[Federal Register Volume 90, Number 118 (Monday, June 23, 2025)]
[Proposed Rules]
[Pages 26684-26721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11477]
[[Page 26683]]
Vol. 90
Monday,
No. 118
June 23, 2025
Part II
Federal Communications Commission
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47 CFR Part 1
Review of Foreign Ownership Policies for Broadcast, Common Carrier and
Aeronautical Radio Licensees; Proposed Rule
Federal Register / Vol. 90 , No. 118 / Monday, June 23, 2025 /
Proposed Rules
[[Page 26684]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[GN Docket No. 25-149; FCC 25-26; FR ID 294037]
Review of Foreign Ownership Policies for Broadcast, Common
Carrier and Aeronautical Radio Licensees
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission or FCC) adopted a Notice of Proposed Rulemaking (NPRM), in
which it seeks comment on or proposes updates to set clear expectations
about the Commission's review in both common carrier and broadcast
licensees and on other updates that apply only to broadcast licensees.
With regard to common carrier licensees, the NPRM seeks comment on or
proposes to amend the rules to codify existing policy regarding which
entity is the controlling U.S. parent; codify the Commission's advance
approval policy regarding certain deemed voting interests; require
identification of trusts and trustees; extend the remedial procedures
and methodology to privately held companies; add requirements regarding
the contents of remedial petitions; require the filing of amendments as
a complete restatement to petitions for declaratory ruling; and clarify
U.S. residency requirements. For broadcast licensees only, the NPRM
seeks comment on how the Commission should process applications filed
by a broadcast licensee during the pendency of a remedial petition for
declaratory ruling; and other foreign ownership considerations related
to processing applications for NCE and LPFM stations. The NPRM proposes
to make it easier for entities to understand and navigate the FCC's
foreign ownership rules. The FCC believes that this proceeding will
avoid inconsistent outcomes; reduce costs; and facilitate the
Commission's public interest analysis.
DATES: Comments may be filed on or before July 23, 2025, and reply
comments may be filed on or before August 22, 2025. Written comments on
the Paperwork Reduction Act proposed information collection
requirements must be submitted by the public, Office of Management and
Budget (OMB), and other interested parties on or before August 22,
2025.
ADDRESSES: You may submit comments, identified by GN Docket No. 25-149,
by any of the following methods:
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.
Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
Filings can be sent by hand or messenger delivery, by
commercial courier, or by the U.S. Postal Service. All filings must be
addressed to the Secretary, Federal Communications Commission.
Hand-delivered or messenger-delivered paper filings for
the Commission's Secretary are accepted between 8:00 a.m. and 4:00 p.m.
by the FCC's mailing contractor at 9050 Junction Drive, Annapolis
Junction, MD 20701. All hand deliveries must be held together with
rubber bands or fasteners. Any envelopes and boxes must be disposed of
before entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Drive,
Annapolis Junction, MD 20701.
Filings sent by U.S. Postal Service First-Class Mail,
Priority Mail, and Priority Mail Express must be sent to 45 L Street
NE, Washington, DC 20554.
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 and Governmental Affairs Bureau at (202) 418-0530.
FOR FURTHER INFORMATION CONTACT: Fara Mohsenikolour, Telecommunications
and Analysis Division, Office of International Affairs, at
[email protected] or (202) 418-1429. For additional
information concerning the Paperwork Reduction Act (PRA) information
collection requirements contained in this document, contact Cathy
Williams at 202-418-2918, or via the Internet at
[email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
and Notice of Proposed Rulemaking (NPRM), GN Docket No. 25-149; FCC 25-
26, adopted on April 28, 2025, and released on April 29, 2025. The full
text of this document is available for public inspection and copying
via ECFS at http://apps.fcc.gov/ecfs and the FCC's website at https://docs.fcc.gov/public/attachments/FCC-25-26A1.pdf. Documents will be
available electronically in ASCII, Microsoft Word, and/or Adobe
Acrobat. Alternative formats are available for people with disabilities
(Braille, large print, electronic files, audio format), by sending an
email to [email protected] or calling the Commission's Consumer and
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432
(TTY).
Initial Paperwork Reduction Act of 1995 Analysis. This NPRM
proposes new or modified information collection requirements. The
Commission, as part of its continuing effort to reduce paperwork
burdens and pursuant to the Paperwork Reduction Act of 1995, Public Law
104-13, invites the general public and the Office of Management and
Budget (OMB) to comment on these information collection requirements.
In addition, pursuant to the Small Business Paperwork Relief Act of
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific
comment on how we might further reduce the information collection
burden for small business concerns with fewer than 25 employees.
Providing Accountability Through Transparency Act. Consistent with
the Providing Accountability Through Transparency Act, Public Law 118-
9, a summary of this document will be available on https://www.fcc.gov/proposed-rulemakings.\1\
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\1\ 5 U.S.C. 553(b)(4). The Providing Accountability Through
Transparency Act, Public Law 118-9 (2023), amended section 553(b) of
the Administrative Procedure Act.
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Synopsis
I. Notice of Proposed Rulemaking
In this NPRM, we propose or seek comment on updates to set clear
expectations about the Commission's review under section 310(b) of the
Act of foreign investment in both common carrier and broadcast
licensees and on other updates that apply only to broadcast licensees.
Additionally, this NPRM seeks comment on other opportunities to improve
the foreign ownership rules or ways we can reduce regulatory burdens,
including whether there are any service-specific differences that would
warrant alternative approaches for particular categories of licensees.
Through these efforts, we strive to increase the likelihood of more
fulsome initial submissions from petitioners to reduce inefficient
follow-up discussions between Commission staff and petitioners to
ensure compliance with section 310(b) of the Act.
[[Page 26685]]
A. Common Carrier and Broadcast Licensees
Below, as applied to both common carrier and broadcast licensees,
we propose to codify certain policies and practices with respect to the
Commission's foreign ownership rules for common carrier and broadcast
licensees subject to 310(b) of the Act and seek comment on possible
approaches to other aspects of the rules. This NPRM seeks comment on or
proposes to amend the rules to: (1) codify existing policy regarding
which entity is the controlling U.S. parent; (2) codify the
Commission's advance approval policy regarding certain deemed voting
interests; (3) require identification of trusts and trustees; (4)
extend the remedial procedures and methodology to privately held
companies; (5) add requirements regarding the contents of remedial
petitions; (6) require the filing of amendments as a complete
restatement to petitions for declaratory ruling; and (7) clarify U.S.
residency requirements.
1. Controlling U.S. Parent Definition
To receive more fulsome and complete initial petitions, reduce
additional submissions by the petitioners, and to streamline
processing, we propose to define the controlling U.S. parent in our
rules. In the 2016 Foreign Ownership Report and Order, the Commission,
among other things, clarified the citizenship and filing requirements
for obtaining prior approval from the Commission for foreign ownership
in the controlling U.S. parent of a licensee that would exceed the 25
percent benchmarks in section 310(b)(4).\2\ Although the Commission
adopted definitions for several terms related to its review of foreign
ownership under section 310(b), including ``public company,''
``subsidiary,'' and ``control,'' the Commission did not adopt a
definition of ``controlling U.S. parent'' at that time. Since 2016, the
overwhelming majority of petitions for declaratory ruling submitted
under section 310(b)(4) have identified a controlling U.S. parent at
the lowest permissible level in the vertical ownership chain while
other petitions submitted have identified an entity higher up in the
vertical ownership chain.\3\ These different approaches to identifying
the controlling U.S. parent often result in considerable additional
processing time to ensure that the petitioner has properly identified
the controlling U.S. parent of the licensee(s); to assess a licensee's
vertical chain of control; to clarify ownership calculations; and/or to
submit any corrections in the docket.
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\2\ See 47 CFR 1.5000; see generally 2016 Foreign Ownership
Report and Order.
\3\ 47 U.S.C. 310(b)(4).
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Based on this experience, we propose to define the controlling U.S.
parent as ``the first controlling entity organized in the United States
that is above the licensee(s) in the vertical chain of control and does
not itself hold a license subject to [S]ection 310(b).'' We believe
that adding a definition to our rules would benefit both the
petitioners and the Commission for a few reasons. Our proposed
definition would provide regulatory certainty to petitioners in
determining how to appropriately factor in the controlling U.S. parents
in their foreign ownership analyses to comply with section 310(b) of
the Act and the Commission's rules. We believe that it would also
reduce regulatory burdens by minimizing the need for staff to seek
supplemental information. For staff and petitioners alike, this could
potentially reduce the time and effort required to correctly identify
the controlling U.S. parent, an exercise that can be burdensome
depending on the complexity of the vertical ownership chain.
Further, we believe that the proposed definition, which codifies
existing practice, would provide more certainty for petitioners and the
ability to utilize the flexibilities provided for petitioners in
Sec. Sec. 1.5004(c)(1) (insertion of new controlling foreign organized
company) and 1.5004(d)(1) (insertion of new non-controlling foreign
organized company) of the Commission's rules. For example, with this
clarity, under Sec. 1.5004(c)(1), petitioners could confidently seek
to insert within the vertical chain of control an additional
controlling foreign-organized company immediately above the controlling
U.S. parent without obtaining a new declaratory ruling. Section
1.5004(c)(1) allows this if the new foreign-organized company(ies) is
``under 100 percent common ownership and control with the foreign
investor approved in the declaratory ruling.'' \4\ We also believe the
proposed definition would clarify how licensees can comply with the
Commission's foreign ownership rules in Sec. Sec. 1.5001(e) through
(f) (disclosable interest holders), 1.5001(i) (specific approvals), and
1.5001(k) (advance approval)--which all rely on the term controlling
U.S. parent.\5\ We believe that the proposed definition will not affect
any requirements under section 310(b)(4) of the Act or the Commission's
foreign ownership rules.
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\4\ In this instance, the licensee must notify the Commission of
the insertion of the new entity, either by filing a letter to the
Chief, Office of International Affairs, or by filing a pro forma
notification. 47 CFR 1.5004(c)(2).
\5\ 47 CFR 1.5001(e) through (f), (i), and (k).
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We seek comment on our proposal, including our expectations
regarding its effects. Would our proposal reduce burdens on staff and
petitioners, as we expect? If not, what, if any, types of burdens would
result, and would the benefits of including the proposed definition in
the rules outweigh any burdens? We propose to apply this definition to
all section 310(b) petitioners regardless of size or revenue but seek
comment on whether there are certain considerations that should be
noted for small entities. Would the proposed definition result in a
more streamlined petition and review process, as we expect, and if so
in what ways? Does this definition provide sufficient clarity for
petitioners and the public while also allowing petitioners flexibility
in structuring their ownership chains? Would the proposed definition
impact other foreign ownership rules, and if so, how? Should the
Commission instead define the term controlling U.S. parent differently,
and if so, how, and what benefits and burdens would the proposed
alternative present? Should the Commission decline to define the term
``controlling U.S. parent'' at this time and if so, why would that be
preferable?
2. Deemed Voting Interest and Advance Approval
We propose to amend our rules to clarify how the Commission treats
limited partners and members of limited liability companies (LLC
members) that have deemed voting interests when considering a request
for advance approval in a section 310(b) petition. Under the
Commission's rules, foreign individuals and/or entities that receive
specific approval pursuant to Sec. 1.5001(i) may also receive advance
approval pursuant to Sec. 1.5001(k) for a future increase of their
interests in the controlling U.S. parent. The advance approval rules
provide flexibility for the foreign investors in a controlling U.S.
parent to increase their interests at some future time up to the
approved amount, eliminating the need to file a section 310(b) petition
at the time of a future foreign investment that increases these
interests. We propose to amend the foreign ownership rules to codify
existing Commission practice to provide petitioners greater certainty
concerning section 310(b) petitions involving limited partners and LLC
members that have deemed voting interests. The proposed language would
state explicitly that a finding of deemed voting interest of 50 percent
or more is
[[Page 26686]]
not a finding of control in and of itself. We also propose to amend the
rule for advance approval, 47 CFR 1.5001(k), to state that a foreign
individual or entity that has a deemed voting interest of 50 percent or
greater voting interest in the controlling U.S. parent, but that does
not have de jure or de facto control of the controlling U.S. parent,
may request advance approval for the foreign individual or entity to
increase its interests, at some future time, up to any non-controlling
amount not to exceed 49.99 percent equity and/or voting interest. We
seek comment on this approach.
Specific Approval. Section 1.5001(i) of the Commission's rules
requires petitioners to submit the names of individuals and entities
that hold or would hold a greater than 5 percent equity and/or voting
interest in the controlling U.S. parent (in certain circumstances, 10
percent), to request specific approval from the Commission to hold
these interests at these percentage levels. In determining which
foreign individuals and/or entities require specific approval under
Sec. 1.5001(i) of the Commission's rules, the Commission assesses the
deemed voting interests of limited partners and LLC members. Although
deemed voting interests are not direct voting rights, for purposes of
specific approval requests submitted by petitioners under Sec.
1.5001(i), the Commission treats deemed voting interests as direct
voting rights. Entities with deemed voting interests under Sec.
1.5001(i) may have less than a 5 percent equity interest and would not
otherwise be subject to specific approval requirements. However, due to
the way partnerships and LLCs are structured, such entities can be
involved in the management of the partnership or LLC even with a less
than 5 percent equity interest. Consequently, the Commission assesses
the deemed voting interests for individuals or entities as part of the
Commission's public interest analysis for section 310(b)(4) petitions.
Advance Approval. Section 1.5001(k) of the Commission's rules
allows petitioners to request advance approval for named individuals or
entities that have requested specific approval (under Sec. 1.5001(i))
to increase their interests in the controlling U.S. parent at some
future time. Individuals or entities that do not have actual control
over the controlling U.S. parent may only request advance approval of
up to a non-controlling 49.99 percent equity and/or voting interest.
The Commission does not use deemed voting interests in determining what
advance approval a petitioner may request for an individual or entity
that obtains specific approval. The Commission's rules regarding
advance approval do not specifically address deemed voting interests.
The Commission staff have received requests for advance approval for
individuals or entities that may have 50 percent or greater deemed
voting interests, but do not have de jure or de facto control over the
controlling U.S. parent. Staff receive questions about these topics
given their interrelated concepts and individuals and/or entities
involved. We believe that our clarification in our rules here would
ensure petitioners understand the requirement for advance approval,
would facilitate provision of more appropriate ownership information,
and would reduce processing time for staff and petitioners.
Insulation and Determining Voting Interests. In determining the
voting interests held by limited partners and LLC members for purposes
of determining their deemed voting interests, the Commission assesses
whether the interests held in the limited partnership and LLC are
insulated.\6\ Section 1.5003 of the Commission's rules sets out the
criteria for determining if such interests are to be considered
insulated or not.\7\ These criteria look at whether the limited partner
or LLC member is prohibited by the operative agreement from active
engagement in the management of the partnership or LLC and in fact is
not actively involved in management, and whether the rights afforded by
the partnership agreement are limited to usual and customary investor
protections.\8\ Usual and customary investor protections include such
things as the power to prevent the sale of all or substantially all of
the assets of the limited partnership or LLC or a voluntary bankruptcy
or liquidation. If the limited partnership or LLC is considered to be
insulated under the Commission's rules, the limited partner or LLC
member is deemed to hold a voting interest equal to its equity
interest. On the other hand, if the limited partnership or LLC is
determined to be uninsulated, the limited partner or LLC member is
deemed to hold the same voting interest as the limited partnership or
LLC holds in the next lower tier in the licensee's vertical ownership
chain. If the limited partnership or LLC holds its interest directly in
the controlling U.S. parent, it is deemed to hold a 100 percent voting
interest.
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\6\ We note that, in the broadcast services, insulation of
limited partnership, limited liability partnership, and limited
liability company interests for applicants and licensees shall be
determined in accordance with note 2(f) of Sec. 73.3555 of the
Commission's rules. See id. 1.5000(i)(1); see also id. 73.3555, note
2.
\7\ 47 CFR 1.5003.
\8\ The Commission presumes that a general partner has a
controlling interest in the partnership and is deemed to hold an
uninsulated interest in the partnership. 47 CFR 1.5001(e), (f), and
Notes.
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Deemed Voting Interest and Control. In determining how much
indirect foreign ownership constitutes control over a licensee, the
Commission distinguishes between deemed voting interests and actual
voting interests. As stated above, the deemed voting interest is only
used to determine which entities require specific approval, and for
which advance approval may be requested. A finding of a deemed voting
interest of 50 percent or more is not a finding of de jure or de facto
control of the controlling U.S. parent. Rather, it is an indication of
the potential influence of the limited partner or LLC member in the
partnership or LLC. The Commission has long found that an owner with a
greater that 5 percent equity and/or voting interest may have the
ability to influence a licensee and thus the foreign ownership rules
have set a 5 percent equity or voting ownership level (in certain
circumstances, 10 percent) as the benchmark for when a foreign
individual or entity is required to obtain specific approval for its
ownership interest in the controlling U.S. parent.
While under certain circumstances, influence can confer control,
influence and control are not the same. Under the Commission's rules, a
disclosure of deemed voting interest(s) does not constitute a
presumptive conclusion about control. In assessing whether an
individual or entity does or does not control a licensee, the
Commission examines de jure and de facto control. De jure control
(control as a matter of law) is typically determined by examining
whether a shareholder owns or legally controls more than 50 percent of
the voting shares of a corporation. De facto control (control in fact)
is typically determined by examining whether, as a matter of fact, a
minority shareholder is able to determine some or all of the licensee's
core policies and operations or dominate corporate affairs. In the
broadcast and common carrier contexts, a variety of different factors
have been found to be relevant in determining whether a person or
entity has de facto control over a company.
Deemed Voting Interest and Influence. The Commission utilizes
deemed voting interests to measure foreign influence separate from its
analysis of whether a particular investor has actual decision-making
power. As such, a determination that a foreign investor has deemed
voting interests in the controlling U.S.
[[Page 26687]]
parent does not necessarily mean that such foreign investor also has de
jure or de facto control of the controlling U.S. parent. When the
Commission reviews a section 310(b) petition and there is a deemed 100
percent voting interest directly in a controlling U.S. parent that is
organized as a partnership or LLC, the Commission's practice has been
to permit a petitioner to request advance approval only up to a non-
controlling 49.99 percent equity and/or voting interest for that
entity. Similarly, when there is a deemed 50 percent or more voting
interest indirectly in a controlling U.S. parent, the Commission's
practice has been to permit a petitioner to request advance approval
only up to a non-controlling 49.99 percent voting interest for that
entity.
The exception to this, however, is when the Commission determines
that there is an actual controlling interest in which case the
Commission would permit a petitioner to request advance approval for up
to a 100 percent voting interest. As noted, a finding of a specific
deemed voting interest of 50 percent or greater is not the same as a
finding of control, and therefore entities that do not already hold an
actual controlling interest and seek to exceed the 49.99 percent equity
and/or voting interest threshold in the future must file a new petition
for declaratory ruling and seek prior Commission approval to hold a
controlling interest in the applicant, licensee, or controlling U.S.
parent. Were the Commission to treat deemed voting interests of 50
percent or greater the same as actual controlling interests, the
Commission would need to require more disclosures from the licensee,
initiate review of the interests, potentially refer the application to
the Committee for national security review, and determine whether the
transfer of control of the licensee was in the public interest. The
Commission's current practice provides flexibility to permit foreign
minority shareholders to increase their interest at some future time
after the grant of the declaratory ruling, while minimizing burdens
associated with disclosing information at a level required of a
controlling interest holder.
As noted above, we propose to amend our rules to codify our
existing Commission practice of how the Commission will analyze
petitions involving limited partners and LLC members that have deemed
voting interests. We seek comment on this approach. Would the proposal
reduce burdens on petitioners, including small entities, improve
transparency, and add clarity to our rules? What additional benefits
may arise from this approach? Should the Commission decline to amend
the rules at this time or consider an alternative approach, and if so,
how would these options affect petitioners, including small business
entities?
3. Trust and Trustees Requirements
We propose to amend our rules to specify the information that
petitioners must submit in section 310(b) petitions concerning trusts
and trustees. The changes to the rules would facilitate more fulsome
submissions in the initial petition and reduce inefficient follow-up
discussions between staff and petitioners to obtain the necessary
information. Under Sec. 1.5001(e) and (f) of the rules, a petitioner
must disclose trusts, as well as any other entity or individual, U.S.
or foreign, as a disclosable interest holder, if the entity or
individual holds, or would hold, a direct or indirect interest of ten
percent or more, or a controlling interest, in the controlling U.S.
parent of the petitioning common carrier applicant or licensee. In the
broadcast context, the petitioner must utilize the attribution rules
and policies applicable to broadcasters to determine the U.S. and
foreign interests that must be disclosed in a section 310(b)(4)
petition.
Another requirement in a petition is that with regard to foreign
equity and/or voting interests that are more than 5 percent, both
broadcast and common carrier petitioners must also request specific
approval for such interests in a controlling U.S. parent of the
petitioning applicant or licensee.\9\ In particular, specific approval
must be requested for a foreign trust or other entity that is organized
in a foreign country, or an individual that is a citizen of a foreign
country, if such entity or individual ``holds, or would hold, directly
and/or indirectly, more than 5 percent of the equity and/or voting
interests, or a controlling interest, in the controlling U.S. parent,''
in the petitioning common carrier applicant or licensee, unless the
foreign investment is exempt. For any foreign entity or individual for
which the petitioner requests specific approval under Sec. 1.5001(i)
of the Commission's rules,\10\ the petitioner may request advance
approval ``to increase its direct and/or indirect equity and/or voting
interests in the controlling U.S. parent of the'' \11\ petitioning
applicant/licensee at some future point above the amount requested
under paragraph (i) without needing to file another petition with the
Commission. We also note that Sec. 1.5004(f)(2) prohibits parties from
using a trust ``as part of a plan or scheme to evade the application of
the Commission's rules or policies under [S]ection 310(b)'' and
subjects violators to enforcement action by the Commission.
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\9\ For petitions filed pursuant to 47 U.S.C. 310(b)(3) and 47
CFR 1.5000(a)(2), with regard to foreign equity and/or voting
interests that are more than 5 percent, common carrier petitioners
must ``request specific approval for any foreign individual, entity,
or group of such individuals or entities that holds, or would hold,
directly, and/or indirectly through one or more intervening U.S.-
organized entities that do not control the applicant or licensee,
more than 5[%] of the equity and/or voting interests in the
applicant or licensee unless the foreign investment is exempt under
paragraph (i)(3).'' 47 CFR 1.5001(i)(2).
\10\ 47 CFR 1.5001(i).
\11\ 47 CFR 1.5001(k) (explaining that the petitioner may
request advance approval of up to a 49.99 percent non-controlling
interest for a foreign entity or individual that holds or would hold
a non-controlling interest as a result of consummation of any
transactions described in the petition, or up to a 100 percent
controlling interest for a foreign entity or individual that holds
or would hold a controlling interest as a result of consummation of
any transactions described in the petition). For petitions filed
pursuant to 47 U.S.C. 310(b)(3) and 47 CFR 1.5000(a)(2), the
petitioner may seek advance approval to increase its direct and/or
indirect equity and/or voting interests in the petitioning common
carrier applicant/licensee at some future point above the amount
requested under paragraph (i) without needing to file another
petition with the Commission. 47 CFR 1.5001(k)(2).
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We propose to amend our rules to conform with policy and practice
that trustees must be disclosed under Sec. 1.5001(e), (f), and (i), as
applicable, which currently require disclosure of interests held in
trust. To analyze whether a particular trust holds an equity and/or
voting interest in the controlling U.S. parent for purposes of
compliance with section 310(b), the Commission staff requires specific
information regarding the identity of trustees of a trust. Where this
information is not provided in the petition, staff require petitioners
to submit the information through supplemental filings. To reduce the
costs and burdens associated with additional requests when the
petitioner fails to provide trustee information in an initial petition,
we propose to codify Commission practice by stating that the petitioner
must disclose both a trust and its trustee(s) under Sec. 1.5001(e)
and/or (f). We believe that our proposal would provide clarity to
petitioners about the type of information required for trusts and
trustees under the rules, streamline the filing process for
petitioners, and enable the Commission to more efficiently review
petitions filed pursuant to Sec. 1.5000(a). We seek comment on the
proposed approach. Should the Commission decline to amend the rules at
this time or consider
[[Page 26688]]
an alternative approach, and if so, how would these options affect
petitioners, including small business entities?
4. Extending the Methodology and Remedial Process to Privately Held
Entities
To address the increasingly complex ownership structures of
privately held companies, we seek to revisit whether we should extend
certain calculation methods and safe harbors afforded to U.S. public
companies in the 2016 Foreign Ownership Report and Order to privately
held companies. Specifically, we seek comment on extending the
Commission's methodology for determining foreign ownership and the
remedial process for inadvertent non-compliance with the foreign
ownership benchmarks to privately held entities for all services
subject to section 310(b)(4). Currently, the methodology for
determining foreign ownership and the remedial process for inadvertent
non-compliance with section 310(b)(4) are limited to U.S. public
companies. The Commission reasoned that privately held companies do not
face the same difficulties in identifying interest holders and that
they have greater flexibility to enact controls--such as restrictions
on the transfer of ownership interests--necessary to ensure continued
compliance with section 310(b). However, the Commission indicated that
it would allow private companies to use the revised calculation
methodology that is applicable to U.S. publicly traded companies on a
case-by-case basis, e.g., ``if in a particular case, there are
significant impediments that prevent a privately held entity from
conducting an up-the-chain analysis to ascertain all of its indirect
ownership interests, including non-voting equity interests held by
remote, insulated investors.''
Since the 2016 Foreign Ownership Report and Order, the Commission
has observed increasingly complex ownership structures of its
licensees, including both U.S. public companies and privately held
companies. Notably, licensees whose controlling U.S. parents are
privately held companies, report that the licensees experience similar
issues as public companies in identifying all disclosable interest
holders, particularly if the ``up-the-chain'' ownership structure
includes entities, such as equity funds, that may themselves either be
public companies or have diverse ownership interests (including other
funds). These licensees also indicate that they have experienced
difficulty in controlling or preventing changes in these funds, even
though the entities are privately held. While current Commission policy
allows for some flexibility in calculating ownership percentages on a
case-by-case basis, absent the safe harbor available to publicly traded
companies, privately held companies are subject to potential
enforcement action if there is an inadvertent violation of the foreign
ownership benchmarks.\12\
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\12\ See 47 CFR 1.5004(f)(3) and (4).
