[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]
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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.
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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.
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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.
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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