***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of ) Globe Wireless, Inc. ) File Nos. 878286, 878287 ) for Public Coast Stations KPH and WCC) MEMORANDUM OPINION AND ORDER Adopted: May 6, 1997 Released: May 12, 1997 By the Acting Chief, Wireless Telecommunications Bureau: I. INTRODUCTION & EXECUTIVE SUMMARY 1. On April 9, 1996, Globe Wireless, Inc. (Globe) filed applications seeking Commission approval for transfer of the licenses for Stations KPH and WCC, Bolinas, California, and South Chatham, Massachusetts, respectively, in the Maritime Radio Services, from their current licensee, Western Union International, Inc. (Western Union), to Globe. On May 17, 1996, the public was given notice that these applications were filed. On June 4, 1996, Teamsters Local Union No. 9 (Teamsters) filed a Petition to Deny assignment of the subject licenses essentially alleging that transfer of these licenses to Globe would impair competition in the maritime communications industry. In response, Globe and Western Union filed Oppositions on July 22, 1996. A Reply to Opposition to Petition to Deny (Teamsters Reply) was filed by the Teamsters on August 9, 1996. For the reasons discussed below, the Teamsters' Petition to Deny is denied. We will grant the applications filed by Globe, and permit transfer of the licenses of Marine Coastal Stations KPH and WCC from Western Union to Globe. II. BACKGROUND 2. Public coast stations have been in existence for approximately 100 years. Currently, high seas public coast stations are governed by Subpart J of Part 80 of the Commission's Rules. These stations provide a variety of voice and data telecommunications services, consisting of radiotelephone, radiotelegraph, narrow-band direct-printing, and facsimile, and are capable of serving vessels thousands of miles away. High seas public coast station frequencies are allocated internationally and distributed among eleven frequency bands. These frequencies are assigned for exclusive use based on the type of radio communication services the station intends to provide. Under current rules, a high seas public coast station may initially be assigned one channel in each of the applicable frequency bands. Stations KPH and WCC currently are licensed as high seas public coast stations to Western Union and are authorized to use a total of forty-six (46) and forty-five (45) frequencies, respectively, in the eleven frequency bands allocated for use by public coast stations serving vessels on the high seas. Station KPH is manned; Station WCC is operated remotely from the KPH location. Together, they employ either 24 or 25 individuals (the figure is in dispute). The two stations jointly serve 400 customers, and provide radiotelegraph services to vessels and monitor a distress frequency on 500 kHz. Globe seeks transfer of these licenses from Western Union to itself. Presently, Globe is the licensee of Stations KFS, WNU, and KEJ at Palo Alto, California, Pearl River, Louisiana, and Kahalelani, Hawaii, respectively. 3. Petition to Deny. The Teamsters, representing employees of Stations KPH and WCC, oppose transfer of these stations from Western Union to Globe, contending that closure of the facilities will result from such a transfer. They allege that this, in turn, will force the maritime community to use the allegedly unreliable Global Maritime Distress Safety System (GMDSS). The Teamsters argue that because there are no adequate substitute facilities of equal capabilities, closure of the facilities will seriously inconvenience the public. The Teamsters further argue that this would contravene Section 214(a) of the Communications Act of 1934, as amended (Communications Act), because the present and future public convenience and necessity will be adversely affected by the discontinuance of the subject stations' operations. 4. The Teamsters state that only four of the seven international public coast marine (IPCM) stations operate 24 hours a day, seven days a week. Those four stations are WLO, Mobile, Alabama (licensed to Global Radio Network, Inc.) (GRN); KFS, Palo Alto, California (licensed to Globe); and Stations KPH and WCC, both of which Globe seeks to obtain from Western Union. The Teamsters contend that if Stations KPH and WCC are closed, only two high seas public coast stations that operate 24 hours per day, seven days a week (KFS of Globe and WLO of GRN) would remain. The Teamsters further note that Globe is also the licensee of one of the other three IPCM stations that would remain under this scenario (Station WNU). The Teamsters assert that (1) purchase and/or closure of Stations KPH and WCC would give customers a choice between only Globe and GRN for operation at any time of day or night, (2) those customers would choose Globe for transmitting and receiving messages because it is the dominant carrier, and (3) Globe's market power would be further enhanced. According to the Teamsters, grant of the subject applications will enable Globe to capture 80% or more of the revenues in the market, thus, creating a monopoly. The Teamsters further contend that denial of these applications would continue existing competition that encourages and assures better services and faster handling of message traffic. Finally, the Teamsters request that before any grant of the subject applications, the Commission establish an independent committee pursuant to Sections 309(e) and 403 of the Communications Act, to review the communications services provided to the maritime industry. It recommends that such committee be comprised of representatives from industry, the Department of Defense, the Department of Justice, unions and common carriers. III. DISCUSSION 5. After a careful review of the record in this proceeding, we conclude that grant of the subject applications is consistent with the public interest, convenience and necessity standard established in Section 309(a) of the Communications Act. We find that the allegations made in the Petition to Deny are not substantiated. 6. Service Discontinuation. Although the Teamsters assert that the license transfers will result in loss of services currently received by the public, Globe, in the context of this proceeding, has stated its intent to continue to offer all services on the same frequencies and the same hours of operation currently available to existing customers of Stations KPH and WCC. The Teamsters, moreover, note that only Stations KPH and WCC have the facilities within the continental United States to reach all the world's oceans. Furthermore, of the approximately 400 customers notified of the change in ownership, only one, Williams, Dimond & Co., indicated any concern. In addition, assignment of these licenses does not pose any harm to the public safety or national security. Based upon these facts and Globe's representations, we conclude that there is insufficient evidence to indicate that there will be disruption to current service as a direct result of the proposed transfer. 