[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Notices]
[Pages 40177-40180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19301]



-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION
[GN Docket No. 93-252, DA 95-1303]


Implementation of Sections 3(n) and 332 of the Communications 
Act; Regulatory Treatment of Mobile Services; Foreign Ownership Waiver 
Petitions

AGENCY: Federal Communications Commission.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: As a result of legislation which reclassified certain 
licensees, waivers were filed to request retention of existing foreign 
ownership that would otherwise not be permitted. This order resolves 
those requests for waiver of the foreign ownership rules filed pursuant 
to the Omnibus Budget Reconciliation Act of 1993 and the First Report 
and Order in this docket.

EFFECTIVE DATE: September 6, 1995.

FOR FURTHER INFORMATION CONTACT:
Sue McNeil, Wireless Telecommunications Bureau, (202) 418-0660.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Order 
in GN Docket No. 93-252, DA 95-1303, adopted June 12, 1995 and released 
June 12, 1995. The full text of Commission decisions are available for 
inspection and copying during normal business hours in the FCC Docket 
Branch (Room 230), 1919 M Street NW., Washington, DC. The complete text 
of this decision may also be purchased from the Commission's copy 
contractor, International Transcription Service, Inc., (202) 857-3800, 
2100 M Street NW., Washington, DC 20037.

Summary of the Order

Introduction

    1. This order resolves thirty-three requests for waiver of the 
foreign ownership rules filed pursuant to the Omnibus Budget 
Reconciliation Act of 1993 (Budget Act) and the First Report and Order 
in this docket (CMRS First and Order) 59 Fed. Reg. 1285 (Jan. 10, 
1994). As discussed herein, we (1) grant the petitions filed by MAP 
Mobile Communications, Geotek Corporation, Nextel Corporation, 
Pittencrieff Communications, RACOM, and Uniden; (2) dismiss the waiver 
petition filed by Comcast Corporation as moot; and (3) deny the 
remaining petitions.

Background

    2. Prior to the enactment of the Budget Act, petitioners were 
regulated as private land mobile radio service providers and therefore 
were not subject to the foreign ownership restrictions contained in 
Section 310(b) of the Communications Act (the Act). In the Budget Act, 
Congress reclassified certain categories of private land mobile radio 
providers as commercial mobile radio service (CMRS) providers, and 
provided that they would be treated as common carriers under the Act. 
As a result of this statutory change, reclassified CMRS providers will 
become subject to the foreign ownership restrictions applicable to 
common carriers.
    3. To alleviate the potential burden on reclassified licensees of 
complying with the foreign ownership restrictions, the Budget Act 
provided for limited grandfathering of existing foreign interests in 
such licensees. Specifically, Congress provided that any private land 
mobile service licensee subject to reclassification as a CMRS provider 
could petition the Commission by February 10, 1994 for waiver of the 
application of Section 310(b) to any foreign ownership that lawfully 
existed as of May 24, 1993. The statute further stated that the 
Commission could grant such waivers to eligible petitioner only upon 
certain conditions: (a) the extent of foreign ownership interest could 
not be increased beyond May 24, 1993 levels; and (b) the waiver could 
not allow any subsequent transfers in violation of Section 310(b).\1\ 
In the CMRS First Report and Order, we indicated that we also would 
apply the waiver provisions to foreign officers and directors.

    \1\ The legislative history accompanying the Budget Act provides 
that a waiver can extend only to the particular person or entity who 
holds the foreign ownership on May 24, 1993 and does not transfer to 
any future foreign owners. H.R. Conf. Rep. No. 213, 103d Cong., 1st 
Sess. 495 (1993), reprinted in 1993 U.S. Code Cong. & Admin. News 
1184.
---------------------------------------------------------------------------

