Federal Communications Commission fcc 13-50 Before the Federal Communications Commission
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, ¶ 74 n.144.
280 Id. at 11741, ¶ 76. 282 Id. 283 Id. at 24033, ¶ 324. 284 NPRM, 26 FCC Rcd at 11741, ¶ 75. 285 SIA NPRM Comments at 9 (stating that this change will “provide filers and investors with a greater level of predictability regarding the Section 310(b)(4) process, and will ease an unnecessary administrative burden on Commission staff”). 286 See Vodafone NPRM Comments at 30-31. See also supra Section IV.B.1, ¶ 35. Vodafone emphasizes that the Commission should not block an investment, or delay action, except on grounds recognized in the Foreign Participation Order. Vodafone NPRM Comments at 31 (citing Foreign Participation Order, 12 FCC Rcd at 23898, ¶ 13 (stating that the Commission reserves the right to block an investment in the exceptional case where the Commission finds the investment poses a very high risk to competition) and id. at 23920-21, ¶¶ 63-66 (stating that the Commission will accord deference to Executive Branch expertise with respect to national security, law enforcement, foreign policy and trade policy)). 287 USTelecom NPRM Reply at 6-7 (stating that one of the “major hurdles” in seeking foreign ownership approval is “the substantial time it takes for companies to prepare their application and for the Commission to complete its review”). 288 DOJ/DHS NPRM Comments at 11 (stating that “[i]n order to adequately review these complex [petitions], the Departments frequently require further information from petitioners, and petitioners need some amount of time to properly respond to those requests”). 289 Id. 290 See, e.g., Section IV.B.5 (allowing a licensee’s subsidiaries and affiliates, as defined in the rules, to rely on the licensee’s foreign ownership ruling, rather than filing petitions in their own names); Section IV.B.6 (allowing the insertion of new, foreign-organized entities into the licensee’s approved vertical ownership chain under certain circumstances without requiring the filing of a new petition for declaratory ruling); Section IV.B.7 (eliminating the practice of issuing service- and geographic-specific rulings to minimize the need for licensees to file new petitions for declaratory ruling); Sections IV.B.1-4 (adopting streamlined requirements for identifying and obtaining prior approval of investments by named foreign investors). 291 See supra note 339. 292 DOJ/DHS NPRM Comments at 11. 293 For example, assume that a common carrier licensee (“Licensee ”) obtains a section 310(b)(4) ruling (in conjunction with a section 310(d) application) that its controlling U.S. Parent (“U.S. Parent”), which holds 75 percent of Licensee’s equity and voting interests, may be wholly owned and controlled by Foreign Company X. Foreign Company Y then seeks to acquire 100 percent ownership and control of U.S. Entity A, which holds a non-controlling 25 percent equity and voting interest in Licensee. Licensee will need a separate ruling, under our section 310(b)(3) forbearance approach, before Foreign Company Y acquires indirectly, through U.S. Entity A, the 25 percent interest in Licensee. See also First Report and Order, 27 FCC Rcd at 9843-44, ¶ 28 & nn.62-63. 294 In this example, the chronological order of the transactions in the prior footnote is reversed. That is, assume that Licensee’s controlling U.S. Parent (“U.S. Parent”) holds 75 percent of Licensee’s equity and voting interests, and U.S. Entity A holds a non-controlling 25 percent equity and voting interest in Licensee. Both U.S. Parent and U.S. Entity A are wholly owned by U.S. individuals. Licensee obtains a ruling under our section 310(b)(3) forbearance approach allowing Foreign Company Y to acquire indirectly a non-controlling 25 percent equity and voting interest in Licensee by acquiring 100 percent ownership and control of U.S. Entity A. Foreign Company X then seeks to acquire 100 percent ownership and control of U.S. Parent. Licensee would need to obtain a separate section 310(b)(4) ruling (in conjunction with a section 310(d) application) before Foreign Company X acquires 100 percent ownership and control of U.S. Parent. 295 See NPRM, 26 FCC Rcd at 11741-42, ¶ 77. 296 SIA NPRM Comments at 10 (supporting reliance on a certification of a petitioner that it has calculated and reported its ownership interests in accordance with the rules, but stating that the Commission should not require the submission of subsequent certifications on a going-forward basis). 297 Verizon NPRM Comments at 19 (stating that there is no need to require periodic certification because “licensees have an obligation to comply with all elements of their authorizations” and, in a license renewal proceeding, “a licensee will need to certify to compliance with all aspects of the authorization”). 298 DOJ/DHS NPRM Comments at 11. The Departments recommend a shorter timeframe, such as every two years, stating that certification would not impose a burden so long as companies are in compliance with their rulings. Id. at 11-12. 299 As SIA points out, licensees are already required to make certifications regarding their foreign ownership in order to acquire or renew licenses. SIA Comments at 10. 300 See supra ¶ 87. 301 NPRM, 26 FCC Rcd at 11742, ¶ 78. 