[Federal Register Volume 78, Number 55 (Thursday, March 21, 2013)]
[Notices]
[Pages 17395-17403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-06548]


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FEDERAL COMMUNICATIONS COMMISSION

[MB Docket No. 13-50; DA 13-281]


Media Bureau Announces Filing of Request for Clarification of the 
Commission's Policies and Procedures Under the Communications Act by 
the Coalition for Broadcast Investment

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document seeks comment on an August 31, 2012 letter from 
the Coalition for Broadcast Investment asking the Commission to

[[Page 17396]]

clarify its policies and procedures under Section 310(b)(4) of the 
Communications Act, 47 U.S.C. 310(b)(4), which restricts foreign 
ownership and voting interests in entities that control Commission 
licensees.

DATES: Interested parties may file comments on or before April 15, 
2013, and reply comments on or before April 30, 2013.

FOR FURTHER INFORMATION CONTACT: Jake Riehm, Media Bureau (202) 418-
2166, or email at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
document in MB Docket No. 13-50, DA 13-281, released February 26, 2013. 
The complete text of the document is available for inspection and 
copying during normal business hours in the FCC Reference Center, 445 
12th Street SW., Washington, DC 20554, and may also be purchased from 
the Commission's copy contractor, BCPI, Inc., Portals II, 445 12th 
Street SW., Washington, DC 20054. Customers may contact BCPI, Inc. at 
their Web site http://www.bcpi.com or call 1-800-378-3160.

Summary of the Public Notice

    1. On August 31, 2012, the Coalition for Broadcast Investment (CBI) 
submitted a letter (the Letter) asking the Commission to clarify its 
policies and procedures under Section 310(b)(4) of the Communications 
Act, 47 U.S.C. Section 310(b)(4), which restricts foreign ownership and 
voting interests in entities that control Commission licensees. CBI 
states that it is a group comprised of national broadcast networks, 
radio and television station licensees, and community and consumer 
organizations. Specifically, CBI asks the Commission to clarify that it 
will conduct a substantive, facts and circumstances evaluation of 
proposals for foreign investment in excess of 25 percent in the parent 
company of a broadcast licensee, consistent with and in furtherance of 
its authority under 47 U.S.C. Section 310(b)(4).
    2. The Media Bureau invites public comment on the Letter from 
interested parties. The complete text of the Letter dated August 31, 
2012, is as follows:
    3. We write on behalf of the Coalition for Broadcast Investment * 
to ask the Commission to clarify and affirm, at the earliest possible 
time, the following:
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    * The Coalition for Broadcast Investment seeks to promote 
enhanced access to capital by U.S. broadcasters. The Coalition 
believes that access to additional and new sources of investment 
capital will benefit the broadcast industry and American consumers 
by financing advanced infrastructure, innovative services and high 
quality programming; and by promoting the creation of highly 
skilled, well-paying jobs. Coalition members comprise national 
broadcast networks, radio and television station licensees and 
community and consumer organizations. A list of Coalition members is 
attached.
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    Going forward, the FCC will conduct substantive, facts and 
circumstances evaluation of proposals for foreign investment in excess 
of 25 percent in the parent company of a broadcast licensee, consistent 
with and in furtherance of its authority under Section 310(b)(4) of the 
Communications Act.
    4. For the avoidance of doubt, we seek here only confirmation of 
the Commission's intent to exercise its statutory discretion to 
consider, in any particular case, whether it would serve the public 
interest to authorize, condition, or disallow proposed foreign 
investment in excess of the 25 percent benchmark.
    5. The clarification requested here is squarely within the 
Commission's existing statutory authority and would neither change (or 
require any change in) any FCC rule nor predetermine the outcome of any 
particular case. Rather, we are asking the Commission merely to advise 
the public prospectively of the manner in which [it] proposes to 
exercise a discretionary power granted to it by Congress under Section 
310(b)(4) of the Act. American Mining Cong. v. Mine Safety and Health 
Admin., 995 F.2d 1106, 1109 (D.C. Cir. 1993).
    6. Taking this modest procedural step would place broadcasters on 
the same footing as every other industry participant and signal that 
the broadcast sector continues to be a vital and valued part of the 
21st-century media and telecommunications ecosystem. It would send a 
positive and powerful message to the industry, the capital markets, 
viewers, listeners and advertisers alike that in the appropriate 
circumstances U.S. broadcasters may be afforded access to new sources 
of capital. It would incent entry into the broadcast sector, including 
by minority- and women-owned businesses. It would facilitate investment 
in new services and infrastructure, create jobs and, ultimately, 
enhance service to local communities and their viewers and listeners.
    7. Absent a clear statement from the Commission, the marketplace 
will continue to assume that proposals for above-benchmark foreign 
investment in broadcasters will not even be considered regardless of 
the facts and circumstances presented or the merits of a particular 
proposal. As a result, transactions that the Commission may have found 
to enhance local broadcast service will continue never to see the light 
of day--an outcome that surely would disserve the public interest.

Introduction and Summary

    8. Clarifying that the Commission is prepared to exercise its 
discretion with respect to broadcast proposals under Section 310(b)(4) 
would acknowledge the competitive realities of the 21st century 
telecommunications and media environment. Today, programmers, consumers 
and advertisers have at their fingertips a multitude of choices on 
radio, television, cable and satellite services, mobile devices, the 
Internet, and elsewhere.
    9. The Commission's Discretion under Section 310(b)(4). Nearly 80 
years ago, Congress established a 25 percent flexible benchmark with 
respect to aggregate foreign investment in the parent company of a 
broadcast or common carrier licensee. Section 310(b)(4) of the 
Communications Act of 1934, as amended, provides, in pertinent part:
    (b) No broadcast or common carrier * * * license shall be granted 
to or held by
* * * * *
    (4) any corporation directly or indirectly controlled by any other 
corporation of which more than one-fourth of the capital stock is owned 
of record or voted by aliens, their representatives, or by a foreign 
government or representative thereof, or by any corporation organized 
under the laws of a foreign country, if the Commission finds that the 
public interest will be served by the refusal or revocation of such 
license.