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Allowing privately held companies to use the methodology that is
applicable to U.S. publicly traded companies in the calculation of
ownership percentages on a case-by-case basis has provided relief to
privately held companies in such situations in prior proceedings.\13\
In our experience, the case-by-case approach provides effective relief
when warranted without unduly impacting our ability to ensure
compliance with section 310(b). Nevertheless, we seek comment on
whether we should adopt a methodology, similar to that applicable to
U.S. publicly traded companies.\14\ Commenters should explain the basis
for their views. What distinctions between public and private companies
are relevant to our analysis and how should we account for these
distinctions? What are the benefits and burdens of continuing to
utilize a case-by-case approach versus adopting a more formal
methodology?
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\13\ See, e.g., Applications of LightSquared Subsidiary LLC,
Debtor-in-Possession, and LightSquared Subsidiary LLC For Consent to
Assign and Transfer Licenses and Other Authorizations and Request
for Declaratory Ruling on Foreign Ownership, IB Docket No. 15-126,
Memorandum Opinion and Order and Declaratory Ruling, 30 FCC Rcd
13988, 13999-14002, paras. 23-27 (2015) (permitting Fortress, a
widely held, publicly traded limited liability company to be treated
in the same manner as a corporation for purposes of calculating
foreign voting interests in the licensee through Fortress).
\14\ 47 CFR 1.5000(e).
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We also seek comment on whether we should extend the Commission's
remedial process, currently available only to publicly held companies,
to privately held companies to allow for the cure of inadvertent non-
compliance with the foreign ownership statutory benchmarks with respect
to any service subject to section 310(b). When a publicly held licensee
determines that it has inadvertently exceeded the statutory foreign
ownership benchmarks or its previously authorized foreign ownership
levels, it may remediate its noncompliance in one of two ways: (1) the
licensee can file a remedial petition for declaratory ruling seeking
Commission approval of the increased foreign ownership; or (2) it can
eliminate the excess foreign ownership. The Commission has stated that
in either case, it does not, as a general rule, expect to take
enforcement action related to the licensee's non-compliance with the
foreign ownership rules, provided that the licensee takes two actions.
First, the licensee submits a letter to the Commission no later than 10
days after learning of the investment(s) that rendered the licensee
non-compliant, that states the licensee's intention to file a petition
for declaratory ruling or, alternatively, take remedial action to come
into compliance within 30 days of the date the licensee learned of the
non-compliant foreign interest(s). Second, the licensee's petition (or
a letter notifying the relevant Bureaus and Offices that the non-
compliance has been timely remedied) demonstrates that the licensee's
non-compliance with the section 310(b)(4) benchmarks or the terms of
the licensee's existing section 310(b)(4) declaratory ruling, was due
solely to circumstances beyond the licensee's control that were not
reasonably foreseeable to or known by the licensee with the exercise of
the required due diligence.
Should we amend our rules to provide that the remedial process is
available to all privately held companies? Or should we decline to
amend the rules and continue with the case-by-case basis, consistent
with the current approach regarding privately held companies' use of
the calculation methodology that is applicable to U.S. publicly traded
companies? What distinctions between public and private companies are
relevant to our analysis and how should we account for these
distinctions? We expect that this process would conserve public and
private resources by minimizing the need for enforcement action. If we
extend the remedial process to privately held entities, we propose that
any new approach should apply to all services subject to section
310(b). Would extending the remedial process and, in particular,
refraining from enforcement action if the licensee follows all
requirements, encourage greater self-reporting of newly discovered or
inadvertent foreign ownership in excess of the statutory benchmarks and
greater compliance with the Commission's rules? Would it result in a
more streamlined remediation process? We seek comment on the expected
benefits of extending the remedial process to privately held companies,
as well as any burdens that may arise in our implementation of this
proposal. Would the benefits of this proposal outweigh the potential
burdens?
[[Page 26689]]
5. Contents of Remedial Petitions
We propose to amend a specific subsection of our rules to state
what information petitioners must include in a remedial petition for
declaratory ruling under Sec. 1.5004(f)(3) through (4) when seeking to
remedy non-compliance with the existing requirements for foreign
ownership benchmarks with respect to any service subject to section
310(b). We believe our proposed rule amendment would promote more
efficient processing and reduce delays resulting from confusion among
petitioners about what information is required for remedial petitions
for declaratory ruling. Our rules currently require that remedial
petitions for declaratory ruling filed under section 310(b) of the Act
must be filed as new petitions for declaratory ruling and set forth the
required contents of petitions for declaratory ruling. Our proposed
rule amendment would state explicitly that remedial petitions must
contain all of the information required for an initial petition for
declaratory ruling and not just the information related to the newly
discovered non-compliant interest(s). Under a remedial petition, a
petitioner seeks Commission approval of the controlling U.S. parent's
above-benchmarks aggregate foreign ownership interests, or approval of
any particular foreign equity and/or voting interests that require
specific approval under the licensee's existing section 310(b)(4)
declaratory ruling.
When an eligible licensee opts to file a remedial petition for
declaratory ruling under Sec. 1.5004(f)(3) or (f)(4) of the
Commission's rules to address an instance of non-compliance with the
Commission's foreign ownership rules, the Commission has required that
the remedial petition contain all the information required for an
initial petition and not just the information related to the non-
compliant interest(s). Indeed, as noted above, the Commission's current
rules require that remedial petitions for declaratory ruling contain
all information required in Sec. 1.5001. And while the Commission has
observed that most petitioners proceed in this fashion sua sponte,
there have been instances where petitioners, despite the existing
Commission rules on foreign ownership, have initially provided only the
information related to the non-compliant interest(s), resulting in
multiple submissions by the petitioners. We believe that failure to
provide all relevant information unduly delays and frustrates efficient
processing of petitions, including remedial petitions.
We propose to codify revised language in a specific subsection of
our rules to state the existing requirement that remedial petitions for
declaratory ruling must contain all the ownership information required
in an initial petition for a declaratory ruling, and not just the
information related to the non-compliant interest(s). We seek comment
on this proposal. We note that there are similar information
requirements in other parts of our foreign ownership rules. In fact,
the Commission's rules require a licensee with an existing declaratory
ruling to submit a new petition for declaratory ruling under Sec.
1.5000, and thus include all required information under Sec. 1.5001,
before its foreign ownership exceeds the routine terms and conditions
set forth in Sec. 1.5004 and/or any specific terms or conditions of
its declaratory ruling. In addition, petitioners submitting remedial
petitions for declaratory ruling are already required to file responses
to the Commission's Standard Questions in connection with the remedial
petition for declaratory ruling to ensure the Committee receives all
information required for its review. This rule applies to all petitions
for declaratory ruling (e.g., initial or remedial), and we do not
propose to change that requirement here.
We seek comment on the expected benefits of the proposal. We expect
that the proposal would result in a more streamlined process since we
are not proposing to change the substantive requirements of the rule,
but rather to add language to state what is already required. We
therefore do not anticipate our proposal would result in any new
burdens. We seek comment on these assessments, including how our
proposal may impact small business entities.
6. Filing Amendments as a Complete Restatement to Petitions for
Declaratory Ruling
The Commission's rules do not specify the procedure for filing an
amendment to a petition for declaratory ruling, which can cause
confusion concerning the parameters of pending requests. We therefore
seek comment on codifying a requirement that any amendments to a
pending petition for declaratory ruling must be filed as a complete
restatement of the initial petition. In the 2016 Foreign Ownership
Report and Order, the Commission adopted rules for the filing and
processing of section 310(b) petitions for declaratory ruling, but it
did not codify procedures for filing an amendment to a petition. The
practice of the Office of International Affairs and the Media Bureau is
that when there have been substantial changes to the petition, is to
have petitioners file a complete restatement of the petition instead of
filing an amendment or supplement with specific changes and to also
file a cover letter with a narrative description of what is being
amended. This practice has ensured that the public and Commission staff
can access accurate and complete ownership information for review
without undue confusion about which filings or portions of filings are
active and/or current. To avoid confusion and promote regulatory
consistency, we seek comment on whether to codify this practice.
Further, to minimize burdens, we seek comment on whether there are
certain ministerial changes to petitions for declaratory ruling that
could be filed by an amendment without filing a complete restatement.
If so, we seek comment on what would constitute a ``ministerial
change,'' such as a misspelled name or incorrect address, and on this
approach generally. We seek comment on the expected benefits and
burdens on petitioners, including small entities. Would the benefits of
such a requirement outweigh the burdens? Would this proposal result in
a more streamlined process?
7. U.S. Residency Requirements
Based on questions Commission staff have received regarding whether
foreign investors in companies seeking a petition for declaratory
ruling must maintain U.S. residency, we propose to clarify that there
is no Commission requirement that a foreign investor must reside within
the United States. Specifically, a foreign investor's lack of a U.S.
residence is not a factor in the Commission's assessment of whether a
petition for declaratory ruling is in the public interest. United
States residency status has not been required or expected previously
under our foreign ownership rules. We believe requiring a foreign
investor to maintain U.S. residence would be contrary to the
Commission's policy of allowing certain levels of foreign ownership
that are not contrary to the public interest. We seek comment on this
proposed clarification. As noted above, we propose that any new
approach adopted by the Commission should apply to all services subject
to section 310(b).
B. Broadcast Licensees Only
As discussed below, regarding broadcast licensees only, in this
NPRM, we seek comment on: (1) how the Commission should process
applications filed by a broadcast licensee during the pendency of a
[[Page 26690]]
remedial petition for declaratory ruling under section 310(b)(4); and
(2) other foreign ownership considerations related to processing
applications for NCE and LPFM stations.
1. Processing Broadcast Licensee Applications During the Remedial
Process
To help provide clarity to the broadcast industry, we seek comment
on how the Commission, including the Media Bureau pursuant to delegated
authority, should process applications generally, or certain types of
applications, filed by a broadcast licensee during the remedial process
set forth in Sec. 1.5004(f) of the Commission's rules. We tentatively
find that processing guidelines will best inform the broadcast industry
on how the Commission will process broadcast applications while a
remedial petition is subject to review and we seek comment on that
position. Indeed, the Commission routinely issues guidelines to help
provide clarity regarding the processing of certain applications.
Under the Commission's current remedial process, where a licensee's
controlling U.S. parent is an eligible U.S. public company, the
licensee may file a remedial petition for declaratory ruling seeking
approval of the U.S. parent's above-benchmark, aggregate foreign
ownership interests or approval of any particular foreign equity and/or
voting interests that require specific approval under the licensee's
existing section 310(b)(4) ruling.\15\ Alternatively, the U.S. parent
has the option to remedy the non-compliance by, for example, redeeming
the foreign interest(s) that rendered the licensee non-compliant with
section 310(b)(4) or the licensee's existing section 310(b)(4) ruling.
---------------------------------------------------------------------------
\15\ 47 CFR 1.5004(f)(3).
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As noted above, the Commission has stated that it does not, as a
general rule, expect to take enforcement action related to the
licensee's non-compliance with the foreign ownership rules in either
case, provided the licensee satisfies certain requirements.\16\
Nonetheless, the Commission may ultimately determine that the licensee
was not actually entitled to use the remedial process or the Commission
may ultimately reject the proposed foreign ownership.\17\ Therefore,
the existence of the remedial process, on its own, does not necessarily
resolve the issue of whether the broadcast licensee is in compliance
with the Commission's rules during the pendency of a remedial petition
for declaratory ruling or following remedy of the non-compliance. This
is significant because it has been the Media Bureau's practice, often
in consultation with the Enforcement Bureau, to place a hold on certain
types of applications while a broadcast licensee is subject to an
investigation for a potential violation of the Commission's rules.\18\
As a result, any unresolved foreign ownership questions presented by
non-compliance with our rules or the terms of a prior declaratory
ruling may impede the processing of pending license applications.
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\16\ 2016 Foreign Ownership Report and Order, 31 FCC Rcd at
11309-10, para. 80.
\17\ The Commission has the right to take enforcement action in
cases where the licensee was not actually entitled to use the
remedial process. 47 CFR 1.5004(f)(1) (``Except as specified in
paragraph (f)(3) of this section, if at any time the licensee,
including any successor-in-interest and any subsidiary or affiliate
as described in paragraph (b) of this section, knows, or has reason
to know, that it is no longer in compliance with its foreign
ownership ruling or the Commission's rules relating to foreign
ownership, it shall file a statement with the Commission explaining
the circumstances within 30 days of the date it knew, or had reason
to know, that it was no longer in compliance therewith. Subsequent
actions taken by or on behalf of the licensee to remedy its non-
compliance shall not relieve it of the obligation to notify the
Commission of the circumstances (including duration) of non-
compliance. Such licensee and any controlling companies, whether
U.S.- or foreign-organized, shall be subject to enforcement action
by the Commission for such non-compliance, including an order
requiring divestiture of the investor's direct and/or indirect
interests in such entities.'').
\18\ ``Enforcement holds'' are often placed by the Commission's
Enforcement Bureau in connection with complaints filed against a
licensee or its stations that remain under investigation. For
example, pursuant to guidance from the Enforcement Bureau, while
``such an enforcement hold is in place, the renewal application
subject to the hold will not be granted until the Enforcement Bureau
releases the hold.'' See Enforcement Bureau Provides Guidance for
Renewal Hold Checks, Public Notice, 35 FCC Rcd 2888 (IHD 2020).
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Moreover, fundamentally, a licensee with a pending remedial
petition for declaratory ruling has a foreign ownership interest that
is inconsistent with the Commission's rules and that has not yet been
approved. And indeed, upon review of the remedial petition, the
Commission may not ultimately approve the foreign ownership interest.
In such circumstances, we seek comment on whether the Commission should
grant the licensee new authorizations or allow a licensee to dispose of
certain authorizations while the petition for declaratory ruling is
pending. If so, should any grant of a license be explicitly conditioned
on the grant of the pending remedial petition for declaratory ruling
and on any enforcement action that may be warranted if the remedial
petition is deemed inadequate? Or should staff hold pending license
applications until review of a remedial petition is completed? In
determining how to proceed, should the Commission take into account the
type of license application that is at issue? Are there certain types
of applications that should continue to be processed in the normal
course during the pendency of the remedial process, such as
applications related to the continued operations of the current
broadcast facilities (e.g., applications for special temporary
authority or minor modifications)? Conversely, are there non-routine
applications such as major modifications, license renewals, and
assignments/transfers of control, that the Commission should refrain
from processing during the pendency of a remedial petition for
declaratory ruling? Similarly, are there otherwise routine applications
that should not be processed during this time, such as changes in
community of license or changes that would expand coverage areas? What
facts and public interest considerations should the Commission consider
in determining whether to process or grant a license application while
a remedial petition is pending? And should any public notice accepting
the application disclose the pending remedial petition for declaratory
ruling? We also seek comment on whether there are any limitations on
the Commission's authority to grant license applications while a
remedial petition for declaratory ruling is pending. To what extent do
these proposals impact the Commission's statutory standard for granting
applications under sections 308(b), 309(a), 310(b)(4), and 310(d) of
the Act, if at all?
Previously, the Media Bureau has, on occasion, found that the
public interest would be served by granting an assignment of license or
transfer of control application during the pendency of a remedial
petition. In doing so, however, the Bureau imposed a number of
conditions to acknowledge the non-compliant foreign ownership and to
ensure the applicant's ability and commitment to comply with the
outcome of the Commission's review. Notably, these conditions included
the suspension of any voting rights for the unapproved interests,
heightened insulation requirements for the new foreign interests,
limitations on the payment of all dividends and/or distributions while
the remedial petition was pending, and the potential to unwind the
transaction if the proposed foreign ownership was ultimately rejected.
Should the Commission continue to process such applications so long as
they are
[[Page 26691]]
similarly conditioned, or conditioned in another manner?
We seek comment on whether adopting rules concerning the processing
of broadcast applications while a foreign ownership petition is pending
would offer greater benefits or fewer burdens than issuing guidance.
Commenters should identify specific anticipated benefits or burdens,
including burdens on small entities, associated with the adoption of
rules or guidance.
2. Assessing Foreign Ownership of Noncommercial Educational (NCE) and
Low Power FM (LPFM) Stations
To better incorporate the ownership structures of NCE and LPFM
stations seeking approval for proposed foreign ownership into our
rules, we seek to clarify how we approach determining the foreign
ownership levels of these particular stations. We therefore seek
comment on changes to the Commission's foreign ownership rules that
would assess the foreign ownership levels of NCE stations, including
full-service FM radio and television stations and LPFM stations, by
considering their unique structures. Just as with their commercial
counterparts, ownership--including foreign ownership--of NCE and LPFM
stations is subject to the provisions of section 310(b). As such, the
Commission's foreign ownership rules are not limited to commercial
stations, though the rules discuss ownership in terms of the voting and
equity shares of individuals and entities. This characterization of
ownership, however, is rarely applicable in the NCE/LPFM context, as
these entities are often governed by a board of directors or an
unincorporated association without traditional voting or equity shares
in the entity. The Commission's rules and policies, however, have long
recognized that these governing bodies--and, by extension, the
individual board members--direct the operations of these stations. The
Commission has addressed this in the broadcast ownership report
context, for attribution purposes, by looking to the composition of the
respondent's governing board or other governing entity, and whether it
is directly or indirectly under the control of another entity.
While to date, there have been relatively few instances of requests
for proposed foreign ownership of NCE and LPFM stations under the
Commission's current foreign ownership rules, we believe it would be
beneficial to consider how to incorporate the structures of these
stations into the current rules. As we do in the broadcast ownership
report context, in determining the voting shares of NCE stations in the
course of our section 310(b)(4) reviews, we propose to consider the
composition of the governing board or other governing entity, and
whether it is directly or indirectly under the control of another
entity for purposes of assessing compliance with the foreign ownership
limits set forth in the Act and the Commission's rules. For example, if
an NCE station licensee (or applicant) is governed by a board with five
members, each member would be deemed to have a 20 percent voting
interest (or ``share'') in the licensee absent an agreement that sets
forth different voting shares for each individual member, in which case
each member would be deemed to have the percentage interest designated
in the agreement. If there are four members, each member would have a
25 percent voting interest, and so forth. In the event that greater
than 25 percent of the controlling interest holders in the licensee's
controlling U.S. parent would be non-U.S. citizens, the licensee would
first need to seek approval for such foreign ownership consistent with
section 310(b)(4) and the Commission's foreign ownership rules. Direct
foreign interests in the licensee would be subject to the 20 percent
benchmarks in section 310(b)(3).
We also note that, consistent with the broadcast ownership context,
there may be station-specific agreements or circumstances that could
impact how the ownership percentages are calculated. For example, the
governing board could cede its decision-making authority over the
station to an executive in the operating organization. Any such
circumstances would continue to be subject to individual review under
section 310(b). And while governing board members in noncommercial
entities do not traditionally have equity interests in the licensee,
any such equity interests specific to a particular licensee would also
be subject to the 310(b) benchmarks.
We seek comment on this approach for determining percentage
ownership interests for the purpose of evaluating whether foreign
ownership is consistent with that laid out in the section 310(b)
benchmarks. We also seek comment on the expected benefits of this
approach, and what, if any, burdens it could impose on petitioners,
including small entities.
We also seek comment on circumstances in which an individual
noncommercial licensee/permittee/applicant adopts a different approach
to determining voting shares, e.g., by allocating voting power to board
members on something other than a pro rata basis. In what cases might a
noncommercial organization adopt an agreement that sets forth different
voting shares for each individual member? Do these types of voting
agreements raise any concerns, such that the Commission should restrict
their use in some or all circumstances? Further, are such weighted
governance structures (i.e., non pro rata) typically permitted by state
or federal laws regarding the incorporation and governance of
noncommercial entities? If agreements that set forth different voting
shares are permissible, should the Commission require that a copy of
the voting agreement accompany the petition for declaratory ruling?
Alternatively, is there a different approach for determining voting
control that would better reflect the structure of NCE and/or LPFM
stations? Are there circumstances in which application of the current
foreign ownership rules would not be appropriate? How should we address
such situations, e.g., waiver or alternate procedures, for petitions
involving NCE/LPFM stations? We seek comment on these questions. We
also seek comment on the expected benefits of each approach, and what,
if any, burdens each approach could impose on petitioners.
3. NCE/LPFM Application Processing Issues
We seek comment on whether and how to clarify the Commission's
rules and procedures regarding the application of section 310(b) in the
context of filing windows for construction permits for noncommercial
authorizations. Under the Commission's rules, companies with foreign
investors are eligible to apply for new construction permits that are
available for application during a filing window, including
noncommercial filing windows. Those companies with foreign investors in
excess of the statutory benchmarks must, at the time the application
for a construction permit is filed, also submit a petition for
declaratory ruling, unless they are already covered by such a ruling.
However, the current rules do not address various procedural issues
that might arise in the context of a filing window for a noncommercial
authorization. For example, the Commission has on occasion opened
application windows for new and major modifications to NCE FM radio
stations, NCE full power television stations, and LPFM stations, which
award such authorizations using a point system for selection criteria.
Applicants must make
[[Page 26692]]
various certifications regarding their foreign ownership, including
whether the applicant is in compliance with the terms and conditions of
an existing foreign ownership declaratory ruling and whether there have
been any changes in the applicant's foreign ownership since the
issuance of a declaratory ruling(s). In the NCE FM and television
context, for example, applicants must also submit information regarding
point system factors and tie breakers, which award merit points based
on certain distinct criteria, including: (1) established local
applicant; (2) diversity of ownership; (3) state-wide network; and (4)
technical parameters. Applications that conflict with one another from
an engineering perspective are considered mutually exclusive (MX).
Applications are assigned points based on these criteria and the Bureau
awards the authorization to the applicant with the superior showing. In
the event MX applications are tied with the highest number of points,
the tied applicants will proceed to a tie-breaker round in which
certain tiebreakers are considered.
In light of these NCE/LPFM filing window procedures, we seek
comment on how best to structure our review of section 310(b)
compliance. First, we propose to clarify that, under the current
requirements in Sec. 1.5000(b) regarding construction permit
applications, entities with foreign ownership in excess of the
statutory benchmarks in section 310(b)(4) and without an existing
declaratory ruling can participate in an NCE/LPFM filing window so long
as they file a petition for declaratory ruling seeking approval of the
foreign ownership interest at the same time they file the application
for a construction permit required for participation in the filing
window. Given that, at that point, the applicant has yet to be awarded
a construction permit or a license, how should the Commission process
the petition? For example, would the entities also need to file
responses to the Standard Questions at the time of filing the
application or would this result in unnecessary filings for those
entities that are not deemed the tentative selectee in the filing
window? Should we require that the petition for declaratory ruling be
processed by Commission staff only if and when the applicant is deemed
the tentative selectee and condition the grant of a construction permit
on the grant of such a petition? In that case, would the applicant then
file its responses to the Standard Questions after it has been
selected? Could processing a petition for declaratory ruling after the
selection result in circumstances in which an unqualified broadcast
applicant is selected, e.g., an entity with foreign ownership that
violates section 310(b)(4)? Should the Commission delay referring the
petition for declaratory ruling to the Executive Branch until after an
applicant is selected? We seek comment on these issues as well as the
expected benefits and burdens imposed on petitioners in each scenario.
Additionally, we seek comment on how accepting applications with
proposed but as-yet unapproved foreign ownership impact MX groups, if
at all? For example, if an applicant is selected in an MX group but
ultimately fails to obtain approval for its foreign ownership, how
should the Commission proceed with respect to the construction permit?
Should it be awarded to the applicant with the second-highest point
tally, as it would under our existing selection criteria, should such
an applicant exist? To what extent should we apply the existing
selection criteria to situations in which the tentative selectee fails
to obtain approval for its foreign ownership? Given the length of time
for review of a petition for declaratory ruling, how might this review
period impact the selection process? How do the procedures we propose
here impact other technical rules, such as the protected status of new
station or modification applications? We also seek comment on how, if
at all, the point system should consider proposed foreign ownership.
How should the Commission formalize any approach it may adopt, e.g.,
rule changes, processing guidance, or both? We seek comment on these
questions as well as the expected benefits and burdens imposed on
petitioners in each scenario.
C. Other Opportunities To Improve or Ways To Reduce Regulatory Burdens
Concerning the Foreign Ownership Rules
We seek comment generally on what other opportunities we can take
to improve the foreign ownership rules or ways we can reduce regulatory
burdens. Are there additional ways we can streamline our section 310(b)
rules or processes? We seek comment on whether there are any service-
specific differences that would warrant alternative approaches or
additional guidance for particular categories of licensees or small
business entities with regard to any of our proposals discussed above.
We seek comment on whether there are any other processes or policies
that may need to be codified in our rules to further assist petitioners
and expedite processing of section 310(b) petitions. Consistent with
the Delete, Delete, Delete Proceeding, we also seek comment on
opportunities to alleviate unnecessary regulatory burdens in the
context of our rules or our foreign ownership review under section
310(b) of the Act.
Additionally, throughout Appendix A, we propose various
ministerial, non-substantive changes such as shifting the language of
the notes and examples into the text of the relevant rule as
subsections to conform to the publishing conventions of the National
Archives and Records Administration's (NARA) Office of the Federal
Register. These changes include, among other things, revisions to
language and terms to ensure consistency of references used in
Sec. Sec. 1.5000 through 1.5004 of the Commission's rules. Appendix A
contains a proposed complete republication of subpart T (47 CFR 1.5001
through 1.5004). We seek comment on these proposals.