    4. In the CMRS First Report and Order, the Commission established a 
petition procedure for affected licensees to request waiver of the 
foreign ownership restrictions. The Commission acknowledged that 
because of the February 10, 1994 filing deadline, petitioners might be 
required to file their waiver requests prior to a final determination 
of whether they were subject to reclassification. Accordingly, the 
Commission stated that the filing of a petition would not prejudice a 
licensee's right at a later date to assert that it should not be 
reclassified as a CMRS provider. Thirty-three timely-filed requests 
were received by the February 10 statutory deadline.
    5. Following the filing of the petitions, the Commission adopted 
the Second Report and Order in this docket (CMRS Second Report and 
Order) 59 Fed. Reg. 18,493 (Apr. 19, 1995), which specified those 
services that would be regulated as CMRS (and thereby subject to the 
foreign ownership restrictions). In that Order, the Commission defined 
CMRS as a mobile service that is: (a) provided for profit, i.e., with 
the intent of receiving compensation or monetary gain; (b) an 
interconnected service; and (c) available to the public or to such 
classes of eligible users as to be effectively available to a 
substantial portion of the public. A mobile service that does not meet 
that definition is presumed to be PMRS.
    6. On May 24, 1994, the Land Mobil and Microwave Division of the 
Private Radio Bureau asked all petitioners to provide supplemental 
information regarding their waiver requests. In particular, the 
Division asked each petitioner to certify whether, in light of the 
guidelines set forth in the CMRS Second Report and Order, it was 
subject to reclassification as a CMRS provider and would therefore 
qualify for statutory relief from the restrictions contained Section 
210(b).

Discussion

A. Waiver Requests of Geotek, MAP Mobile, RACOM, and Uniden
    7. In their initial and follow-up filings, petitioners Geotek, MAP 
Mobile, RACOM and Uniden indicate that they are subject to 
reclassification as CMRS providers and accordingly request waiver of 
the foreign ownership restrictions. No opposition to any of these 
petitions were filed.

[[Page 40178]]

