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Before the
               Federal Communications Commission
                     Washington, D.C. 20554



In the Matter of

Joint Applications of Telephone and Data
Systems, Inc. and Chorus Communications,
Ltd. for Authority to Transfer Control of
Commission Licenses and Authorizations
Pursuant to Sections 214 and 310(d) of the
Communications Act and Parts 22, 63 and 90
of the Commission's Rules
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CC Docket No. 01-73

ITC-T/C-20010307-00128
ITC-T/C-20010307-00129

ULS File Nos.
0000352422 
0000352426, et al.




                  MEMORANDUM OPINION AND ORDER

   
   Adopted:  August 10, 2001              Released:  August 10, 2001

By the Chief, Common Carrier Bureau; Chief, Wireless Telecommunications Bureau:

     I.   introduction
1.     In this Order, we approve the transfer of control applications filed on February 8,
2001, and March 7, 2001, by Telephone and Data Systems, Inc. (TDS) and Chorus
Communications, Ltd. (Chorus) (collectively, the Applicants), pursuant to sections 214 and
310(d) of the Communications Act of 1934, as amended (the Act).  The applications were placed
on public notice on March 20, 2001, and no comments were received.  The Applicants filed
additional information in support of their applications in letters dated May 16, 2001, June 6, 2001,
and August 3, 2001.  Based on the record, we conclude that the public interest will be served by
approval of the transfer of control applications, subject to the condition that Chorus divest to an
unrelated third party before consummation certain wireless licenses that TDS is not permitted to
hold or control under the Commission's rules. 
     II.  Background
3.     Chorus provides local exchange services in Wisconsin and Minnesota through both its
incumbent local exchange carrier (LEC) and competitive LEC subsidiaries.  Chorus also provides
long distance services to 19,329 customers through two subsidiaries.  In addition, Chorus holds,
directly and indirectly, several radio licenses.  The transferee, TDS, is a holding company, which
through its wholly-owned subsidiary, TDS Telecommunications Corporation (TDS Telecom) and
incumbent LEC operating subsidiaries, provides telecommunications service to approximately
731,000 access lines in 28 states.  The Applicants propose to transfer control of certain of the
wireless licenses and the domestic and international section 214 authorizations held by Chorus and
its subsidiaries to TDS by merging Singer Acquisition Corporation, a wholly-owned subsidiary of
TDS, with and into Chorus.  The merger would make Chorus a wholly-owned subsidiary of
TDS, and Chorus's subsidiaries would become wholly-owned indirect subsidiaries of TDS. 
Chorus proposes to divest its 75-percent interest in PCS Wisconsin and 18-percent interest in
Madison SMSA before consummating the merger with TDS to comply with the Commission's
rules.
4.     Pursuant to sections 214(a) and 310(d) of the Act, we must determine whether the
Applicants have demonstrated that the proposed transfer of control of Chorus's licenses and
authorizations will serve the public interest, convenience, and necessity.  In discharging these
statutory responsibilities, we have weighed the potential public interest harms of the proposed
transaction against the potential public interest benefits to ensure that, on balance, the transfers of
control serve the public interest, convenience, and necessity.  
     V.   Discussion
6.     After reviewing the record, we determine that the proposed transfer will not likely
result in harm to competition in any relevant U.S. market and will likely yield public interest
benefits.  No qualifications or competitive issues have been raised concerning TDS's acquisition
of Chorus's other wireless licenses, and we find no independent reason to believe that the
proposed transaction raises those issues in light of the Applicants' agreement that Chorus must
divest its interests in PCS Wisconsin and Madison SMSA before consummating its merger with
TDS.  To that end, we condition grant of the applications on Chorus divesting these interests
before consummation of its transaction with TDS to ensure that the transaction will not result in a
violation of the Commission's rules.
          A.   Divestiture of Chorus's Interests in PCS Wisconsin and Madison SMSA
7.     Chorus holds an indirect, controlling 75-percent interest in PCS Wisconsin, LLC, the
Madison PCS F block licensee.  TDS is ineligible to hold this license because TDS does not
qualify as an entrepreneur, and Chorus has committed to divest the F block PCS license.  To
accomplish the divestiture, Chorus has filed alternate applications requesting consent to assign
this license to either Metcalf Partners L.P. or the current PCS Wisconsin minority interest holder,
Mt. Horeb Telephone Company. 
8.     Chorus also holds an 18-percent interest in Madison SMSA Limited Partnership, a
Madison MSA cellular licensee.  Under the Commission's rules, TDS currently is precluded from
acquiring Chorus' interest in the Madison cellular carrier because TDS controls the other cellular
carrier in the Madison market.  The Commission's rules preclude an entity that controls a cellular
licensee from holding more than a five-percent interest in the other cellular licensee in that
market.  Therefore, to comply with the Commission's rules, Chorus has committed to divest its
interest in Madison SMSA Limited Partnership prior to consummation of the instant transaction,
and requests approval to divest this interest to a divestiture trust pending sale to a third party. 
While the sale of Chorus' 18-percent interest in Madison SMSA Limited Partnership does not
require Commission approval because it does not constitute a transfer of control of the license(s)
involved, the Commission's rules place certain limitations on the establishment and administration
of divestiture trusts. 
9.     We grant Chorus' request that its interest in Madison SMSA be transferred to a
divestiture trust.  We have reviewed the proposed Trust Agreement and find that it complies with
the Commission's requirements for divestiture trusts.    We are satisfied that the Trustee will be
independent, that he will be able to dispose of the properties as he sees fit, that communication
between the Trustee and the Applicants will be limited to communications initiated by the Trustee