D. Cost and Benefit Analysis
This NPRM proposes to codify certain policies and practices with
respect to the Commission's foreign ownership rules for common carrier
and broadcast licensees subject to 310(b) of the Act and seeks comment
on possible approaches to other aspect of the rules. This NPRM seeks
comment on or proposes to amend the rules to: (1) codify existing
policy regarding which entity is the controlling U.S. parent; (2)
codify the Commission's advance approval policy regarding certain
deemed voting interests; (3) require identification of trusts and
trustees; (4) extend the remedial procedures and methodology to
privately held companies; (5) add requirements regarding the contents
of remedial petitions; (6) require the filing of amendments as a
complete restatement to petitions for declaratory ruling; and (7)
clarify U.S. residency requirements. As applied to broadcast licensees
only, we also seek comment on: (1) how the Commission should process
applications filed by a broadcast licensee during the pendency of a
remedial petition for declaratory ruling under Section 310(b); and (2)
other foreign ownership considerations related to processing
applications for noncommercial educational (NCE) and low power FM
(LPFM) stations. Finally, the NPRM seeks comment on other ways to
improve the foreign ownership rules or reduce regulatory burdens.
We find that clarifying our rules, codifying existing requirements
and practices related to foreign ownership,
[[Page 26693]]
and providing guidance with respect to filing of applications should
reduce uncertainty for applicants, which in turn should reduce the need
to revise or refile requests and thus expedite the application approval
process without significantly burdening petitioners. We further find
that extending the methodology and the remedial process for inadvertent
non-compliance with the foreign ownership benchmarks to privately held
entities for all services subject to Section 310(b)(4) should further
reduce enforcement costs by limiting the likelihood of Commission
enforcement action in circumstances where the non-compliance with U.S.
foreign ownership benchmarks was inadvertent. More broadly, by
clarifying the rules and potentially streamlining processes, we find
that the proposed rules and processing guidelines could facilitate
foreign investments in the U.S. market, while simultaneously reducing
any risks to national security, law enforcement, foreign policy, and
trade policy interests.\19\
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\19\ For instance, we propose to amend Sec. 1.5001(k)(1) to
specify that such foreign entities that are minority shareholders
can only request advance approval of up to a non-controlling 49.99
percent interest. Supra paragraph 20.
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As a result, we tentatively conclude that the costs associated with
the proposed rules are negligible and that the benefits associated with
the proposed rules outweigh the costs. We seek comment on our tentative
conclusion and more generally on the benefits and costs associated with
adopting the proposals set forth in this NPRM. We also seek comment on
any benefits to the public and to industry through adoption of our
proposals, including the effects of our proposed changes on small
entities. Comments should be accompanied by specific data and analysis
supporting claimed costs and benefits.
II. Procedural Issues
Initial Regulatory Flexibility Act Analysis. The Regulatory
Flexibility Act of 1980, as amended (RFA),\20\ requires that an initial
regulatory flexibility analysis be prepared for notice-and-comment rule
making proceedings, unless the agency certifies that ``the rule will
not, if promulgated, have a significant economic impact on a
substantial number of small entities.'' \21\ Accordingly, we have
prepared an Initial Regulatory Flexibility Analysis (IRFA) concerning
the potential impact of rule and policy changes in this Notice of
Proposed Rulemaking on small entities. The IRFA is set forth in
Appendix B. Written public comments are requested on the IRFA. Comments
must be filed by the deadlines for comments on the Notice indicated on
the first page of this document and must have a separate and distinct
heading designating them as responses to IRFA.
---------------------------------------------------------------------------
\20\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been
amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), Public Law 104-121, Title II, 110 Stat. 857 (1996).
\21\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------
A. Need for, and Objectives of, the Proposed Rules
In the NPRM, the Commission initiates this rulemaking proceeding to
obtain comments from small and other entities regarding its proposal to
update several of its rules to better reflect current application
processing requirements and align Commission procedures with
developments in the domestic investment process. In 2013, the
Commission adopted streamlined rules and procedures that apply to the
review of foreign ownership of common carrier licensees and certain
aeronautical licensees under section 310(b) of the Act. Subsequently,
in 2016, the Commission extended these streamlined rules and procedures
to the broadcast context, with certain limited exceptions. Since that
time, the number of foreign ownership petitions has increased,
including petitions submitted with complex ownership structures,
particularly in privately held companies. This NPRM responds to these
developments by clarifying the section 310(b) foreign ownership rules
to facilitate foreign investment and reduce regulatory burdens while
continuing to protect national security, law enforcement, foreign
policy, and trade policy interests.
This NPRM proposes to clarify the Commission's foreign ownership
rules, requirements, and practices for common carrier and broadcast
licensees subject to 310(b) of the Act. This NPRM seeks comment on or
proposes to amend the rules to: (1) codify existing policy regarding
which entity is the controlling U.S. parent; (2) codify the
Commission's advance approval policy regarding certain deemed voting
interests; (3) require identification of trusts and trustees; (4)
extend the remedial procedures and methodology to privately held
companies; (5) add requirements regarding the contents of remedial
petitions; (6) require the filing of amendments as a complete
restatement to petitions for declaratory ruling; and (7) clarify U.S.
residency requirements. As applied to broadcast licensees only, we also
seek comment on: (1) how the Commission should process applications
filed by a broadcast licensee during the pendency of a remedial
petition for declaratory ruling under section 310(b); and (2) other
foreign ownership considerations related to processing applications for
noncommercial educational (NCE) and low power FM (LPFM) stations.
Finally, the NPRM seeks comment on other ways to improve the foreign
ownership rules or reduce regulatory burdens.
B. Legal Basis
The proposed action is authorized pursuant to sections 1, 2, 4(i),
4(j), 303, 307, 308, 309, 310, of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 152, 154(i), 154(j), 303, 307, 308, 309, and
310.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act.'' A ``small business concern'' is one which: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the SBA.
1.4 GHz Band Licensees. Licenses in this band include 1.4 GHz band
licenses in the paired 1392-1395 MHz and 1432-1435 MHz bands, and in
the unpaired 1390-1392 MHz band. Wireless Telecommunications Carriers
(except Satellite) is the closest industry with an SBA small business
size standard applicable to 1.4 GHz band licensees. The SBA small
business size standard for this industry classifies a business as small
if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017
show that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA small business size standard, the
Commission estimates that a majority of the licensees in this industry
can be considered small.
Based on Commission data as of November 2021, one licensee
currently holds the 64 active licenses in this band. The Commission's
small business size standards with respect to 1.4 GHz Band Licensees
involve eligibility for bidding credits and installment payments in the
auction of 1.4 GHz band licenses. For the auction of these licenses, an
entity
[[Page 26694]]
with average annual gross revenues for the three preceding years not
exceeding $40 million is defined as a ``small business,'' and an entity
with average annual gross revenues for the three preceding years not
exceeding $15 million is defined as a ``very small business.''
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, the Commission does not know
whether the licensee with the active licenses qualifies as small under
the SBA's small business size standard.
1670-1675 MHz Services. These wireless communications services can
be used for fixed and mobile uses, except aeronautical mobile. Wireless
Telecommunications Carriers (except Satellite) is the closest industry
with an SBA small business size standard applicable to these services.
The SBA size standard for this industry classifies a business as small
if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017
show that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA size standard, the Commission estimates
that a majority of licensees in this industry can be considered small.
According to Commission data as of November 2021, there were three
active licenses in this service. The Commission's small business size
standards with respect to 1670-1675 MHz Services involve eligibility
for bidding credits and installment payments in the auction of licenses
for these services. For licenses in the 1670-1675 MHz service band, a
``small business'' is defined as an entity that, together with its
affiliates and controlling interests, has average gross revenues not
exceeding $40 million for the preceding three years, and a ``very small
business'' is defined as an entity that, together with its affiliates
and controlling interests, has had average annual gross revenues not
exceeding $15 million for the preceding three years. The 1670-1675 MHz
service band auction's winning bidder did not claim small business
status.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
2.3 GHz Wireless Communications Services. These services can be
used for fixed, mobile, radiolocation, and digital audio broadcasting
satellite uses. Wireless Telecommunications Carriers (except Satellite)
is the closest industry with an SBA small business size standard
applicable to these services. The SBA size standard for this industry
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2017 show that there were 2,893 firms that
operated in this industry for the entire year. Of this number, 2,837
firms employed fewer than 250 employees. Thus under the SBA size
standard, the Commission estimates that a majority of licensees in this
industry can be considered small.
Based on Commission data as of December 2021, there were
approximately 10 licensees with 628 active licenses in this service.
The Commission's small business size standards with respect to 2.3 GHz
Wireless Communications Services (WCS) involve eligibility for bidding
credits and installment payments in the auction of 2.3 GHz WCS
licenses. For these licenses a ``small business'' is defined as an
entity with average gross revenues of $40 million for each of the three
preceding years, and a ``very small business'' is defined as an entity
with average gross revenues of $15 million for each of the three
preceding years. Pursuant to these definitions, seven bidders who won
31 licenses qualified as very small business entities, and one bidder
that won one license qualified as a small business entity. Of these
small and very small businesses that won licenses, none had active
licenses in December 2021.
In frequency bands where licenses were subject to auctions, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
218-219 MHz Service. The 218-219 MHz Service is a service where
commercial and private radio stations are licensed and used in Wireless
Telecommunications Services. The service is designated as a point-to-
multipoint, multipoint-to-point, short-distance private radio service
in which licensees may provide information or services to individual
subscribers within a service area, and subscribers may provide
interactive responses. These systems use radio channels in the 218-219
MHz band for fixed and mobile services between the licensee's cell
transmitter station (CTS) and the subscriber's response transmitter
unit (RTU), or between two CTSs. Wireless Telecommunications Carriers
(except Satellite) is the closest industry with an SBA small business
size standard applicable to these services. The SBA size standard for
this industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
According to Commission data as of July 2021, there were
approximately 25 licensees with 32 active licenses in this service. The
Commission's small business size standards with respect to the 218-219
MHz service involves eligibility for bidding credits and installment
payments in the auction of 218-219 MHz spectrum licenses. In the
auction for these licenses where the Commission defined ``small
business'' as an entity that, together with its affiliates, had no more
than a $6 million net worth and, after federal income taxes (excluding
any carry over losses), had no more than $2 million in annual profits
each year for the previous two years, 146 entities qualifying as a
small business won 557 of the 594 available licenses. Of the 25
licensees for this service, 4 of the licensees that claimed
[[Page 26695]]
small or very small business status in the initial auction had active
licenses as of July 2021.
Subsequently, for auctions of 218-219 MHz spectrum, the Commission
defined a size standard for a ``small business'' as an entity that,
together with its affiliates and persons or entities that hold
interests in such an entity and their affiliates, has average annual
gross revenues not to exceed $15 million for the preceding three years,
and a ``very small business'' as an entity that, together with its
affiliates and persons or entities that hold interests in such an
entity and its affiliates, has average annual gross revenues not to
exceed $3 million for the preceding three years.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard. However,
for purposes of this regulatory flexibility analysis, the Commission
presumes that a majority of the licensees in this service are small
entities.
220 MHz Radio Service. The 220 MHz service is radio service for the
licensing of frequencies in the 220-222 MHz band. Frequencies in the
220-222 MHz band are available for land mobile and fixed use for both
government and non-government operations. Commercial and private radio
stations may be licensed in the Wireless Telecommunications Services.
Licensees in this service are classified as Phase I or Phase II
licensees. Wireless Telecommunications Carriers (except Satellite) is
the closest industry with an SBA small business size standard
applicable to this services. The SBA size standard for this industry
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2017 show that there were 2,893 firms that
operated in this industry for the entire year. Of this number, 2,837
firms employed fewer than 250 employees. Thus under the SBA size
standard, the Commission estimates that a majority of licensees in this
industry can be considered small.
According to Commission data as of November 2021, there were
approximately 526 active licenses in the auctioned 220 MHz band. There
were also approximately 351 non-nationwide active licenses and 222
active nationwide licenses authorized to operate in the 220 MHz band.
The Commission's small business size standards with respect to the 220
MHz service involves eligibility for bidding credits and installment
payments in the auction of 220 MHz spectrum licenses. In the auctions
for these licenses where the Commission defined a ``small business'' as
an entity that, together with its affiliates and controlling
principals, had average gross revenues not exceeding $15 million for
the preceding three years, and a ``very small business'' as an entity
that, together with its affiliates and controlling principals, had
average gross revenues not exceeding $3 million for the preceding three
years, 56 bidders winning 592 licenses claimed small or very small
business credits. In November 2021, two of the winning bidders that
claimed small business credits in the Phase II 220 MHz auctions had
active licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
3650-3700 MHz band. Wireless broadband service licensing in the
3650-3700 MHz band provides for nationwide, non-exclusive licensing of
terrestrial operations, utilizing contention-based technologies, in the
3650 MHz band (i.e., 3650-3700 MHz). Licensees are permitted to provide
services on a non-common carrier and/or on a common carrier basis.
Wireless broadband services in the 3650-3700 MHz band fall in the
Wireless Telecommunications Carriers (except Satellite) industry with
an SBA small business size standard that classifies a business as small
if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017
show that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA size standard, the Commission estimates
that a majority of licensees in this industry can be considered small.
The Commission has not developed a small business size standard
applicable to 3650-3700 MHz band licensees. Based on the licenses that
have been granted, however, we estimate that the majority of licensees
in this service are small internet Access Service Providers (ISPs). As
of November 2021, Commission data shows that there were 902 active
licenses in the 3650-3700 MHz band. However, since the Commission does
not collect data on the number of employees for licensees providing
these services, at this time we are not able to estimate the number of
licensees with active licenses that would qualify as small under the
SBA's small business size standard.
39 GHz Service. This flexible-use wireless service band encompasses
spectrum in the 38.6--40 GHz bands that can be used for fifth-
generation (5G) wireless, Internet of Things, and other advanced
services. Wireless Telecommunications Carriers (except Satellite) is
the closest industry with an SBA small business size standard
applicable to these services. The SBA small business size standard for
this industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
The Commission's small business size standards with respect to the
39 GHz Services involve eligibility for bidding credits and installment
payments in the auction of licenses for these services. In 2019, the 39
GHz band was reconfigured in preparation for an incentive auction
(Auction 103) to offer new flexible use licenses in the Upper 37 GHz
(37.6-38.6 GHz), 39 GHz (38.6-40 GHz), and 47 GHz (47.2-48.2 GHz)
bands. In Auction 103, 5,824 licenses in the 39 GHz band were auctioned
as part of the Commission's auction of 14,144 Upper Microwave Flexible
Use Service. For purposes of bidding credits, the Commission defined
``small business'' as an entity with average annual gross revenues that
did not exceed $55 million for the preceding three years average, and a
``very small business'' as an entity with average annual gross revenues
that did not exceed $20
[[Page 26696]]
million for the preceding three years. Of the 5,824 licenses auctioned
in the 39 GHz band in Auction 103, 4 bidders claimed small business
status winning 182 licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
600 MHz Band. These wireless communications services are
radiocommunication services licensed in the 617-652 MHz and 663-698 MHz
frequency bands that can be used for fixed and mobile flexible uses.
600 MHz Band services fall within the scope of the Wireless
Telecommunications Carriers (except Satellite) industry where the SBA
small business size standard classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated in this industry for the entire
year. Of this number, 2,837 firms employed fewer than 250 employees.
Thus under the SBA size standard, the Commission estimates that a
majority of licensees in this industry can be considered small.
Based on Commission data as of November 2021, there were
approximately 3,327 active licenses in the 600 MHz Band service. The
Commission's small business size standards with respect to 600 MHz Band
services involve eligibility for bidding credits and installment
payments in the auction of licenses for these services. For purposes of
bidding credits, the Commission defined ``small business'' as an entity
with average gross revenues not exceeding $55 million for each of the
three preceding years, and a ``very small business'' as an entity with
average gross revenues not exceeding $20 million for each of the three
preceding years for the 600 MHz band auction. Pursuant to these
definitions, 15 bidders claiming small business status won 290
licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
700 MHz Guard Band Licensees. The 700 MHz Guard Band encompasses
spectrum in 746-747/776-777 MHz and 762-764/792-794 MHz frequency
bands. Wireless Telecommunications Carriers (except Satellite) is the
closest industry with a SBA small business size standard applicable to
licenses providing services in these bands. The SBA small business size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated in this industry for the entire
year. Of this number, 2,837 firms employed fewer than 250 employees.
Thus under the SBA size standard, the Commission estimates that a
majority of licensees in this industry can be considered small.
According to Commission data as of December 2021, there were
approximately 224 active 700 MHz Guard Band licenses. The Commission's
small business size standards with respect to 700 MHz Guard Band
licensees involve eligibility for bidding credits and installment
payments in the auction of licenses. For the auction of these licenses,
the Commission defined a ``small business'' as an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding $40 million for the preceding three years, and a
``very small business'' an entity that, together with its affiliates
and controlling principals, has average gross revenues that are not
more than $15 million for the preceding three years. Pursuant to these
definitions, five winning bidders claiming one of the small business
status classifications won 26 licenses, and one winning bidder claiming
small business won two licenses. None of the winning bidders claiming a
small business status classification in these 700 MHz Guard Band
license auctions had an active license as of December 2021.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Advanced Wireless Services (AWS)--(1710-1755 MHz and 2110-2155 MHz
bands (AWS-1); 1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-
2180 MHz bands (AWS-2); 2155-2175 MHz band (AWS-3); 2000-2020 MHz and
2180-2200 MHz (AWS-4)). Spectrum is made available and licensed in
these bands for the provision of various wireless communications
services. Wireless Telecommunications Carriers (except Satellite) is
the closest industry with a SBA small business size standard applicable
to these services. The SBA small business size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus, under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
According to Commission data as of December 2021, there were
approximately 4,472 active AWS licenses. The Commission's small
business size standards with respect to AWS involve eligibility for
bidding credits and installment payments in the auction of licenses for
these services. For the auction of AWS licenses, the Commission defined
a ``small business'' as an entity with average annual gross revenues
for the preceding three years not exceeding $40 million, and a ``very
small business'' as an entity with average annual gross revenues for
the preceding three years not exceeding $15 million. Pursuant to these
definitions, 57 winning bidders claiming status as small or very small
businesses won 215 of 1,087 licenses. In the most recent auction of AWS
licenses 15 of 37 bidders qualifying for status as small or very small
businesses won licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the
[[Page 26697]]
number of winning bidders that qualify as small businesses at the close
of an auction does not necessarily represent the number of small
businesses currently in service. Further, the Commission does not
generally track subsequent business size unless, in the context of
assignments or transfers, unjust enrichment issues are implicated.
Additionally, since the Commission does not collect data on the number
of employees for licensees providing these services, at this time we
are not able to estimate the number of licensees with active licenses
that would qualify as small under the SBA's small business size
standard.
Air-Ground Radiotelephone Service. Air-Ground Radiotelephone
Service is a wireless service in which licensees are authorized to
offer and provide radio telecommunications service for hire to
subscribers in aircraft. A licensee may provide any type of air-ground
service (i.e., voice telephony, broadband internet, data, etc.) to
aircraft of any type, and serve any or all aviation markets
(commercial, government, and general). A licensee must provide service
to aircraft and may not provide ancillary land mobile or fixed services
in the 800 MHz air-ground spectrum.
The closest industry with an SBA small business size standard
applicable to these services is Wireless Telecommunications Carriers
(except Satellite). The SBA small business size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
Based on Commission data as of December 2021, there were
approximately four licensees with 110 active licenses in the Air-Ground
Radiotelephone Service. The Commission's small business size standards
with respect to Air-Ground Radiotelephone Service involve eligibility
for bidding credits and installment payments in the auction of
licenses. For purposes of auctions, the Commission defined ``small
business'' as an entity that, together with its affiliates and
controlling interests, has average gross revenues not exceeding $40
million for the preceding three years, and a ``very small business'' as
an entity that, together with its affiliates and controlling interests,
has had average annual gross revenues not exceeding $15 million for the
preceding three years. In the auction of Air-Ground Radiotelephone
Service licenses in the 800 MHz band, neither of the two winning
bidders claimed small business status.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, the Commission
does not collect data on the number of employees for licensees
providing these services therefore, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Aviation and Marine Radio Services. Maritime mobile service is a
mobile service between coast stations and ship stations, or between
ship stations, or between associated on-board communication stations.
Survival craft stations and emergency position indicating radio beacon
(EPIRB) stations also participate in this service. Small businesses in
the aviation and marine radio services use a marine very high frequency
(VHF), medium frequency (MF), or high frequency (HF) radio, any type of
EPIRB and/or radar, an aircraft radio, and/or any type of emergency
locator transmitter (ELT) and may provide fixed, mobile, or hybrid
voice or data communications. Aviation services are radio-communication
services for the operation of aircraft. These services include
aeronautical fixed service, aeronautical mobile service, aeronautical
radiodetermination service, and secondarily, the handling of public
correspondence on frequencies in the maritime mobile and maritime
mobile satellite services to and from aircraft.
Wireless Telecommunications Carriers (except Satellite) is the
closest industry with a SBA small business size standard applicable to
these services. The SBA small business size standard for this industry
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2017 show that there were 2,893 firms that
operated in this industry for the entire year. Of this number, 2,837
firms employed fewer than 250 employees. Thus under the SBA size
standard, the Commission estimates that a majority of licensees in this
industry can be considered small. Additionally, according to Commission
data as December 2021, there were 14,532 active licenses in the
Aviation and Marine Radio Services. However, since the Commission does
not collect data on the number of employees for licensees providing
these services, at this time we are not able to estimate the number of
licensees with active licenses that would qualify as small under the
SBA's small business size standard.
Broadband Personal Communications Service. The broadband personal
communications services (PCS) spectrum encompasses services in the
1850-1910 and 1930-1990 MHz bands. The closest industry with a SBA
small business size standard applicable to these services is Wireless
Telecommunications Carriers (except Satellite). The SBA small business
size standard for this industry classifies a business as small if it
has 1,500 or fewer employees. U.S. Census Bureau data for 2017 show
that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA size standard, the Commission estimates
that a majority of licensees in this industry can be considered small.
Based on Commission data as of November 2021, there were
approximately 5,060 active licenses in the Broadband PCS service. The
Commission's small business size standards with respect to Broadband
PCS involve eligibility for bidding credits and installment payments in
the auction of licenses for these services. In auctions for these
licenses, the Commission defined ``small business'' as an entity that,
together with its affiliates and controlling interests, has average
gross revenues not exceeding $40 million for the preceding three years,
and a ``very small business'' as an entity that, together with its
affiliates and controlling interests, has had average annual gross
revenues not exceeding $15 million for the preceding three years.
Winning bidders claiming small business credits won Broadband PCS
licenses in C, D, E, and F Blocks.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these, at this time we are not able to estimate
[[Page 26698]]
the number of licensees with active licenses that would qualify as
small under the SBA's small business size standard.
Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service systems, previously referred to as Multipoint
Distribution Service (MDS) and Multichannel Multipoint Distribution
Service (MMDS) systems, and ``wireless cable,'' transmit video
programming to subscribers and provide two-way high speed data
operations using the microwave frequencies of the Broadband Radio
Service (BRS) and Educational Broadband Service (EBS) (previously
referred to as the Instructional Television Fixed Service (ITFS)).
Wireless cable operators that use spectrum in the BRS often
supplemented with leased channels from the EBS, provide a competitive
alternative to wired cable and other multichannel video programming
distributors. Wireless cable programming to subscribers resembles cable
television, but instead of coaxial cable, wireless cable uses microwave
channels.
In light of the use of wireless frequencies by BRS and EBS
services, the closest industry with a SBA small business size standard
applicable to these services is Wireless Telecommunications Carriers
(except Satellite). The SBA small business size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
number, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
According to Commission data as of December 2021, there were
approximately 5,869 active BRS and EBS licenses. The Commission's small
business size standards with respect to BRS involves eligibility for
bidding credits and installment payments in the auction of licenses for
these services. For the auction of BRS licenses, the Commission adopted
criteria for three groups of small businesses. A very small business is
an entity that, together with its affiliates and controlling interests,
has average annual gross revenues exceed $3 million and did not exceed
$15 million for the preceding three years, a small business is an
entity that, together with its affiliates and controlling interests,
has average gross revenues exceed $15 million and did not exceed $40
million for the preceding three years, and an entrepreneur is an entity
that, together with its affiliates and controlling interests, has
average gross revenues not exceeding $3 million for the preceding three
years. Of the ten winning bidders for BRS licenses, two bidders
claiming the small business status won 4 licenses, one bidder claiming
the very small business status won three licenses and two bidders
claiming entrepreneur status won six licenses. One of the winning
bidders claiming a small business status classification in the BRS
license auction has an active licenses as of December 2021.
The Commission's small business size standards for EBS define a
small business as an entity that, together with its affiliates, its
controlling interests and the affiliates of its controlling interests,
has average gross revenues that are not more than $55 million for the
preceding five (5) years, and a very small business is an entity that,
together with its affiliates, its controlling interests and the
affiliates of its controlling interests, has average gross revenues
that are not more than $20 million for the preceding five (5) years. In
frequency bands where licenses were subject to auction, the Commission
notes that as a general matter, the number of winning bidders that
qualify as small businesses at the close of an auction does not
necessarily represent the number of small businesses currently in
service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Cellular Radiotelephone Service. This service is radio service in
which licensees are authorized to offer and provide cellular service
for hire to the general public and was formerly titled Domestic Public
Cellular Radio Telecommunications Service. Cellular Radiotelephone
Service falls within the scope the Wireless Telecommunications Carriers
(except Satellite) industry, where the SBA small business size standard
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2017 show that there were 2,893 firms that
operated in this industry for the entire year. Of this number, 2,837
firms employed fewer than 250 employees. Thus under the SBA size
standard, the Commission estimates that a majority of licensees in this
industry can be considered small.
