WPC3 2BJZ Courier3|j  Bx6X@`7X@HP LaserJet 4M (PCL) (Add) RM 7130HL4MPCAD.PRSx  @\)"KX@26 ZFv:3|j  HP LaserJet 4M (PCL) (Add) RM 7130HL4MPCAD.PRSC\  P6Q\)"KP I. A. 1. a.(1)(a) i) a) 1. 1. 1. a.(1)(a) i) a)a8DocumentgDocument Style StyleXX` `  ` 2pkRk(a4DocumentgDocument Style Style . a6DocumentgDocument Style Style GX  a5DocumentgDocument Style Style }X(# a2DocumentgDocument Style Style<o   ?  A.  2&vtu a7DocumentgDocument Style StyleyXX` ` (#` BibliogrphyBibliography:X (# a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  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I.   a7TechnicalTechnical Document Style(@D i) . 2y32e6a8TechnicalTechnical Document Style(D a) . Doc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:/>/>/>/x]SSSSx]x]x]x]xSxSx]SSxSxSf]xSxSxSxIxIxWxIx{nInInInISSSWS]a?/?]?9?]]WW]n/nKn9nCn/x]xx]x]SSxxIxIxI]?]?]?]WnUn9nax]x]x]x]x]x]xxWnInInIx]n9x]]?n9xSz+SS8-8WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN8HH"&H>XHH8HB8>HH^HH>"".2",2,2,"222N2222"&22H22,006"6."""""""""""2H,H,H,H,H,XAB,>,>,>,>,""""H2H2H2H2H2H2H2H2H2H2H,H2H1H2H2H282H,H,H,B,B,B6B,H?>,>,>,>,H2H2H2H6H2H6H2""2"""2F866H2>>(>">">H2;H2H2H2H2XHB"B"B"8&8&8&86>*>>.H2H2H2H2H2H2^HH6>,>,>,H2>"H28&>"H2?22!!WFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN$<<$.2",2222`2 LL2 LL2L"",,2d""O: yO!'ԍDecember 9 Form 600, Ex. E at 23.S The  !control group also owns some of NTI's Series B stock, which elects a minority of the board, and  X!4 !&otherwise votes only for certain "extraordinary" events.9? "!: yOz$' xp ԍNTI's Restated Certificate of Incorporation provides that holders of Series B (and Series C stock if issued)  ! voting together as a single class, must approve by a majority of the class, the following: amendments to the NTI's  !k bylaws or certificate of incorporation that would compromise the rights of holders of this stock; encumbrance or  !| sale of all or substantially all of NTI's assets; certain mergers; dissolution; declarations of certain kinds of dividends;"&>,N(N(&"  !! reorganizations; certain issuances of stock; public offerings of certain classes of stock; encumbrances of more than  ! $50 million; execution of contracts that would require a single payment of $10 million, or aggregate payments of  {O ' ! $50 million over the course of a year. See December 9 Form 600, Ex. E at 4. Certain of these voting rights expire upon a qualified public offering.9 Thus, as required under the "25 Percent"! ?,N(N(ZZ"  !"Equity Exception," NextWave's control group owns more than 25 percent of NTI's total equity,  !/on a fully diluted basis, and owns 100 percent of the stock that elects a majority of the board of  X4 !Rdirectors, and so has de jure control over NextWave. NextWave's control group otherwise  X4satisfies other applicable requirements as well.`@: {O ' x ԍThese requirements, which NextWave satisfies, are set forth above. See supra at note 54. NextWave's  !7 control group is entitled to receive all of the dividends on Series A stock that elects a majority of the board, and,  ! although payment on Series B stock is preferred over Series A upon dissolution, holders of Series A are otherwise  !^ entitled to the full value of their stock, and a percentage of the retained earnings that is equivalent to their equity  ! interest in the corporation. In addition, NextWave's "qualifying investors" own approximately 15 percent of NTI's  {O ' ! total equity, on a fully diluted basis, and approximately 90 percent of its Series A stock. See December 9 Form 600,  {O ' ! Ex. E at 12. NextWave's management owns the balance of the equity within the control group. See December 9  !} Form 600, Ex. E at 12. Although NextWave's December 9 Form 600 is an amended one, its earlier long form  !H applications showed that its "qualifying investors" owned at least 15 percent of NTI's total equity, on a fully diluted basis, and owned the majority of the stock that elects a majority of the board of directors.`  X4 x 28. Based on the above analysis, unless one or more of its investors exercises de facto  Xz4 !+control over NextWave or otherwise divests NextWave's control group of de facto control,  Xe4 !NextWave satisfies the Commission's Cblock and "small business" eligibility requirements. The  XN4 !&Commission has repeatedly stated that its analysis of de facto control is necessarily casebycase,  X94 !&and governed by a totality of the circumstances.