[Federal Register Volume 63, Number 41 (Tuesday, March 3, 1998)]
[Rules and Regulations]
[Pages 10338-10345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5336]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR 22, 24, 27, 90, and 101

[FCC 98-18]


Public Mobile Radio Services, Personal Communications Services, 
Wireless Communications Services, Private Land Mobile Radio Services, 
and Fixed Microwave Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Memorandum Opinion and Order, in response to a 
petition for forbearance, the Commission forbears from its existing 
procedures for transfers of control and assignment of licenses for non-
substantial or ``pro forma'' transactions for certain wireless 
telecommunications licensees and adopts streamlined procedures in order 
to reduce such carriers' regulatory burdens.

EFFECTIVE DATE: April 2, 1998.

FOR FURTHER INFORMATION CONTACT: David Furth at (202) 418-0620 or 
Rhonda Lien at (202) 418-7240 (Wireless Telecommunications Bureau/
Commercial Wireless Division).

SUPPLEMENTARY INFORMATION: This is a summary of the Memorandum Opinion 
and Order, adopted and released February 4, 1998. The complete text of 
the Memorandum Opinion and Order is available for inspection and 
copying during normal business hours in the FCC Reference Center (Room 
239), 1919 M Street, N.W., Washington D.C. and also may be purchased 
from the Commission's copy contractor, International Transcription 
Services, (202) 857-3800, 1231 20th St. N.W., Washington, D.C. 20037.

Synopsis of the Report and Order

I. Introduction

    1. On February 4, 1997, the Wireless Telecommunications Practice 
Committee of the Federal Communications Bar Association (FCBA) filed a 
Petition for Forbearance from the application of the prior notification 
and approval requirements of section 310(d) of the Communications Act 
of 1934, as amended (the Act) to telecommunications carriers licensed 
by the Wireless Telecommunications Bureau of the Federal Communications 
Commission (Commission) for pro forma assignments of licenses and 
transfers of control. See 47 U.S.C. 310. On May 22, 1997, the Broadband 
Personal Communications Services Alliance of the Personal 
Communications Industry Association (PCIA) filed a separate petition 
for forbearance, which reiterates FCBA's request for forbearance from 
section 310(d) and requests forbearance from other regulations as well. 
For the reasons discussed below, the Commission grants the FCBA 
Petition and that portion of the PCIA Petition relating to forbearance 
from section 310(d), subject to several exceptions noted below. This 
Memorandum Opinion and Order (Order) only addresses PCIA's request for 
forbearance from enforcement of section 310(d). PCIA's requests for 
forbearance of other regulations contained in PCIA's petition will be 
addressed in a separate order.

II. Background, Petition, and Comments

    2. Section 310(d) of the Act forbids any assignment of a radio 
license or transfer of control of a radio licensee corporation without 
obtaining prior Commission consent, and states in relevant part: ``No 
construction permit or station license * * * shall be transferred, 
assigned, or disposed of in any manner, voluntarily or involuntarily, 
directly or indirectly, or by transfer of control of any corporation 
holding such permit or license, to any person except upon application 
to the Commission and upon finding by the Commission that the public 
interest, convenience, and necessity will be served thereby.'' 47 
U.S.C. 310(d). Currently, transfers or assignments that do not 
``involve a substantial change in ownership or control,'' commonly 
referred to as pro forma transactions, must receive prior Commission 
approval but are exempt from the 30-day public notice requirement that 
would otherwise apply. Applicants identify whether their applications 
for transfer and assignment are pro forma in nature, and the Wireless 
Telecommunications Bureau (Bureau) processes pro forma applications 
through an initial determination that the application is in fact pro 
forma in nature, and a review of the application for accuracy and 
completeness. When these criteria are met, there is no need for 
additional public interest review of the application, because the 
person or entity retaining ultimate control of the license was subject 
to prior public interest review and approval by the Commission when it 
was originally awarded the license, whether by initial licensing or by 
a previous transfer or assignment. Therefore, where no substantial 
change of control will result from the transfer or assignment, grant of 
the application is presumptively in the public interest, and the 
application is placed on public notice as granted.

[[Page 10339]]

    3. In its Petition, FCBA states that forbearance from the section 
310(d) requirements of prior Commission application and approval of pro 
forma transfers and assignments is warranted under section 10 of the 
Act. Section 10 requires the Commission to forbear from applying any 
regulation or provision of the Act to a telecommunications carrier if 
it determines that: (1) Enforcement is not necessary to ensure that 
charges, practices, classifications and services are just and 
reasonable, and not unjustly or unreasonably discriminatory; (2) 
enforcement is not necessary for the protection of consumers; and (3) 
forbearance is consistent with the public interest. See 
Telecommunications Act of 1996, Public Law 104-104, 110 Stat. 56, 
Section 10, codified at 47 U.S.C. 160(a). In making the determination 
that forbearance is consistent with the public interest, the Commission 
shall consider whether forbearance from enforcing the provision or 
regulation will promote competitive market conditions, including the 
extent to which such forbearance will enhance competition among 
providers of telecommunications services. 47 U.S.C. 160(b).
    4. FCBA asserts that the Commission should forbear from enforcing 
its section 310(d) requirements with respect to pro forma transfers and 
assignments involving telecommunications carriers licensed by the 
Bureau because all three prongs of the section 10 forbearance standard 
are met. FCBA's Petition was filed on behalf of and in cooperation with 
numerous carriers holding radio licenses and the associations 
representing their interests. All of the commenters to the FCBA 
Petition support its request for forbearance and no oppositions were 
filed. PCIA's Petition was filed by the Broadband Personal 
Communications Services Alliance of the PCIA, representing numerous 
broadband personal communications services (PCS) licensees. All 
commenters to the section 310(d) portion of the PCIA Petition support 
forbearance from section 310(d). The Commission adopts streamlined 
procedures in response to these petitions only related to non-
substantial transfer and assignments involving telecommunications 
carriers licensed by the Bureau. However, the Commission will continue 
to apply existing procedures to applications for pro forma transactions 
involving telecommunications carriers licensed by the Bureau that are 
subject to the Commission's unjust enrichment provisions, and proposed 
transactions involving changes to corporate management through the use 
of proxy mechanisms.