47 U.S.C. 310(b)(4).

    10. The text of Section 310(b)(4) makes clear that the 25 percent 
figure was intended to be a public interest yardstick only, and not a 
cap. Under the plain language of the Act the FCC is authorized to 
disallow a particular instance of foreign investment in excess of the 
benchmark only upon a finding that the public interest will be served 
by prohibiting it. Just two weeks ago the Commission reiterated that it 
has discretion under Section 310(b)(4) to permit foreign investment 
above the 25 percent benchmark unless it finds such ownership would be 
inconsistent with the public interest. Review of Foreign Ownership 
Policies for Common Carrier and Aeronautical Radio Licensees under 
Section 310(b)(4) of the Communications Act of 1934, as Amended, Report 
and Order, FCC 12-93 (rel. Aug. 17, 2012) (adopting a proposal

[[Page 17397]]

set out in Public Notice, International Bureau Seeks Further Comment on 
Foreign Ownership Policies: Forbearance from Section 310(b)(3) for 
Common Carrier Licensees, 27 FCC Rcd 3946 (Int'l Bur., 2012)) (the 
Forbearance Order) at 3 (Section 5).
    11. Consistent with the language and intent of Section 310(b)(4), 
the Commission repeatedly has evaluated above-benchmark foreign 
investment in the common carrier context and exercised its discretion 
to approve or condition such investment when and as appropriate. Yet, 
at the same time, the Commission to date has maintained what the FCC 
itself has characterized as an irrefutable presumption against even 
considering--much less authorizing-- proposals for foreign investment 
in broadcasters that would exceed the 25 percent benchmark.
    12. Changed circumstances. The Commission's refusal even to 
consider exercising its discretion under Section 310(b)(4) in the 
broadcast context has been attributed variously to concerns that 
foreign governments could disrupt communications during wartime or 
commandeer public opinion through propaganda aired on radio and 
television stations. Regardless of whether the American public ever 
could have been susceptible to such perceived threats, technological 
and marketplace developments have obviated these concerns.
     Americans live, work and play in a multichannel, multi-
platform environment in which they can produce and consume content 
freely--locally, nationally, and internationally.
    [rtarr8] Today, in addition to broadcasting, many other sources of 
information are available to the U.S. public.
    [rtarr8] Today, consumers have access to local, national, and 
international news and information from myriad sources-- including the 
Internet, mobile applications, video and audio streaming services, 
cable and satellite programming networks, and social networking tools. 
None of these outlets are subject to limitations on foreign investment.
     At the same time, the Commission has developed substantial 
expertise and tools to evaluate the merits of proposed foreign 
investment.
    [rtarr8] The Commission routinely conducts on-the-merits reviews of 
foreign investment in common carriers pursuant to a presumption that 
the public interest is served by capital sourced from WTO-member 
states.
    [rtarr8] Close coordination with federal national security agencies 
ensures that U.S. security interests are taken into account and that, 
where appropriate, transactions are conditioned or disapproved.
    13. Public interest benefits. The modest relief requested here 
would enable local broadcast stations to join their cable, satellite 
and online counterparts in having the opportunity to gain access to 
significant new or additional sources of capital. Ceasing to single out 
broadcasters, and broadcasters alone, for a per se ban on above-
benchmark foreign investment would ensure that common carrier and 
broadcast licensees' respective ability to participate in world capital 
markets is not determined by a false dichotomy in the application of 
the statutory benchmark.
     Broadcasters should be able to access the capital markets 
on the same terms as their unregulated competitors.
    [rtarr8] In the multiplatform, multi-channel environment in which 
broadcasters now compete, being the sole medium without even potential 
access to above-benchmark levels of foreign capital is arbitrary and 
inequitable.
    [rtarr8] This is especially true at a time when the Commission has 
liberalized its foreign investment policies and procedures for common 
carriers, which are subject to the same statutory regime as 
broadcasters for evaluation of foreign investment.
     In exercising its discretion to consider proposals for 
above-benchmark indirect foreign investment in broadcast licensees, the 
Commission could provide new opportunities for minority businesses and 
entrepreneurs, whose access to the domestic capital markets has been 
limited, thereby advancing the public interest in viewpoint diversity 
and media competition.
    14. Alignment with U.S. Policy. Clarifying that the Commission will 
no longer maintain an ad hoc presumption against above-benchmark 
foreign investment in radio and television broadcasters would be 
consistent with broader U.S. policy favoring inbound foreign 
investment, a recognized source of jobs and capital for businesses that 
operate locally in the United States. The irony in the persistence of 
any historical presumption against inbound foreign investment in 
broadcasters is that today, it is outbound investment that causes 
debate among policymakers and the public alike--for example, the 
transfer of a manufacturing plant to another country with lower labor 
costs. It is remarkable that the world's leading economy would restrict 
the broadcast sector, almost alone, in its ability to create jobs, 
build infrastructure, and otherwise serve local American communities 
using foreign capital.
     As the White House stated in June 2011, The United States 
welcomes the investment and jobs supported by the U.S. affiliates of 
foreign-domiciled companies. These companies play an important role in 
the U.S. economy, as they build plants and other facilities or provide 
additional capital to businesses that already operate locally in the 
United States.
     See SelectUSA, available at http://selectusa.commerce.gov, 
a U.S. government site listing as industries represent[ing] 
unparalleled opportunity for global growth and success aerospace, 
automotive, biotechnology, chemical, consumer goods, creative and 
media, energy, environmental technology, financial services, healthcare 
and medical technology, logistics and transportation, machinery and 
equipment, pharmaceuticals, professional services, retail trade, 
semiconductors, software and information technology services, textiles, 
and travel, tourism, and hospitality.
    15. Authority to Act. The Coalition asks merely that the Commission 
clarify that it will accept and consider on the merits proposals for 
indirect foreign investment in broadcasters in excess of the 25 percent 
benchmark. Such a clarification constitutes precisely the type of 
``general statement[] of policy'' that the Commission is authorized to 
make on its own motion pursuant to Section 553(b) of the Administrative 
Procedure Act. 5 U.S.C. 553(b)(B). Indeed, in the Forbearance Order 
issued earlier this month, the Commission clarified its intent, going 
forward, to forbear in certain circumstances from applying the 20 
percent foreign ownership limit set forth in Section 310(b)(3) of the 
Act to the class of common carrier licensees in which foreign interests 
are held through U.S.-organized entities that do not control the 
licensee.
    16. A comprehensive discussion of the origins and historical 
application of the Section 310(b)(4) benchmark, the Commission's 
discretion under the statute, and the acknowledged public interest 
benefits of enhanced access to capital, is set out in the Appendix. We 
emphasize that the relief we are seeking here--a clear statement by the 
Commission that, going forward, it will exercise its authority to 
evaluate on the merits broadcast proposals under Section 310(b)(4)--
would not dictate the result of any particular substantive evaluation 
precisely because, under the Act, the outcome of any review under 
Section 310(b)(4) is within the Commission's discretion in the 
application of its public interest test.