Based on Commission data, as of November 2021, there were
approximately 1,908 active licenses in this service. The Commission's
small business size standards with respect to Cellular Radiotelephone
Services involve eligibility for bidding credits and installment
payments in the auction of licenses for these services. For purposes of
bidding credits, the Commission has defined ``small business'' as an
entity that either (1) together with its affiliates and controlling
interests has average gross revenues of not more than $3 million for
each of the three preceding years, or (2) together with its affiliates
and controlling interests has average gross revenues of not more $15
million for each of the three preceding years.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Fixed Microwave Services. Fixed microwave services include common
carrier,\22\ private-operational fixed, and broadcast auxiliary radio
services. They also include the Upper Microwave Flexible Use Service
(UMFUS), Millimeter Wave Service (70/80/90 GHz), Local Multipoint
Distribution Service (LMDS), the Digital Electronic Message Service
(DEMS), 24 GHz Service, Multiple Address Systems (MAS), and
Multichannel Video Distribution and Data Service (MVDDS), where in some
bands licensees can choose between common carrier and non-common
carrier status. Wireless Telecommunications Carriers (except Satellite)
is the closest industry with a SBA small business size standard
applicable to these services. The SBA small size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this
[[Page 26699]]
industry for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Thus under the SBA size standard, the
Commission estimates that a majority of fixed microwave service
licensees can be considered small.
---------------------------------------------------------------------------
\22\ See 47 CFR part 101, subparts C and I.
---------------------------------------------------------------------------
The Commission's small business size standards with respect to
fixed microwave services involve eligibility for bidding credits and
installment payments in the auction of licenses for the various
frequency bands included in fixed microwave services. When bidding
credits are adopted for the auction of licenses in fixed microwave
services frequency bands, such credits may be available to several
types of small businesses based average gross revenues (small, very
small and entrepreneur) pursuant to the competitive bidding rules
adopted in conjunction with the requirements for the auction and/or as
identified in Part 101 of the Commission's rules for the specific fixed
microwave services frequency bands.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
FM Translator Stations and Low Power FM Stations. FM translators
and Low Power FM Stations are classified in the industry for Radio
Stations. The Radio Stations industry comprises establishments
primarily engaged in broadcasting aural programs by radio to the
public. Programming may originate in their own studio, from an
affiliated network, or from external sources. The SBA small business
size standard for this industry classifies firms having $47 million or
less in annual receipts as small. U.S. Census Bureau data for 2017 show
that 2,963 firms operated during that year. Of that number, 1,879 firms
operated with revenue of less than $25 million per year. Therefore,
based on the SBA's size standard we conclude that the majority of FM
Translator stations and Low Power FM Stations are small. Additionally,
according to Commission data, as of March 31, 2025, there were 8,891 FM
Translator Stations and 1,976 Low Power FM licensed broadcast stations.
The Commission however does not compile and otherwise does not have
access to information on the revenue of these stations that would
permit it to determine how many of the stations would qualify as small
entities. For purposes of this regulatory flexibility analysis, we
presume the majority of these stations are small entities.
Future 24 GHz Licensees. 24 GHz spectrum services in the 24.25-
24.45 GHz and 24.75-25.25 GHz bands involve a fixed point-to-point,
point-to-multipoint, and multipoint-to-multipoint radio system in the
24.25-24.45 GHz band and in the 25.05-25.25 GHz band consisting of a
fixed main (nodal) station and a number of fixed user terminals. These
services are flexible-use wireless service that may encompass any
digital fixed service. Wireless Telecommunications Carriers (except
Satellite) is the closest industry with a SBA small business size
standard applicable to these services. The SBA size standard for this
industry classifies a business as small if it has 1,500 or fewer
employees. U.S. Census Bureau data for 2017 show that there were 2,893
firms that operated in this industry for the entire year. Of this
total, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
The Commission's small business size standards with respect to 24
GHz licensees involve eligibility for bidding credits and installment
payments in the auction of licenses for 24 GHz services. In 2019 in
Auction 102, 2,909 licenses in the 24 GHz band were auctioned as part
of the Commission's auction of Upper Microwave Flexible Use Service
licenses. For purposes of bidding credits, the Commission defined
``small business'' as an entity with average annual gross revenues that
did not exceed $55 million for the preceding three years average, and a
``very small business'' as an entity with average annual gross revenues
that did not exceed $20 million for the preceding three years. Of the
2,909 licenses auctioned in the 24 GHz band in Auction 102, 7 bidders
claimed small business status winning 34 licenses.
For those services subject to auctions, the Commission notes that
as a general matter, the number of winning bidders that qualify as
small businesses at the close of an auction does not necessarily
represent the number of small businesses currently in service. Further,
the Commission does not generally track subsequent business size
unless, in the context of assignments or transfers, unjust enrichment
issues are implicated. Additionally, since the Commission does not
collect data on the number of employees for licensees providing these
services, at this time we are not able to estimate the number of
licensees with active licenses that would qualify as small under the
SBA's small business size standard.
Government Transfer Bands. Licenses for wireless services in the
government transfer bands include the unpaired 1390-1392 MHz band, the
paired 1392-1395 MHz and 1432-1435 MHz bands (1.4 GHz band) and the
1670-1675 MHz band. Licensees in these bands are authorized to provide
fixed or mobile service, except aeronautical mobile service. Wireless
Telecommunications Carriers (except Satellite) is the closest industry
with a SBA small business size standard applicable to these services.
The SBA size standard for this industry classifies a business as small
if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017
show that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA size standard, the Commission estimates
that a majority of licensees in this industry can be considered small.
According to Commission data as of November 2021, there were four
licensees with sixty-seven active licenses in these service bands. The
Commission's small business size standards with respect to services in
government transfer bands involve eligibility for bidding credits and
installment payments in the auction of licenses for these services. For
the unpaired 1390-1392 MHz, 1670-1675 MHz, and the paired 1392-1395 MHz
and 1432-1435 MHz bands, an entity with average annual gross revenues
for the three preceding years not exceeding $40 million is defined as a
``small business,'' and an entity with average annual gross revenues
for the three preceding years not exceeding $15 million is defined as a
``very small business.'' For licenses in the 1670-1675 MHz service
band, a ``small business'' is defined as an entity that, together with
its affiliates and controlling interests, has average gross revenues
not exceeding $40 million for the preceding three years, and a ``very
small business'' is defined as an entity that, together with its
affiliates and controlling interests, has had average annual gross
revenues not exceeding $15 million for the preceding three years.
[[Page 26700]]
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Incumbent 24 GHz Licensees. Neither the Commission nor the SBA have
developed a small business size standard specifically for Incumbent 24
GHz licensees. Incumbent licensees who were relocated to the 24 GHz
band from the 18 GHz band and applicants who wish to provide services
in the 24 GHz band fall in this category. Wireless Telecommunications
Carriers (except Satellite) is the closest industry with a SBA small
business size standard. The SBA small business size standard classifies
businesses having 1,500 or fewer employees as small. For this industry,
U.S. Census Bureau data for 2017 show that there were 2,893 firms that
operated for the entire year. Of this total, 2,837 firms employed fewer
than 250 employees. Thus, under this category and the associated small
business size standard, the majority of firms can be considered small.
The Commission notes that the U.S. Census Bureau's use of the
classification ``firms'' does not track the number of ``licenses'' or
``licensees''. The Commission believes that there are only two
licensees in the 24 GHz band that were relocated from the 18 GHz band,
Teligent and TRW, Inc. It is our understanding that Teligent and its
related companies have less than 1,500 employees, although this may
change in the future. TRW is not a small entity. Thus, only one
incumbent licensee in the 24 GHz band is a small business.
Local Multipoint Distribution Service. A Local Multipoint
Distribution Service (LMDS) System is a fixed point-to-point or point-
to-multipoint radio system consisting of Local Multipoint Distribution
Service Hub Stations and their associated Local Multipoint Distribution
Service Subscriber Stations. LMDS is capable of offering subscribers a
variety of one and two-way broadband services, such as video
programming distribution; video teleconferencing; wireless local loop
telephony; and high speed data transmission, e.g. Internet access.
Wireless Telecommunications Carriers (except Satellite) is the closest
industry with a SBA small business size standard applicable to these
services. The SBA small business size standard for this industry
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2017 show that there were 2,893 firms that
operated in this industry for the entire year. Of this number, 2,837
firms employed fewer than 250 employees. Thus under the SBA size
standard, the Commission estimates that a majority of licensees in this
industry can be considered small.
According to Commission data as of December 2021, there were
approximately 524 active LMDS licenses. The Commission's small business
size standards with respect to LMDS involve eligibility for bidding
credits and installment payments in the auction of licenses for these
services. For the auction of LMDS licenses, the Commission defined a
``small business'' as an entity that, together with its affiliates and
controlling interests, has average gross revenues for the three
preceding years of more than $15 million but not more than $40 million,
and a very small business as an entity that, together with its
affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $15 million. Pursuant to
these definitions, 93 small and very small businesses won approximately
277 A Block licenses and 387 B Block licenses. In the re-auction of
LDMS licenses 74 percent of the licenses were won by small businesses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Local Resellers. Neither the Commission nor the SBA have developed
a small business size standard specifically for Local Resellers.
Telecommunications Resellers is the closest industry with a SBA small
business size standard. The Telecommunications Resellers industry
comprises establishments engaged in purchasing access and network
capacity from owners and operators of telecommunications networks and
reselling wired and wireless telecommunications services (except
satellite) to businesses and households. Establishments in this
industry resell telecommunications; they do not operate transmission
facilities and infrastructure. Mobile virtual network operators (MVNOs)
are included in this industry. The SBA small business size standard for
Telecommunications Resellers classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
1,386 firms in this industry provided resale services for the entire
year. Of that number, 1,375 firms operated with fewer than 250
employees. Additionally, based on Commission data in the 2022 Universal
Service Monitoring Report, as of December 31, 2021, there were 207
providers that reported they were engaged in the provision of local
resale services. Of these providers, the Commission estimates that 202
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, most of these providers can be considered
small entities.
Location and Monitoring Service (LMS). LMS operates in the 902-928
MHz frequency band. The band is allocated for primary use by Federal
Government radiolocation systems. Next in order of priority are uses
for industrial, scientific, and medical devices. Federal Government
fixed and mobile and LMS systems are secondary to both of these uses.
The remaining uses of the 902-928 MHz band include licensed amateur
radio operations and unlicensed Part 15 equipment, both of which are
secondary to all other uses of the band. LMS systems use non-voice
radio techniques to determine the location and status of mobile radio
units, and may transmit and receive voice and non-voice status and
instructional information related to such units. Wireless
Telecommunications Carriers (except Satellite) is the closest industry
with a SBA small business size standard applicable to these services.
The SBA small business size standard for this industry classifies a
business as small if it has 1,500 or fewer employees. U.S. Census
Bureau data for 2017 show that there were 2,893 firms that operated in
this industry for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Thus under the SBA size standard, the
Commission
[[Page 26701]]
estimates that a majority of licensees in this industry can be
considered small.
According to Commission data as of November 2021, there were two
licensees with approximately 354 active LMS licenses. The Commission's
small business size standards with respect to LMS involve eligibility
for bidding credits and installment payments in the auction of licenses
for these services. For the auction of LMS licenses, the Commission
defined a ``small business'' as an entity that, together with
controlling interests and affiliates with average annual gross revenues
for the preceding three years not to exceed $15 million, and a ``very
small business'' as an entity that, together with controlling interests
and affiliates with average annual gross revenues for the preceding
three years not to exceed $3 million. Pursuant to these definitions,
four winning bidders that claimed small business credits won 289
licenses in Auction 21, and four winning bidders that claimed small
business credits won 201 LMS licenses in Auction 43. Of these winning
bidders, only one had active licenses in November 2021.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Low Power FM Stations. The SBA small business size standard for
Radio Stations applies to low power FM stations. The Radio Stations
industry comprises establishments primarily engaged in broadcasting
aural programs by radio to the public. Programming may originate in
their own studio, from an affiliated network, or from external sources.
The SBA small business size standard for this industry classifies firms
having $47 million or less in annual receipts as small. U.S. Census
Bureau data for 2017 show that 2,963 firms in this industry operated
during that year. Of this number, 1,879 firms operated with revenue of
less than $25 million per year. Therefore, based on the SBA's size
standard we conclude that the majority low power FM stations are small.
Additionally, according to Commission data as of March 31, 2025,
there were 1,976 Low Power FM licensed broadcast stations and 8,891 FM
Translator Stations. The Commission does not compile and otherwise does
not have access to financial information for these stations that would
permit it to determine how many of the stations would qualify as small
entities under the SBA size standard. However, given that low power FM
stations and FM translators and boosters are very small and limited in
their operations and unlikely to have annual receipts anywhere near the
SBA small size standard, we will presume that these licensees qualify
as small entities under the SBA size standard.
Lower 700 MHz Band Licenses. The lower 700 MHz band encompasses
spectrum in the 698-746 MHz frequency bands. Permissible operations in
these bands include flexible fixed, mobile, and broadcast uses,
including mobile and other digital new broadcast operation; fixed and
mobile wireless commercial services (including FDD- and TDD-based
services); as well as fixed and mobile wireless uses for private,
internal radio needs, two-way interactive, cellular, and mobile
television broadcasting services. Wireless Telecommunications Carriers
(except Satellite) is the closest industry with a SBA small business
size standard applicable to licenses providing services in these bands.
The SBA small business size standard for this industry classifies a
business as small if it has 1,500 or fewer employees. U.S. Census
Bureau data for 2017 show that there were 2,893 firms that operated in
this industry for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Thus under the SBA size standard, the
Commission estimates that a majority of licensees in this industry can
be considered small.
According to Commission data as of December 2021, there were
approximately 2,824 active Lower 700 MHz Band licenses. The
Commission's small business size standards with respect to Lower 700
MHz Band licensees involve eligibility for bidding credits and
installment payments in the auction of licenses. For auctions of Lower
700 MHz Band licenses the Commission adopted criteria for three groups
of small businesses. A very small business was defined as an entity
that, together with its affiliates and controlling interests, has
average annual gross revenues not exceeding $15 million for the
preceding three years, a small business was defined as an entity that,
together with its affiliates and controlling interests, has average
gross revenues not exceeding $40 million for the preceding three years,
and an entrepreneur was defined as an entity that, together with its
affiliates and controlling interests, has average gross revenues not
exceeding $3 million for the preceding three years. In auctions for
Lower 700 MHz Band licenses seventy-two winning bidders claiming a
small business classification won 329 licenses, twenty-six winning
bidders claiming a small business classification won 214 licenses, and
three winning bidders claiming a small business classification won all
five auctioned licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Marine Radio Services. Maritime mobile service is a mobile service
between coast stations and ship stations, or between ship stations, or
between associated on-board communication stations. Survival craft
stations and emergency position indicating radio beacon (EPIRB)
stations also participate in this service. Small businesses in the
aviation and marine radio services use a marine very high frequency
(VHF), medium frequency (MF), or high frequency (HF) radio, any type of
EPIRB and/or radar, an aircraft radio, and/or any type of emergency
locator transmitter (ELT) and may provide fixed, mobile, or hybrid
voice or data communications. Wireless Telecommunications Carriers
(except Satellite) is the closest industry with a SBA small business
size standard applicable to these services. The SBA small business size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated in this industry for the entire
year. Of this number, 2,837 firms employed fewer than 250 employees.
Thus under the SBA size standard, the Commission
[[Page 26702]]
estimates that a majority of licensees in this industry can be
considered small.
The Commission's small business size standards with respect to
Marine Radio Services involve eligibility for bidding credits and
installment payments in the auction of VHF Public Coast licenses in the
157.1875-157.4500 MHz (ship transmit) and 161.775-162.0125 MHz (coast
transmit) bands. According to Commission data as December 2021, there
were approximately 262 active Public Coast licenses and 3,753 active
Maritime Coast licenses. For Public Coast license auction purposes,,
the Commission defined a ``small'' business as an entity that, together
with controlling interests and affiliates, has average gross revenues
for the preceding three years not to exceed $15 million dollars, and a
``very small'' business as an entity that, together with controlling
interests and affiliates, has average gross revenues for the preceding
three years not to exceed $3 million dollars. Pursuant to these
definitions, 3 small business bidders won 17 licenses, and 3 winning
bidders claiming a small business qualification won 9 licenses. As of
December 2021, two of the winning bidders in these auctions claiming
small business credits had active licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Multichannel Video Distribution and Data Service (MVDDS). MVDDS is
a fixed microwave service operating in the 12.2-12.7 GHz band that can
be used to provide various wireless services. Mobile and aeronautical
operations are prohibited. Wireless Telecommunications Carriers (except
Satellite) is the closest industry with a SBA small business size
standard applicable to these services. The SBA small business size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated in this industry for the entire
year. Of this number, 2,837 firms employed fewer than 250 employees.
Thus under the SBA size standard, the Commission estimates that a
majority of licensees in this industry can be considered small.
According to Commission data as of December 2021, there were 9
licensees with 250 active licenses in this service. The Commission's
small business size standards with respect MVDDS involve eligibility
for bidding credits and installment payments in the auction of licenses
for these services. For auctions of MVDDS licenses the Commission
adopted criteria for three groups of small businesses. A very small
business is an entity that, together with its affiliates and
controlling interests, has average annual gross revenues not exceeding
$3 million for the preceding three years, a small business is an entity
that, together with its affiliates and controlling interests, has
average gross revenues not exceeding $15 million for the preceding
three years, and an entrepreneur is an entity that, together with its
affiliates and controlling interests, has average gross revenues not
exceeding $40 million for the preceding three years. In two auctions
for MVDDs licenses, eight of the ten winning bidders who won 144
licenses claimed one of the small business status classifications, and
two of the three winning bidders who won 21 of 22 licenses, claimed one
of the small business status classifications. Five of the winning
bidders claiming a small business status classification in these
auctions had active licenses as of December 2021.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Multiple Address Systems (MAS). MAS are point-to-multipoint or
point-to-point radio communications systems used for either one-way or
two-way transmissions that operates in the 928/952/956 MHz, the 928/959
MHz or the 932/941 MHz bands. Entities using MAS spectrum, in general,
fall into two categories: (1) those using the spectrum for profit-based
uses, and (2) those using the spectrum for private internal uses to
accommodate internal communications needs. MAS serves an essential role
in a range of industrial, safety, business, and land transportation
activities and are used by companies of all sizes operating in
virtually all U.S. business categories, and by all types of public
safety entities. Wireless Telecommunications Carriers (except
Satellite) is the closest industry with a SBA small business size
standard applicable to these services. The SBA small business size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated in this industry for the entire
year. Of this number, 2,837 firms employed fewer than 250 employees.
Thus under the SBA size standard, the Commission estimates that a
majority of licensees in this industry can be considered small.
According to Commission data as December 2021, there were
approximately 9,798 active MAS licenses. The Commission's small
business size standards with respect to MAS involve eligibility for
bidding credits and installment payments in the auction of licenses for
these services. For the auction of MAS licenses, the Commission defined
``small business'' as an entity that has average annual gross revenues
of less than $15 million over the three previous calendar years, and a
``very small business'' is defined as an entity that, together with its
affiliates, has average annual gross revenues of not more than $3
million over the preceding three calendar years. In auctions for MAS
licenses, 7 winning bidders claimed status as small or very small
businesses and won 611 of 5,104 licenses, and 5 of 26 winning bidders
claimed status as small or very small businesses and won 1,891 of 4,226
licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with
[[Page 26703]]
active licenses that would qualify as small under the SBA's small
business size standard.
Narrowband Personal Communications Services. Narrowband Personal
Communications Services (Narrowband PCS) are PCS services operating in
the 901-902 MHz, 930-931 MHz, and 940-941 MHz bands. PCS services are
radio communications that encompass mobile and ancillary fixed
communication that provide services to individuals and businesses and
can be integrated with a variety of competing networks. Wireless
Telecommunications Carriers (except Satellite) is the closest industry
with a SBA small business size standard applicable to these services.
The SBA small business size standard for this industry classifies a
business as small if it has 1,500 or fewer employees. U.S. Census
Bureau data for 2017 show that there were 2,893 firms that operated in
this industry for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Thus under the SBA size standard, the
Commission estimates that a majority of licensees in this industry can
be considered small.
According to Commission data as of December 2021, there were
approximately 4,211 active Narrowband PCS licenses. The Commission's
small business size standards with respect to Narrowband PCS involve
eligibility for bidding credits and installment payments in the auction
of licenses for these services. For the auction of these licenses, the
Commission defined a ``small business'' as an entity that, together
with affiliates and controlling interests, has average gross revenues
for the three preceding years of not more than $40 million. A ``very
small business'' is defined as an entity that, together with affiliates
and controlling interests, has average gross revenues for the three
preceding years of not more than $15 million. Pursuant to these
definitions, 7 winning bidders claiming small and very small bidding
credits won approximately 359 licenses. One of the winning bidders
claiming a small business status classification in these Narrowband PCS
license auctions had an active license as of December 2021.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Noncommercial Educational (NCE) and Public Broadcast Stations.
Noncommercial educational broadcast stations and public broadcast
stations are television or radio broadcast stations which under the
Commission's rules are eligible to be licensed by the Commission as a
noncommercial educational radio or television broadcast station and are
owned and operated by a public agency or nonprofit private foundation,
corporation, or association; or are owned and operated by a
municipality which transmits only noncommercial programs for education
purposes.
The SBA small business size standards and U.S. Census Bureau data
classify radio stations and television broadcasting separately and both
categories may include both noncommercial and commercial stations. The
SBA small business size standard for both radio stations and television
broadcasting classify firms having $47 million or less in annual
receipts as small. For Radio Stations, U.S. Census Bureau data for 2017
show that 1,879 of the 2,963 firms that operated during that year had
revenue of less than $25 million per year. For Television Broadcasting,
U.S. Census Bureau data for 2017 show that 657 of the 744 firms that
operated for the entire year had revenue of less than $25 million per
year. While the U.S. Census Bureau data does not indicate the number of
non-commercial stations, we estimate that under the applicable SBA size
standard the majority of noncommercial educational broadcast stations
and public broadcast stations are small entities.
According to Commission data as of March 31, 2025, there were 5,017
licensed noncommercial educational radio and television stations. In
addition, the Commission estimates as March 31, 2025, there were 383
licensed noncommercial educational (NCE) television stations, 383 Class
A TV stations, 1,786 LPTV stations and 3,099 TV translator stations.
The Commission does not compile and otherwise does not have access to
financial information for these stations that permit it to determine
how many stations qualify as small entities under the SBA small
business size standards. However, given the nature of these services,
we will presume that all noncommercial educational and public broadcast
stations qualify as small entities under the above SBA small business
size standards.
Offshore Radiotelephone Service. This service operates on several
UHF television broadcast channels that are not used for television
broadcasting in the coastal areas of states bordering the Gulf of
America, and is governed by subpart I of Part 22 of the Commission's
Rules. Wireless Telecommunications Carriers (except Satellite) is the
closest industry with a SBA small business size standard applicable to
this service. The SBA small business size standard for this industry
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2017 show that there were 2,893 firms that
operated in this industry for the entire year. Of this number, 2,837
firms employed fewer than 250 employees. Thus, under the SBA size
standard, the Commission estimates that a majority of licensees in this
industry can be considered small. Additionally, based on Commission
data, as of December 2021, there was one licensee with an active
license in this service. However, since the Commission does not collect
data on the number of employees for this service, at this time we are
not able to estimate the number of licensees that would qualify as
small under the SBA's small business size standard.
Paging Services. Paging services encompass spectrum in the lower
paging bands (35-36 MHz, 43-44 MHz, 152-159 MHz, 454-460 MHz) and in
the upper paging bands (929-931 MHz), and includes services provided by
both private and common carriers. These services fall in the Wireless
Telecommunications Carriers (except Satellite) industry. Illustrative
examples of services in this industry include paging services, except
satellite; two-way paging communications carriers, except satellite;
and radio paging services communications carriers. The SBA small
business size standard classifies a business in this industry as small
if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017
show that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Additionally, based on Commission data in the 2022 Universal
Service Monitoring Report, as of December 31, 2021, there were 76
providers that reported they were engaged in the provision of paging
and messaging services. Of these providers, the Commission estimates
that all 76 providers have 1,500 or fewer employees. Consequently,
using the SBA's small business size standard,
[[Page 26704]]
most of these providers can be considered small entities.
Payphone Service Providers (PSPs). Neither the Commission nor the
SBA have developed a small business size standard specifically for
payphone service providers. Telecommunications Resellers is the closest
industry with a SBA small business size standard. The
Telecommunications Resellers industry comprises establishments engaged
in purchasing access and network capacity from owners and operators of
telecommunications networks and reselling wired and wireless
telecommunications services (except satellite) to businesses and
households. Establishments in this industry resell telecommunications;
they do not operate transmission facilities and infrastructure. Mobile
virtual network operators (MVNOs) are included in this industry. The
SBA small business size standard for Telecommunications Resellers
classifies a business as small if it has 1,500 or fewer employees. U.S.
Census Bureau data for 2017 show that 1,386 firms in this industry
provided resale services for the entire year. Of that number, 1,375
firms operated with fewer than 250 employees. Additionally, based on
Commission data in the 2022 Universal Service Monitoring Report, as of
December 31, 2021, there were 36 providers that reported they were
engaged in the provision of payphone services. Of these providers, the
Commission estimates that 32 providers have 1,500 or fewer employees.
Consequently, using the SBA's small business size standard, most of
these providers can be considered small entities.
Public Safety Radio Licensees. As a general matter, Public Safety
Radio Pool licensees include police, fire, local government, forestry
conservation, highway maintenance, and emergency medical services.
Because of the vast array of public safety licensees, the Commission
has not developed a small business size standard specifically
applicable to public safety licensees. Wireless Telecommunications
Carriers (except Satellite) is the closest industry with a SBA small
business size standard applicable to these services. The SBA small
business size standard for this industry classifies a business as small
if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017
show that there were 2,893 firms that operated in this industry for the
entire year. Of this number, 2,837 firms employed fewer than 250
employees. Thus under the SBA size standard, the Commission estimates
that a majority of licensees in this industry can be considered small.
With respect to local governments, in particular, since many
governmental entities comprise the licensees for these services, we
include under public safety services the number of government entities
affected. According to Commission records as of December 2021, there
were approximately 127,019 active licenses within these services.