III. Discussion

A. Scope of Proposed Forbearance--Pro Forma v. Non-Pro Forma 
Transactions

    5. Background. In its Petition, the FCBA uses the term ``non-
substantial'' or ``pro forma'' to refer to assignments and transfers of 
control that do not involve a substantial change in the ultimate de 
facto or de jure control of a licensee.
    6. Discussion. The streamlined procedures that the Commission 
adopts herein apply only to pro forma transfers and assignments, that 
is, transfers and assignments that do not cause a ``substantial change 
in ownership or control'' of the license as provided in section 
309(c)(2)(B) of the Act. 47 U.S.C. 309(c)(2)(B). Where a proposed 
transfer or assignment would result in a substantial change of de jure 
or de facto control, the transaction is not treated as pro forma and is 
outside the scope of the forbearance provided for in this Order. De 
jure control is control as a matter of law. It is present where a 
shareholder or shareholders voting together own or control fifty 
percent or more of the licensee's voting shares. De jure control of a 
partnership is similarly based on holding a fifty percent or greater 
voting interest. De facto control is defined as actual control of the 
licensee, and primarily applies where the party or entity in question 
has the power to control or dominate management of the licensee. 
Because it inherently involves issues of fact, de facto control is 
determined on a case-by-case basis, and may vary with the circumstances 
presented by each licensee. While the size of a person's or entity's 
ownership interest is relevant, it is not necessarily a determinative 
factor in establishing de facto control. Other factors that may be 
relevant to a finding of de facto control include: (1) Power to 
constitute or appoint more than fifty percent of the board of directors 
or partnership management committee; (2) authority to appoint, promote, 
demote and fire senior executives that control the day-to-day 
activities of the licensee; (3) ability to play an integral role in 
major management decisions of the licensee; (4) authority to pay 
financial obligations, including expenses arising out of operating; (4) 
ability to receive monies and profits from the facility's operations; 
and (5) unfettered use of all facilities and equipment. See 
Implementation of Section 309(j) of the Communications Act--Competitive 
Bidding, Fifth Memorandum Opinion and Order, PP Docket No. 93-253, 59 
FR 63210 (December 7, 1994). Under some circumstances, a change in 
corporate management resulting from a proxy contest may affect de facto 
control.
    7. In general, a substantial change in ownership or control occurs 
when there is a transfer of fifty percent or more a licensee's stock or 
a transfer that results in a stockholder, whose qualifications have not 
been passed on by the Commission, acquiring at least a fifty percent 
voting interest in a licensee. However, because there are other factors 
that also may be found in a particular case to substantially affect de 
facto control, there is no express rule or ``bright-line'' test that 
distinguishes those transfers and assignments of telecommunications 
licenses that involve substantial changes in ownership or control and 
those that do not. In the case of common carrier transfers and 
assignments, the Commission has applied the same standard that is set 
forth in Sec. 73.3540(f) of its broadcast rules, which identifies 
common categories of transactions that are considered non-substantial 
and therefore are eligible for pro forma treatment: (1) Assignment from 
an individual or individuals (including partnerships) to a corporation 
owned or controlled by such individuals or partnerships without any 
substantial change in their relative interests; (2) assignment from a 
corporation to its stockholders without effecting any substantial 
change in the disposition of their interests; (3) assignment or 
transfer by which certain stockholders retire and the interest 
transferred is not a controlling one; (4) corporate reorganization 
which involves no substantial change in the beneficial ownership of the 
corporation; (5) assignment or transfer from a corporation to a wholly 
owned subsidiary thereof or vice versa, or where there is an assignment 
from a corporation to a corporation owned or controlled by the assignor 
stockholders without substantial change in their interests; or (6) 
assignment of less than a controlling interest in a partnership. See 47 
CFR 73.3540(f).
    8. For purposes of this Order, the Commission limits its 
consideration of forbearance to the above categories of pro forma 
transactions only. The Commission is not changing its procedures with 
respect to Commission review and approval of non-pro forma 
transactions. The Commission also notes that applicants will continue 
to be responsible in each instance, as they are currently, for 
determining whether a proposed transaction is pro forma or non-pro 
forma, and for complying with the relevant rules and procedures that

[[Page 10340]]

govern Commission approval of such transactions. This Order also does 
not limit the Commission's authority to determine that a transaction 
presented to us as pro forma should in fact be classified as non-pro 
forma, or vice versa. The Commission considers telecommunications 
carriers licensed by the Bureau and subject to this Order to include 
telecommunications carriers licensed under part 21 (domestic public 
fixed radio services), part 22 (public mobile radio services), part 24 
(personal communications services), part 27 (wireless communications 
services), part 90 (private land mobile radio services) and part 101 
(common carrier fixed microwave services) of the Commission's rules. 
However, licensees governed by these rule parts who do not meet the 
definition of ``telecommunications carrier'' (e.g., public safety and 
private microwave licensees) are beyond the scope of the Commission's 
Sec. 10 forbearance authority, and therefore are not subject to the 
revised procedures established by this Order. The Commission also 
reiterates that its treatment of pro forma transactions herein does not 
apply in other contexts, such as transfers of broadcast permits or 
licenses, where different statutory and policy considerations apply.