[[Page 17398]]

Conclusion

    17. The Commission's effective presumption against enhanced foreign 
investment in the broadcast sector no longer serves the public 
interest--if it ever did. It deters investment in businesses that 
provide service to local communities and invest in jobs and 
infrastructure in those communities. It disadvantages a single class of 
participants in an increasingly complex media and telecommunications 
ecosystem that faces rigorous competition from firms that are not 
subject to any restrictions on foreign investment. Meanwhile, the 
concerns that once informed the Commission's presumptive policy have 
lost their meaning.
    18. Accordingly, for all the reasons stated herein and in the 
Appendix, we respectfully request that the Commission promptly clarify 
and affirm that, going forward, it will conduct a case-by-case 
evaluation of proposals for foreign investment in U.S. broadcast 
holding companies at levels exceeding the 25 percent benchmark.
    19. Kindly direct any questions concerning this submission to the 
undersigned.

Respectfully Submitted,

Mace Rosenstein
Gerald J. Waldron

Counsel for the Coalition for Broadcast Investment

Attachments

cc: Hon. Julius Genachowski, Chairman
Commissioner Robert McDowell
Commissioner Mignon Clyburn
Commissioner Ajit Pai
Commissioner Jessica Rosenworcel

The Coalition for Broadcast Investment

Adelante Media Group Bonten
Media Group BuenaVision
Television Network Bustos Media
Holdings, LLC CBS Corporation
Clear Channel Communications, Inc.
Cuban National Council
Emmis Communications Corporation
Entravision Communications Corporation
Hearst Television Inc.
International Black Broadcasters Association
ION Media Networks, Inc.
Latinos in Information Science and Technology Association
League of United Latin American Citizens LIN
Television Corporation d/b/a LIN Media
Minority Media & Telecommunications Council
National Association of Black County Officials
National Black Caucus--Local Elected Officials
National Black Chamber of Commerce
National Organization of Black Elected Legislative Women
The National Puerto Rican Chamber of Commerce
Nexstar Broadcasting Group Inc.
Schurz Communications Inc.
Sinclair Broadcast Group, Inc.
Una Vez Mas Television Group
United States Hispanic Chamber of Commerce
Univision Communications Inc.
The Walt Disney Company

Appendix

I. Historical Justifications for Disparate Treatment of Broadcasters 
Under Section 310(b)(4) Have Been Overtaken by Technological and Market 
Developments

    20. The Commission has recognized that ``Congress has given [the 
FCC] the flexibility to consider a broad range of factors, and to 
adapt [its] policies and rules to reflect current conditions'' in 
making its public interest determination under Section 310(b)(4).\1\ 
Just as the technological and competitive environment in which 
broadcasters operate today was unimaginable in 1934, so the 
historical moment in which the Commission first implemented Section 
310(b)(4) is unrecognizable and, we would submit, irrelevant, today.
    21. In the common carrier context the Commission, over time, has 
modified its practices under Section 310(b)(4) in order to consider 
and, where appropriate, authorize foreign investment in excess of 
the statutory benchmark in order to encourage a more open and 
competitive U.S. telecommunications market.\2\ Yet, during the same 
period in which the Commission has, among other things, established 
a rebuttable presumption in favor of foreign investment in common 
carriers in most circumstances, it has effectively created the 
presumption in the broadcast area that, absent special 
considerations that outweigh the statutory concerns, the public 
interest [would] be served by denying licenses to entities with 
alien ownership above 25 percent.\3\
    22. The Commission has discretion in applying the benchmark to 
broadcast investment. Yet diametrically opposed presumptions--one in 
favor of foreign investment for common carriers, another against 
foreign investment for broadcasters--are at least anachronistic in 
today's marketplace, as carriers continue to expand their service 
offerings to deliver audio and video content to consumers, and to 
compete directly with broadcast licensees for programming inputs, 
advertisers and viewers.
    23. We need not catalogue here nearly eight decades' worth of 
disruptive innovation in the media and telecommunications industry 
affecting common carriers and broadcasters alike. One thing is 
clear: In the face of such momentous changes the Commission's 
effective presumption against even the consideration of 
broadcasters' Section 310(b)(4) proposals is neither justifiable nor 
sustainable.

