could use its monopoly power to impede competition in the market it seeks to enter." The various Operating Company interests expressed supra must, of course, be evaluated against that standard.
The effect on competition may be viewed from two aspects: (1) Operating Company competition vis-a-vis the interexchange carriers, and (2) Operating Company competition vis-a-vis the Radio Common Carriers in the mobile radio services market.
With respect to the first of these, the crux of the matter is that the mobile radio services for which relief is sought are not substitutes for landline inter-LATA facilities such that the Operating Companies would, to any significant degree, be competing with AT&T or any other interexchange carrier.
Indeed, AT&T itself supports the petition of the Operating Companies -- which at this stage it would hardly do if the proposed mobile radio services were a serious threat to its own long distance network.
Only a limited number of inter-LATA communications are transmitted over conventional mobile radio systems.
With respect more specifically to cellular radio, most cellular calls in the nine areas for which exceptions are sought would still be intra-LATA in character, and the total number of inter-LATA cellular calls would be only a very small fraction of total inter-LATA communications in the area.
In short, the mobile radio services at issue are either so fundamentally different from two-way landline service or are so much more limited and expensive that it is highly unlikely that Operating Company provision of these services across LATA boundaries in some selected areas could provide them with an incentive to fail in their obligation to provide equal access to interexchange carriers.
Thus, there does not appear to be a substantial possibility that the grant of the requested relief would impede competition in the interexchange market as a whole.
Somewhat different questions are presented with respect to competition in the mobile radio service market itself, but the result is no different. In this market, the Operating Companies will, of course, be competing with the Radio Common Carriers within the LATAs in any event, but if the requested relief is granted, they will extend this competition beyond LATA boundaries in some locations. On that basis, the Department of Justice and several intervenors have argued that this could create incentives for various types of anticompetitive conduct, particularly in the cellular radio field. While these concerns are not wholly without substance, they do not justify denial of the petition. Several of the objections can and will be satisfied by the imposition by the Court of conditions upon the grant of the petition. As for the broader policy objection, it is not, on balance, sufficiently well founded to outweigh other considerations. See Part V infra.
First. It has been argued that to allow the Operating Companies to offer inter-LATA mobile radio services would give them an incentive to discriminate against competing mobile radio systems with respect to interconnection.
Since the Operating Companies already have the right to provide mobile radio services within LATA boundaries, such an incentive may be said to exist already to some extent. The relatively limited expansion of areas across LATA boundaries in some locations would not appear to be a significant additional factor.
However, in order to alleviate any problems in that regard, the Court hereby requires as a condition of the grant of the petition that the Operating Companies offer to each non-wireline mobile radio licensee interconnection on the same terms and conditions as they provide to their own mobile radio systems.
Second. The Department of Justice states that competing mobile radio service providers will be at a significant disadvantage if the Operating Companies do not impose an inter-LATA access charge on their own inter-LATA mobile radio services while collecting such charges from their radio service competitors.
That concern is legitimate, and in order to meet it, the Court hereby requires that the Operating Companies shall provide access to their own regional cellular corporations on the same terms -- including price -- as are offered to competing cellular systems.
Third. It has been argued that the construction of inter-LATA landline facilities for mobile radio systems might, in the short term, be cross-subsidized from local monopoly services, and that such facilities might then interconnect with the local telephone network in a manner unavailable to the Radio Common Carriers.
The Operating Companies have stated that they intend, upon divestiture, to lease all inter-LATA facilities for their mobile radio systems from interexchange carriers on the same terms as are offered to their competitors.
This expectation, too, is hereby made a specific condition of the grant of the Operating Companies' petition.
The Department of Justice contends more broadly that the requested relief might give the Operating Companies the incentive and the ability to subsidize inter-LATA mobile radio services in the long term with monopoly revenues. While it may be true that, the larger the Operating Companies' mobile radio operations, the more opportunity there is theoretically for cross-subsidization, the Department itself recognizes that an Operating Company
has existing incentives to cross-subsidize its cellular offerings with revenues derived from the provision of regulated monopoly exchange services, whether those public radio services are offered only within LATA boundaries, or on an inter-LATA basis as well.
No persuasive reason has been given why the expansion of the Operating Companies' cellular service areas across LATA boundaries in nine locations would increase to any appreciable degree the ability and incentive of these companies to cross-subsidize.
To the extent that such a risk exists, it is substantially outweighed by the gains that will accrue to competition from the removal of the Operating Companies' competitive
disadvantage vis-a-vis the Radio Common Carriers, who are not confined by the LATAs. Even though the grant of the petition would directly affect only a small fraction of all inter-LATA communications in any particular area, its denial would greatly reduce the Operating Companies' profits from mobile radio services, for the Operating Companies' systems in their entirety might then be unable to compete effectively with the Radio Common Carriers' systems. Such a disadvantage would, of course, tend to reduce the profits of the Operating Companies' mobile radio services -- profits which could otherwise contribute to their financial strength. It would follow that projections of return on investment might not be commensurate with the risk involved, and this, in turn, might lead the Operating Companies to cancel altogether their plans to provide cellular radio, at least with respect to some areas.
It must finally be remembered that the petition before the Court would not involve the Operating Companies in a business venture in an unrelated field, for these companies are already legitimately in the mobile radio service business. Under the petition, they will simply be allowed to enlarge on that business, with safeguards imposed by the Court to eliminate any risks to competition.
As in the past, the Court's approach to the issues is being dictated by pragmatic rather than ideological considerations. Where, as here, there is, realistically, no danger that the relief would harm competition, the court will not deny it merely because abstractly the activities may be classified as being in the competitive rather than in the monopoly area. At the same time the Court will, of course, vigilantly enforce the provisions of sections II(D) and VIII(C), and where there is no showing that "there is no substantial possibility" that the Operating Companies could use their monopoly power to impede competition -- whether by means of cross-subsidization or otherwise -- they will be precluded from entering the relevant markets.
The Operating Companies' petition pursuant to Section VIII(C) is hereby granted, subject to the three restrictions described at slip op. pp. 18-20 supra.43