B. Analysis of Section 10 Forbearance Standard

    9. Section 10 provides that the Commission must forbear from 
applying any regulation or provision of the Act to a telecommunications 
carrier if it determines that:

    (1) Enforcement of such regulation or provision is not necessary 
to ensure that the charges, practices, classifications, or 
regulations by, for, or in connection with that telecommunications 
carrier or telecommunications service are just and reasonable and 
are not unjustly or unreasonably discriminatory;
    (2) Enforcement of such regulation or provision is not necessary 
for the protection of consumers; and
    (3) Forbearance from applying such provision or regulation is 
consistent with the public interest. 47 U.S.C. 160(a).
i. Just and Reasonable Practices
    10. Background. The first prong of the section 10 standard for 
forbearance is that enforcement of the regulation is not necessary to 
ensure that charges, practices, classifications, and services are just 
and reasonable, and are not unjustly or unreasonably discriminatory. 47 
U.S.C. 160(a)(1). FCBA asserts that applications for pro forma 
transfers and assignments do not contain information concerning a 
carrier's charges, practices, classifications, or services. 
Additionally, FCBA notes that the Commission has expressly declined to 
address such issues in connection with its review of major transfers 
and assignments, holding that such matters should be addressed 
separately.
    11. Discussion. The Commission concludes that prior approval of 
applications for consent to pro forma transfers and assignments is not 
necessary to ensure that licensees' charges, practices, 
classifications, and services are just and reasonable, and not unjustly 
or unreasonably discriminatory. Because pro forma transactions do not 
affect actual control of the licensee, they are unlikely to have any 
impact on the licensees' charges, practices, classifications, or 
services. Thus, it has not been necessary to consider these issues in 
the Commission's review of pro forma transactions, and the Commission 
has never done so. Given the existence of other mechanisms to deal with 
these issues, and the fact that the Commission has had no need to 
consider them in the context of pro forma transactions, it concludes 
that the first prong of the forbearance standard is met.
ii. Consumer Protection
    12. Background. The second prong of the Sec. 10 forbearance 
standard requires that enforcement not be necessary for the protection 
of consumers. 47 U.S.C. 160(a)(2). FCBA argues that the vast majority 
of pro forma assignments and transfers do not affect consumers, but 
merely allow licensees to modify their corporate organization or 
ownership structure in a non-substantial way from the structure 
previously approved by the Commission. FCBA notes that for substantial 
transactions, the Commission often engages in a competitive analysis to 
determine the effects of the proposed transaction on consumers and on 
competition. FCBA asserts, however, that the Commission does not 
conduct such an analysis for pro forma transactions because, by 
definition, such transactions cannot significantly change ownership or 
control, and thus cannot have a significant impact on consumers.
    13. Discussion. The Commission concludes that requiring prior 
review of pro forma transfers and assignments is not necessary for the 
protection of consumers. First, as several commenters note, non-
substantial transactions are exempt from the public notice requirement 
of section 309(b), indicating that Congress perceived a decreased need 
for public scrutiny of such transactions prior to action by the 
Commission. The Commission also finds, based on its experience 
reviewing pro forma applications, that pro forma transfers and 
assignments rarely, if ever, raise consumer issues, because the 
ultimate control of the licensee--which has already been subject to 
Commission review and approval--does not change as a result of the 
transaction. The Commission concludes that forbearance will not deprive 
consumers of protection because the Commission will continue to review 
any transfer or assignment that would result in a substantial change in 
a licensee's ownership or control. Moreover, in the unlikely event that 
a pro forma transfer or assignment raises such issues, the streamlined 
procedures the Commission adopts herein will provide an opportunity for 
Commission reconsideration if necessary.
iii. Public Interest
    14. Background. The third prong of the section 10 forbearance 
standard requires that forbearance be consistent with the public 
interest. FCBA makes four arguments to support its assertion that this 
prong is met. First, FCBA asserts that forbearance would promote the 
public interest by allowing carriers to make non-substantial changes to 
their ownership structure or internal organization without delay to 
respond to competition. Second, FCBA argues that advance approval for 
pro forma assignments and transfers is not needed to safeguard the 
public interest, because no meaningful public interest determination is 
made when such applications are reviewed. Third, FCBA argues that 
eliminating the application requirements for pro forma transactions 
will allow a more efficient use of scarce public and private resources. 
Finally, FCBA asserts that forbearance will promote uniformity among 
services because different procedures exist for processing pro forma 
applications in different wireless services. Commenters uniformly 
support FCBA's arguments, and offer numerous examples of the increased 
public benefit that would result from forbearance.
    15. Discussion. The Commission finds that, provided certain 
procedures discussed below are in place, forbearance from section 
310(d) requirements for pro forma transactions is consistent with the 
public interest. Forbearance will promote competition by allowing 
carriers to change their ownership structure or internal organization 
without regulatory delay where such delay serves no useful function. 
Such efficiency will increase wireless carriers' ability to compete in 
today's marketplace, a goal frequently

