[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