seeking information needed to divest the interest, and that the trust will be of limited duration.  In
addition, the Trustee will report to the Commission every 60 days on progress towards ultimate
divestiture.  Grant of the applications referenced herein is conditioned, however, on further
approval of material revisions to the Trust Agreement, and the failure to adhere to these critical
elements of the Trust Agreement could subject the Applicants to an enforcement action by the
Commission.  We see no reason here, as we have in previous cases, to place a specific limit on the
period of time for consummating the transfer of Chorus' interest in Madison SMSA to the
divestiture trust because the interest must be divested to the trust before the merger with TDS
may be consummated. 
          A.   Analysis of Public Interest Effects in the Local Exchange and Exchange
          Access Markets
               1.   Potential Public Interest Harms
10.    The Commission has previously found that, absent conditions, a proposed merger of
incumbent LECs could harm consumers by precluding the potential for one party to a transaction
to enter the other's local exchange and exchange access markets as a competitor.  Specifically,
the Commission has found that a proposed merger involving incumbent LECs can raise public
interest concerns by eliminating the potential for competitive entry by or actual competition
between the merging parties.  To determine whether a proposed combination of incumbent
LECs would cause a public interest harm, the Commission examines several relevant
considerations, including the metropolitan areas involved; the mobile telephony holdings of the
parties, which could enhance their ability to springboard into adjacent markets; the announced
plans and potential for one company to enter the other's markets; and the advantages of adjacent
local exchange operations to support competitive entry.  The Commission has considered
whether this type of analysis is necessary when the transaction pertains to smaller carriers, and
found that it would, on a case-by-case basis, determine the competitive effects of such proposed
transactions.
11.    In this case, TDS and Chorus are actual competitors for local exchange and exchange
access services in the Madison area.  Specifically, the proposed transaction would eliminate TDS
as a competitor in two exchange areas in which Chorus is an incumbent LEC.  After carefully
reviewing the specific facts of this case, we are persuaded that the loss of TDS as a competitor in
the Chorus exchanges is not likely to result in a public interest harm.  We reach this conclusion for
the following reasons.  First, the record indicates that a significant number of actual and potential
competitors will remain in the Madison area, and in the Chorus exchanges, even after the
proposed transaction is consummated.  Second, the vast majority of TDS Metrocom's
competitive LEC lines in the Middleton and West Towne exchanges serve business customers. 
The Commission has recognized that such business customers, in particular larger businesses,
generally face more competitive choices than residential customers, and that business customers
are more attractive to competitive LECs than residential customers.  Third, the record indicates
that TDS has made a significant investment to expand beyond its incumbent LEC exchanges and
provide competitive LEC services in Madison.  The extent of TDS's competitive LEC activities
in Madison provides specific, identifiable evidence that, rather than reducing competition, the
transaction will instead increase competition by making TDS a stronger competitor to SBC in the
local market in the Madison area.  In sum, although the presence of TDS as a competitor in
Chorus's exchanges in the Madison area is a serious consideration in this case, we conclude that
the Applicants have sufficiently demonstrated through credible record evidence that these other
relevant factors mitigate the potential harm to local competition in the Madison area.  Moreover,
with respect to long distance services, the merged company will provide long distance services to
less than one percent of the customers in Wisconsin and thus will not pose a competitive threat to
competition in the provision of long distance services.
12.    Furthermore, aside from the Madison area exchanges discussed above, there is no
evidence of intent on the part of either party in this transaction to engage in any significant further
entry into any of the markets of the other party.  The Bell Atlantic/NYNEX Order, the
SBC/Ameritech Order and the Bell Atlantic/GTE Order expressed the Commission's concerns
where carriers may have had intent to enter one another's markets and, thus, were likely to be
competitors if the proposed transaction did not take place.  Similarly, the advantages that
incumbent LECs have to support competitive entry in adjacent exchanges are not present here,
since neither the Farmers exchanges nor the Dickeyville exchange is adjacent to a TDS incumbent
LEC exchange.  Although USCC, a TDS affiliate, provides cellular service in many parts of
Wisconsin, including areas served by Farmers and Dickeyville, Chorus's customers in these
exchanges make up only a small portion of the population of USCC's service areas in Wisconsin
and therefore are not likely to have a significant effect on any decision by USCC to provide fixed
wireless or other services.  In addition, TDS uses separate facilities, and billing, branding and
operation resources from USCC, thus eliminating some of the competitive entrant advantages that
otherwise would flow from TDS's affiliation with USCC.  In short, we find no reason to
conclude that, but for the proposed transaction, TDS is likely to be a significant market
participant in the Farmers or Dickeyville exchanges, or that Chorus is likely to be a significant
market participant in the TDS exchanges. 
               1.   Potential Public Interest Benefits
13.    We determine, based on the record and as discussed above, that the proposed transfer
of control is likely to result in public interest benefits through enhanced competition in the market
for domestic and foreign telecommunications services by strengthening TDS's ability to compete
against larger incumbent LECs and long distance providers.  The record also indicates that the
proposed transaction will result in economic and operational efficiencies.  Accordingly, we
conclude that the proposed transaction, on balance, will benefit the public.