A. The Availability of Myriad Sources of News, Information, Sports, 
and Entertainment Content Delivered Over Multiple Competing 
Platforms Has Undermined the Commission's Historical Rationale for 
Refusing To Consider Above-Benchmark Broadcast Foreign Investment

    24. The historical justification for the Commission's 
categorical refusal even to consider indirect broadcast foreign 
investment above the 25 percent benchmark, dating from the earliest 
days of wireless communications, was that foreign powers could 
acquire and disrupt ship-to-shore and governmental communications 
facilities during wartime.\4\ Later, with the emergence of 
commercial broadcasting, some expressed concern that a hostile 
foreign power could use broadcast outlets--which, at the time, were 
the only real-time mass communications platform--to manipulate 
American public opinion.
    25. Even accepting the validity of those concerns for purposes 
of argument, they reflect a factual predicate that long ago was 
overtaken by marketplace and technological developments. Now, nearly 
80 years following enactment of Section 310(b)(4), the media 
landscape has been transformed.
     Broadcast services compete with myriad sources of 
information and entertainment in a highly and increasingly 
competitive broadband environment.\5\
     92 percent of Americans use multiple platforms to 
access news and information content.\6\
     Broadcast stations compete with other media outlets not 
only for viewers and listeners, but also for advertising revenue.\7\
    26. Broadcasters today must compete with a vast number of non-
broadcast media outlets for news and information--and diverse 
editorial viewpoints--both domestically and from around the world. 
These include satellite-delivered news channels owned and operated 
by foreign governments, such as the RT (Russia Today) Network, Al 
Jazeera, Deutsche Welle and the BBC; online news sites such as The 
Guardian, Japan Today and The Jerusalem Post; Internet portals such 
as Google, Yahoo! and AOL; and streaming video sites such as Hulu 
and Bambuser--among others.\8\ Yet neither the countless competing 
program services that vie for consumers' attention, nor the cable 
and satellite systems and Internet service providers that deliver 
them, are subject to presumptive--or any--limitations on foreign 
investment.
     The availability of rich and varied content, including 
news and information programming, from around the world--as owned or 
chosen by many non-U.S. persons--disseminated over the air, on cable 
and satellite systems and on the Internet, has done no discernible 
harm to the public interest. Nor has harm from such content been 
alleged.
    27. The FCC last considered adopting a more flexible approach to 
foreign investment in the broadcast context in 1995--at the dawn of 
the Internet age and before the explosion of information outlets 
throughout our society and economy.\9\ Even then, the FCC 
acknowledged that the burgeoning number of information and 
entertainment

[[Page 17399]]

sources has lessened the concern that misinformation and propaganda 
broadcast by alien-controlled licensees could overwhelm other media 
voices.\10\ But in 1995 the Commission did not believe that the time 
ha[d] yet come to ease restrictions on alien ownership of broadcast 
license[e]s.\11\
    28. The technological and commercial revolution that was only 
beginning in 1995 has matured within the space of a generation. The 
media marketplace is, truly, cacophonous, and each local broadcaster 
must vie to be heard by consumers who are distracted by a 
multiplicity of competing choices from here and abroad. There is no 
basis in fact or law for continuing to impose an ad hoc ban on even 
the consideration of indirect foreign investment above the statutory 
benchmark in broadcast licensees.

B. The Perception That Foreign Editorial Control Over a U.S. 
Broadcaster Poses a Greater National Security Risk Than Foreign 
Control of Domestic Telecommunications Networks or Other Media 
Outlets Is Outdated and Inaccurate

    29. In contrast to what the Commission has characterized as its 
``traditionally heightened concern for foreign influence over or 
control of licensees which exercise editorial discretion over the 
content of their transmissions,'' \12\ the Commission has justified 
its willingness to consider foreign investment in common carrier 
licensees on the ground that they are passive conduits for 
information provided by others.\13\ But this outdated rationale, 
too, can no longer be squared with the realities of 
telecommunications technology and the media marketplace in the 21st 
century.
    30. Indeed, the current threat of greatest concern to 
policymakers comes not from editorial control over broadcast 
transmissions, but the possibility that foreign agents will engage 
in cyber-warfare using our communications networks. President Obama 
has identified cybersecurity as one of the most serious economic and 
national security challenges we face as a nation.\14\ Chairman 
Genachowski also has observed this phenomenon:
    Broadband Internet--over wired and wireless communications 
networks-- has transformed our economy and society, opening up a new 
world of broad opportunity. $8 trillion are exchanged over these 
wired and wireless networks each year, and growing. If you shut down 
the Internet, you'd shut down our economy.\15\
    31. In an era in which ostensibly passive wired and wireless 
networks play such an essential role in our economy and society, 
including the dissemination of data and information from around the 
world, and yet routinely are permitted to exceed the benchmark, a 
presumption against foreign investment on the basis that 
broadcasting is a more active service simply makes no sense with 
respect to communications, national security, trade or competition 
policy concerns. Yet broadcasters continue to be subject to this 
stark structural disadvantage vis-[agrave]-vis every other 
participant in the 21st century media marketplace--cable television 
operators, direct-to-home satellite systems, national and regional 
non-broadcast programming networks, wireless broadband networks, 
online content aggregators, Internet portals, Web site hosts, and 
others.