Included in this number were 3,577 active licenses in the Public Safety
4.9 GHz band. Since the Commission does not collect data on the number
of employees for licensees providing these services, at this time we
are therefore not able to estimate the number of licensees with active
licenses that would qualify as small under the SBA's small business
size standard.
Radio Stations. This industry is comprised of ``establishments
primarily engaged in broadcasting aural programs by radio to the
public.'' Programming may originate in their own studio, from an
affiliated network, or from external sources. The SBA small business
size standard for this industry classifies firms having $47 million or
less in annual receipts as small. U.S. Census Bureau data for 2017 show
that 2,963 firms operated in this industry during that year. Of this
number, 1,879 firms operated with revenue of less than $25 million per
year. Based on this data and the SBA's small business size standard, we
estimate a majority of such entities are small entities.
The Commission estimates that as of March 31, 2025, there were
4,367 licensed commercial AM radio stations and 6,621 licensed
commercial FM radio stations, for a combined total of 10,988 commercial
radio stations. Of this total, 10,987 stations (or 99.99 percent) had
revenues of $47 million or less in 2023, according to Commission staff
review of the BIA Kelsey Inc. Media Access Pro Database (BIA) on April
4, 2025, and therefore these licensees qualify as small entities under
the SBA definition. In addition, the Commission estimates that as of
March 31, 2025, there were 4,634 licensed noncommercial (NCE) FM radio
stations, 1,976 low power FM (LPFM) stations, and 8,891 FM translators
and boosters. The Commission however does not compile, and otherwise
does not have access to financial information for these radio stations
that would permit it to determine how many of these stations qualify as
small entities under the SBA small business size standard.
Nevertheless, given the SBA's large annual receipts threshold for this
industry and the nature of radio station licensees, we presume that all
of these entities qualify as small entities under the above SBA small
business size standard.
We note, however, that in assessing whether a business concern
qualifies as ``small'' under the above definition, business (control)
affiliations must be included. Our estimate, therefore, likely
overstates the number of small entities that might be affected by our
action, because the revenue figure on which it is based does not
include or aggregate revenues from affiliated companies. In addition,
another element of the definition of ``small business'' requires that
an entity not be dominant in its field of operation. We are unable at
this time to define or quantify the criteria that would establish
whether a specific radio or television broadcast station is dominant in
its field of operation. Accordingly, the estimate of small businesses
to which the rules may apply does not exclude any radio or television
station from the definition of a small business on this basis and is
therefore possibly over-inclusive. An additional element of the
definition of ``small business'' is that the entity must be
independently owned and operated. Because it is difficult to assess
these criteria in the context of media entities, the estimate of small
businesses to which the rules may apply does not exclude any radio or
television station from the definition of a small business on this
basis and similarly may be over-inclusive.
Rural Radiotelephone Service. Neither the Commission nor the SBA
have developed a small business size standard specifically for small
businesses providing Rural Radiotelephone Service. Rural Radiotelephone
Service is radio service in which licensees are authorized to offer and
provide radio telecommunication services for hire to subscribers in
areas where it is not feasible to provide communication services by
wire or other means. A significant subset of the Rural Radiotelephone
Service is the Basic Exchange Telephone Radio System (BETRS). Wireless
Telecommunications Carriers (except Satellite), is the closest
applicable industry with a SBA small business size standard. The SBA
small business size standard for Wireless Telecommunications Carriers
(except Satellite) classifies firms having 1,500 or fewer employees as
small. For this industry, U.S. Census Bureau data for 2017 show that
there were 2,893 firms that operated for the entire year. Of this
total, 2,837 firms employed fewer than 250 employees. Thus under the
SBA size standard, the Commission estimates that the majority of Rural
Radiotelephone Services firm are small
[[Page 26705]]
entities. Based on Commission data as of December 27, 2021, there were
approximately 119 active licenses in the Rural Radiotelephone Service.
The Commission does not collect employment data from these entities
holding these licenses and therefore we cannot estimate how many of
these entities meet the SBA small business size standard.
Specialized Mobile Radio Licenses. Special Mobile Radio (SMR)
licenses allow licensees to provide land mobile communications services
(other than radiolocation services) in the 800 MHz and 900 MHz spectrum
bands on a commercial basis including but not limited to services used
for voice and data communications, paging, and facsimile services, to
individuals, Federal Government entities, and other entities licensed
under Part 90 of the Commission's rules. Wireless Telecommunications
Carriers (except Satellite) is the closest industry with a SBA small
business size standard applicable to these services. The SBA size
standard for this industry classifies a business as small if it has
1,500 or fewer employees. For this industry, U.S. Census Bureau data
for 2017 show that there were 2,893 firms in this industry that
operated for the entire year. Of this number, 2,837 firms employed
fewer than 250 employees. Additionally, based on Commission data in the
2022 Universal Service Monitoring Report, as of December 31, 2021,
there were 95 providers that reported they were of SMR (dispatch)
providers. Of this number, the Commission estimates that all 95
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, these 119 SMR licensees can be considered
small entities.
Based on Commission data as of December 2021, there were 3,924
active SMR licenses. However, since the Commission does not collect
data on the number of employees for licensees providing SMR services,
at this time we are not able to estimate the number of licensees with
active licenses that would qualify as small under the SBA's small
business size standard. Nevertheless, for purposes of this analysis the
Commission estimates that the majority of SMR licensees can be
considered small entities using the SBA's small business size standard.
Television Broadcasting. This industry is comprised of
``establishments primarily engaged in broadcasting images together with
sound.'' These establishments operate television broadcast studios and
facilities for the programming and transmission of programs to the
public. These establishments also produce or transmit visual
programming to affiliated broadcast television stations, which in turn
broadcast the programs to the public on a predetermined schedule.
Programming may originate in their own studio, from an affiliated
network, or from external sources. The SBA small business size standard
for this industry classifies businesses having $47 million or less in
annual receipts as small. 2017 U.S. Census Bureau data indicate that
744 firms in this industry operated for the entire year. Of that
number, 657 firms had revenue of less than $25 million per year. Based
on this data we estimate that the majority of television broadcasters
are small entities under the SBA small business size standard.
As of March 31, 2025, there were 1,384 licensed commercial
television stations. Of this total, 1,307 stations (or 94.4 percent)
had revenues of $47 million or less in 2023, according to Commission
staff review of the BIA Kelsey Inc. Media Access Pro Television
Database (BIA) on April 4, 2025, and therefore these licensees qualify
as small entities under the SBA definition. In addition, the Commission
estimates as of March 31, 2025, there were 383 licensed noncommercial
educational (NCE) television stations, 383 Class A TV stations, 1,786
LPTV stations and 3,099 TV translator stations. The Commission,
however, does not compile and otherwise does not have access to
financial information for these television broadcast stations that
would permit it to determine how many of these stations qualify as
small entities under the SBA small business size standard.
Nevertheless, given the SBA's large annual receipts threshold for this
industry and the nature of these television station licensees, we
presume that all of these entities qualify as small entities under the
above SBA small business size standard.
Toll Resellers. Neither the Commission nor the SBA have developed a
small business size standard specifically for Toll Resellers.
Telecommunications Resellers is the closest industry with a SBA small
business size standard. The Telecommunications Resellers industry
comprises establishments engaged in purchasing access and network
capacity from owners and operators of telecommunications networks and
reselling wired and wireless telecommunications services (except
satellite) to businesses and households. Establishments in this
industry resell telecommunications; they do not operate transmission
facilities and infrastructure. Mobile virtual network operators (MVNOs)
are included in this industry. The SBA small business size standard for
Telecommunications Resellers classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
1,386 firms in this industry provided resale services for the entire
year. Of that number, 1,375 firms operated with fewer than 250
employees. Additionally, based on Commission data in the 2022 Universal
Service Monitoring Report, as of December 31, 2021, there were 457
providers that reported they were engaged in the provision of toll
services. Of these providers, the Commission estimates that 438
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, most of these providers can be considered
small entities.
Upper 700 MHz Band Licenses. The upper 700 MHz band encompasses
spectrum in the 746-806 MHz bands. Upper 700 MHz D Block licenses are
nationwide licenses associated with the 758-763 MHz and 788-793 MHz
bands. Permissible operations in these bands include flexible fixed,
mobile, and broadcast uses, including mobile and other digital new
broadcast operation; fixed and mobile wireless commercial services
(including FDD- and TDD-based services); as well as fixed and mobile
wireless uses for private, internal radio needs, two-way interactive,
cellular, and mobile television broadcasting services. Wireless
Telecommunications Carriers (except Satellite) is the closest industry
with a SBA small business size standard applicable to licenses
providing services in these bands. The SBA small business size standard
for this industry classifies a business as small if it has 1,500 or
fewer employees. U.S. Census Bureau data for 2017 show that there were
2,893 firms that operated in this industry for the entire year. Of that
number, 2,837 firms employed fewer than 250 employees. Thus, under the
SBA size standard, the Commission estimates that a majority of
licensees in this industry can be considered small.
According to Commission data as of December 2021, there were
approximately 152 active Upper 700 MHz Band licenses. The Commission's
small business size standards with respect to Upper 700 MHz Band
licensees involve eligibility for bidding credits and installment
payments in the auction of licenses. For the auction of these licenses,
the Commission defined a ``small business'' as an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding $40 million for the preceding three years, and a
``very
[[Page 26706]]
small business'' an entity that, together with its affiliates and
controlling principals, has average gross revenues that are not more
than $15 million for the preceding three years. Pursuant to these
definitions, three winning bidders claiming very small business status
won five of the twelve available licenses.
In frequency bands where licenses were subject to auction, the
Commission notes that as a general matter, the number of winning
bidders that qualify as small businesses at the close of an auction
does not necessarily represent the number of small businesses currently
in service. Further, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated. Additionally, since the
Commission does not collect data on the number of employees for
licensees providing these services, at this time we are not able to
estimate the number of licensees with active licenses that would
qualify as small under the SBA's small business size standard.
Wireless Broadband internet Access Service Providers (Wireless ISPs
or WISPs). Providers of wireless broadband internet access service
include fixed and mobile wireless providers. The Commission defines a
WISP as ``[a] company that provides end-users with wireless access to
the internet[.]'' Wireless service that terminates at an end user
location or mobile device and enables the end user to receive
information from and/or send information to the internet at information
transfer rates exceeding 200 kilobits per second (kbps) in at least one
direction is classified as a broadband connection under the
Commission's rules. Neither the SBA nor the Commission have developed a
size standard specifically applicable to Wireless Broadband internet
Access Service Providers. The closest applicable industry with an SBA
small business size standard is Wireless Telecommunications Carriers
(except Satellite). The SBA size standard for this industry classifies
a business as small if it has 1,500 or fewer employees. U.S. Census
Bureau data for 2017 show that there were 2,893 firms in this industry
that operated for the entire year. Of that number, 2,837 firms employed
fewer than 250 employees.
Additionally, according to Commission data on internet access
services as of June 30, 2019, nationwide there were approximately 1,237
fixed wireless and 70 mobile wireless providers of connections over 200
kbps in at least one direction. The Commission does not collect data on
the number of employees for providers of these services, therefore, at
this time we are not able to estimate the number of providers that
would qualify as small under the SBA's small business size standard.
However, based on data in the Commission's 2022 Communications
Marketplace Report on the small number of large mobile wireless
nationwide and regional facilities-based providers, the dozens of small
regional facilities-based providers and the number of wireless mobile
virtual network providers in general, as well as on terrestrial fixed
wireless broadband providers in general, we believe that the majority
of wireless internet access service providers can be considered small
entities.
Wireless Telecommunications Carriers (except Satellite). This
industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the
airwaves. Establishments in this industry have spectrum licenses and
provide services using that spectrum, such as cellular services, paging
services, wireless internet access, and wireless video services. The
SBA size standard for this industry classifies a business as small if
it has 1,500 or fewer employees. U.S. Census Bureau data for 2017 show
that there were 2,893 firms in this industry that operated for the
entire year. Of that number, 2,837 firms employed fewer than 250
employees. Additionally, based on Commission data in the 2022 Universal
Service Monitoring Report, as of December 31, 2021, there were 594
providers that reported they were engaged in the provision of wireless
services. Of these providers, the Commission estimates that 511
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, most of these providers can be considered
small entities.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
The RFA directs agencies to describe the economic impact proposed
rules on small entities, as well as projected reporting, recordkeeping
and other compliance requirements, including an estimate of the classes
of small entities which will be subject to the requirement and the type
of professional skills necessary for preparation of the report or
record.
The NPRM proposes to amend existing rules to better reflect current
policies and practice and to clarify and harmonize certain rule
provisions. We estimate that the rule changes discussed in this NPRM,
if adopted, would result in a reduction in the time and expense
associated with filing section 310(b)(4) petitions for declaratory
ruling as well as no significant material changes to reporting,
recordkeeping, or compliance obligations for small and other Commission
licensees. For example, the NPRM proposes to clarify and streamline the
section 310 foreign ownership rules as applied to both broadcast and
common carrier licensees by defining the terms ``controlling U.S.
parent'' to make our rules consistent with our longstanding practices
without disturbing or contradicting the substantive requirements in
section 310(b)(4). Other proposals would, if adopted, clarify the
requirements for trusts and trustees and the treatment of deemed voting
interests for specific and advance approval requests to avoid
duplicative filings and reduce the burdens imposed on petitioners
subjection to section 310(b). This NPRM also seeks comment on the
expected benefits of the proposals, whether the proposals offer
sufficient predictability to Commission licensees, whether the
proposals offer licensees flexibility in structuring their ownership
chains, and whether the proposals would result in more streamlined
Commission processes.
In addition, for all services subject to section 310(b), the NPRM
proposes to add text in our rules to state the existing requirement
that remedial petitions for declaratory ruling contain all of the
information required for an initial petition for declaratory ruling and
not just the information related to the newly discovered non-compliant
interest(s). The proposed rule amendments may result in a modest
paperwork obligation for small businesses and other entities that are
not already aware of the existing requirement. The minimal burdens
would be offset by the benefit of promoting a more efficient
processing, avoiding confusion, and promoting regulatory consistency.
In addition, the NPRM proposes to clarify that, with respect to
petitions for declaratory ruling that request approval for certain
foreign investors to increase their equity and/or voting interests in
the U.S. parent for all services subject to section 310(b), there is no
Commission requirement that such foreign investor must reside within
the U.S., which would have no regulatory burden on small entities.
Although U.S. residency status has not previously been required or
expected under the foreign ownership rules, this clarifies that a
foreign investor's lack of a U.S. residence is not a factor in the
[[Page 26707]]
Commission's assessment of whether a petition for declaratory ruling is
in the public interest. We believe that this rule clarification will
not have an impact on a small business entity.
The NPRM seeks comment on extending the Commission's methodology
for determining foreign ownership levels and the remedial process for
inadvertent violations of the foreign ownership benchmarks to privately
held entities for all services subject to section 310(b), which, if
adopted, we believe would ease the regulatory burden on small entities.
The NPRM also seeks comment on codifying the requirement that any
amendments to a petition for declaratory ruling must be filed as a
complete restatement of the initial petition, which may result in a
modest paperwork obligation for small and other entities.
With respect to broadcast licensees only, the NPRM seeks comment on
how the Commission, including the Media Bureau pursuant to delegated
authority, should process applications, or certain types of
applications, filed by a broadcast licensee during the remedial process
set forth in Sec. 1.5004(f) of the Commission's rules, which would
promote regulatory certainty and consistency for small and other
entities. Similarly, the NPRM seeks comment on changes to the
Commission's foreign ownership rules that would assess the foreign
ownership levels of NCE stations, including full-service FM radio and
television stations, and LPFM stations, by considering their unique
structures. Similarly, the Commission's current rules do not address
various procedural issues that might arise in the context of a filing
window for noncommercial authorizations in the context of companies
with foreign ownership that are eligible to apply for new construction
permits. Considering how to best incorporate the structures of these
stations and revising these processes would promote regulatory
certainty for small entities and overall transparency of the process.
The Commission believes that the streamlining proposals and other
options on which the Commission seeks comment in this NPRM will reduce
costs and burdens currently imposed on licensees, including those
licensees that are small entities, and accelerate the foreign ownership
review process, while continuing to ensure that the Commission has the
information needed to carry out our statutory duties. We believe that
these revisions will make the rules more transparent and accessible to
small entities and thus reduce the need for professional services such
as expert engineering or legal assistance with compliance and reporting
requirements. We anticipate the information we receive in comments,
including where requested, information on costs and benefits, will help
the Commission identify and evaluate relevant compliance issues
impacting small entities, including costs to hire professionals to
comply with these rules, and other burdens that may result from the
proposed revisions in the NPRM.
E. Steps Taken To Minimize the Significant Economic Impact on Small
Entities and Significant Alternatives Considered
The RFA directs agencies to provide a description of any
significant alternatives to the proposed rules that would accomplish
the stated objectives of applicable statutes, and minimize any
significant economic impact on small entities. The discussion is
required to include alternatives such as: ``(1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities.''
In the NPRM, the Commission considered alternatives such as
amending rules to provide a clearer path for foreign investment in
licensees by aligning Commission procedures with developments in the
market, while continuing to protect important interests related to
national security, law enforcement, foreign policy, trade policy, and
other public policy goals, many of which may minimize the impact of the
regulations on small entities.
The Commission seeks comment on whether any of the burdens
associated the filing, recordkeeping and reporting requirements
described in the NPRM can be minimized for small entities. The
Commission is open to considering alternatives to the rules proposed in
the NPRM, including but not limited to alternatives that will minimize
significant economic burdens on small and other licensee entities.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
None.
List of Subjects in 47 CFR Part 1
Administrative practice and procedure, Authority delegations
(government agencies), Communications, Communications common carriers,
Organization and functions (Government agencies), Reporting and
recordkeeping requirements.
Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
Proposed Rules
For the reasons discussed in this preamble, the Federal
Communications Commission proposes to amend 47 CFR part 1 as follows:
PART 1--PRACTICE AND PROCEDURE
0
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. chs. 2, 5, 9, 13; 28 U.S.C. 2461 note; 47
U.S.C. 1754, unless otherwise noted.
0
2. Revise and republish subpart T, consisting of Sec. Sec. 1.5000
through 1.5004, to read as follows:
Subpart T--Foreign Ownership of Broadcast, Common Carrier,
Aeronautical En Route, and Aeronautical Fixed Radio Station
Licenses
Sec.
1.5000 Citizenship and filing requirements under section 310(b) of
the Communications Act of 1934, as amended.
1.5001 Contents of petitions for declaratory ruling under section
310(b) of the Communications Act of 1934, as amended.
1.5002 How to calculate indirect equity and voting interests.
1.5003 Insulation criteria for interests in limited partnerships,
limited liability partnerships, and limited liability companies.
1.5004 Routine terms and conditions.
Sec. 1.5000 Citizenship and filing requirements under section 310(b)
of the Communications Act of 1934, as amended.
The rules in this subpart establish the requirements and conditions
for obtaining the Commission's prior approval of foreign ownership in
broadcast, common carrier, aeronautical en route, and aeronautical
fixed radio station licensees and common carrier spectrum lessees that
would exceed the 25 percent benchmarks in section 310(b)(4) of the Act.
These rules also establish the requirements and conditions for
obtaining the Commission's prior approval of foreign
[[Page 26708]]
ownership in common carrier (but not broadcast, aeronautical en route
or aeronautical fixed) radio station licensees and spectrum lessees
that would exceed the 20 percent limit in section 310(b)(3) of the Act.
These rules also establish the methodology applicable to eligible U.S.
public companies for purposes of determining and ensuring their
compliance with the foreign ownership limitations set forth in sections
310(b)(3) and 310(b)(4) of the Act.
(a)(1) A broadcast, common carrier, aeronautical en route or
aeronautical fixed radio station licensee or common carrier spectrum
lessee shall file a petition for declaratory ruling to obtain
Commission approval under section 310(b)(4) of the Act, and obtain such
approval, before the aggregate foreign ownership of any controlling
U.S. parent exceeds, directly and/or indirectly, 25 percent of the
controlling U.S. parent's equity interests and/or 25 percent of its
voting interests. An applicant for a broadcast, common carrier,
aeronautical en route or aeronautical fixed radio station license or
common carrier spectrum leasing arrangement shall file the petition for
declaratory ruling required by this paragraph at the same time that it
files its application.
(i) Paragraph (a)(1) of this section implements the Commission's
foreign ownership policies under section 310(b)(4) of the Act, 47
U.S.C. 310(b)(4), for broadcast, common carrier, aeronautical en route,
and aeronautical fixed radio station licensees and common carrier
spectrum lessees. It applies to foreign equity and/or voting interests
that are held, or would be held, directly and/or indirectly in a
controlling U.S. parent that itself directly or indirectly controls a
broadcast, common carrier, aeronautical en route, or aeronautical fixed
radio station licensee or common carrier spectrum lessee. A foreign
individual or entity that seeks to hold a controlling interest in such
a licensee or spectrum lessee must hold its controlling interest
indirectly, in a controlling U.S. parent that itself directly or
indirectly controls the licensee or spectrum lessee. Such controlling
interests are subject to section 310(b)(4) and the requirements of
paragraph (a)(1) of this section. The Commission assesses foreign
ownership interests subject to section 310(b)(4) separately from
foreign ownership interests subject to section 310(b)(3).
(ii) [Reserved]
(2) A common carrier radio station licensee or spectrum lessee
shall file a petition for declaratory ruling to obtain approval under
the Commission's section 310(b)(3) forbearance approach, and obtain
such approval, before aggregate foreign ownership, held through one or
more intervening U.S.- organized entities that hold non-controlling
equity and/or voting interests in the licensee, along with any foreign
interests held directly in the licensee or spectrum lessee, exceeds 20
percent of its equity interests and/or 20 percent of its voting
interests. An applicant for a common carrier radio station license or
spectrum leasing arrangement shall file the petition for declaratory
ruling required by this paragraph at the same time that it files its
application. Foreign interests held directly in a licensee or spectrum
lessee, or other than through U.S.-organized entities that hold non-
controlling equity and/or voting interests in the licensee or spectrum
lessee, shall not be permitted to exceed 20 percent.
(i) Paragraph (a)(2) of this section implements the Commission's
section 310(b)(3) forbearance approach adopted in the First Report and
Order in IB Docket No. 11-133, FCC 12-93 (released Aug. 17, 2012), 77
FR 50628 (Aug. 22, 2012). The section 310(b)(3) forbearance approach
applies only to foreign equity and voting interests that are held, or
would be held, in a common carrier licensee or spectrum lessee through
one or more intervening U.S.-organized entities that do not control the
licensee or spectrum lessee. Foreign equity and/or voting interests
that are held, or would be held, directly in a licensee or spectrum
lessee, or indirectly other than through an intervening U.S.-organized
entity, are not subject to the Commission's section 310(b)(3)
forbearance approach and shall not be permitted to exceed the 20
percent limit in section 310(b)(3) of the Act, 47 U.S.C. 310(b)(3). The
Commission's forbearance approach does not apply to broadcast,
aeronautical en route or aeronautical fixed radio station licenses.
(ii) [Reserved]
(3) Examples under paragraphs (a)(1) and (2) of this section--(i)
Example 1. U.S.-organized Corporation A is preparing an application to
acquire a common carrier radio license by assignment from another
licensee. U.S.-organized Corporation A is wholly owned and controlled
by U.S.-organized Corporation B. U.S.-organized Corporation B is 51
percent owned and controlled by U.S.-organized Corporation C, which is,
in turn, wholly owned and controlled by foreign-organized Corporation
D. The remaining non-controlling 49 percent equity and voting interests
in U.S.-organized Corporation B are held by U.S.-organized Corporation
X, which is, in turn, wholly owned and controlled by U.S. citizens.
Paragraph (a)(1) of this section requires that U.S.-organized
Corporation A file a petition for declaratory ruling to obtain
Commission approval of the 51 percent foreign ownership of its
controlling U.S. parent, Corporation B, by foreign-organized
Corporation D, which exceeds the 25 percent benchmarks in section
310(b)(4) of the Act for both equity interests and voting interests.
Corporation A is also required to identify and request specific
approval in its petition for any foreign individual or entity, or
``group,'' as defined in paragraph (d) of this section, that holds
directly and/or indirectly more than 5 percent of Corporation B's total
outstanding capital stock (equity) and/or voting stock, or a
controlling interest in Corporation B, unless the foreign investment is
exempt under Sec. 1.5001(i)(3).
(ii) Example 2. U.S.-organized Corporation A is preparing an
application to acquire a common carrier radio license by assignment
from another licensee. U.S.-organized Corporation A is 51 percent owned
and controlled by U.S.-organized Corporation B, which is, in turn,
wholly owned and controlled by U.S. citizens. The remaining non-
controlling 49 percent equity and voting interests in U.S.-organized
Corporation A are held by U.S.-organized Corporation X, which is, in
turn, wholly owned and controlled by foreign-organized Corporation Y.
Paragraph (a)(2) of this section requires that U.S.-organized
Corporation A file a petition for declaratory ruling to obtain
Commission approval of the non-controlling 49 percent foreign ownership
of U.S.-organized Corporation A by foreign-organized Corporation Y
through U.S.-organized Corporation X, which exceeds the 20 percent
limit in section 310(b)(3) of the Act for both equity interests and
voting interests. U.S.-organized Corporation A is also required to
identify and request specific approval in its petition for any foreign
individual or entity, or ``group,'' as defined in paragraph (d) of this
section, that holds an equity and/or voting interest in foreign-
organized Corporation Y that, when multiplied by 49 percent, would
exceed 5 percent of U.S.-organized Corporation A's equity and/or voting
interests, unless the foreign investment is exempt under Sec.
1.5001(i)(3).