[[Page 10341]]

advocated by Congress and the Commission.
    16. For example, FCBA notes that licenses often must be transferred 
or assigned internally as a result of merging local subsidiaries into 
new business units, such as regional or national corporations in order 
to respond to competitors' business strategies. Alternatively, after 
two or more carriers merge during the course of a substantial transfer 
or assignment, the merged company may need to reorganize internally and 
make non-substantial changes in order to bring different services under 
common management. In both of these examples, carriers currently must 
file applications for pro forma assignments or transfers well in 
advance of the desired transaction and wait for Commission processing 
and grant of such applications, despite the fact that the changes would 
not result in a substantial change in ownership or control. Such 
regulatory delay hampers carriers' ability to respond efficiently to 
competitive conditions.
    17. The Commission also concludes that advance approval of pro 
forma assignments and transfers is not needed because such 
transactions, by their nature, do not change the underlying ownership 
or control of licensees that the Commission has already reviewed and 
approved. As noted above, pro forma transactions are considered 
presumptively in the public interest because no substantial change of 
control is involved. Therefore, the only purpose of reviewing pro forma 
applications in advance is to determine that they are, in fact, pro 
forma in nature. While this is a legitimate objective, the Commission 
believes the same objective can be accomplished just as effectively and 
far more efficiently through a notification procedure. The vast 
majority of pro forma applications are for routine transactions where 
the pro forma nature of the transaction is self-evident. The Commission 
uses the information in these applications merely to update its 
ownership and control records, which, as noted below, can be 
accomplished just as easily by requiring written proof of a transaction 
after it has occurred or by requiring licensees to file updated forms 
after the transaction is complete.
    18. The Commission further concludes that requiring prior review of 
hundreds of routine applications a year is not needed to protect 
against the rare instance in which an applicant may file a pro forma 
application that should be treated as non-pro forma. Under the 
forbearance procedures adopted herein, interested parties will have an 
opportunity to challenge and seek reconsideration of any pro forma 
transaction granted by notification, and the Commission will retain the 
authority to rescind its approval of any purported pro forma 
transaction that it determines involves a substantial change of 
control. The Commission will also continue to require prior review of 
all substantial transfers and assignments and will evaluate the public 
interest implications of such proposed transactions as required by the 
Act. The Commission believes that elimination of the pre-transaction 
application and approval requirement for pro forma transactions will 
allow a more efficient use of scarce public and private resources. 
Additionally, forbearance will allow Bureau personnel to focus on non-
pro forma applications for transfers and assignments that involve 
actual changes of control, as well as the initial review of new 
licensees.
    19. Forbearance will also eliminate a significant and unnecessary 
expenditure of carrier and Commission resources. As FCBA and numerous 
commenters note, carriers must devote significant time and resources to 
prepare and file pro forma applications, track their status, and ensure 
that the transactions are consummated in the time allotted. Forbearance 
will free up these resources so that carriers can concentrate on 
providing competitive telecommunications services. FCBA also notes that 
existing procedures for pro forma transactions are a strain on 
Commission resources, because staff must process filing fees, assign 
file numbers, review applications for completeness, and prepare public 
notices of grants. Forbearance from these activities will allow the 
Commission to deploy its resources more efficiently.
    20. Finally, forbearance will promote uniformity among services, as 
all wireless telecommunications carriers will be subject to the 
forbearance adopted in this Order. Licensees that hold authorizations 
in different wireless telecommunications services, such as PCS, paging, 
and cellular, will be able to make pro forma changes efficiently 
without filing multiple applications for each license and service. 
Thus, forbearance will facilitate pro forma transactions that include 
multiple services or licenses, such as an internal reorganization of a 
company that holds numerous licenses.
iv. Licensees Affected
    21. Background. FCBA requests that the Commission adopt forbearance 
of section 310(d) requirements for all non-substantial transactions 
involving telecommunications carriers licensed by the Bureau. A 
telecommunications carrier, as defined by the Act, is ``any provider of 
telecommunications services,'' and ``telecommunications service'' is in 
turn defined as the offering of telecommunications for a fee directly 
to the public, or to such classes of users as to be effectively 
available to the public. See 47 U.S.C. 153(44), (46). In its petition, 
PCIA initially proposed that forbearance be applied only to broadband 
PCS carriers, but in its reply comments, PCIA agrees with commenters 
who contend that forbearance should be applied equally to all 
commercial mobile radio services (CMRS) licensees. Commenters who 
address this issue generally urge the Commission to apply forbearance 
broadly, either to all CMRS licensees or to all wireless 
telecommunications carriers licensed by the Bureau.
    22. Discussion. The Commission concludes that the record 
establishes sufficient justification to forbear from enforcing section 
310(d) requirements as they apply to all wireless telecommunications 
carriers. The Commission finds, based on the record, that forbearance 
will enhance competition among telecommunications carriers and serve 
the public interest. As noted above, many commenters support broad 
forbearance for CMRS providers, based on Congress' mandate when it 
enacted the 1993 Omnibus Reconciliation Act that similar mobile 
services receive similar regulatory treatment. The Commission also 
believes that the same forbearance should be extended to wireless 
telecommunications carriers who are not CMRS providers, e.g., common 
carrier microwave licensees. While fewer commenters expressly addressed 
this issue, the Commission notes that no commenter expressly opposed 
FCBA's proposal to extend forbearance to all wireless 
telecommunications carriers, and the Commission sees no reason to 
distinguish among different categories of telecommunications carriers 
in this regard. Therefore, subject to the exceptions discussed below, 
the Commission will apply forbearance from section 310(d) requirements 
for pro forma applications uniformly to telecommunications carriers 
licensed under part 21 (domestic public fixed radio services), part 22 
(public mobile radio services), part 24 (personal communications 
services), part 27 (wireless communications services), part 90 (private 
land mobile radio services), and part 101 (fixed microwave services) of 
the Commission's rules. However, as discussed above, the forbearance 
provisions of this Order do