C. The Commission Would Continue To Have Plenary Authority To 
Enforce Commercial Broadcasters' Compliance With Their Public 
Interest Obligations Under the Act

    32. Notwithstanding their locus of ownership or investment, 
broadcast stations are obligated under the Act to provide service in 
the public interest to their local communities. We are not seeking 
any change in those fundamental obligations. The Commission's 
exercise of its discretion under Section 310(b)(4) to consider and, 
where appropriate, authorize foreign investment in excess of the 25 
percent benchmark would not abrogate its fundamental responsibility 
under Section 310(d) of the Act to evaluate the nature and extent of 
a broadcaster's service to its community--among other matters--to 
determine whether a station license should be granted or renewed.
    33. The Commission's authority to ensure that broadcasters 
continue to discharge their obligations under the public interest 
standard is analogous to its power to ensure that common carrier 
licensees comply with the nondiscrimination provisions of the Act. 
Significantly, the Commission has observed that, in its experience 
in authorizing up to 100 percent foreign ownership and control of 
U.S. wireless parent companies under section 310(b)(4), we find no 
evidence that the foreign ownership of a common carrier licensee, in 
and of itself, is directly relevant to the carrier's compliance with 
its statutory obligations.\16\ Furthermore, because the other, more 
tailored tools at [the Commission's] disposal'' enable it ``to 
ensure that rates, practices and classifications of common carrier 
licensees are just and reasonable and not unjustly or unreasonably 
discriminatory, authorizing increased foreign investment ``would not 
hinder the Commission's ability to enforce carriers' compliance with 
their obligations under the Act * * *'' \17\
    34. Similarly, in the broadcast context, precisely the same 
tools that have always been available to the Commission under 
Section 310(d) in the licensing and renewal processes--for example, 
ensuring that local stations' programming decisions are responsive 
to the needs, interests and concerns of their communities, and 
reviewing broadcasters' compliance with the rules pertaining to 
children's programming and political broadcasting, among other 
things--will continue to enable the Commission to enforce 
broadcasters' compliance with their obligations under the Act. 
Meanwhile, improved access to foreign capital may enhance a 
broadcast licensee's ability to meet its public interest obligations 
by financing improvements in existing broadcast services and the 
development of new and innovative ones.

II. Foreign Investment Is Beneficial for United States Industry and 
Consumers and Could Benefit Broadcasters and the Communities They Serve

    35. To gauge the opportunity costs of the Commission's 
historical refusal to consider above-benchmark foreign investment in 
broadcasters one need look no further than the telecommunications 
industry and the many competitive and consumer benefits of inbound 
foreign investment in that sector. Today, [f]ew sectors are more 
global than telecommunications. Telecommunications technology, 
services, and equipment are a major driver of trade, growth, and 
innovation.\18\ Globalization, growth, and innovation are a direct 
result of the discretion the Commission has exercised to consider 
and, where appropriate after a merits-based review, authorize 
foreign investment in common carriers in excess of the statutory 
benchmark.
    36. The impact of foreign investment on the U.S. 
telecommunications industry is well documented. Foreign investment 
has proven to be an important source of equity financing for U.S. 
telecommunications companies, fostering technical innovation, 
economic growth, and job creation.\19\
     Verizon Wireless, the nation's largest wireless 
provider, is a joint venture of Verizon Communications, Inc., and 
Vodafone Group PLC, a United Kingdom Company.\20\ Verizon Wireless 
owns and operates the nation's largest 4G LTE network, covering more 
than 200 million people in more than 230 markets across the United 
States.\21\
     T-Mobile USA, Inc., a wholly owned subsidiary of German 
telecommunications provider Deutsche Telekom AG, is the fourth 
largest wireless provider in the United States by 
subscribership.\22\ The Commission has recognized the important role 
foreign-owned T-Mobile has played in the development of a more 
competitive mobile services marketplace by engaging in both pricing 
and technical innovation.\23\
    37. Other sectors of the telecommunications industry likewise 
have benefited from significant foreign investment made possible by 
the Commission's exercise of its discretion under Section 310(b)(4).
     The Commission has approved above-benchmark foreign 
investment in Global Crossing Ltd., a major Tier One common carrier 
and Internet Service Provider, and in Level 3, a major Department of 
Defense contractor.\24\ The merged companies' extensive U.S. and 
international network reaches more than 450 core markets in North 
America, Latin America, Europe, the Middle East, Africa, and 
Asia.\25\
     The Commission has twice exercised its statutory 
discretion to permit significant foreign investment in Iridium,\26\ 
an integral element in the U.S. Government's communications 
infrastructure, approximately 25 percent of whose revenue is 
attributable to its contracts as a communications services provider 
to the Department of Defense.\27\
    38. As recently as August 17, 2012, the Commission reiterated 
its belief ``that providing greater flexibility in the structuring 
of foreign investment in common carrier licensees will enhance 
opportunities for technological innovation and promote economic 
growth and potential job creation in the telecommunications 
sector.'' \28\ By contrast, the Commission's refusal even to 
consider transactions involving indirect foreign investment in 
excess of 25 percent in

[[Page 17400]]

broadcasters has deprived the broadcast sector of needed and 
available capital and its concomitant benefits. It is, of course, 
impossible to quantify precisely the effect of the Commission's 
policy on the broadcast sector or American consumers. Because the 
industry understands the Commission's policy to result in an 
effective irrefutable presumption against foreign investment, 
broadcasters do not even seek Commission review of potentially 
beneficial transactions.
    39. Nevertheless, just as the telecommunications sector and 
other industries benefit from enhanced growth and productivity, job 
creation and increased competition as a result of foreign 
investment, there is ample basis to conclude that broadcasters and 
the American public likewise would benefit from broadcasters' 
enhanced access to foreign capital. In fact, a more balanced 
approach to inbound foreign investment in broadcasting would serve 
several historical goals of U.S. telecommunications policy.