(iii) Example 3. U.S.-organized Corporation A is preparing an
application to acquire a common carrier radio license by assignment
from another licensee. U.S.-organized Corporation A is 51 percent owned
and controlled by U.S.-organized
[[Page 26709]]
Corporation B, which is, in turn, wholly owned and controlled by
foreign-organized Corporation C. The remaining non-controlling 49
percent equity and voting interests in U.S.-organized Corporation A are
held by U.S.-organized Corporation X, which is, in turn, wholly owned
and controlled by foreign-organized Corporation Y. Paragraphs (a)(1)
and (a)(2) of this section require that U.S.-organized Corporation A
file a petition for declaratory ruling to obtain Commission approval of
foreign-organized Corporation C's 100 percent ownership interest in
U.S.-organized parent, Corporation B, and of foreign-organized
Corporation Y's noncontrolling, 49 percent foreign ownership interest
in U.S.-organized Corporation A through U.S-organized Corporation X,
which exceed the 25 percent benchmark and 20 percent limit in sections
310(b)(4) and 310(b)(3) of the Act, respectively, for both equity
interests and voting interests. U.S-organized Corporation A's petition
also must identify and request specific approval for ownership
interests held by any foreign individual, entity, or ``group,'' as
defined in paragraph (d) of this section, to the extent required by
Sec. 1.5001(i).
(b) Except for petitions involving broadcast stations only, the
petition for declaratory ruling required by paragraph (a) of this
section shall be filed electronically through the International
Communications Filing System (ICFS) or any successor system thereto.
For information on filing a petition through ICFS, see subpart Y of
this part and the ICFS homepage at https://www.fcc.gov/icfs. Petitions
for declaratory ruling required by paragraph (a) of this section
involving broadcast stations only shall be filed electronically on the
internet through the Media Bureau's Licensing and Management System
(LMS) or any successor system thereto when submitted to the Commission
as part of an application for a construction permit, assignment, or
transfer of control of a broadcast license; if there is no associated
construction permit, assignment or transfer of control application,
petitions for declaratory ruling should be filed with the Office of the
Secretary via the Commission's Electronic Comment Filing System (ECFS).
(c)(1) Each applicant, licensee, or spectrum lessee filing a
petition for declaratory ruling required by paragraph (a) of this
section shall certify to the information contained in the petition in
accordance with the provisions of Sec. 1.16 and the requirements of
this paragraph. The certification shall include a statement that the
applicant, licensee and/or spectrum lessee has calculated the ownership
interests disclosed in its petition based upon its review of the
Commission's rules and that the interests disclosed satisfy each of the
pertinent standards and criteria set forth in the rules.
(2) Multiple applicants and/or licensees shall file jointly the
petition for declaratory ruling required by paragraph (a) of this
section where the entities are under common control and
contemporaneously hold, or are contemporaneously filing applications
for, broadcast, common carrier licenses, common carrier spectrum
leasing arrangements, or aeronautical en route or aeronautical fixed
radio station licenses. Where joint petitioners have different
responses to the information required by Sec. 1.5001, such information
should be set out separately for each joint petitioner, except as
otherwise permitted in Sec. 1.5001(h)(2).
(i) Each joint petitioner shall certify to the information
contained in the petition in accordance with the provisions of Sec.
1.16 with respect to the information that is pertinent to that
petitioner. Alternatively, the controlling parent of the joint
petitioners may certify to the information contained in the petition.
(ii) Where the petition is being filed in connection with an
application for consent to transfer control of licenses or spectrum
leasing arrangements, the transferee or its ultimate controlling parent
may file the petition on behalf of the licensees or spectrum lessees
that would be acquired as a result of the proposed transfer of control
and certify to the information contained in the petition.
(3) Multiple applicants and licensees shall not be permitted to
file a petition for declaratory ruling jointly unless they are under
common control.
(d) The following definitions shall apply to this section and
Sec. Sec. 1.5001 through 1.5004.
Aeronautical radio licenses refers to aeronautical en route and
aeronautical fixed radio station licenses only. It does not refer to
other types of aeronautical radio station licenses.
Affiliate refers to any entity that is under common control with a
licensee, defined by reference to the holder, directly and/or
indirectly, of more than 50 percent of total voting power, where no
other individual or entity has de facto control.
Control includes actual working control in whatever manner
exercised and is not limited to majority stock ownership. Control also
includes direct or indirect control, such as through intervening
subsidiaries.
Controlling U.S. parent refers to the first controlling entity
organized in the United States that is above the licensee(s) in the
vertical chain of control and that does not itself hold a license
subject to section 310(b).
Entity includes a partnership, association, estate, trust,
corporation, limited liability company, governmental authority or other
organization.
Group refers to two or more individuals or entities that have
agreed to act together for the purpose of acquiring, holding, voting,
or disposing of their equity and/or voting interests in the relevant
licensee, controlling U.S. parent, or entity holding a direct and/or
indirect equity and/or voting interest in the licensee or U.S. parent.
Individual refers to a natural person as distinguished from a
partnership, association, corporation, or other organization.
Licensee as used in Sec. Sec. 1.5000 through 1.5004 includes a
spectrum lessee as defined in Sec. 1.9003.
Privately held company refers to a U.S.- or foreign-organized
company that has not issued a class of equity securities for which
beneficial ownership reporting is required by security holders and
other beneficial owners under sections 13(d) or 13(g) of the Securities
Exchange Act of 1934, as amended, 15 U.S.C. 78a et seq. (Exchange Act),
and corresponding Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a
substantially comparable foreign law or regulation.
Public company refers to a U.S.- or foreign-organized company that
has issued a class of equity securities for which beneficial ownership
reporting is required by security holders and other beneficial owners
under sections 13(d) or 13(g) of the Securities Exchange Act of 1934,
as amended, 15 U.S.C. 78a et seq. (Exchange Act) and corresponding
Exchange Act Rule 13d-1, 17 CFR 240.13d-1, or a substantially
comparable foreign law or regulation.
Subsidiary refers to any entity in which a licensee owns or
controls, directly and/or indirectly, more than 50 percent of the total
voting power of the outstanding voting stock of the entity, where no
other individual or entity has de facto control.
Voting stock refers to an entity's corporate stock, partnership or
membership interests, or other equivalents of corporate stock that,
under ordinary circumstances, entitles the holders thereof to elect the
entity's board of directors, management committee, or other equivalent
of a corporate board of directors.
Would hold as used in Sec. Sec. 1.5000 through 1.5004 includes
interests that
[[Page 26710]]
an individual or entity proposes to hold in an applicant, licensee, or
spectrum lessee, or their controlling U.S. parent, upon consummation of
any transactions described in the petition for declaratory ruling filed
under paragraphs (a)(1) or (2) of this section.
(e)(1) This section sets forth the methodology applicable to
broadcast, common carrier, aeronautical en route, and aeronautical
fixed radio station licensees and common carrier spectrum lessees that
are, or are directly or indirectly controlled by, an eligible U.S.
public company for purposes of monitoring the licensee's or spectrum
lessee's compliance with the foreign ownership limits set forth in
sections 310(b)(3) and 310(b)(4) of the Act and with the terms and
conditions of a licensee's or spectrum lessee's foreign ownership
ruling issued pursuant to paragraph (a)(1) or (2) of this section. For
purposes of this section:
(i) An ``eligible U.S. public company'' is a company that is
organized in the United States; whose stock is traded on a stock
exchange in the United States; and that has issued a class of equity
securities for which beneficial ownership reporting is required by
security holders and other beneficial owners under sections 13(d) or
13(g) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. 78a
et seq. (Exchange Act) and corresponding Exchange Act Rule 13d-1, 17
CFR 240.13d-1;
(ii) A ``beneficial owner'' of a security refers to any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares voting power,
which includes the power to vote, or to direct the voting of, such
security; and
(iii) An ``equity interest holder'' refers to any person or entity
that has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, a share.
(2) An eligible U.S. public company shall use information that is
known or reasonably should be known by the company in the ordinary
course of business, as described in this paragraph, to identify the
beneficial owners and equity interest holders of its voting and non-
voting stock:
(i) Information recorded in the company's share register;
(ii) Information as to shares held by officers, directors, and
employees;
(iii) Information reported to the Securities and Exchange
Commission (SEC) in Schedule 13D (17 CFR 240.13d-101) and in Schedule
13G (17 CFR 240.13d-102), including amendments filed by or on behalf of
a reporting person, and company specific information derived from SEC
Form 13F (17 CFR 249.325);
(iv) Information as to beneficial owners of shares required to be
identified in a company's annual reports (or proxy statements) and
quarterly reports;
(v) Information as to the identify and citizenship of a beneficial
owner and/or equity interest holder where such information is actually
known to the public company as a result of shareholder litigation,
financing transactions, and proxies voted at annual or other meetings;
and
(vi) Information as to the identity and citizenship of a beneficial
owner and/or equity interest holder where such information is actually
known to the company by whatever source.
(3) An eligible U.S. public company shall use information that is
known or reasonably should be known by the company in the ordinary
course of business to determine the citizenship of the beneficial
owners and equity interest holders, identified pursuant to paragraph
(e)(2) of this section, including information recorded in the company's
shareholder register, information required to be disclosed pursuant to
rules of the Securities and Exchange Commission, other information that
is publicly available to the company, and information received by the
company through direct inquiries with the beneficial owners and equity
interest holders where the company determines that direct inquiries are
necessary to its compliance efforts.
(4) A licensee or spectrum lessee that is, or is directly or
indirectly controlled by, an eligible U.S. public company, shall
exercise due diligence in identifying and determining the citizenship
of such public company's beneficial owners and equity interest holders.
(5) To calculate aggregate levels of foreign ownership, a licensee
or spectrum lessee that is, or is directly or indirectly controlled by,
an eligible U.S. public company, shall base its foreign ownership
calculations on such public company's known or reasonably should be
known foreign equity and voting interests as described in paragraphs
(e)(2) and (3) of this section. The licensee shall aggregate the public
company's known or reasonably should be known foreign voting interests
and separately aggregate the public company's known or reasonably
should be known foreign equity interests. If the public company's known
or reasonably should be known foreign voting interests and its known or
reasonably should be known foreign equity interests do not exceed 25
percent (20 percent in the case of an eligible publicly traded licensee
subject to section 310(b)(3)) of the company's total outstanding voting
shares or 25 percent (20 percent in the case of an eligible publicly
traded licensee subject to Section 310(b)(3)) of the company's total
outstanding shares (whether voting or non-voting), respectively, the
company shall be deemed compliant, under this section, with the
applicable statutory limit.
(i) Example. Assume that a licensee's controlling U.S. parent is an
eligible U.S. public company. The publicly traded U.S. parent has one
class of stock consisting of 100 total outstanding shares of common
voting stock. The licensee (and/or the U.S. parent on its behalf) has
exercised the required due diligence in following the above-described
methodology for identifying and determining the citizenship of the
controlling U.S. parent's ``known or reasonably should be known''
interest holders and has identified one foreign shareholder that owns 6
shares (i.e., 6 percent of the total outstanding shares) and another
foreign shareholder that owns 4 shares (i.e., 4 percent of the total
outstanding shares). The licensee would add the controlling U.S.
parent's known foreign shares and divide the sum by the number of the
controlling U.S. parent's total outstanding shares. In this example,
the licensee's controlling U.S. parent would be calculated as having an
aggregate 10 percent foreign equity interests and 10 percent foreign
voting interests (6 + 4 foreign shares = 10 foreign shares; 10 foreign
shares divided by 100 total outstanding shares = 10 percent). Thus, in
this example, the licensee would be deemed compliant with Section
310(b)(4).
(ii) [Reserved]
Sec. 1.5001 Contents of petitions for declaratory ruling under
section 310(b) of the Communications Act of 1934, as amended.
The petition for declaratory ruling required by Sec. 1.5000(a)(1)
and/or (2) shall contain the following information:
(a) Applicant or licensee information. With respect to each
petitioning applicant or licensee, provide its name; FCC Registration
Number (FRN); mailing address; place of organization; telephone number;
facsimile number (if available); electronic mail address (if
available); type of business organization (e.g., corporation,
unincorporated association, trust, general partnership, limited
partnership, limited liability company, other (include description of
legal entity)); name and title of officer
[[Page 26711]]
certifying to the information contained in the petition.
(b) Third party information. If the petitioning applicant or
licensee is represented by a third party (e.g., legal counsel), specify
that individual's name, the name of the firm or company, mailing
address and telephone number/electronic mail address.
(c) Services covered. (1) For each named licensee, list the type(s)
of radio service authorized (e.g., broadcast service, cellular radio
telephone service; microwave radio service; mobile satellite service;
aeronautical fixed service). In the case of broadcast licensees, also
list the call sign, facility identification number (if applicable), and
community of license or transmit site for each authorization covered by
the petition.
(2) If the petition is filed in connection with an application for
a radio station license or a spectrum leasing arrangement, or an
application to acquire a license or spectrum leasing arrangement by
assignment or transfer of control, specify for each named applicant:
(i) The File No(s). of the associated application(s), if available
at the time the petition is filed; otherwise, specify the anticipated
filing date for each application; and
(ii) The type(s) of radio services covered by each application
(e.g., broadcast service, cellular radio telephone service; microwave
radio service; mobile satellite service; aeronautical fixed service).
(d) Type of Declaratory Ruling. With respect to each petitioner,
include a statement as to whether the petitioner is requesting a
declaratory ruling under Sec. 1.5000(a)(1) and/or (2).
(e) Disclosable interest holders--direct U.S. or foreign interests
in the controlling U.S. parent. Paragraphs (e)(1) through (4) of this
section apply only to petitions filed under Sec. 1.5000(a)(1) and/or
(2) for common carrier, aeronautical en route, and aeronautical fixed
radio station applicants or licensees, as applicable. Petitions filed
under Sec. 1.5000(a)(1) for broadcast licensees shall provide the name
of any individual or entity that holds, or would hold, directly, an
attributable interest in the controlling U.S. parent of the petitioning
broadcast station applicant(s) or licensee(s), as defined in the Notes
to Sec. 73.3555 of this chapter. Where no individual or entity holds,
or would hold, directly, an attributable interest in the controlling
U.S. parent (for petitions filed under Sec. 1.5000(a)(1)), the
petition shall specify that no individual or entity holds, or would
hold, directly, an attributable interest in the U.S. parent,
applicant(s), or licensee(s).
(1) Direct U.S. or foreign interests of ten percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(1), provide the name of any individual or entity that holds,
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in the controlling U.S.
parent of the petitioning common carrier or aeronautical radio station
applicant(s) or licensee(s) as specified in paragraphs (e)(4)(i)
through (iv) of this section.
(2) Direct U.S. or foreign interests of ten percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(2), provide the name of any individual or entity that holds,
or would hold, directly 10 percent or more of the equity interests and/
or voting interests, or a controlling interest, in each petitioning
common carrier applicant or licensee as specified in paragraphs
(e)(4)(i) through (iv) of this section.
(3) Where no individual or entity holds, or would hold, directly 10
percent or more of the equity interests and/or voting interests, or a
controlling interest, in the controlling U.S. parent (for petitions
filed under Sec. 1.5000(a)(1)) or in the applicant or licensee (for
petitions filed under Sec. 1.5000(a)(2)), the petition shall state
that no individual or entity holds or would hold directly 10 percent or
more of the equity interests and/or voting interests, or a controlling
interest, in the controlling U.S. parent, applicant or licensee.
(4)(i) Where a named U.S. parent, applicant, or licensee is
organized as a corporation, provide the name of any individual or
entity that holds, or would hold, 10 percent or more of the outstanding
capital stock and/or voting stock, or a controlling interest.
(ii) Where a named U.S. parent, applicant, or licensee is organized
as a general partnership, provide the names of the partnership's
constituent general partners.
(iii) Where a named U.S. parent, applicant, or licensee is
organized as a limited partnership or limited liability partnership,
provide the name(s) of the general partner(s) (in the case of a limited
partnership), any uninsulated partner, regardless of its equity
interest, and any insulated partner with an equity interest in the
partnership of at least 10 percent (calculated according to the
percentage of the partner's capital contribution). With respect to each
named partner (other than a named general partner), the petitioner
shall state whether the partnership interest is insulated or
uninsulated, based on the insulation criteria specified in Sec.
1.5003.
(iv) Where a named U.S. parent, applicant, or licensee is organized
as a limited liability company, provide the name(s) of each uninsulated
member, regardless of its equity interest, any insulated member with an
equity interest of at least 10 percent (calculated according to the
percentage of its capital contribution), and any non-equity manager(s).
With respect to each named member, the petitioner shall state whether
the interest is insulated or uninsulated, based on the insulation
criteria specified in Sec. 1.5003, and whether the member is a
manager.
(5) With respect to trusts, the trustee(s) of the trust must be
disclosed regardless of whether the trustee(s) otherwise holds, or
would otherwise hold, directly 10 percent or more of the equity
interests and/or voting interests, or a controlling interest, in the
controlling U.S. parent, petitioning applicant/licensee, or an
intervening U.S. entity that does not control the petitioning
applicant/licensee.
(6) The Commission presumes that a general partner of a general
partnership or limited partnership has a controlling (100 percent)
voting interest in the partnership. A general partner shall in all
cases be deemed to hold an uninsulated interest in the partnership.
(f) Disclosable interest holders--indirect U.S. or foreign
interests in the controlling U.S. parent. Paragraphs (f)(1) through (3)
of this section apply only to petitions filed under Sec. 1.5000(a)(1)
and/or Sec. 1.5000(a)(2) for common carrier, aeronautical en route,
and aeronautical fixed radio station applicants or licensees, as
applicable. Petitions filed under Sec. 1.5000(a)(1) for broadcast
licensees shall provide the name of any individual or entity that
holds, or would hold, indirectly, an attributable interest in the
controlling U.S. parent of the petitioning broadcast station
applicant(s) or licensee(s), as defined in the Notes to Sec. 73.3555
of this chapter. Where no individual or entity holds, or would hold,
indirectly, an attributable interest in the controlling U.S. parent
(for petitions filed under Sec. 1.5000(a)(1)), the petition shall
specify that no individual or entity holds, or would hold, indirectly,
an attributable interest in the controlling U.S. parent, applicant(s),
or licensee(s).
(1) Indirect U.S. or foreign interests of 10 percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(1), provide the name of any individual or entity that holds,
or would hold, indirectly, through one or more intervening entities, 10
percent or more of the equity interests and/or
[[Page 26712]]
voting interests, or a controlling interest, in the controlling U.S.
parent of the petitioning common carrier or aeronautical radio station
applicant(s) or licensee(s). Equity interests and voting interests held
indirectly shall be calculated in accordance with the principles set
forth in Sec. 1.5002.
(2) Indirect U.S. or foreign interests of 10 percent or more or a
controlling interest. With respect to petitions filed under Sec.
1.5000(a)(2), provide the name of any individual or entity that holds,
or would hold, indirectly, through one or more intervening entities, 10
percent or more of the equity interests and/or voting interests, or a
controlling interest, in the petitioning common carrier radio station
applicant(s) or licensee(s). Equity interests and voting interests held
indirectly shall be calculated in accordance with the principles set
forth in Sec. 1.5002.
(3) Where no individual or entity holds, or would hold, indirectly
10 percent or more of the equity interests and/or voting interests, or
a controlling interest, in the controlling U.S. parent (for petitions
filed under Sec. 1.5000(a)(1)) or in the petitioning applicant(s) or
licensee(s) (for petitions filed under Sec. 1.5000(a)(2)), the
petition shall specify that no individual or entity holds indirectly 10
percent or more of the equity interests and/or voting interests, or a
controlling interest, in the controlling U.S. parent, applicant(s), or
licensee(s).
(4) With respect to trusts, the trustee(s) of the trust must be
disclosed regardless of whether the trustee(s) otherwise holds, or
would otherwise hold, indirectly 10 percent or more of the equity
interests and/or voting interests, or a controlling interest, in the
controlling U.S. parent, petitioning applicant/licensee, or an
intervening U.S. entity that does not control the petitioning
applicant/licensee.
(5) The Commission presumes that a general partner of a general
partnership or limited partnership has a controlling interest in the
partnership. A general partner shall in all cases be deemed to hold an
uninsulated interest in the partnership.
(g) Citizenship and other information--(1) Citizenship and other
information for disclosable interests in common carrier, aeronautical
en route, and aeronautical fixed radio station applicants and
licensees. For each 10 percent interest holder named in response to
paragraphs (e) and (f) of this section, specify the equity interest
held and the voting interest held (each to the nearest one percent); in
the case of an individual, his or her citizenship; and in the case of a
business organization, its place of organization, type of business
organization (e.g., corporation, unincorporated association, trust,
general partnership, limited partnership, limited liability company,
other (include description of legal entity)), and principal
business(es).
(2) Citizenship and other information for disclosable interests in
broadcast station applicants and licensees. For each attributable
interest holder named in response to paragraphs (e) and (f) of this
section, describe the nature of the attributable interest and, if
applicable, specify the equity interest held and the voting interest
held (each to the nearest one percent); in the case of an individual,
his or her citizenship; and in the case of a business organization, its
place of organization, type of business organization (e.g.,
corporation, unincorporated association, trust, general partnership,
limited partnership, limited liability company, other (include
description of legal entity)), and principal business(es).
(h) Ownership information--(1) Estimate of aggregate foreign
ownership. For petitions filed under Sec. 1.5000(a)(1), attach an
exhibit that provides a percentage estimate of the controlling U.S.
parent's aggregate direct and/or indirect foreign equity interests and
its aggregate direct and/or indirect foreign voting interests. For
petitions filed under Sec. 1.5000(a)(2), attach an exhibit that
provides a percentage estimate of the aggregate foreign equity
interests and aggregate foreign voting interests held directly in the
petitioning applicant(s) and/or licensee(s), if any, and the aggregate
foreign equity interests and aggregate foreign voting interests held
indirectly in the petitioning applicant(s) and/or licensee(s). The
exhibit required by this paragraph must also provide a general
description of the methods used to determine the percentages, and a
statement addressing the circumstances that prompted the filing of the
petition and demonstrating that the public interest would be served by
grant of the petition.
(2) Ownership and control structure. Attach an exhibit that
describes the ownership and control structure of the applicant(s) and/
or licensee(s) that are the subject of the petition, including an
ownership diagram and identification of the real party-in-interest
disclosed in any companion applications. The ownership diagram should
illustrate the petitioner's vertical ownership structure, including the
controlling U.S. parent named in the petition (for petitions filed
under Sec. 1.5000(a)(1)) and either:
(i) For common carrier, aeronautical en route, and aeronautical
fixed radio station applicants and licensees, the direct and indirect
ownership (equity and voting) interests held by the individual(s) and/
or entity(ies) named in response to paragraphs (e) and (f) of this
section; or
(ii) For broadcast station applicants and licensees, the
attributable interest holders named in response to paragraphs (e) and
(f) of this section. Each such individual or entity shall be depicted
in the ownership diagram and all controlling interests labeled as such.
Where the petition includes multiple petitioners, the ownership of all
petitioners may be depicted in a single ownership diagram or in
multiple diagrams.
(i) Requests for specific approval. Provide, as required or
permitted by this paragraph, the name of each foreign individual and/or
entity for which each petitioner requests specific approval, if any,
and the respective percentages of equity and/or voting interests (to
the nearest one percent) that each such foreign individual or entity
holds, or would hold, directly and/or indirectly, in the controlling
U.S. parent of the petitioning broadcast, common carrier or
aeronautical radio station applicant(s) or licensee(s) for petitions
filed under Sec. 1.5000(a)(1), and in each petitioning common carrier
applicant or licensee for petitions filed under Sec. 1.5000(a)(2).
(1) Each petitioning broadcast, common carrier or aeronautical
radio station applicant or licensee filing under Sec. 1.5000(a)(1)
shall identify and request specific approval for any foreign
individual, entity, or group of such individuals or entities that
holds, or would hold, directly and/or indirectly, more than 5 percent
of the equity and/or voting interests, or a controlling interest, in
the petitioner's controlling U.S. parent unless the foreign investment
is exempt under paragraph (i)(3) of this section. Equity and voting
interests held indirectly in the petitioner's controlling U.S. parent
shall be calculated in accordance with the principles set forth in
Sec. Sec. 1.5002 and 1.5003. Equity and voting interests held directly
in a petitioner's controlling U.S. parent that is organized as a
partnership or limited liability company shall be calculated in
accordance with paragraph (i)(4)(ii)(C)(1) of this section.
(2) Solely for the purpose of identifying foreign interests that
require specific approval under this paragraph (i), broadcast station
applicants and licensees filing petitions under Sec. 1.5000(a)(1)
should calculate equity and voting interests in accordance with the
principles set forth in Sec. Sec. 1.5002 and
[[Page 26713]]
1.5003 and not as set forth in the Notes to Sec. 73.3555 of this
chapter, to the extent that there are any differences in such
calculation methods. Notwithstanding the foregoing, the insulation of
limited partnership, limited liability partnership, and limited
liability company interests for broadcast applicants and licensees
shall be determined in accordance with Note 2(f) of Sec. 73.3555 of
this chapter.
(3) Each petitioning common carrier radio station applicant or
licensee filing under Sec. 1.5000(a)(2) shall identify and request
specific approval for any foreign individual, entity, or group of such
individuals or entities that holds, or would hold, directly, and/or
indirectly through one or more intervening U.S.-organized entities that
do not control the applicant or licensee, more than 5 percent of the
equity and/or voting interests in the applicant or licensee unless the
foreign investment is exempt under paragraph (i)(3) of this section.
Equity and voting interests held indirectly in the applicant or
licensee shall be calculated in accordance with the principles set
forth in Sec. Sec. 1.5002 and 1.5003. Equity and voting interests held
directly in an applicant or licensee that is organized as a partnership
or limited liability company shall be calculated in accordance with
paragraph (i)(4)(ii)(C)(1) of this section.
(i) Certain foreign interests of 5 percent or less may require
specific approval under paragraphs (i)(1) and (2). See paragraph
(i)(4)(ii)(C)(2) of this section.
(ii) Two or more individuals or entities will be treated as a
``group'' when they have agreed to act together for the purpose of
acquiring, holding, voting, or disposing of their equity and/or voting
interests in the licensee and/or controlling U.S. parent of the
licensee or in any intermediate company(ies) through which any of the
individuals or entities holds its interests in the licensee and/or
controlling U.S. parent of the licensee.