302 Id. 303 DOD/DHS NPRM Comments at 12. See also id. (stating that “[t]he Departments need an opportunity to review any proposed changes that may affect ownership and the products and services provided, since these factors may not have been evaluated in prior public interest determinations”). 304 AT&T NPRM Comments at 10 (stating that the Commission should modify all existing rulings to incorporate any new policies without requiring licensees to request new rulings); SIA NPRM Comments at 8 (same); see also id. (stating, in the alternative, that the Commission should issue a Public Notice providing licensees that have a ruling the opportunity to “opt in” to the new rules and, under any procedure, “the FCC should enable existing holders of Section 310(b)(4) rulings automatically to replace the current standard 25 percent aggregate allowance with a new 100 percent aggregate allowance); T-Mobile NPRM Comments at 7 (suggesting that we provide, at a minimum, a reasonable transition period during which a licensee’s U.S. parent could notify the Commission of the names of all of the U.S. parent’s subsidiaries and affiliates to which the licensee’s existing ruling would apply, even if the terms of the ruling remain the same). 305 Intelsat NPRM Comments at 4; SIA NPRM Comments at 4-5. All space station and earth station applications are filed on FCC Form 312. 47 C.F.R. § 25.110(b). 1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. § 601-612, has been amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996). 2 5 U.S.C. § 605(b). 3 5 U.S.C. § 601(6). 4 5 U.S.C. § 601(3) (incorporating by reference the definition of “small business concern” in the Small Business Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definitions(s) in the Federal Register.” 5 15 U.S.C. § 632. 6 27 FCC Rcd 9832. 7 This estimate is based on two reviews done by International Bureau staff. In the first review, based on the 21 section 310(b)(4) petitions filed with the Commission during a randomly-selected period (September 1, 2007 through August 31, 2008), staff concluded that adoption of the proposals and other options discussed in the NPRM would result in a more than 70 percent reduction in the number of petitions for declaratory ruling filed with the Commission annually, as compared to the current regulatory framework. In the second review, based on the 13 section 310(b)(4) petitions filed between January 1, 2011, and October 1, 2012, staff concluded that the rules adopted in this Order would result in at least a 40 percent reduction. We note that a large proportion of the filings during the first review period involved requests by licensees with existing foreign ownership rulings for approval, under section 310(b)(4), to acquire licenses in new wireless services being auctioned. In the second review period, these auctions had been completed and no auction-related petitions were filed. The lack of auction-related filings by licensees with existing foreign ownership rulings during the second review period accounts in large part for the difference between the higher 70 percent reduction figure and the 40 percent reduction figure for the two review periods. Significantly, industry commenters in this proceeding broadly supported elimination of the requirement that licensees with existing rulings return to the Commission for a new ruling when they apply for a license in a new service or geographic service area. See supra ¶ 107. 8 As USTR observes, this requirement imposes a “non-trivial burden on applicants by requiring them to demonstrate whether foreign investors are from a WTO or non-WTO Member.” USTR notes that the requirement “also imposes a not insignificant burden on FCC staff to evaluate the information.” See USTR Letter, supra note 19. 9 Industry commenters generally agree that, under our current requirements, companies face significant difficulties and costs in trying to ascertain the citizenship and principal places of business of their investors, which often hold their interests indirectly through multiple investment vehicles and holding companies. See supra ¶ 45. USTelecom describes our current requirement as a “tortuous process of identifying each ultimate shareholder.” USTelecom NPRM Reply at 5-6. 10 5 U.S.C. § 605(b). 11 Id. 12 The Office of Management and Budget preapproved the information collection requirements at the NPRM stage of this proceeding, and the information collection requirements are adopted with nonsubstantial modification in this Second Report and Order. 1 Second Report and Order, ¶ 3. 2 Cf. Jane Austen, Pride and Prejudice 1 (1813). 3 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, including Commercial Mobile Services, WT Docket No. 11-186, Sixteenth Report, FCC 13-34, at Table 33 (rel. Mar. 19, 2013). 4 See, e.g., Remarks of Commissioner Ajit Pai before the NAB Radio Show at 5–6 (Sept. 19, 2012), available at http://go.usa.gov/Tj2G; Statement of Commissioner Ajit Pai on Modernizing Approach to Foreign Investment in Broadcast Stations (Feb. 26, 2013), available at http://go.usa.gov/TjTC; Statement of Commissioner Ajit Pai, Hearing Before the United States Senate Committee on Commerce, Science, and Transportation, “Oversight of the Federal Communications Commission” at 9 (Mar. 12, 2013), available at http://go.usa.gov/TjTW. 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