[[Page 10342]]

not apply to licensees governed by these rule parts who do not meet the 
statutory definition of ``telecommunications carrier.'' Under section 
10, the Commission's forbearance authority only extends to 
telecommunications carriers and telecommunications services. It does 
not apply to services such as public safety and private point-to-point 
microwave, which do not involve the provision of ``telecommunications 
service,'' i.e., the offering of telecommunications for a fee to the 
public, or to such classes of users as to be effectively available to 
the public. 47 U.S.C. 153(44), (46). Thus, licensees in these non-
telecommunications services will continue to be subject to existing 
procedures with respect to pro forma applications for assignment and 
transfer. The Commission recognizes that in some instances, this may 
cause inconvenience to licensees who hold both telecommunications and 
non-telecommunications licenses, because they will be unable to use the 
streamlined notification procedures adopted in this Order with respect 
to their non-telecommunications licenses. However, because section 10 
does not extend forbearance to non-telecommunications services, the 
Commission is constrained from applying these procedures more broadly. 
Nevertheless, in order to minimize any disparity in the Commission's 
treatment of non-telecommunications as compared to telecommunications 
licenses, the Commission intends to consider adoption of expedited 
procedures for pro forma transfers and assignments of non-
telecommunications licenses in an upcoming rulemaking implementing the 
Universal Licensing System for wireless services. The Commission is 
developing the Universal Licensing System to integrate its licensing 
databases and provide for electronic filing of wireless applications, 
including transfer and assignment requests.
v. Exceptions to Forbearance
    23. While the Commission will generally apply forbearance to pro 
forma transactions involving telecommunications carriers, it concludes 
that existing procedures should continue to apply to applications for 
pro forma transactions involving licensees subject to the Commission's 
unjust enrichment provisions, i.e., licensees that hold licenses on 
spectrum blocks restricted to designated entities, or licensees that 
utilize installment financing or have received bidding credits during 
the competitive bidding process. See 47 CFR 1.2111. Because pro forma 
transactions involving these licenses may affect financial obligations 
to the Commission, transfer and assignment applications by these 
licensees are processed differently than other pro forma applications, 
and require additional review, paperwork, and coordination, as well as 
additional processing time. Each transaction involving a license 
subject to unjust enrichment provisions must be carefully scrutinized 
to ensure that the proposed transaction, even if pro forma in nature, 
would not violate any of the Commission's unjust enrichment rules. The 
Commission must also process additional paperwork related to any 
installment financing or bidding credits, and coordinate the approval 
of financial documentation with the applicant and the U.S. Department 
of Treasury.
    24. The Commission does not find that licensees subject to its 
unjust enrichment provisions meet the section 10 forbearance standard. 
Because these licensees have received financial benefits and have 
continuing financial obligations to the Commission and, in turn, to the 
public, even a pro forma transfer from one affiliated entity to another 
may have implications with respect to the transferee's eligibility for 
the same financial benefits, the ability of the transferee to meet its 
financial obligations, and the ability of the Commission to take 
recourse in the event of default or unjust enrichment. The Commission 
believes that continued application of its section 310(d) procedures in 
such circumstances is in the public interest, because it enables the 
Commission to review the financial implications of the transfer before 
approving it. Therefore, the Commission will continue to enforce its 
section 310(d) prior notice and approval requirements as applied to 
those licenses subject to its unjust enrichment provisions.
    25. The Commission also concludes that existing pro forma 
application procedures should be retained in connection with transfers 
arising out of shareholder proxy contests. The Commission has stated 
that changes in the composition of a licensee's board of directors 
resulting from a proxy contest must be carefully analyzed in terms of 
potential outcome in order to determine the appropriate transfer 
procedures. Although the Commission recognized that in many instances, 
such changes do not constitute a transfer of control that would require 
prior Commission approval, it concluded that under limited 
circumstances, a change in corporate management arising from a proxy 
contest could result in a substantial transfer of control to persons or 
persons or entities who had not been subject to prior Commission 
review. Id. Therefore, the Commission concluded that transfer 
applications arising out of proxy contests could be filed under 
existing pro forma transfer and assignment procedures, but that 
applicants would also be required to supplement their applications with 
information on citizenship, other attributable interests, and other 
relevant information. Id.
    26. Because each transaction involving a proxy mechanism requires 
careful analysis of the potential outcome to ensure that there is no 
substantial transfer of control, the Commission does not believe that 
forbearance from its prior notification and application procedures in 
this context meets the public interest prong of the section 10 
forbearance standard. The Commission notes that neither FCBA nor any of 
the commenters have specifically addressed whether forbearance should 
be extended to proxy-related transfers. To ensure that a proxy contest 
does not result in control passing to persons or persons or entities 
who have not been subject to prior Commission review, the Commission 
continues to believe that it should review such potential changes in 
corporate management prospectively under existing pro forma procedures. 
Therefore, the Commission declines to extend forbearance to pro forma 
transactions involving use of proxy mechanisms at this time.