    8. We conclude that the petitions filed by Geotek, MAP Mobile, 
RACOM, and Uniden meet the statutory requirements for grant of the 
requested waivers. Each of these petitioners has satisfied the 
informational showings and certifications required by the Budget Act, 
the CMRS First Report and Order, and our May 24 request for 
information. Moreover, allowing these petitioners to retain foreign 
ownership that existed as of May 23, 1993, will help ensure a smooth 
transition as these entities and/or their subsidiaries become subject 
to CMRS regulation.
    9. We therefore exercise our authority to grandfather all foreign 
ownership that lawfully existed in each of these petitioners as of May 
24, 1993. Consistent with the Budget Act, we also impose the following 
conditions on each waiver: (a) The extent of foreign ownership interest 
cannot be increased beyond May 24, 1993 levels; and (b) any subsequent 
transfers in violation of Section 310(b) are prohibited. Licensees 
operating in violation of the terms of these waivers will be subject to 
appropriate enforcement action.
    10. We also clarify that, while petitioners may not increase their 
level of foreign ownership above May 24, 1993 levels, the waivers 
granted by this Order do apply to additional licenses granted to 
petitioners in the same service after May 24, 1993 and prior to August 
10, 1996, provided the same ownership structure is maintained. We 
believe that this is consistent with Congressional intent in 
grandfathering the foreign ownership interests of reclassified 
licensees. In the CMRS Second Report and Order 59 FR 18,493 (Apr. 19, 
1995), we provided that grandfathered licensees who acquired new 
licenses in the same service during the 3-year statutory transition 
period could extend grandfathered PMRS status to such new licenses 
until August 10, 1996. We believe the same flexibility should be 
extended to petitioners with respect to the waivers granted by this 
Order. Accordingly, until August 10, 1996, petitioners may acquire 
additional licenses in the same service using the ownership structure 
approved by this waiver. The requirements of Section 310(b) will apply, 
however, to any licenses awarded to petitioners after August 10, 1996.
B. Waiver Request of Pittencrieff
    11. In its initial petition and May 24 supplemental filing, 
Pittencrieff stated that as of May 24, 1993, it was 100 percent foreign 
owned, but that its level of foreign ownership had declined to 54.4 
percent as of the date of the petition. Subsequently, in a September 
26, 1994 letter, Pittencrieff stated that after the initial petition 
was filed, it had undergone a corporate reorganization involving the 
pro forma transfer of its licenses to a newly-created wholly-owned 
subsidiary. Pittencrieff indicated that while the formal chain of 
ownership of the licenses had been altered by the transaction, the 
identity of the foreign interest holders did not change. Pittencrieff 
also noted that it has further reduced its foreign ownership level to 
23.8 percent.
    12. The Bureau concludes that Pittencrieff is entitled to a waiver 
applicable to any foreign individual or entity who held an interest in 
Pittencrieff's licenses as of May 24, 1993. Pittencrieff's September 
26, 1994 letter indicates that as a result of its corporate 
reorganization, such foreign interest holders now hold their interests 
through a new entity created since the petition was filed. 
Nevertheless, we believe that the waiver policy established by Congress 
extends to such interests, provided that the petitioner certifies that 
(1) the identify of the foreign interest holders has not changed, and 
(2) the percentage interest in the licensees held by such interest 
holders has not increased since May 24, 1993. We therefore grant 
Pittencrieff's waiver request provided that it certifies to the above 
conditions within 60 days after publication of this Order in the 
Federal Register. As discussed in paragraph 10, supra, we also extend 
this waiver to additional licenses acquired by Pittencrieff through 
August 10, 1996, in services where it held licenses as of May 24, 1993, 
so long as its ownership structure remains in place.
C. Waiver Request of Nextel
    13. Nextel states in its petition and follow-up filings that it is 
subject to reclassification as a CMRS provider and accordingly requests 
waiver of the foreign ownership restrictions. Nextel explains that a 
waiver is needed because Matsushita, a Japanese corporation, acquired a 
1.38 percent equity interest in Nextel in 1992 and has the right to 
designate one member of Nextel's nine person Board of Directors. Nextel 
also notes that the identity of the board member designated by 
Matsushita has changed since May 24, 1993. Nextel maintains that in the 
case of a corporate directorship interest, the Budget Act grandfathers 
the interest itself, not the individual representing the corporate 
interest. Therefore, Nextel argues, the Commission should grandfather 
Matsushita's corporate directorship interest and grant the waiver.
    14. In addition, Nextel notes that it has executed an agreement 
with another Japanese corporation, Nippon Telephone and Telegraph 
Company (NTT), which will permit NTT to acquire a 0.7 percent interest 
in Nextel and to be represented by a director on Nextel's Board. Nextel 
states that in connection with the transaction, it has undertaken a 
corporate restructuring and has filed applications for the pro forma 
assignment of all licenses held by Nextel to its wholly-owned 
subsidiaries. Once these pro forma applications are granted, Nextel 
states that the Matsushita and NTT interests in Nextel will be within 
the limitations of Section 310(b)(4) and the waiver requested here no 
longer will be necessary.
    15. Nextel's waiver request is opposed by Kevin Lausman, who filed 
an Opposition and a number of related documents. In his Opposition, 
Lausman alleges that Nextel mischaracterized the nature of the 
Matsushita's interest in Nextel. Specifically, Lausman maintains that 
Nextel's representation that Matsushita's right to ``designate'' one 
member of the board is inconsistent with an SEC filing showing that 
Matsushita could ``nominate'' a board member, provided its ownership 
remained at a certain level. Lausman also alleges that Nextel attempted 
to mislead the Commission when its petition only identified licenses 
held by Nextel and not those of its subsidiaries. Moreover, Lausman 
maintains that Nextel is ineligible for the relief it requests on the 
grounds that it improperly executed an agreement to increase its level 
of foreign ownership and permitted Matsushita to change its 
representative on the Board of Directors. Finally, Lausman argues that 
granting Nextel's waiver is inconsistent with public policy in view of 
Japan's unfair trade practices.
    16. We are not persuaded by Lausman's arguments.\2\ At the outset, 
we observe that Lausman's opposition was not timely filed and thereby 
is procedurally defective. Pursuant to Section 1.45(a) of the 
Commission's Rules, Lausman should have filed his opposition by 
February 18, 1994, but did not in fact file with the Commission until 
March 11. Moreover, Lausman did not provide any basis why the 
Commission should accept its opposition out-of-time.

