Metro PCS 2010 Annual Report Download - page 28

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Transfer and Assignment of FCC licenses
The Communications Act requires prior FCC approval for assignments or transfers of control of any license or
construction permit, with limited exceptions. In granting FCC approval for assignments or transfers, the FCC may
impose conditions. To date, we have managed to secure FCC consent to a variety of assignments and transfers
without undue delay or the imposition of conditions outside of the ordinary course. If we are acquired, or acquire
another entity, in the future, the FCC 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 applies heightened scrutiny to transactions in which wireless spectrum is
being assigned or transferred whenever both parties to the transaction hold CMRS spectrum in the same or in an
overlapping area. Specifically, the FCC will screen a transaction for competitive concerns if, upon consummation,
the acquirer, and any affiliated group whose spectrum is attributed to the acquirer, holds more than a certain 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. The amount of spectrum attributed to a licensee for spectrum
screening purposes depends on the availability of certain spectrum.
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
the case-by-case application of a spectrum screen in favor of a bright-line spectrum cap.
We are well below the spectrum aggregation screen in all of the geographic areas in which we hold licenses
which means that the FCC’s spectrum concentration policies should not prevent us from acquiring 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
improve their relative spectrum positions and competitive strength. Some of our competitors may have spectrum
holdings close to, at, or over the spectrum screen amount and any acquisition of us or spectrum from us by such
competitors may not be approved or divesture may be required which could deter such competitors from acquiring
us or engaging in spectrum swaps or transactions with us.
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