7. As to the Teamsters' concerns that the closure of these stations will force increased reliance on the GMDSS, which they consider to be unreliable, the U.S. Congress demonstrated its belief in the reliability of the GMDSS by recently eliminating the requirement that large cargo and passenger vessels carry radiotelegraph installations operators when these vessels are equipped and operated in accordance with GMDSS provisions. In implementing Section 365 of the Telecommunications Act of 1996, the Commission concluded that the GMDSS is at least, if not more, reliable than the outdated radiotelegraph system which is based on manual Morse code technology. In fact, the GMDSS represents the biggest improvement in marine safety since the first maritime regulations were enacted following the sinking of the Titanic in 1912. It is an automated ship-to-shore distress alerting system that relies on satellite and advanced terrestrial systems. 8. Even if Western Union had discontinued service, or if at anytime in the future Globe does discontinue service, no prior Commission authorization is required. Under recently adopted Section 63.19(a) of the Commission's Rules, only notification to customers and the Commission (sixty days in advance) is required of non-dominant international carriers that seek to discontinue, reduce or impair service. In streamlining the international Section 214 authorization process, the Commission stated that the increase in the number of international carriers and competition in international services means that customers can switch to another international carrier if service is discontinued by their current carrier. In view of this, the Commission concluded that impairment of service is unlikely, and customers will be able to obtain alternative service within the sixty days provided by notice. Moreover, there are channels currently available for use by new license applicants in the eleven frequency bands which are allocated to high seas public coast stations. In view of the above, we conclude that transfer of the subject stations does not contravene Section 214 of the Communications Act or Section 63.19(a) of the Commission's Rules. 9. The Market. We believe that competition will not be impaired by the transfer of the subject licenses. The maritime communications market is broader than merely public coast stations. High seas public coast stations face direct competition from satellite-based service providers, such as INMARSAT, and, to a limited extent, from cellular-based service providers. Indeed, as maritime service customers increasingly have turned to satellite and cellular services, there has been a considerable contraction in the number of public coast stations over the past twenty- five years. Even including the subject stations, Globe estimates that it will be serving only five percent of the American marine communications market. 10. While we concur with the Teamsters that competition encourages better services, faster handling of message traffic, and spurs technological development, the Teamsters take too narrow a view of the relevant market. In fact, the Commission has already held that public coast stations do not possess market power. Further, the Commission recently reclassified international public coast stations as non-dominant common carriers to promote competition. As a non-dominant carrier, Globe will not have any ability to control prices or engage successfully in any other anticompetitive conduct following the assignment of the subject licenses. For that matter, Globe and Western Union, as non-dominant international carriers, are under no obligation to seek authorization from the Commission to discontinue service. Petitioner's allegation that the transfer is a ruse to circumvent Western Union's obligation, as an international carrier, to file a Section 214 application to cease operations is unpersuasive because Western Union does not have such an obligation. Thus, Petitioner's allegations that the proposed license transfers contravene Section 214 of the Communications Act on this basis are also without merit. 11. Competition. We concur with Globe that the transfer of the facilities will better serve the public interest by increasing the availability of new and innovative services in the public coast station context. In addition to traditional services, Globe intends to offer "Globe E-Mail," which would permit individuals to communicate with ships, and vice-versa, directly via electronic mail. In its comments, HAL notes that the Globe E-mail system forwards typical ship-to-shore traffic faster and at a fraction of the cost of satellite communications systems. We find merit in Globe's contention that such technical innovations are crucial for the continued survival of public coast stations. Western Union submits that it has upgraded the antennas and equipment at the stations, automated many of the systems, and reduced the staff by nearly a half, but these measures have not made these stations economically successful. It appears likely that the economic viability of public coast stations is inextricably intertwined with successful implementation of additional technical improvements, such as Globe's E-Mail feature. The subject license transfers will permit Globe, within the scope of its authorizations under the Commission's Rules, to institute an advanced maritime communications system and achieve efficiencies previously unavailable to Western Union, which will undoubtedly enhance Globe's ability to effectively compete. This should further increase overall competition in the maritime communications market by enabling Globe's public coast stations to directly compete more effectively with satellite and cellular communications providers. IV. CONCLUSION 12. Contrary to the Teamsters' contention, we do not find that the grant of these applications will result in the concentration of control of the maritime communications market. Rather, we conclude, based on the record in this proceeding, that these stations' existing customers will continue to receive their current services, as well as new, innovative communications services such as Globe E-mail. We also determine that there are no substantial and material questions of fact warranting either designation of these applications for hearing or establishment of an investigatory committee. We further conclude that the license transfers will comply with the public interest, convenience and necessity standards mandated by the Communications Act. V. ORDERING CLAUSES 13. IT IS ORDERED that pursuant to Sections 4(i), 309(d)(2), and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 309(d)(2), 310(d), and Sections 1.962 and 1.971 of the Commission's Rules, 47 C.F.R. 1.962, 1.971, the Petition to Deny filed by Teamsters Local Union No. 9 on June 4, 1996, against Globe Wireless, Inc., IS DENIED. 14. IT IS FURTHER ORDERED that the applications of Globe Wireless, Inc., for approval to transfer the licenses for Stations KPH and WCC, Bolinas, California, and South Chatham, Massachusetts, respectively, in the Maritime Radio Services, from Western Union International, Inc., to Globe Wireless, Inc., ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION Daniel B. Phythyon Acting Chief, Wireless Telecommunications Bureau j:\prd\100globe.w10 4-25-97