     XIV. Conclusion
15.    For the forgoing reasons, we conclude that the transaction likely will yield tangible
public interest benefits that outweigh any potential public interest harms.  Accordingly, we
approve the requested transfer of the domestic wireline section 214 authorizations and the
wireless licenses associated with these applications, subject to the wireless conditions described
below.
     XVI. Ordering Clauses
17.    Accordingly, having reviewed the domestic wireline and wireless applications and the
record in this matter, IT IS ORDERED, pursuant to sections 4(i) and (j), 214 (a) and (c), and 309
and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), 214(a),
214(c), 309, and 310(d), that the application for transfer of control of the domestic section 214
authorizations and the applications for transfer of control of wireless licenses filed by TDS and
Chorus in the above captioned proceeding ARE GRANTED.
18.    IT IS FURTHER ORDERED, pursuant to sections 4(i) and (j), 309, and 310(d) of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i) and (j), 309, and 310(d), and
sections 0.331 and 22.942 of the Commission's rules, 47 C.F.R.  0.331 and 22.942, that the
grant of these applications is subject to the condition that, prior to consummating the merger
transaction described in the applications, Chorus divest enough of its interest in Madison SMSA
Limited Partnership to an unrelated third party such that the consummation of the merger
transaction will not violate 47 C.F.R.  22.942.
19.    IT IS FURTHER ORDERED, pursuant to sections 4(i) and (j), 309, and 310(d) of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i) and (j), 309, and 310(d), and
sections 0.331, 24.709 and 24.839 of the Commission's rules, 47 C.F.R.  0.331, 24.709 and
24.839, that the grant of these applications is subject to the condition that, prior to consummating
the merger transaction described in the applications, Chorus divest its F block PCS license to an
unrelated third party such that the transaction(s) contemplated in the Joint Applications will not
violate 47 C.F.R.  24.709 or 24.839.
20.    IT IS FURTHER ORDERED that the grant of these applications is subject to the
condition that Applicants seek further approval before making material revisions to their Trust
Agreement.
21.    IT IS FURTHER ORDERED that this action is taken under delegated authority
pursuant to 47 C.F.R.  0.91, 0.291, 0.131, and 0.331.

22.    IT IS FURTHER ORDERED that this Memorandum Opinion and Order SHALL BE
EFFECTIVE upon release in accordance with 47 C.F.R.  1.103.

                         FEDERAL COMMUNICATIONS COMMISSION


                         Dorothy T. Attwood
                         Chief, Common Carrier Bureau

                              


                    Thomas J. Sugrue
                         Chief, Wireless Telecommunications Bureau
                                                                
                                
                           ATTACHMENT
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                  DIVESTITURE TRUST AGREEMENT