C. Procedures Adopted for Pro Forma Transfers and Assignments

    27. Background. Under the Commission's current rules, when a 
telecommunications carrier files an application for consent to transfer 
control of its license or assign its license, it must file either an 
FCC Form 490, ``Application for Assignment of Authorization or Consent 
to Transfer of Control of Licensee,'' or, if it is a common carrier 
microwave licensee, a Form 702, ``Application for Consent to Assignment 
of Radio Station Construction Authorization or License for Stations in 
Services Other than Broadcast,'' or Form 704, ``Application for Consent 
to Transfer of Control.'' These forms contain information on the 
assignee or transferee, new licensee information, basic licensee 
qualifications, and certifications by the assignor/assignee or 
transferor/transferee. The forms must be accompanied by a description 
of the transaction and a public interest showing. Additionally, if not 
a common carrier microwave licensee, the assignee or transferee must 
file a report qualifying it as a common carrier radio

[[Page 10343]]

licensee by filing an FCC Form 430 unless a current report is already 
on file with the Commission. See 47 CFR 22.137(a), 24.839(b)(3), 
27.324, 90.153(a).
    28. The Bureau makes every attempt to process pro forma 
transactions within 30 days, but cannot guarantee grant by date 
certain, especially at the end of the calendar year. Additionally, 
those non-substantial transactions subject to the Commission's unjust 
enrichment provisions, 47 CFR 1.2111, are processed no earlier than 
ninety days from the filing date of the application, as they involve 
additional paperwork and review and the coordination of the loan 
documentation with the applicant and the United States Department of 
Treasury. Once the transfer or assignment has been approved, the 
Commission places the grant of the pro forma transaction on public 
notice as approved, and sends the applicant a consent authorization, 
FCC Form 726-C for CMRS licensees or FCC Form 732-C for common carrier 
microwave licensees. Applicants other than common carrier microwave 
applicants must respond in writing within sixty days of the Form 726-C 
and certify that the approved transaction has been consummated. See 47 
CFR 22.137(b), 27.324, 90.153(b). As a result of the Commission's 
recent part 101 proceeding, which consolidated its point-to-point 
microwave rules, common carrier microwave licensees are subject to 
streamlined procedures for transfers and assignments, which vary 
slightly from the procedures used by other telecommunications carriers. 
While they must file an application prior to a proposed transfer or 
assignment transaction, they do not need to file a post-consummation 
letter or an FCC Form 430.
    29. Discussion. The Commission agrees with commenters that its 
recordkeeping needs would be best addressed by requiring written 
notification of a pro forma transaction within a certain time period 
after the transaction is completed. Such procedures will ensure that 
the Commission's records are current, and a clear public record exists 
of the changes that resulted from any pro forma transaction. Also, the 
procedures adopted are slight modifications of existing rules which 
should be familiar to every telecommunications carrier. The Commission 
disagrees with those commenters who suggest that no written 
notification of a pro forma transaction should be required, or that 
such proof should only be required in annual filings. Such procedures 
would allow more time to elapse after consummation than is currently 
permitted, and would also allow the Commission's public records to 
quickly become outdated.
    30. The Commission therefore adopts several of the proposals 
suggested by commenters as a condition of the adopted forbearance and 
amends the transfer and assignment sections of its rules in parts 22, 
24, 27, 90, and 101. Within 30 days after consummation of a pro forma 
transaction, the licensee must submit written proof of such transaction 
either in letter form or by filing the appropriate transfer or 
assignment form currently in use, i.e., Form 490, 702, or 704, so that 
the Commission can place its application on public notice as granted. 
In order to obtain streamlined processing under these procedures, 
licensees who use Form 490, 702, or 704, rather than a letter, to 
notify us of the transaction should indicate on the form, as they 
currently do, that the transaction is pro forma. This 30-day 
notification requirement is a slight modification of the Commission's 
current requirement that licensees notify it within 60 days of 
consummation, and of the Commission's streamlined procedures for common 
carrier microwave licensees. However, the Commission believes that, 
despite this shortened notification period, licensees will benefit from 
its streamlined procedures, as they will no longer have to seek pre-
transaction approval by the Commission prior to consummating a pro 
forma transaction. Common carrier microwave licensees will no longer 
have to seek pre-transaction approval, but will only have to provide 
post-consummation information. This modification treats all 
telecommunications carriers alike and allows them to take advantage of 
the Commission's streamlined procedures. In addition, these 
requirements could be subject to further modification as a result of 
the Commission's upcoming development of the Universal Licensing System 
(ULS), which will provide for electronic filing of wireless 
telecommunications applications, including transfer and assignment 
requests. The Commission also anticipates proposing certain rule 
changes to implement ULS in an upcoming rulemaking. If adopted, these 
proposals may slightly modify the procedures the Commission adopts in 
this Order by requiring the use of a new post-consummation form for 
electronic filing, and the Commission will take appropriate action upon 
the final determination of these proposals.
    31. Additionally, if a licensee chooses to notify the Commission of 
a pro forma transaction in a letter form, the post-transaction 
notification letter must contain the licensee's certification that the 
subject transfer or assignment is non-substantial and that, together 
with all previous non-substantial transactions, it does not involve a 
change in the ultimate de facto or de jure control of the licensee. If 
the transfer or assignment of more than one license is involved, a 
single letter may be filed, so long as all licenses affected by the 
transfer are identified by call sign in the letter.
    32. In addition to requiring post-consummation notification, the 
Commission concludes that licensees must concurrently provide updated 
ownership information in order to ensure that the public has a record 
of any changes that have occurred to their ownership structure. 
Therefore, the Commission continues to require each assignee or 
transferee to file an updated ownership report on FCC Form 430 when it 
notifies the Commission of the consummated transaction, unless an 
updated report is already on file with the Commission. See 47 CFR 
22.137(a), 24.839(b)(3), 90.153(a). If such a report is on file, the 
assignee or transferee must update this report to reflect any changes. 
If the licensee's name has changed as a result of the transaction, it 
must request reissuance of the license in the new name, as is currently 
required. Additionally, a licensee that transfers or assigns its 
license within three years of receiving the license through competitive 
bidding remains subject to the reporting requirements of Sec. 1.2111(a) 
of its rules. See 47 CFR 1.2111(a). Such licensee must file the 
documentation required by this rule when it files its post-consummation 
notification.
    33. Upon receipt of the Form 490, 702, or 704 or letter 
notification from the parties, the Commission will place the 
transaction on public notice as granted. This will provide an 
opportunity for public scrutiny of the transaction. Moreover, any 
interested party who objects to the transaction may, within 30 days 
from the date upon which public notice is given, file a petition 
requesting reconsideration. See 47 U.S.C. 405; see also 47 CFR 
1.106(b). The Commission believes this procedure will protect the 
public interest by deterring any attempt to misuse its processes and by 
providing the public with accurate information regarding Commission 
licensees.