------------------------------------------------------------------------
                                    Potential effect of enhanced foreign
           Policy goal                   investment in broadcasting
------------------------------------------------------------------------
Diversity........................   In exercising its discretion
                                    to consider proposals for above-
                                    benchmark indirect foreign
                                    investment in broadcast licensees,
                                    the Commission could provide new
                                    opportunities for minority- and
                                    women-owned businesses and
                                    entrepreneurs whose access to the
                                    domestic capital markets has been
                                    limited.\29\
                                    Several public interest
                                    organizations and the Commission's
                                    own Advisory Committee for Diversity
                                    have demonstrated that revisiting
                                    the Commission's broadcast policy
                                    under Section 310(b)(4) could
                                    advance the public interest in media
                                    diversity.\30\
Innovation.......................   Expanding broadcasters'
                                    access to capital would enable them
                                    to expand the services they offer
                                    their communities and to provide a
                                    competitive spur to other media
                                    companies to do the same.
                                    Broadcasters already have
                                    begun to use mobile applications and
                                    social media to coordinate responses
                                    to emergencies or to keep the public
                                    continuously updated on local and
                                    national news issues.\31\
                                    Radio stations are investing
                                    millions of dollars in digital
                                    technology to augment and expand
                                    their service to local communities.
                                    Improved access to capital
                                    would facilitate the implementation
                                    of these initiatives and fund the
                                    development of new, as yet
                                    unforeseeable, innovations.
Competition......................   A more conducive environment
                                    for foreign investment in
                                    broadcasting would promote the
                                    Commission's policy of fostering
                                    competition in the marketplace for
                                    the delivery of video
                                    programming.\32\
                                    Broadcasters should be able
                                    to seek access to the same sources
                                    of investment capital that are
                                    available to their unregulated
                                    competitors.
                                    As Chairman Genachowski
                                    observed in a recent speech to the
                                    National Association of
                                    Broadcasters, in order to compete in
                                    the dramatically changed multi-
                                    platform digital broadband world,
                                    broadcasters must pursue innovative
                                    strategies to reach audiences in new
                                    ways and are investing millions of
                                    dollars in digital products to serve
                                    their communities.\33\
------------------------------------------------------------------------

    40. But these and other benefits that could be realized by 
facilitating broadcasters' access to capital will not, and cannot, 
materialize without the clarification we are requesting here. Absent 
guidance from the Commission, broadcasters and the capital markets 
will continue to assume that any proposal seeking authorization 
under Section 310(b)(4) for above-benchmark foreign investment will 
be denied, or effectively denied by not being acted on.

III. The Commission Has the Expertise and Resources Necessary To 
Evaluate Broadcast Sector Foreign Investment as a Result of Its 
Historical Exercise of Its Section 310(b)(4) Discretion in the Common 
Carrier Sector

    41. The FCC already possesses the substantive expertise, 
practical experience and institutional resources to conduct on-the-
merits reviews of indirect foreign investment in broadcast 
licensees, based upon its extensive and ongoing experience under 
Section 310(b)(4) in reviewing transactions involving foreign 
investment in the parent companies of common carrier licensees. The 
Commission has considered and approved, denied or (where 
appropriate) conditioned numerous instances of indirect foreign 
investment in excess of the statutory benchmark. Furthermore, in 
doing so, the Commission has evaluated the potential costs and 
benefits of foreign investment to the telecommunications industry 
and American consumers, including with respect to competition and 
diversity.
    42. In exercising its Section 310(b)(4) responsibility with 
respect to common carrier licensees, the Commission has developed 
and refined the procedures and criteria generally applicable to the 
consideration of above-benchmark foreign investment in harmony with 
its recognition of the benefits of foreign investment in the U.S. 
telecommunications industry:

[[Page 17401]]