(iii) Example. Common carrier applicant (``Applicant'') is
preparing a petition for declaratory ruling to request Commission
approval for foreign ownership of its controlling U.S. parent to exceed
the 25 percent benchmarks in section 310(b)(4) of the Act and Sec.
1.5000(a)(1) of the Commission's rules. The Applicant identifies that
Trust A, a U.S. entity, will hold indirect 40 percent equity and voting
interests in the Applicant's controlling U.S. parent. A Trustee to
Trust A is a foreign citizen. Pursuant to Sec. 1.5001(e) of the
Commission's rules, the Applicant must disclose the Trustees to Trust
A. Pursuant to Sec. 1.5001(i), if the foreign Trustee(s) holds or will
hold more than five percent equity and/or voting interests, the
Trustee(s) must request specific approval for its equity and/or voting
interests in the Applicant's controlling U.S. parent prior to its
interests exceeding five percent.
(4) A foreign investment is exempt from the specific approval
requirements of paragraphs (i)(1) and (2) of this section where:
(i) The foreign individual or entity holds, or would hold, directly
and/or indirectly, no more than 10 percent of the equity and/or voting
interests of the controlling U.S. parent (for petitions filed under
Sec. 1.5000(a)(1)) or the petitioning applicant or licensee (for
petitions filed under Sec. 1.5000(a)(2)); and
(ii) The foreign individual or entity does not hold, and would not
hold, a controlling interest in the petitioner or any controlling
parent company, does not plan or intend to change or influence control
of the petitioner or any controlling parent company, does not possess
or develop any such purpose, and does not take any action having such
purpose or effect. The Commission will presume, in the absence of
evidence to the contrary, that the following interests satisfy this
criterion for exemption from the specific approval requirements in
paragraphs (i)(1) and (2) of this section:
(A) Where the petitioning applicant or licensee, controlling U.S.
parent, or entity holding a direct or indirect equity and/or voting
interest in the applicant/licensee or controlling U.S. parent is a
``public company,'' as defined in Sec. 1.5000(d), provided that the
foreign holder is an institutional investor that is eligible to report
its beneficial ownership interests in the company's voting, equity
securities in excess of 5 percent (not to exceed 10 percent) pursuant
to Exchange Act Rule 13d-1(b), 17 CFR 240.13d-1(b), or a substantially
comparable foreign law or regulation. This presumption shall not apply
if the foreign individual, entity or group holding such interests is
obligated to report its holdings in the company pursuant to Exchange
Act Rule 13d-1(a), 17 CFR 240.13d-1(a), or a substantially comparable
foreign law or regulation.
(1) Example. Common carrier applicant (``Applicant'') is preparing
a petition for declaratory ruling to request Commission approval for
foreign ownership of its controlling U.S. parent to exceed the 25
percent benchmarks in section 310(b)(4) of the Act. Applicant does not
currently hold any FCC licenses. Shares of controlling U.S. parent
trade publicly on the New York Stock Exchange. Based on a review of its
shareholder records, controlling U.S. parent has determined that its
aggregate foreign ownership on any given day may exceed an aggregate 25
percent, including a 6 percent common stock interest held by a foreign-
organized mutual fund (``Foreign Fund''). Controlling U.S. parent has
confirmed that Foreign Fund is not currently required to report its
interest pursuant to Exchange Act Rule 13d-1(a) and instead is eligible
to report its interest pursuant to Exchange Act Rule 13d-1(b).
Controlling U.S. parent also has confirmed that Foreign Fund does not
hold any other interests in controlling U.S. parent's equity
securities, whether of a class of voting or non-voting securities.
Applicant may, but is not required to, request specific approval of
Foreign Fund's 6 percent interest in controlling U.S. parent.
(2) Where an institutional investor holds voting, equity securities
that are subject to reporting under Exchange Act Rule 13d-1, 17 CFR
240.13d-1, or a substantially comparable foreign law or regulation, in
addition to equity securities that are not subject to such reporting,
the investor's total capital stock interests may be aggregated and
treated as exempt from the 5 percent specific approval requirement in
paragraphs (i)(1) and (2) of this section so long as the aggregate
amount of the institutional investor's holdings does not exceed 10
percent of the company's total capital stock or voting rights and the
investor is eligible to certify under Exchange Act Rule 13d-1(b), 17
CFR 240.13d-1(b), or a substantially comparable foreign law or
regulation that it has acquired its capital stock interests in the
ordinary course of business and not with the purpose nor with the
effect of changing or influencing the control of the company. In
calculating foreign equity and voting interests, the Commission does
not consider convertible interests such as options, warrants and
convertible debentures until converted, unless specifically requested
by the petitioner, i.e., where the petitioner is requesting approval so
those rights can be exercised in a particular case without further
Commission approval.
(B) Where the petitioning applicant or licensee, controlling U.S.
parent, or entity holding a direct and/or indirect equity and/or voting
interest in the applicant/licensee or U.S. parent is a ``privately
held'' corporation, as defined in Sec. 1.5000(d), provided that a
shareholders' agreement, or similar voting agreement, prohibits the
foreign holder from becoming actively involved in the management or
operation of the corporation and limits the foreign
[[Page 26714]]
holder's voting and consent rights, if any, to the minority shareholder
protections listed in paragraph (i)(5) of this section.
(C) Where the petitioning applicant or licensee, controlling U.S.
parent, or entity holding a direct and/or indirect equity and/or voting
interest in the licensee or U.S. parent is ``privately held,'' as
defined in Sec. 1.5000(d), and is organized as a limited partnership,
limited liability company (``LLC''), or limited liability partnership
(``LLP''), provided that the foreign holder is ``insulated'' in
accordance with the criteria specified in Sec. 1.5003.
(1) For purposes of identifying foreign interests that require
specific approval, where the petitioning applicant, licensee, or
controlling U.S. parent is itself organized as a partnership or LLC, a
general partner, uninsulated limited partner, uninsulated LLC member,
and non-member LLC manager shall be deemed to hold a controlling (100
percent) voting interest in the applicant, licensee, or controlling
U.S. parent.
(2) For purposes of identifying foreign interests that require
specific approval, where interests are held indirectly in the
petitioning applicant, licensee, or controlling U.S. parent through one
or more intervening partnerships or LLCs, a general partner,
uninsulated limited partner, uninsulated LLC members, and non-member
LLC managers shall be deemed to hold the same voting interest as the
partnership or LLC holds in the company situated in the next lower tier
of the petitioner's vertical ownership chain and, ultimately, the same
voting interest as the partnership or LLC is calculated as holding in
the controlling U.S. parent (for petitions filed under Sec.
1.5000(a)(1)) or in the applicant or licensee (for petitions filed
under Sec. 1.5000(a)(2)). See Sec. 1.5002(b)(2)(ii)(A) and
(b)(2)(iii)(A). Where a limited partner or LLC member is insulated, the
limited partner's or LLC member's voting interest in the controlling
U.S. parent (for petitions filed under Sec. 1.5000(a)(1)), or in the
applicant or licensee (for petitions filed under Sec. 1.5000(a)(2)) is
calculated as equal to the limited partner's or LLC member's equity
interest in the controlling U.S. parent or in the applicant or
licensee, respectively. See Sec. 1.5002(b)(2)(ii)(B) and
(b)(2)(iii)(B). Thus, depending on the particular ownership structure
presented in the petition, a foreign general partner, uninsulated
limited partner, LLC member, or non-member LLC manager of an
intervening partnership or LLC may be deemed to hold an indirect voting
interest in the controlling U.S. parent or in the petitioning applicant
or licensee that requires specific approval because the voting interest
exceeds the 5 percent amount specified in paragraphs (i)(1) and (2) of
this section and, unless the voting interest is otherwise insulated at
a lower tier of the petitioner's vertical ownership chain, the voting
interest would not qualify as exempt from specific approval under this
paragraph (i)(4)(ii)(C) even in circumstances where the voting interest
does not exceed 10 percent.
(3) A finding that a foreign individual or entity is deemed to hold
a 100 percent voting interest in the controlling U.S. parent for
purposes of Sec. 1.5001(i)(4)(ii)(C)(1) or a 50 percent or greater
voting interest in the controlling U.S. parent pursuant to Sec.
1.5001(i)(4)(ii)(C)(2), does not indicate that the interest constitutes
de jure control for purposes of compliance with Section 310(d) of the
Act.
(4) A petitioner may, but is not required to, request specific
approval for any other foreign individual or entity that holds, or
would hold, a direct and/or indirect equity and/or voting interest in
the controlling U.S. parent (for petitions filed under Sec.
1.5000(a)(1)) or in the petitioning applicant or licensee (for
petitions filed under Sec. 1.5000(a)(2)).
(5) The minority shareholder protections referenced in paragraph
(i)(3)(ii)(B) of this section consist of the following rights:
(i) The power to prevent the sale or pledge of all or substantially
all of the assets of the corporation or a voluntary filing for
bankruptcy or liquidation;
(ii) The power to prevent the corporation from entering into
contracts with majority shareholders or their affiliates;
(iii) The power to prevent the corporation from guaranteeing the
obligations of majority shareholders or their affiliates;
(iv) The power to purchase an additional interest in the
corporation to prevent the dilution of the shareholder's pro rata
interest in the event that the corporation issues additional
instruments conveying shares in the company;
(v) The power to prevent the change of existing legal rights or
preferences of the shareholders, as provided in the charter, by-laws or
other operative governance documents;
(vi) The power to prevent the amendment of the charter, by-laws or
other operative governance documents of the company with respect to the
matters described in paragraph (i)(5)(i) through (v) of this section.
(6) The Commission reserves the right to consider, on a case-by-
case basis, whether voting or consent rights over matters other than
those listed in paragraph (i)(5) of this section shall be considered
permissible minority shareholder protections in a particular case.
(j) Specific approval information. For each foreign individual or
entity named in response to paragraph (i) of this section, provide the
following information:
(1) In the case of an individual, his or her citizenship and
principal business(es);
(2) In the case of a business organization:
(i) Its place of organization, type of business organization (e.g.,
corporation, unincorporated association, trust, general partnership,
limited partnership, limited liability company, other (include
description of legal entity)), and principal business(es);
(ii)(A) For common carrier, aeronautical en route, and aeronautical
fixed radio station applicants and licensees, the name of any
individual or entity that holds, or would hold, directly and/or
indirectly, through one or more intervening entities, 10 percent or
more of the equity interests and/or voting interests, or a controlling
interest, in the foreign entity for which the petitioner requests
specific approval. Specify for each such interest holder, his or her
citizenship (for individuals) or place of legal organization (for
entities). Equity interests and voting interests held indirectly shall
be calculated in accordance with the principles set forth in Sec.
1.5002.
(B) For broadcast applicants and licensees, the name of any
individual or entity that holds, or would hold, directly and/or
indirectly, through one or more intervening entities, an attributable
interest in the foreign entity for which the petitioner requests
specific approval. Specify for each such interest holder, his or her
citizenship (for individuals) or place of legal organization (for
entities). Attributable interests shall be calculated in accordance
with the principles set forth in the Notes to Sec. 73.3555 of this
chapter.
(iii)(A) For common carrier, aeronautical en route, and
aeronautical fixed radio station applicants and licensees, where no
individual or entity holds, or would hold, directly and/or indirectly,
10 percent or more of the equity interests and/or voting interests, or
a controlling interest, the petition shall specify that no individual
or entity holds, or would hold, directly and/or indirectly, 10 percent
or more of the equity interests and/or voting interests, or a
controlling interest, in the foreign entity for which the petitioner
requests specific approval.
[[Page 26715]]
(B) For broadcast applicants and licensees, where no individual or
entity holds, or would hold, directly and/or indirectly, an
attributable interest in the foreign entity, the petition shall specify
that no individual or entity holds, or would hold, directly and/or
indirectly, an attributable interest in the foreign entity for which
the petitioner requests specific approval.
(k) Requests for advance approval. The petitioner may, but is not
required to, request advance approval in its petition for any foreign
individual or entity named in response to paragraph (i) of this section
to increase its direct and/or indirect equity and/or voting interests
in the controlling U.S. parent of the broadcast, common carrier or
aeronautical radio station licensee, for petitions filed under Sec.
1.5000(a)(1), and/or in the common carrier licensee, for petitions
filed under Sec. 1.5000(a)(2), above the percentages specified in
response to paragraph (i) of this section. Requests for advance
approval shall be made as follows:
(1) Petitions filed under Sec. 1.5000(a)(1). Where a foreign
individual or entity named in response to paragraph (i) of this section
holds, or would hold upon consummation of any transactions described in
the petition, a de jure or de facto controlling interest in the
controlling U.S. parent, the petitioner may request advance approval in
its petition for the foreign individual or entity to increase its
interests, at some future time, up to any amount, including 100 percent
of the direct and/or indirect equity and/or voting interests in the
controlling U.S. parent. The petitioner shall specify for the named
controlling foreign individual(s) or entity(ies) the maximum
percentages of equity and/or voting interests for which advance
approval is sought or, in lieu of a specific amount, state that the
petitioner requests advance approval for the named controlling foreign
individual or entity to increase its interests up to and including 100
percent of the controlling U.S. parent's direct and/or indirect equity
and/or voting interests.
(2) Petitions filed under Sec. 1.5000(a)(1) and/or (2). Where a
foreign individual or entity named in response to paragraph (i) of this
section holds, or would hold upon consummation of any transactions
described in the petition, a non-controlling interest in the
controlling U.S. parent of the licensee, for petitions filed under
Sec. 1.5000(a)(1), or in the licensee, for petitions filed under Sec.
1.5000(a)(2), the petitioner may request advance approval in its
petition for the foreign individual or entity to increase its
interests, at some future time, up to any non-controlling amount not to
exceed 49.99 percent. The petitioner shall specify for the named
foreign individual(s) or entity(ies) the maximum percentages of equity
and/or voting interests for which advance approval is sought or, in
lieu of a specific amount, shall state that the petitioner requests
advance approval for the named foreign individual(s) or entity(ies) to
increase their interests up to and including a non-controlling 49.99
percent equity and/or voting interest in the licensee, for petitions
filed under Sec. 1.5000(a)(2), or in the controlling U.S. parent of
the licensee, for petitions filed under Sec. 1.5000(a)(1).
(3) Foreign individuals or entities that are deemed to hold 100
percent voting interest pursuant to Sec. 1.5001(i)(4)(ii)(C)(1) or a
50 percent or greater voting interest in the controlling U.S. parent
pursuant to Sec. 1.5001(i)(4)(ii)(C)(2), but do not have de jure or de
facto control of the controlling U.S. parent, may only request advance
approval in the petition for declaratory ruling for the foreign
individual or entity to increase its interests, at some future time, up
to any non-controlling amount not to exceed 49.99 percent.
(l) Each applicant, licensee, or spectrum lessee filing a petition
for declaratory ruling shall certify to the information contained in
the petition in accordance with the provisions of Sec. 1.16 and the
requirements of Sec. 1.5000(c)(1).
(m) Submission of petition and responses to standard questions to
the Committee for the assessment of foreign participation in the United
States telecommunications services sector. For each petition subject to
a referral to the executive branch pursuant to Sec. 1.40001, the
petitioner must submit:
(1) Responses to standard questions, prior to or at the same time
the petitioner files its petition with the Commission, pursuant to
subpart CC of this part, directly to the Committee for the Assessment
of Foreign Participation in the United States Telecommunications
Services Sector (Committee). The standard questions and instructions
for submitting the responses are available on the FCC website. The
required information shall be submitted separately from the petition
and shall be submitted directly to the Committee.
(2) A complete and unredacted copy of its FCC petition(s),
including the file number(s) and docket number(s), to the Committee
within three (3) business days of filing it with the Commission. The
instructions for submitting a copy of the FCC petition(s) to the
Committee are available on the FCC website.
(n) Certifications. (1) Broadcast applicants and licensees shall
make the following certifications by which they agree:
(i) To designate a point of contact who is located in the United
States and is a U.S. citizen or lawful U.S. permanent resident, for the
execution of lawful requests and as an agent for legal service of
process;
(ii)(A) That the petitioner is responsible for the continuing
accuracy and completeness of all information submitted, whether at the
time of submission of the petition or subsequently in response to
either the Commission or the Committee's request, as required in Sec.
1.65(a), and that the petitioner agrees to inform the Commission and
the Committee of any substantial and significant changes while a
petition is pending; and
(B) After the petition is no longer pending for purposes of Sec.
1.65, the petitioner must notify the Commission and the Committee of
any changes in petitioner information and/or contact information
promptly, and in any event within thirty (30) days; and
(iii) That the petitioner understands that if the petitioner or an
applicant or licensee covered by the declaratory ruling fails to
fulfill any of the conditions and obligations in the certifications set
out in paragraph (n)(1) of this section or in the grant of an
application, petition, license, or authorization associated with the
declaratory ruling and/or that if the information provided to the
United States Government is materially false, fictitious, or
fraudulent, the petitioner, applicants, and licensees may be subject to
all remedies available to the United States Government, including but
not limited to revocation and/or termination of the Commission's
declaratory ruling, authorization or license, and criminal and civil
penalties, including penalties under 18 U.S.C. 1001.
(2) Common carrier applicants, licensees, or spectrum lessees shall
make the following certifications by which they agree:
(i) To comply with all applicable Communications Assistance for Law
Enforcement Act (CALEA) requirements and related rules and regulations,
including any and all FCC orders and opinions governing the application
of CALEA, pursuant to the Communications Assistance for Law Enforcement
Act and the Commission's rules and regulations in subpart Z of this
part;
(ii) To make communications to, from, or within the United States,
as well as records thereof, available in a form and location that
permits them to be subject
[[Page 26716]]
to a valid and lawful request or legal process in accordance with U.S.
law, including but not limited to:
(A) The Wiretap Act, 18 U.S.C. 2510 et seq.;
(B) The Stored Communications Act, 18 U.S.C. 2701 et seq.;
(C) The Pen Register and Trap and Trace Statute, 18 U.S.C. 3121 et
seq.; and
(D) Other court orders, subpoenas, or other legal process;
(iii) To designate a point of contact who is located in the United
States and is a U.S. citizen or lawful U.S. permanent resident, for the
execution of lawful requests and as an agent for legal service of
process;
(iv)(A) That the petitioner is responsible for the continuing
accuracy and completeness of all information submitted, whether at the
time of submission of the petition or subsequently in response to
either the Commission or the Committee's request, as required in Sec.
1.65(a), and that the petitioner agrees to inform the Commission and
the Committee of any substantial and significant changes while a
petition is pending; and
(B) After the petition is no longer pending for purposes of Sec.
1.65 of the rules, the petitioner must notify the Commission and the
Committee of any changes in petitioner information and/or contact
information promptly, and in any event within thirty (30) days; and
(v) That the petitioner understands that if the petitioner or an
applicant or licensee covered by the declaratory ruling fails to
fulfill any of the conditions and obligations set forth in the
certifications set out in paragraph (n)(2) of this section or in the
grant of an application, petition, license, or authorization associated
with this declaratory ruling and/or that if the information provided to
the United States Government is materially false, fictitious, or
fraudulent, the petitioner, applicants, and licensees may be subject to
all remedies available to the United States Government, including but
not limited to revocation and/or termination of the Commission's
declaratory ruling, authorization or license, and criminal and civil
penalties, including penalties under 18 U.S.C. 1001.
Sec. 1.5002 How to calculate indirect equity and voting interests.
(a) The criteria specified in this section shall be used for
purposes of calculating indirect equity and voting interests under
Sec. 1.5001.
(b) Indirect equity and voting interests-- (1) Equity interests
held indirectly in the licensee and/or controlling U.S. parent. Equity
interests that are held by an individual or entity indirectly through
one or more intervening entities shall be calculated by successive
multiplication of the equity percentages for each link in the vertical
ownership chain, regardless of whether any particular link in the chain
represents a controlling interest in the company positioned in the next
lower tier.
(i) Example (for rulings issued under Sec. 1.5000(a)(1)). Assume
that a foreign individual holds a non-controlling 30 percent equity and
voting interest in U.S.-organized Corporation A which, in turn, holds a
non-controlling 40 percent equity and voting interest in U.S.-organized
Parent Corporation B. The foreign individual's equity interest in U.S.-
organized Parent Corporation B would be calculated by multiplying the
foreign individual's equity interest in U.S.-organized Corporation A by
that entity's equity interest in U.S.-organized Parent Corporation B.
The foreign individual's equity interest in U.S.-organized Parent
Corporation B would be calculated as 12 percent (30% x 40% = 12%). The
result would be the same even if U.S.-organized Corporation A held a de
facto controlling interest in U.S.-organized Parent Corporation B.
(ii) [Reserved]
(2) Voting interests held indirectly in the licensee and/or
controlling U.S. parent. Voting interests that are held by any
individual or entity indirectly through one or more intervening
entities will be determined depending upon the type of business
organization(s) in which the individual or entity holds a voting
interest as follows:
(i) Voting interests that are held through one or more intervening
corporations shall be calculated by successive multiplication of the
voting percentages for each link in the vertical ownership chain,
except that wherever the voting interest for any link in the chain is
equal to or exceeds 50 percent or represents actual control, it shall
be treated as if it were a 100 percent interest.
(A) Example (for rulings issued under Sec. 1.5000(a)(1)). Assume
that a foreign individual holds a non-controlling 30 percent equity and
voting interest in U.S.-organized Corporation A which, in turn, holds a
controlling 70 percent equity and voting interest in U.S.-organized
Parent Corporation B. Because U.S.-organized Corporation A's 70 percent
voting interest in U.S.-organized Parent Corporation B constitutes a
controlling interest, it is treated as a 100 percent interest. The
foreign individual's 30 percent voting interest in U.S.-organized
Corporation A would flow through in its entirety to U.S. Parent
Corporation B and thus be calculated as 30 percent (30% x 100% = 30%).
(B) [Reserved]
(ii) Voting interests that are held through one or more intervening
partnerships shall be calculated depending upon whether the individual
or entity holds a general partnership interest, an uninsulated
partnership interest, or an insulated partnership interest as specified
in paragraphs (b)(2)(ii)(A) and (B) of this section.
(A) General partnership and other uninsulated partnership
interests. A general partner and uninsulated partner shall be deemed to
hold the same voting interest as the partnership holds in the company
situated in the next lower tier of the vertical ownership chain. A
partner shall be treated as uninsulated unless the limited partnership
agreement, limited liability partnership agreement, or other operative
agreement satisfies the insulation criteria specified in Sec. 1.5003.
(B) Insulated partnership interests. A partner of a limited
partnership (other than a general partner) or partner of a limited
liability partnership that satisfies the insulation criteria specified
in Sec. 1.5003 shall be treated as an insulated partner and shall be
deemed to hold a voting interest in the partnership that is equal to
the partner's equity interest.
(C) The Commission presumes that a general partner of a general
partnership or limited partnership has a controlling interest in the
partnership. A general partner shall in all cases be deemed to hold an
uninsulated interest in the partnership.
(iii) Voting interests that are held through one or more
intervening limited liability companies shall be calculated depending
upon whether the individual or entity is a non-member manager, an
uninsulated member or an insulated member as specified in paragraphs
(b)(2)(iii)(A) and (B) of this section.
(A) Non-member managers and uninsulated membership interests. A
non-member manager and an uninsulated member of a limited liability
company shall be deemed to hold the same voting interest as the limited
liability company holds in the company situated in the next lower tier
of the vertical ownership chain. A member shall be treated as
uninsulated unless the limited liability company agreement satisfies
the insulation criteria specified in Sec. 1.5003.
(B) Insulated membership interests. A member of a limited liability
company that satisfies the insulation criteria specified in Sec.
1.5003 shall be treated as an insulated member and shall be
[[Page 26717]]
deemed to hold a voting interest in the limited liability company that
is equal to the member's equity interest.
Sec. 1.5003 Insulation criteria for interests in limited
partnerships, limited liability partnerships, and limited liability
companies.
(a) A limited partner of a limited partnership and a partner of a
limited liability partnership shall be treated as uninsulated within
the meaning of Sec. 1.5002(b)(2)(ii)(A) unless the partner is
prohibited by the limited partnership agreement, limited liability
partnership agreement, or other operative agreement from, and in fact
is not engaged in, active involvement in the management or operation of
the partnership and only the usual and customary investor protections
are contained in the partnership agreement or other operative
agreement. These criteria apply to any relevant limited partnership or
limited liability partnership, whether it is the licensee, a
controlling U.S. parent, or any partnership situated above them in the
vertical chain of ownership. Notwithstanding the foregoing, the
insulation of limited partnership and limited liability partnership
interests for broadcast applicants and licensees shall be determined in
accordance with Note 2(f) of Sec. 73.3555 of this chapter.
(b) A member of a limited liability company shall be treated as
uninsulated for purposes of Sec. 1.5002(b)(2)(iii)(A) unless the
member is prohibited by the limited liability company agreement from,
and in fact is not engaged in, active involvement in the management or
operation of the company and only the usual and customary investor
protections are contained in the agreement. These criteria apply to any
relevant limited liability company, whether it is the licensee, a
controlling U.S. parent, or any limited liability company situated
above them in the vertical chain of ownership. Notwithstanding the
foregoing, the insulation of limited liability company interests for
broadcast applicants and licensees shall be determined in accordance
with Note 2(f) of Sec. 73.3555 of this chapter.