IV. Procedural Matters

    34. Paperwork Reduction Act Analysis. This Memorandum Opinion and 
Order contains an information collection that was submitted to the 
Office of Management and Budget

[[Page 10344]]

(OMB) for emergency approval under the Paperwork Reduction Act.

V. Ordering Clauses

    35. Accordingly, it is Ordered That Parts 22, 24, 90, and 101 of 
the Commission's Rules are amended, effective April 2, 1998.
    36. Additionally, it is Ordered That, pursuant to sections 4(i) and 
10 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and 
160, the Petition for Forbearance filed by the Federal Communications 
Bar Association Wireless Telecommunications Practice Committee on 
February 4, 1997 is Granted in Part and Denied in Part to the extent 
discussed above.
    37. Additionally, it is Ordered That, pursuant to sections 4(i) and 
10 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and 
160, the Petition for Forbearance filed by the Broadband Personal 
Communications Services Alliance of the Personal Communications 
Industry Association on May 22, 1997 is Granted in Part and Denied in 
Part to the extent discussed above.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    Parts 22, 24, 27, 90, and 101 of Title 47 of the Code of Federal 
Regulations are amended to read as follows:

PART 22--PUBLIC MOBILE SERVICES

    1. The authority citation for part 22 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, unless otherwise noted.

    2. Section 22.137 is amended by adding paragraphs (a)(1) and (a)(2) 
and revising the first sentence in paragraph (b) to read as follows:


Sec. 22.137  Assignment of authorization; transfer of control.

* * * * *
    (a) * * *
    (1) Forbearance from pro forma assignments and transfers of 
control. Licensees that are telecommunications carriers as defined in 
47 U.S.C. 153 are subject to streamlined procedures for pro forma, 
i.e., non-substantial, transfers and assignments.
    (2) A pro forma assignee or transferee is not required to seek 
prior FCC approval for the transaction, but must notify the FCC no 
later than 30 days after the event causing the assignment or transfer, 
either by filing an FCC Form 490 or in letter form. If a letter is 
submitted, it must contain a certification that the transfer or 
assignment is non-substantial and, together with all previous non-
substantial transactions, does not involve a change in the licensee's 
ultimate control. A single letter may be filed for a transfer or 
assignment of control of more than one authorization if each 
authorization affected is identified by call sign. Licensees must 
concurrently update ownership information on their FCC Form 430, if 
necessary.
    (b) Notification of completion. Assignments and transfers of 
control must be completed within 60 days of FCC approval, except those 
licensees subject to the streamlined procedures of paragraph (a)(1). * 
* *
* * * * *

PART 24--PERSONAL COMMUNICATIONS SERVICES

    3. The authority citation for part 24 continues to read as follows:

    Authority: 47 U.S.C. 154, 301, 302, 303, 309 and 332.

    4. Section 24.439 is amended by adding paragraph (a)(3) to read as 
follows:


Sec. 24.439  Transfer of control or assignment of station 
authorization.

    (a) * * *
    (3) Forbearance from pro forma assignments and transfers of 
control. PCS licensees that are telecommunications carriers as defined 
in 47 U.S.C. 153 are subject to streamlined procedures for pro forma, 
i.e., non-substantial, transfers and assignments. A pro forma assignee 
or transferee is not required to seek prior FCC approval for the 
transaction, but must notify the FCC no later than 30 days after the 
event causing the assignment or transfer, either by filing an FCC Form 
490 or in letter form. If a letter is submitted, it must contain a 
certification that the transfer or assignment is non-substantial and, 
together with all previous non-substantial transactions, does not 
involve a change in the licensee's ultimate control. A single letter 
may be filed for a transfer or assignment of control of more than one 
authorization if each authorization affected is identified by call sign 
in the letter. Licensees must concurrently update ownership information 
on their FCC Form 430, if necessary.
* * * * *
    5. Section 24.839 is amended by adding paragraphs (a)(1) and (a)(2) 
to read as follows:


Sec. 24.839  Transfer of control or assignment of license.