@A9P : {O:' x ԍSee, e.g., In the Matter of Implementation of Section 309(j) of the Communications Act Competitive  {O' ! Bidding, Fifth Memorandum Opinion and Order, 10 FCC Rcd 403, 447,  80 (1994) ("Fifth MO&O"). With respect  ! to the factors immediately following in the text, the Commission said: "We emphasize . . . that these criteria are  {O' ! guidelines only and are not necessarily dispositive of the issue of de facto control in all situations. Even where these  ! criteria are met, therefore, the determination of whether de facto control exists will depend on the totality of the  {O('circumstances in the particular case." Id.@ However, as a general matter, the Commission  !phas stated that a Cblock applicant's control group must, at a minimum: (1) appoint or constitute  !50 percent of the board of directors; (2) appoint, promote, demote, and fire senior executives that  X 4control daytoday activities; and (3) play an integral role in all major management decisions.^B : {Ou'ԍFifth MO&O, 10 FCC Rcd at 447,  80.^  xm29. As explained above, NextWave's control group elects a majority of the board.  !"Indeed, its current board is composed exclusively of control group members, or representatives  !of control group members. According to NextWave's long form application, "the control group  !has authority to appoint, promote, demote, and fire the senior executives that control the  Xj4 !yApplicant's daytoday activities [and] plays a key role in all major management decisions."RCjb: yO}&'ԍDecember 9 Form 600, Ex. E at 3. R  !In its response to the LOI, NextWave states that the major investors about which the Bureau"S C,N(N(ZZ"  !}inquired do not have any role in recruiting or hiring NextWave's senior management, except that  !those investors that are Series B stockholders, elect a minority of the board of directors, and some  X4are entitled to a seat on the board.OD: yOK'ԍLOI November 18 Response at 7.O  x30. Series B shareholders have other rights besides that to vote for a minority of the  X4 !Zboard and certain board seats.hEX: {O'ԍThese are set forth above. See supra at note 63.h However, these are of the kind the Commission has said generally  Xv4 !do not amount to de facto control: "We . . . clarify that under our case law nonmajority or non !voting shareholders may be given a decisionmaking role (through supermajority or similar  XJ4 !&mechanisms) in major corporate decisions that fundamentally affect their interests as shareholders  X34 !<without being deemed to be in de facto control. Such decisions generally include: (1) issuance  !or reclassification of stock; (2) setting compensation for senior management; (3) expenditures that  !ysignificantly affect market capitalization; (4) incurring significant corporate debt or otherwise  !Vencumbering corporate assets; (5) sale of major corporate assets; and (6) fundamental changes  X 4 !in corporate structure, including merger or dissolution."aF : {Ot'ԍFifth MO&O, 10 FCC Rcd at 44748,  81.a In sum, the rights of Series B shareholders do not, standing alone, amount to control.  x31. We note, however, that NTI and POSAM have entered into a letter agreement,  !whereby "[p]rior to any qualified public offering by NTI, NTI agreed to seek POSAM's approval  Xf4 !with respect to any equity investment by any other Korean investor."RGf|: yO'ԍDecember 9 Form 600, Ex. J at 21.R While we will review any  XO4 !such agreement closely, we do not find that this particular agreement gives POSAM de facto  !pcontrol over NextWave. By its terms, POSAM has the right to approve only additional Korean,  !and therefore only a fraction of additional foreign, investment. Moreover, given our conclusion  !Zbelow that NextWave has exceeded the foreign ownership benchmark, and that it must restructure  !accordingly, NextWave is unlikely to be able to seek additional Korean, or indeed any other foreign investment for the foreseeable future.  x32. In sum, based on the record before us, we find, under the "25 Percent Equity  !Exception," that neither POSAM nor Qualcomm has an attributable interest in NextWave, and  X4 !that NextWave's control group owns 25 percent of NTI on a fully diluted basis, and has de facto  Xm4 !land de jure control over NextWave. We also find that there are no substantial and material  !/questions of fact that would require further inquiry into the ownership interests of POSAM and Qualcomm.  