    \2\ For the reasons set forth below, we also dismiss all 
subsequently-filed pleadings related to Lausman's Opposition.
---------------------------------------------------------------------------

    17. While we have sufficient reason to dismiss Lausman's opposition 
as untimely on its face, we also find Lausman's substantive allegations 
to be without merit. We disagree with Lausman's allegation that Nextel 

[[Page 40179]]
misrepresented or failed to disclose information material to our 
consideration of the waiver requested in Nextel's petition. Nextel's 
petition and supplemental filings fully comply with the informational 
requirements set forth in the CMRS First Report and Order. In its 
petition, Nextel states that Matsushita is a foreign entity that holds 
an equity interest in Nextel that does not exceed the Section 310(b)(3) 
benchmark. Nextel also disclosed that, based on that interest, 
Matsushita has the right to designate one member of Nextel's Board of 
Directors. Nextel also explains that, due to personnel changes in 
Matsushita, the individual serving as Matsushita's representative on 
Nextel's Board has changed subsequent to May 24, 1993. Lausman has 
failed to show how any of these disclosures are incomplete or 
misleading. The purported discrepancy between Nextel's waiver petition 
and its SEC filing is a minor difference in terminology that has not 
substantive significance.
    18. In addition, we find that Nextel did not act improperly in 
identifying only those licenses held by Nextel (and not by its 
subsidiaries) for purposes of its waiver request. Nextel's waiver 
request is expressly limited to those licenses that it holds directly 
and which otherwise would be subject to Section 310(b)(3). Nextel was 
not required to identify its indirect interest in other licenses for 
which no waiver either was required or sought.
    19. Finally, we do not believe the agreement with NTT makes Nextel 
ineligible for the relief it requested. While Lausman correctly 
observes that the statute prohibits increases in foreign ownership 
subsequent to May 24, 1993, we note that Nextel has not requested such 
relief with respect to NTT's prospective interest. Instead, Nextel 
properly has taken separate steps to comply with the Section 310(b)(4) 
foreign ownership restrictions.
    20. Accordingly, we grandfather all foreign ownership in Nextel 
that lawfully existed as of May 24, 1993, subject to the following 
conditions: (a) The extent of foreign ownership interest cannot be 
increased beyond May 24, 1993 levels; and (b) any subsequent transfers 
in violation of Section 310(b) are prohibited. As discussed supra, we 
construe the statute to extend the waiver to the acquisition of new 
licenses in services that Nextel provided as of May 24, 1993, so long 
as the same ownership structure remains in place.
    21. We also grandfather Matsushita's designee on the Nextel Board 
of Directors, regardless of the fact that the identity of the 
individual serving as Matsushita's representative changed after May 24, 
1993. While the statute prohibits changes in the identity of foreign 
owners of grandfathered licensees, it does not expressly address the 
issue of directors. We further note that individual or corporate 
shareholders commonly seek to protect their investment by obtaining the 
right to nominate representatives to the board of directors. We 
conclude that in allowing foreign entities who held ownership interests 
in reclassified licensees prior to May 24, 1993 to retain those 
interests, Congress did not intend to deprive such entities of pre-
existing rights to nominate members of the board of directors based on 
such ownership. So long as the entity controlling the directorship 
remains unchanged, we believe a change in the identity of the 
individual director is permissible. Accordingly, we conclude that 
Matsushita's corporate directorship interest should be grandfathered 
along with its ownership interest, and that the change in the identity 
of the individual serving as Matsushita's representative does not 
vitiate the waiver.
D. Waiver Request of Comcast
    22. Comcast notes that the Commission previously has granted it a 
waiver of the foreign ownership restrictions to permit an Australian 
citizen to serve as an officer of the corporation. Nevertheless, 
Comcast requests a waiver to the extent necessary to allow this officer 
to remain once certain of its private land mobile subsidiaries are 
reclassified as CMRS providers.
    23. The Bureau agrees with Comcast that the Commission's prior 
order allowing Comcast to have a foreign corporate officer under 
Section 310(b)(4) of the Act obviates the need for a separate, 
statutory waiver. In that Order, the Commission determined that the 
appointment of John Alchin, an Australian citizen, to the corporate 
officer of senior Vice President and Treasurer of Comcast would not 
adversely affect the public interest. The Commission subsequently has 
extended the scope of this waiver to permit Alchin to serve as an 
officer of any subsidiary of Comcast that directly or indirectly 
controls common carrier licensees but is not itself a common carrier 
licensee. Because the Commission has determined that Alchin's service 
as a corporate officer is in the public interest, and thereby has 
granted Comcast a waiver pursuant to Section 310(b)(4), the Bureau 
concludes that the additional waiver relief requested is unnecessary. 
Accordingly, Comcast's petition is dismissed as moot.
E. Other Waiver Requests
    24. In responses to the Land Mobile and Microwave Division's May 24 
supplemental information request, the remaining petitioners stated 
that, based on the Commission's rules, they would not be reclassified 
and thereby declined to certify that they would become CMRS licensees. 
Noting that the Commission has stated that ``the filing of a [Section 
310(b)] petition would not prejudice a licensee's future arguments as 
to whether it should be reclassified,'' these petitioners stated that, 
based on their current understanding of the Commission's rules, their 
radio operations are private. The petitioners nevertheless requested 
waiver of the foreign ownership restriction in the event that future 
Commission interpretations suggested they would be reclassified as CMRS 
providers. The petitioners otherwise failed to provide the information 
requested in the May 24 letters.
    25. The Bureau declines to grant waivers to petitioners who have 
stated they will remain private mobile radio service providers. Under 
the Budget Act, waiver of the foreign ownership restrictions is only 
available to licensees that will be reclassified as CMRS. Because 
petitioners maintain that their radio operations remain private under 
the criteria set forth in the CMRS Second Report and Order, the relief 
requested neither is available nor required. Petitioners' argument that 
the CMRS First Report and Order affords the flexibility to obtain 
waiver relief in the future should the Commission clarify its CMRS 
definition is erroneous. Rather, the language cited by petitioners was 
intended to protect licensees that could not determine whether they 
would be reclassified until the CMRS Second Report and Order was 
released. Based on the standards set forth in the CMRS Second Report 
and Order, petitioners had sufficient information to determine whether 
they would be reclassified.