    (a) * * *
    (1) Forbearance from pro forma assignments and transfers of 
control. PCS licensees that are telecommunications carriers as defined 
in 47 U.S.C. 153 are subject to streamlined procedures for pro forma, 
i.e., non-substantial, transfers and assignments.
    (2) A pro forma assignee or transferee is not required to seek 
prior FCC approval for the transaction, but must notify the FCC no 
later than 30 days after the event causing the assignment or transfer, 
either by filing an FCC Form 490 or in letter form. If a letter is 
submitted, it must contain a certification that the transfer or 
assignment is non-substantial and, together with all previous non-
substantial transactions, does not involve a change in the licensee's 
ultimate control. A single letter may be filed for a transfer or 
assignment of control of more than one authorization if each 
authorization affected is identified by call sign in the letter. 
Licensees must concurrently update ownership information on their FCC 
Form 430, if necessary.
* * * * *

PART 27--WIRELESS COMMUNICATIONS SERVICES

    6. The authority citation for part 27 continues to read as follows:

    Authority: 47 U.S.C. sections 154, 301, 302, 303, 307, 309, and 
332.

    7. Section 27.324 is amended by adding paragraph (a)(3) and 
revising paragraph (b)(3) to read as follows:


Sec. 27.324  Transfer of control or assignment of station 
authorization.

    (a) * * *
    (3) Forbearance from pro forma assignments and transfers of 
control. WCS licensees that are telecommunications carriers as defined 
in 47 U.S.C. 153 are subject to streamlined procedures for pro forma, 
i.e., non-substantial, transfers and assignments. A pro forma assignee 
or transferee is not required to seek prior FCC approval for the 
transaction, but must notify the FCC no later than 30 days after the 
event causing the assignment or transfer, either by filing an FCC Form 
490 or in letter form. If a letter is submitted, it must contain a 
certification that the transfer or assignment is non-substantial and, 
together with all previous non-substantial transactions, does not 
involve a change in the licensee's ultimate control. A single letter 
may be

[[Page 10345]]

filed for a transfer or assignment of control of more than one 
authorization if each authorization affected is identified by call sign 
in the letter. Licensees must concurrently update ownership information 
on their FCC Form 430, if necessary.
* * * * *
    (b) * * *
    (3) Notification of completion. The Commission shall be notified by 
letter of the date of completion of the assignment or transfer of 
control, except those licensees subject to the streamlined procedures 
of paragraph (a)(3) of this section.
* * * * *

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

    8. The authority citation for part 90 continues to read as follows:

    Authority: Secs. 4, 252-2, 303, 309, and 332, 48 Stat. 1066, 
1082, as amended; 47 U.S.C. 154, 251-2, 303, 309 and 332, unless 
otherwise noted.

    9. Section 90.153 is amended by adding paragraphs (a)(1) and (a)(2) 
and revising the first sentence in paragraph (b) to read as follows:


Sec. 90.153  Transfer or assignment of station authorization.

    (a) * * *
    (1) Forbearance from pro forma assignments and transfers of 
control. Licensees that are telecommunications carriers as defined in 
47 U.S.C. 153 are subject to streamlined procedures for pro forma, 
i.e., non-substantial, transfers and assignments.
    (2) A pro forma assignee or transferee is not required to seek 
prior FCC approval for the transaction, but must notify the FCC no 
later than 30 days after the event causing the assignment or transfer, 
either by filing an FCC Form 490 or in letter form. If a letter is 
submitted, it must contain a certification that the transfer or 
assignment is non-substantial and, together with all previous non-
substantial transactions, does not involve a change in the licensee's 
ultimate control. A single letter may be filed for a transfer or 
assignment of control of more than one authorization if each 
authorization affected is identified by call sign in the letter. 
Licensees must concurrently update ownership information on their FCC 
Form 430, if necessary.
    (b) Notification of completion. Assignments and transfers of 
control of commercial mobile radio licenses must be completed within 
sixty (60) days of Commission approval, except those licensees subject 
to the streamlined procedures of paragraph (a)(1) of this section. * * 
*
* * * * *

PART 101--FIXED MICROWAVE SERVICES

    10. The authority citation for part 101 continues to read as 
follows:

    Authority: 47 U.S.C. 154, 303.

    11. Section 101.53 is amended by adding paragraphs (a)(1) and 
(a)(2) to read as follows:


Sec. 101.53  Assignment or transfer of station authorization.

    (a) * * *
    (1) Forbearance from pro forma assignments and transfers of 
control. Licensees that are telecommunications carriers as defined in 
47 U.S.C. 153 are subject to streamlined procedures for pro forma, 
i.e., non-substantial, transfers and assignments.
    (2) A pro forma assignee or transferee is not required to seek 
prior FCC approval for the transaction, but must notify the FCC no 
later than 30 days after the event causing the assignment or transfer, 
either by filing an FCC Form 490 or in letter form. If a letter is 
submitted, it must contain a certification that the transfer or 
assignment is non-substantial and, together with all previous non-
substantial transactions, does not involve a change in the licensee's 
ultimate control. A single letter may be filed for a transfer or 
assignment of control of more than one authorization if each 
authorization affected is identified by call sign in the letter. 
Licensees must concurrently update ownership information on their FCC 
Form 430, if necessary.
* * * * *
[FR Doc. 98-5336 Filed 3-2-98; 8:45 am]
BILLING CODE 6712-01-P