[GRAPHIC] [TIFF OMITTED] TN21MR13.106

    The Commission's consideration of proposed broadcast foreign 
investment could include the same factors that inform the exercise 
of its Section 310(b)(4) discretion with respect to common carrier 
licensees. For example, looking to whether the source country or 
countries enjoy ``close and friendly relations with the United 
States'' could help the Commission determine whether a proposed 
transaction implicates a national security concern.\34\
    43. In addition, today the Commission regularly refers requests 
for declaratory rulings under Section 310(b)(4) to Team Telecom, an 
interagency group consisting of representatives of the Department of 
Justice, the Federal Bureau of Investigation and the Department of 
Homeland Security, and grants those agencies de facto authority to 
disallow a transaction unless and until any national security 
concerns have been addressed.\35\ Alternatively, Team Telecom can, 
and often does, intervene on its own motion in FCC foreign ownership 
review proceedings, requesting that the FCC defer action on a 
transaction until such time as Team Telecom's national security 
analysis has been completed. Where the Team Telecom agencies have 
concerns about potential national security implications of a 
transaction, they typically require the transaction parties to enter 
into national security agreements as a condition of approval. These 
requirements, in turn, are relevant to the Commission's ultimate 
determination whether the proposed investment would disserve the 
public interest under Section 310(b)(4).\36\
    44. The Team Telecom process ensures that broadcast transactions 
proposing foreign investment in excess of the 25 percent benchmark 
would receive a second-line review that was not available at the 
time the Commission developed its presumption against such 
investment; indeed, under existing procedures, the FCC will not 
authorize foreign investment subject to a Section 310(b)(4) review 
until it has been authorized to do so by Team Telecom. The 
Commission itself reiterated earlier this month in the Forbearance 
Order that authorizing above-benchmark foreign investment does not 
impair national security because the Commission's Section 310(b)(4) 
policies and procedures provide Executive Branch expert agencies the 
opportunity to review proposed foreign ownership in the controlling 
U.S.-organized parents of common carrier licensees for any national 
security, law enforcement, or public safety issues.\37\
    45. The Commission's historical exercise of its statutory 
responsibility under Section 310(b)(4) with respect to common 
carrier licensees is doubly instructive. First, it demonstrates that 
the Commission already possesses the technical expertise and 
resources needed to review and analyze indirect foreign investment. 
Second, it confirms that the Commission is capable of exercising its 
ultimate discretion under Section 310(b)(4) in a manner that both 
serves the Act's fundamental public interest requirements and is 
cognizant of, and responsive to, the competitive dynamics of a 
flourishing and increasingly global telecommunications industry--all 
to the benefit of the U.S. telecommunications industry and American 
consumers.
    46. The Commission already is equally well equipped to review 
indirect foreign investment in broadcast licensees and can satisfy 
Congress's directive in Section 310(b)(4) by taking into 
consideration bedrock communications policy tenets such as promoting 
competition and fostering media diversity; by ensuring that the 
national security is protected and that no other public interest 
harms are likely to materialize; and by taking into consideration 
the acknowledged benefits of technological innovation, economic 
growth and job creation.

Notes and References

    \1\ Review of Foreign Ownership Policies for Common Carrier and 
Aeronautical Radio Licensees Under Section 310(b)(4) of the 
Communications Act of 1934, as Amended, Notice of Proposed 
Rulemaking, FCC 11-121 (rel. Aug. 9, 2011) (2011 NPRM), at para. 3.
    \2\ Market Entry and Regulation of Foreign-Affiliated Entities, 
Report and Order, 12 FCC Rcd 23891 (1995) (ECO Order), at para. 183.
    \3\ Fox Television Stations, Inc., 11 FCC Rcd 5714 (1995), at 
para. 21 (Fox II) (emphasis added).
    \4\ See, e.g., Radio Communication: Hearings on S. 3620 and S. 
5334 Before the House

[[Page 17402]]

