizens or entities exceeds 25%, the FCC
may revoke licenses, or require us to restructure our ownership. However, the FCC may waive the foreign
ownership limits for CMRS licensees, such as us, and generally permits additional indirect foreign ownership in
excess of the statutory 25% benchmark particularly if that interest is held by an entity or entities that are citizens of,
representatives of or organized under the laws of countries that are members of the World Trade Organization, or
WTO. For investors from countries that are not members of the WTO, the FCC will determine if the home country
extends reciprocal treatment, called “effective competitive opportunities,” to United States entities. If these
opportunities do not exist, the FCC may not permit such foreign investment beyond the 25% benchmark. We have
established internal procedures to ascertain the nature and extent of our foreign ownership, and we believe that the
indirect ownership of our equity by foreign entities is below the benchmarks established by the Communications
Act. If we were to have foreign ownership in excess of the limits, we have the right to acquire that portion of the