Ordering Clauses

    26. Pursuant to our authority under 47 U.S.C. Secs. 155(c)(1) and 
332(c)(6), it is ordered that the requests for waiver filed by Geotek, 
MAP Mobile, Nextel, RACOM, and Uniden are hereby granted subject to the 
conditions described above.
    27. It is further ordered That the waiver request filed by 
Pittencrieff is granted, provided that Pittencrieff certifies within 60 
days after this Order is published in the Federal Register that (1) The 
identity of the foreign interest holders has not changed, and (2) the 

[[Page 40180]]
percentage interest in the licenses held by such interest holders has 
not increased since May 24, 1993.
    28. It is further ordered That the waiver request filed by Comcast 
IS DISMISSED as moot.
    29. It is further ordered That the waiver requests filed by ADT, 
ADT Mid-South, ADT Mountain West, ADT Northeast, ADT Southwest, ADT 
West, Amerchol, Big Sky, BP Chemicals, Eastern Associated, Hanson, 
North Antelope, NuEast, Peabody, Praxair, Rhone-Poulenc, Rochelle, 
Seadrift, Timken, UCAR, UCAR Carbon, UCAR Resinas, UCC&P, UMETCO, Union 
Carbide, and Union Carbide Caribe are denied.
    30. It is further ordered That the Opposition, Petition, for an 
Order to Cease and Desist, Motion for Summary Judgment, Petition for an 
Order to Show Cause Why All Radio Station Licenses Held or Controlled 
by Nextel Communications, Inc. Should Not Be Revoked, Supplement to 
Opposition, Motion for Deferral of Action, and Motion to Accept 
Unauthorized Pleading filed by Kevin Lausman are dismissed.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 95-19301 Filed 8-4-95; 8:45 am]
BILLING CODE 6712-01-M