Commerce Committee, 62nd Cong. 35-37 (Mar. 1, 1912).
    \5\ See Steven Waldman et al., The Information Needs of 
Communities (July 2011), at 73 (describing broadcast audience drift 
to cable, satellite, and the Internet.
    \6\ Kristen Purcell et al., Understanding the Participatory News 
Customer (March 2010), available at http://www.pewinternet.org/Reports/2010/Online-News.aspx.
    \7\ Pew Research Center, Project for Excellence in Journalism, 
2012 State of the News Media, available at http://stateofthemedia.org/ (2012 State of the Media).
    \8\ LinkTV, available on DirecTV and Dish Network, which brings 
satellite news from around the world to American households, Paul 
Wilner, Broadcasting a Global Sampler, The New York Times (Jan. 13, 
2008), available at http://query.nytimes.com/gst/fullpage.html?res=9D03E6DC1739F930A25752C0A96E9C8B63& 
pagewanted=all, provides a unique perspective on international news, 
current events, and diverse cultures, presenting issues not often 
covered in the U.S. media. About Link TV, available at http://www.linktv.org/about.
    \9\ ECO Order at paras. 190-94.
    \10\ Id. at para. 194.
    \11\ Id.
    \12\ Market Entry and Regulation of Foreign-Affiliated Entities, 
Notice of Proposed Rulemaking, 10 FCC Rcd 4884 (1995), at paras. 99-
101.
    \13\ See, e.g., GRC Cablevision, 47 FCC 2d 467, at para. 5 
(1974); Cable & Wireless, Inc. 10 FCC Rcd 13177, at para. 18 (1995) 
(We have concluded that concern about the effect of alien ownership 
is lessened when common carrier radio licenses are involved because 
they are `passive' in nature and there is no control over the 
content of the transmission.).
    \14\ National Security Council, The Comprehensive National 
Cybersecurity Initiative, available at http://www.whitehouse.gov/cybersecurity/comprehensive-national-cybersecurity-initiative.
    \15\ Prepared Remarks of FCC Chairman Julius Genachowski, 
Bipartisan Policy Center, Washington, DC, Feb. 22, 2012, available 
at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-312602A1.pdf.
    \16\ Forbearance Order at para. 15.
    \17\ Id.
    \18\ Ambassador Kirk Announces Results of Annual 1377 Review, 
Press Release, Office of the United States Trade Representative 
(April 2010), available at http://www.ustr.gov/about-us/press-office/press-releases/2010/april/ambassador-kirk-announces-results-annual-1377-review.
    \19\ 2011 NPRM at para. 2.
    \20\ See Cellco Partnership d/b/a/Verizon Wireless and Atlantis 
Holdings LLC, 23 FCC Rcd 17444, at paras. 6-8 (2008).
    \21\ Verizon Wireless Facts-at-a-Glance, available at http://aboutus.verizonwireless.com/ataglance.html.
    \22\ AT&T Inc. and Deutsche Telekom AG, Staff Analysis and 
Findings, 26 FCC Rcd 1184, at para. 8 (November 2011).
    \23\ Id. at para. 22.
    \24\ Global Crossing Ltd., 18 FCC Rcd 20301 (2003).
    \25\ Level 3 Company History, available at http://www.level3.com/en/about-us/company-information/company-history/.
    \26\ Space Station System Licensee, Inc., 17 FCC Rcd 2271 
(2002); Iridium Holdings LLC and Iridium Carrier Holdings LLC, 24 
FCC Rcd 10725 (2009).
    \27\ Iridium Announces Fourth-Quarter and Full-Year 2011 
Results, Press Release (Mar. 6, 2012), available at http://investor.iridium.com/releasedetail.cfm?ReleaseID=654525; Elizabeth 
Woyke, Satellite Phone Surge, Forbes.com (Sept. 2008), available at 
http://www.forbes.com/2008/09/16/satellite-phones-disaster-techsolutions08-personal-cx_ew_0916satphone.html.
    \28\ Forbearance Order at para. 3.
    \29\ 2010 Quadrennial Regulatory Review, Reply Comments of the 
Minority Media and Telecommunications Council, MB Docket No. 09-182, 
at 4 (filed Jul. 26, 2010).
    \30\ See Advisory Committee on Diversity, Recommendation on 
Adoption of a Declaratory Ruling on Section 310(b)(4) Waivers (Dec. 
10, 2004), available at http://www.fcc.gov/DiversityFAC/adopted-recommendations/ForeignOwnershipFinal.doc; see also 2006 Quadrennial 
Regulatory Review, Initial Comments of the Diversity and Competition 
Supporters in Response to the Second Further Notice of Proposed 
Rulemaking, MB Docket No. 06-121, at 3, 37-39 (filed Oct. 1, 2007).
    \31\ 2012 State of the News Media.
    \32\ See, e.g., Annual Assessment of the Status of Competition 
in the Market for the Delivery of Video Programming, FCC 07-207 
(2009).
    \33\ Prepared Remarks of FCC Chairman Julius Genachowski, NAB 
Show 2012, Las Vegas, Nevada, April 16, 2012, available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0417/DOC-313605A1.pdf
    \34\ GRC Cablevision at para. 5.
    \35\ See FCC Homeland Security Liaison Activities (Mar. 2012), 
available at http://transition.fcc.gov/pshs/docs/liaison.pdf.
    \36\ See, e.g., Verizon Communications, Inc., 22 FCC Rcd 6195 
(2007); Guam Cellular and Paging, Inc. and Docomo Guam Holdings, 
Inc., 21 FCC Rcd 13580 (2006). Furthermore, the review process 
administered by the Committee on Foreign Investment in the United 
States (CFIUS) ensures that foreign investment in all market sectors 
is thoroughly screened for any detrimental national security 
implications. Although this process is voluntary, CFIUS is widely 
used and provides statutory certainty to investors in the form of 
firm timelines for review and ruling.
    \37\ Forbearance Order at para. 20.
    47. Procedural Matters: The proceeding this Notice initiates 
shall be treated as a ``permit-but-disclose'' proceeding in 
accordance with the Commission's ex parte rules.\1\ Persons making 
ex parte presentations must file a copy of any written presentation 
or a memorandum summarizing any oral presentation within two 
business days after the presentation (unless a different deadline 
applicable to the Sunshine period applies). Persons making oral ex 
parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part 
of the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such 
data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and 
must be filed consistent with rule 1.1206(b). In proceedings 
governed by rule 1.49(f) or for which the Commission has made 
available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be 
filed in their native format (e.g., .doc, .xml, .ppt, searchable 
.pdf). Participants in this proceeding should familiarize themselves 
with the Commission's ex parte rules.
---------------------------------------------------------------------------

    \1\ 47 CFR para. 1.1200 et seq.
---------------------------------------------------------------------------

    48. Comment Information: Pursuant to Sec. Sec.  1.415 and 1.419 
of the Commission's rules, 47 CFR 1.415, 1.419, interested parties 
may file comments and reply comments on or before the dates 
indicated on the first page of this document. Comments may be filed 
using: (1) The Commission's Electronic Comment Filing System (ECFS), 
(2) the Federal Government's eRulemaking Portal, or (3) by filing 
paper copies. See Electronic Filing of Documents in Rulemaking 
Proceedings, 63 FR 24121 (1998).
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov.
    [ssquf] For ECFS filers, if multiple docket or rulemaking 
numbers appear in the caption of this proceeding, filers must 
transmit one electronic copy of the comments for each docket or 
rulemaking number referenced in the caption. In completing the 
transmittal screen, filers should include their full name, U.S. 
Postal Service mailing address, and the applicable docket or 
rulemaking number. Parties may also submit an electronic comment by 
Internet email. To get filing instructions, filers should send an 
email to [email protected], and include the following words in the body 
of the message ``get form.'' A Sample form and directions will be 
sent in response.
    [ssquf] Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this 
proceeding, filers must submit two additional copies for each 
additional docket or rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or

[[Page 17403]]

by first-class or overnight U.S. Postal Service mail. All filings 
must be addressed to the Commission's Secretary, Office of the 
Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters 
at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing 
hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held 
together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal 
Service Express Mail and Priority Mail) must be sent to 9300 East 
Hampton Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington DC 20554.
    [ssquf] People with Disabilities: To request materials in 
accessible formats for people with disabilities (braille, large 
print, electronic files, audio format), send an email to 
[email protected] or call the Consumer & Governmental Affairs Bureau at 
202-418-0530 (voice), 202-418-0432 (tty).


Federal Communications Commission.
Thomas Horan,
Chief of Staff, Media Bureau.
[FR Doc. 2013-06548 Filed 3-20-13; 8:45 am]
BILLING CODE 6712-01-P