(c) The usual and customary investor protections referred to in
paragraphs (a) and (b) of this section shall consist of:
(1) The power to prevent the sale or pledge of all or substantially
all of the assets of the limited partnership, limited liability
partnership, or limited liability company or a voluntary filing for
bankruptcy or liquidation;
(2) The power to prevent the limited partnership, limited liability
partnership, or limited liability company from entering into contracts
with majority investors or their affiliates;
(3) The power to prevent the limited partnership, limited liability
partnership, or limited liability company from guaranteeing the
obligations of majority investors or their affiliates;
(4) The power to purchase an additional interest in the limited
partnership, limited liability partnership, or limited liability
company to prevent the dilution of the partner's or member's pro rata
interest in the event that the limited partnership, limited liability
partnership, or limited liability company issues additional instruments
conveying interests in the partnership or company;
(5) The power to prevent the change of existing legal rights or
preferences of the partners, members, or managers as provided in the
limited partnership agreement, limited liability partnership agreement,
or limited liability company agreement, or other operative agreement;
(6) The power to vote on the removal of a general partner, managing
partner, managing member, or other manager in situations where such
individual or entity is subject to bankruptcy, insolvency,
reorganization, or other proceedings relating to the relief of debtors;
adjudicated insane or incompetent by a court of competent jurisdiction
(in the case of a natural person); convicted of a felony; or otherwise
removed for cause, as determined by an independent party;
(7) The power to prevent the amendment of the limited partnership
agreement, limited liability partnership agreement, or limited
liability company agreement, or other organizational documents of the
partnership or limited liability company with respect to the matters
described in paragraph (c)(1) through (c)(6) of this section.
(d) The Commission reserves the right to consider, on a case-by-
case basis, whether voting or consent rights over matters other than
those listed in paragraph (c) of this section shall be considered usual
and customary investor protections in a particular case.
Sec. 1.5004 Routine terms and conditions.
Foreign ownership declaratory rulings issued pursuant to Sec. Sec.
1.5000 through 1.5004 shall be subject to the following terms and
conditions, except as otherwise specified in a particular declaratory
ruling:
(a)(1) Aggregate allowance for declaratory rulings issued under
Sec. 1.5000(a)(1). In addition to the foreign ownership interests
approved specifically in a licensee's declaratory ruling issued
pursuant to Sec. 1.5000(a)(1), the controlling U.S. parent named in
the declaratory ruling (or a U.S.-organized successor-in-interest
formed as part of a pro forma reorganization) may be 100 percent owned,
directly and/or indirectly through one or more U.S- or foreign-
organized entities, on a going-forward basis (i.e., after issuance of
the declaratory ruling) by other foreign investors without prior
Commission approval. This ``100 percent aggregate allowance'' is
subject to the requirement that the licensee seek and obtain Commission
approval before any foreign individual, entity, or ``group'' not
previously approved acquires, directly and/or indirectly, more than 5
percent of the controlling U.S. parent's outstanding capital stock
(equity) and/or voting stock, or a controlling interest, with the
exception of any foreign individual, entity, or ``group'' that acquires
an equity and/or voting interest of 10 percent or less, provided that
the interest is exempt under Sec. 1.5001(i)(3).
(2) Aggregate allowance for declaratory rulings issued under Sec.
1.5000(a)(2). In addition to the foreign ownership interests approved
specifically in a licensee's declaratory ruling issued pursuant to
Sec. 1.5000(a)(2), the licensee(s) named in the ruling (or a U.S.-
organized successor-in-interest formed as part of a pro forma
reorganization) may be 100 percent owned on a going forward basis
(i.e., after issuance of the declaratory ruling) by other foreign
investors holding interests in the licensee indirectly through U.S.-
organized entities that do not control the licensee, without prior
Commission approval. This ``100 percent aggregate allowance'' is
subject to the requirement that the licensee seek and obtain Commission
approval before any foreign individual, entity, or ``group'' not
previously approved acquires directly and/or indirectly, through one or
more U.S.-organized entities that do not control the licensee, more
than 5 percent of the licensee's outstanding capital stock (equity)
and/or voting stock, with the exception of any foreign individual,
entity, or ``group'' that acquires an equity and/or voting interest of
10 percent or less, provided that the interest is exempt under Sec.
1.5001(i)(3). Foreign ownership interests held directly in a licensee
shall not be permitted to exceed an aggregate 20 percent of the
licensee's equity and/or voting interests.
(3) Licensees have an obligation to monitor and stay ahead of
changes in foreign ownership of their controlling U.S. parent (for
declaratory rulings
[[Page 26718]]
issued pursuant to Sec. 1.5000(a)(1)) and/or in the licensee itself
(for declaratory rulings issued pursuant to Sec. 1.5000(a)(2)), to
ensure that the licensee obtains Commission approval before a change in
foreign ownership renders the licensee out of compliance with the terms
and conditions of its declaratory ruling(s) or the Commission's rules.
Licensees, their controlling parent, and other entities in the
licensee's vertical ownership chain may need to place restrictions in
their bylaws or other organizational documents to enable the licensee
to ensure compliance with the terms and conditions of its declaratory
ruling(s) and the Commission's rules.
(4) Example 1 (for declaratory rulings issued under Sec.
1.5000(a)(1)). U.S. Corp. files an application for a common carrier
license. U.S. Corp. is wholly owned and controlled by U.S. Parent,
which is a newly formed, privately held Delaware Corporation in which
no single shareholder has de jure or de facto control. A shareholder's
agreement provides that a five-member board of directors shall govern
the affairs of the company; five named shareholders shall be entitled
to one seat and one vote on the board; and all decisions of the board
shall be determined by majority vote. The five named shareholders and
their respective equity interests are as follows: Foreign Entity A,
which is wholly owned and controlled by a foreign citizen (5 percent);
Foreign Entity B, which is wholly owned and controlled by a foreign
citizen (10 percent); Foreign Entity C, a foreign public company with
no controlling shareholder (20 percent); Foreign Entity D, a foreign
pension fund that is controlled by a foreign citizen and in which no
individual or entity has a pecuniary interest exceeding one percent (21
percent); and U.S. Entity E, a U.S. public company with no controlling
shareholder (25 percent). The remaining 19 percent of U.S. Parent's
shares are held by three foreign-organized entities as follows: F (4
percent), G (6 percent), and H (9 percent). Under the shareholders'
agreement, voting rights of F, G, and H are limited to the minority
shareholder protections listed in Sec. 1.5001(i)(5). Further, the
agreement expressly prohibits G and H from becoming actively involved
in the management or operation of U.S. Parent and U.S. Corp.
(i) As required by the rules, U.S. Corp. files a section 310(b)(4)
petition concurrently with its application. The petition identifies and
requests specific approval for the ownership interests held in U.S.
Parent by Foreign Entity A and its sole shareholder (5 percent equity
and 20 percent voting interest); Foreign Entity B and its sole
shareholder (10 percent equity and 20 percent voting interest), Foreign
Entity C (20 percent equity and 20 percent voting interest), and
Foreign Entity D (21 percent equity and 20 percent voting interest) and
its fund manager (20 percent voting interest). The Commission's
declaratory ruling specifically approves these foreign interests. The
declaratory ruling also provides that, on a going-forward basis, U.S.
Parent may be 100 percent owned in the aggregate, directly and/or
indirectly, by other foreign investors, subject to the requirement that
U.S. Corp. seek and obtain Commission approval before any previously
unapproved foreign investor acquires more than 5 percent of U.S.
Parent's equity and/or voting interests, or a controlling interest,
with the exception of any foreign investor that acquires an equity and/
or voting interest of ten percent or less, provided that the interest
is exempt under Sec. 1.991(i)(3).
(ii) In this case, foreign entities F, G, and H would each be
considered a previously unapproved foreign investor (along with any new
foreign investors). However, prior approval for F, G and H would only
apply to an increase of F's interest above 5 percent (because the ten
percent exemption under Sec. 1.5001(i)(3) does not apply to F) or to
an increase of G's or H's interest above 10 percent (because G and H do
qualify for this exemption). U.S. Corp. would also need Commission
approval before Foreign Entity D appoints a new fund manager that is a
non-U.S. citizen and before Foreign Entities A, B, C, or D increase
their respective equity and/or voting interests in U.S. Parent, unless
the petition previously sought and obtained Commission approval for
such increases (up to non-controlling 49.99 percent interests). (See
Sec. 1.5001(k)(2).) Foreign shareholders of Foreign Entity C and U.S.
Entity E would also be considered previously unapproved foreign
investors. Thus, Commission approval would be required before any
foreign shareholder of Foreign Entity C or U.S. Entity E acquires (1) a
controlling interest in either company; or (2) a non-controlling equity
and/or voting interest in either company that, when multiplied by the
company's equity and/or voting interests in U.S. Parent, would exceed 5
percent of U.S. Parent's equity and/or voting interests, unless the
interest is exempt under Sec. 1.5001(i)(3).
(5) Example 2 (for declaratory rulings issued under Sec.
1.5000(a)(2)). Assume that the following three U.S.-organized entities
hold non-controlling equity and voting interests in common carrier
Licensee, which is a privately held corporation organized in Delaware:
U.S. corporation A (30 percent); U.S. corporation B (30 percent); and
U.S. corporation C (40 percent). Licensee's shareholders are wholly
owned by foreign individuals X, Y, and Z, respectively. Licensee has
received a declaratory ruling under Sec. 1.5000(a)(2) specifically
approving the 30 percent foreign ownership interests held in Licensee
by each of X and Y (through U.S. corporation A and U.S. corporation B,
respectively) and the 40 percent foreign ownership interest held in
Licensee by Z (through U.S. corporation C). On a going-forward basis,
Licensee may be 100 percent owned in the aggregate by X, Y, Z, and
other foreign investors holding interests in Licensee indirectly,
through U.S.-organized entities that do not control Licensee, subject
to the requirement that Licensee obtain Commission approval before any
previously unapproved foreign investor acquires more than 5 percent of
Licensee's equity and/or voting interests, with the exception of any
foreign investor that acquires an equity and/or voting interest of 10
percent or less, provided that the interest is exempt under Sec.
1.5001(i)(3). In this case, any foreign investor other than X, Y, and Z
would be considered a previously unapproved foreign investor. Licensee
would also need Commission approval before X, Y, or Z increases its
equity and/or voting interests in Licensee unless the petition
previously sought and obtained Commission approval for such increases
(up to non-controlling 49.99 percent interests). (See Sec.
1.5001(k)(2).)
(b) Subsidiaries and affiliates. A foreign ownership declaratory
ruling issued to a licensee shall cover it and any U.S.-organized
subsidiary or affiliate, as defined in Sec. 1.5000(d), whether the
subsidiary or affiliate existed at the time the declaratory ruling was
issued or was formed or acquired subsequently, provided that the
foreign ownership of the licensee named in the declaratory ruling, and
of the subsidiary and/or affiliate, remains in compliance with the
terms and conditions of the licensee's declaratory ruling and the
Commission's rules.
(1) The subsidiary or affiliate of a licensee named in a foreign
ownership declaratory ruling issued under Sec. 1.5000(a)(1) may rely
on that declaratory ruling for purposes of filing its own application
for an initial broadcast, common carrier or aeronautical license or
spectrum leasing arrangement, or an application to acquire such license
or spectrum leasing
[[Page 26719]]
arrangement by assignment or transfer of control provided that the
subsidiary or affiliate, and the licensee named in the declaratory
ruling, each certifies in the application that its foreign ownership is
in compliance with the terms and conditions of the foreign ownership
declaratory ruling and the Commission's rules.
(2) The subsidiary or affiliate of a licensee named in a foreign
ownership declaratory ruling issued under Sec. 1.5000(a)(2) may rely
on that declaratory ruling for purposes of filing its own application
for an initial common carrier radio station license or spectrum leasing
arrangement, or an application to acquire such license or spectrum
leasing arrangement by assignment or transfer of control provided that
the subsidiary or affiliate, and the licensee named in the declaratory
ruling, each certifies in the application that its foreign ownership is
in compliance with the terms and conditions of the foreign ownership
declaratory ruling and the Commission's rules.
(3) The certifications required by paragraphs (b)(1) and (2) of
this section shall also include the citation(s) of the relevant
declaratory ruling(s) (i.e., the DA or FCC Number, FCC Record citation
when available, and release date).
(c) Insertion of new controlling foreign-organized companies. (1)
Where a licensee's foreign ownership declaratory ruling specifically
authorizes a named, foreign investor to hold a controlling interest in
the licensee's controlling U.S. parent, for declaratory rulings issued
under Sec. 1.5000(a)(1), or in an intervening U.S.-organized entity
that does not control the licensee, for declaratory rulings issued
under Sec. 1.5000(a)(2), the declaratory ruling shall permit the
insertion of new, controlling foreign-organized companies in the
vertical ownership chain above the controlling U.S. parent, for
declaratory rulings issued under Sec. 1.5000(a)(1), or above an
intervening U.S.-organized entity that does not control the licensee,
for declaratory rulings issued under Sec. 1.5000(a)(2), without prior
Commission approval provided that any new foreign-organized
company(ies) are under 100 percent common ownership and control with
the foreign investor approved in the declaratory ruling.
(2) Where a previously unapproved foreign-organized entity is
inserted into the vertical ownership chain of a licensee, or its
controlling U.S. parent, without prior Commission approval pursuant to
paragraph (c)(1) of this section, the licensee shall file a letter to
the attention of the Chief, Office of International Affairs, within 30
days after the insertion of the new, foreign-organized entity. The
letter must include the name of the new, foreign-organized entity and a
certification by the licensee that the entity complies with the 100
percent common ownership and control requirement in paragraph (c)(1) of
this section. The letter must also reference the licensee's foreign
ownership declaratory ruling(s) by ICFS File No. and FCC Record
citation, if available. This letter notification need not be filed if
the ownership change is instead the subject of a pro forma application
or pro forma notification already filed with the Commission pursuant to
the relevant broadcast service rules, wireless radio service rules or
satellite radio service rules applicable to the licensee.
(3) For broadcast stations, in order to insert a previously
unapproved foreign-organized entity that is under 100 percent common
ownership and control with the foreign investor approved in the
declaratory ruling into the vertical ownership chain of the licensee's
controlling U.S. parent, as described in paragraph (c)(1) of this
section, the licensee must always file a pro forma application
requesting prior consent of the FCC pursuant to Sec. 73.3540(f) of
this chapter.
(4) Nothing in this section is intended to affect any requirements
for prior approval under 47 U.S.C. 310(d) or conditions for forbearance
from the requirements of 47 U.S.C. 310(d) pursuant to 47 U.S.C. 160.
(5) Example (for declaratory rulings issued under Sec.
1.5000(a)(1)). Licensee of a common carrier license receives a foreign
ownership declaratory ruling under Sec. 1.5000(a)(1) that authorizes
its controlling U.S. parent (``U.S. Parent A'') to be wholly owned and
controlled by a foreign-organized company (``Foreign Company'').
Foreign Company is minority owned (20 percent) by U.S.-organized
Corporation B, with the remaining 80 percent controlling interest held
by Foreign Citizen C. After issuance of the declaratory ruling, Foreign
Company forms a wholly-owned, foreign-organized subsidiary (``Foreign
Subsidiary'') to hold all of Foreign Company's shares in U.S. Parent A.
There are no other changes in the direct or indirect foreign ownership
of U.S. Parent A. The insertion of Foreign Subsidiary into the vertical
ownership chain between Foreign Company and U.S. Parent A would not
require prior Commission approval, except for any approval otherwise
required pursuant to section 310(d) of the Communications Act and not
exempt therefrom as a pro forma transfer of control under Sec.
1.948(c)(1).
(6) Example (for rulings issued under Sec. 1.5000(a)(2)). An
applicant for a common carrier license receives a foreign ownership
ruling under Sec. 1.5000(a)(2) that authorizes a foreign-organized
company (``Foreign Company'') to hold a non-controlling 44 percent
equity and voting interest in the applicant through Foreign Company's
wholly-owned, U.S.-organized subsidiary, U.S. Corporation A, which
holds the non-controlling 44 percent interest directly in the
applicant. The remaining 56 percent of the applicant's equity and
voting interests are held by its controlling U.S.-organized parent,
which has no foreign ownership. After issuance of the ruling, Foreign
Company forms a wholly-owned, foreign-organized subsidiary to hold all
of Foreign Company's shares in U.S. Corporation A. There are no other
changes in the direct or indirect foreign ownership of U.S. Corporation
A. The insertion of the foreign-organized subsidiary into the vertical
ownership chain between Foreign Company and U.S. Corporation A would
not require prior Commission approval.
(d) Insertion of new non-controlling foreign-organized companies.
(1) Where a licensee's foreign ownership declaratory ruling
specifically authorizes a named, foreign investor to hold a non-
controlling interest in the licensee's controlling U.S. parent, for
declaratory rulings issued under Sec. 1.5000(a)(1), or in an
intervening U.S.-organized entity that does not control the licensee,
for declaratory rulings issued under Sec. 1.5000(a)(2), the
declaratory ruling shall permit the insertion of new, foreign-organized
companies in the vertical ownership chain above the controlling U.S.
parent, for declaratory rulings issued under Sec. 1.5000(a)(1), or
above an intervening U.S.-organized entity that does not control the
licensee, for declaratory rulings issued under Sec. 1.5000(a)(2),
without prior Commission approval provided that any new foreign-
organized company(ies) are under 100 percent common ownership and
control with the foreign investor approved in the declaratory ruling.
(i) Where a licensee has received a foreign ownership declaratory
ruling under Sec. 1.5000(a)(2) and the declaratory ruling specifically
authorizes a named, foreign investor to hold a non-controlling interest
directly in the licensee (subject to the 20 percent aggregate limit on
direct foreign investment), the declaratory ruling shall permit the
insertion of new, foreign-organized companies in the vertical
[[Page 26720]]
ownership chain of the approved foreign investor without prior
Commission approval provided that any new foreign-organized companies
are under 100 percent common ownership and control with the approved
foreign investor.
(ii) Example (for declaratory rulings issued under Sec.
1.5000(a)(1)). Licensee receives a foreign ownership declaratory ruling
under Sec. 1.5000(a)(1) that authorizes a foreign-organized company
(``Foreign Company'') to hold a non-controlling 30 percent equity and
voting interest in Licensee's controlling, U.S. parent (``U.S. Parent
A''). The remaining 70 percent equity and voting interests in U.S.
Parent A are held by U.S.-organized entities which have no foreign
ownership. After issuance of the declaratory ruling, Foreign Company
forms a wholly-owned, foreign-organized subsidiary (``Foreign
Subsidiary'') to hold all of Foreign Company's shares in U.S. Parent A.
There are no other changes in the direct or indirect foreign ownership
of U.S. Parent A. The insertion of Foreign Subsidiary into the vertical
ownership chain between Foreign Company and U.S. Parent A would not
require prior Commission approval.
(iii) Example (for declaratory rulings issued under Sec.
1.5000(a)(2)). Licensee receives a foreign ownership declaratory ruling
under Sec. 1.5000(a)(2) that authorizes a foreign-organized entity
(``Foreign Company'') to hold approximately 24 percent of Licensee's
equity and voting interests, through Foreign Company's non-controlling
48 percent equity and voting interest in a U.S.-organized entity, U.S.
Corporation A, which holds a non-controlling 49 percent equity and
voting interest directly in Licensee. (A U.S. citizen holds the
remaining 52 percent equity and voting interests in U.S. Corporation A,
and the remaining 51 percent equity and voting interests in Licensee
are held by its U.S.-organized parent, which has no foreign ownership.
After issuance of the declaratory ruling, Foreign Company forms a
wholly-owned, foreign-organized subsidiary (``Foreign Subsidiary'') to
hold all of Foreign Company's shares in U.S. Corporation A. There are
no other changes in the direct or indirect foreign ownership of U.S.
Corporation A. The insertion of Foreign Subsidiary into the vertical
ownership chain between Foreign Company and U.S. Corporation A would
not require prior Commission approval.
(2) Where a previously unapproved foreign-organized entity is
inserted into the vertical ownership chain of a licensee, or its
controlling U.S. parent, without prior Commission approval pursuant to
paragraph (d)(1) of this section, the licensee shall file a letter to
the attention of the Chief, Office of International Affairs, within 30
days after the insertion of the new, foreign-organized entity; or in
the case of a broadcast licensee, the licensee shall file a letter to
the attention of the Chief, Media Bureau, within 30 days after the
insertion of the new, foreign-organized entity. The letter must include
the name of the new, foreign-organized entity and a certification by
the licensee that the entity complies with the 100 percent common
ownership and control requirement in paragraph (d)(1) of this section.
The letter must also reference the licensee's foreign ownership
declaratory ruling(s) by ICFS File No. and FCC Record citation, if
available; or, if a broadcast licensee, the letter must reference the
licensee's foreign ownership declaratory ruling(s) by LMS File No.,
Docket No., call sign(s), facility identification number(s), and FCC
Record citation, if available. This letter notification need not be
filed if the ownership change is instead the subject of a pro forma
application or pro forma notification already filed with the Commission
pursuant to the relevant broadcast service, wireless radio service
rules or satellite radio service rules applicable to the licensee.
(e) New petition for declaratory ruling required. A licensee that
has received a foreign ownership declaratory ruling, including a U.S.-
organized successor-in-interest to such licensee formed as part of a
pro forma reorganization, or any subsidiary or affiliate relying on
such licensee's declaratory ruling pursuant to paragraph (b) of this
section, shall file a new petition for declaratory ruling under Sec.
1.5000 to obtain Commission approval before its foreign ownership
exceeds the routine terms and conditions of this section, and/or any
specific terms or conditions of its declaratory ruling.
(f) Continuing compliance. (1) Except as specified in paragraph
(f)(3) of this section, if at any time the licensee, including any
successor-in-interest and any subsidiary or affiliate as described in
paragraph (b) of this section, knows, or has reason to know, that it is
no longer in compliance with its foreign ownership declaratory ruling
or the Commission's rules relating to foreign ownership, it shall file
a statement with the Commission explaining the circumstances within 30
days of the date it knew, or had reason to know, that it was no longer
in compliance therewith. Subsequent actions taken by or on behalf of
the licensee to remedy its non-compliance shall not relieve it of the
obligation to notify the Commission of the circumstances (including
duration) of non-compliance. Such licensee and any controlling
companies, whether U.S.- or foreign-organized, shall be subject to
enforcement action by the Commission for such non-compliance, including
an order requiring divestiture of the investor's direct and/or indirect
interests in such entities.
(2) Any individual or entity that, directly or indirectly, creates
or uses a trust, proxy, power of attorney, or any other contract,
arrangement, or device with the purpose or effect of divesting itself,
or preventing the vesting, of an equity interest or voting interest in
the licensee, or in a controlling U.S. parent, as part of a plan or
scheme to evade the application of the Commission's rules or policies
under section 310(b) shall be subject to enforcement action by the
Commission, including an order requiring divestiture of the investor's
direct and/or indirect interests in such entities.
(3) Where the controlling U.S. parent of a broadcast, common
carrier, aeronautical en route, or aeronautical fixed radio station
licensee or common carrier spectrum lessee is an eligible U.S. public
company within the meaning of Sec. 1.5000(e), the licensee may file a
remedial petition for declaratory ruling under Sec. 1.5000(a)(1)
seeking approval of particular foreign equity and/or voting interests
that are non-compliant with the licensee's foreign ownership
declaratory ruling or the Commission's rules relating to foreign
ownership; or, alternatively, the licensee may remedy the non-
compliance by, for example, redeeming the foreign interest(s) that
rendered the licensee non-compliant with the licensee's existing
foreign ownership declaratory ruling. In either case, the Commission
does not expect to take enforcement action related to the non-
compliance subject to the requirements specified in paragraphs
(f)(3)(i) and (ii) of this section and except as otherwise provided in
paragraph (f)(3)(iii) of this section.
(i) The licensee shall notify the relevant Bureau by letter no
later than 10 days after learning of the investment(s) that rendered
the licensee non-compliant with its foreign ownership ruling or the
Commission's rules relating to foreign ownership and specify in the
letter that it will file a petition for declaratory ruling under Sec.
1.5000(a)(1) or, alternatively, take remedial action to come into
compliance within 30 days of the date it learned of the non-compliant
foreign interest(s).
(ii) The licensee shall demonstrate in its petition for declaratory
ruling (or in
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a letter notifying the relevant Bureau that the non-compliance has been
timely remedied) that the licensee's non-compliance with the terms of
the licensee's existing foreign ownership ruling or the foreign
ownership rules was due solely to circumstances beyond the licensee's
control that were not reasonably foreseeable to or known by the
licensee with the exercise of the required due diligence.
(iii) Where the licensee has opted to file a petition for
declaratory ruling under Sec. 1.5000(a)(1), the Commission will not
require that the licensee's controlling U.S. parent redeem the non-
compliant foreign interest(s) or take other action to remedy the non-
compliance during the pendency of the licensee's petition. If the
Commission ultimately declines to approve the petition, however, the
licensee must have a mechanism available to come into compliance with
the terms of its existing declaratory ruling within 30 days following
the Commission's decision. The Commission reserves the right to require
immediate remedial action by the licensee where the Commission finds in
a particular case that the public interest requires such action--for
example, where, after consultation with the relevant Executive Branch
agencies, the Commission finds that the non-compliant foreign interest
presents national security or other significant concerns that require
immediate mitigation.
(4) Where a publicly traded common carrier licensee is an eligible
U.S. public company within the meaning of Sec. 1.5000(e), the licensee
may file a remedial petition for declaratory ruling under Sec.
1.5000(a)(2) seeking approval of particular foreign equity and/or
voting interests that are non-compliant with the licensee's foreign
ownership declaratory ruling or the Commission's rules relating to
foreign ownership; or, alternatively, the licensee may remedy the non-
compliance by, for example, redeeming the foreign interest(s) that
rendered the licensee non-compliant with the licensee's existing
foreign ownership declaratory ruling. In either case, the Commission
does not, as a general rule, expect to take enforcement action related
to the non-compliance subject to the requirements specified in
paragraphs (f)(3)(i) and (f)(3)(ii) of this section and except as
otherwise provided in paragraph (f)(3)(iii) of this section.
(i) For purposes of this paragraph, the provisions in paragraphs
(f)(3)(i) through (f)(3)(iii) that refer to petitions for declaratory
ruling under Sec. 1.5000(a)(1) shall be read as referring to petitions
for declaratory ruling under Sec. 1.5000(a)(2).
(ii) [Reserved]
(5) For all remedial petitions for declaratory ruling, as specified
in paragraphs (f)(3) and (f)(4) of this section, the licensee must
include all applicable information required by Sec. 1.5001 in addition
to specifying the non-compliant interest(s).
[FR Doc. 2025-11477 Filed 6-20-25; 8:45 am]
BILLING CODE 6712-01-P