X*4   X' C. Foreign Ownership " G,N(N(ZZ"Ԍ X4 xJ  33. We now consider whether NextWave exceeds the 25 percent foreign ownership  X4 !benchmark of Section 310(b)(4) of the Communications Act.JH: yOb'ԍ47 U.S.C.  310(b)(4).J We conclude that certain debt  !"instruments of NTI should be treated as equity and, as a result, NextWave exceeds the foreign  !ownership benchmark with respect to both foreign stock ownership and foreign capital  X4 !contributions. After reviewing the measures proposed in NextWave's Restructuring Plan and  !<Petitioners' response to the Plan, we believe that successful completion of the Plan's measures,  !Vas discussed below, should bring NextWave's foreign ownership within the benchmark set forth  !lin Section 310(b)(4) of the Communications Act. We therefore grant NextWave six months  XH4 !within which to implement the Plan. In addition, as discussed below,LIHX: {OQ 'ԍSee infra at  90.L beginning one month  !from January 3, 1997, NextWave must report to the Bureau on a monthly basis regarding the  X 4steps it is taking to come within the statutory benchmark.J" : yO' x ԍUpon NextWave's request and Petitioners agreement not to oppose the request, we granted NextWave an  {O}' !g extension of time until February 17, 1997, to submit its first monthly report. See Letter from Thomas Gutierrez,  ! counsel to NextWave, to Sandra K. Danner, Deputy Chief, Commercial Wireless Division (Jan. 31, 1997) (confirming grant of request).  X '  Wq` ` 1. Consideration of Stock Ownership and Capital Contributions under  X 'Section 310(b)(4) of the Communications Act (#  X 4 xd !34. Section 310(b)(4) of the Communications Act authorizes the Commission to deny  !license applications, upon determination that denial is in the public interest, where more than 25  !percent of a parent corporation's capital stock is owned or voted by foreign entities. That section provides in pertinent part that: XX` ` [n]o . . . radio station . . . license shall be granted to or held by x`  ( XX` ` . . . any corporation directly or indirectly controlled by any other  ( %corporation of which more than onefourth of the capital stock is  ( 2owned of record or voted by aliens, their representatives, or by a  ( foreign government or representative thereof, or by any corporation  ( 2organized under the laws of a foreign country, if the Commission  ( finds that the public interest will be served by the refusal or  X4revocation of such license.LK: yO"'ԍ47 U.S.C.  310(b)(4). Lx`  x"35. We have recently considered the application of the Section 310(b)(4) benchmark in  XN4 ! Fox Television Stations, Inc., 10 FCC Rcd 8452 (1995) (Fox I). In Fox I, the Commission was  !+presented with a renewal application where a single foreign investor in the licensee's parent  !company paidin more than 99 percent of the capital for common stock constituting 24 percent""d K,N(N(ZZ"  !of both the voting power and all stock issued by the corporation. The remaining stock was  !+preferred stock, which exercised 76 percent of the voting power. The foreign owner of the  X4 !ucommon stock in Fox I had the right to virtually all of the profits and, upon liquidation, the  X4 !assets of a company worth more than one billion dollars.ZL: {O6'ԍFox I, 10 FCC Rcd at 8474,  50.Z The Commission concluded that  X4 !"where the ownership of corporate shares does not correspond to the beneficial ownership of the  !corporation, we will not be bound by a formalistic 'counttheshares' approach that understates  Xx4 !the true extent of foreign ownership."MZxZ: {O ' x ԍFox I, 10 FCC Rcd at 8474,  48. In Wilner & Scheiner, 103 F.C.C. 2d 511 (1985), the Commission  ! determined that because the statutory limitations are cast in the disjunctive, foreignowned nonvoting stock is  yO 'considered in evaluating whether Section 310(b) thresholds are exceeded. 103 F.C.C. 2d at 519 n.37. Rather, in Fox I, the Commission considered the foreign  Xc4 !capital contributions paid into the corporation.ZNc|: {O 'ԍFox I, 10 FCC Rcd at 8468,  36.Z The Commission concluded that because foreign  !interests contributed more than 99 percent of the capital to the parent corporation, the level of  X54ownership greatly exceeded the 25 percent benchmark established in Section 310(b)(4).ZO5: {O'ԍFox I, 10 FCC Rcd at 8474,  50.Z  X 4 x,#36. Our analysis under Section 310(b)(4) is twopronged, one pertaining to voting  X 4 !cinterests and the second to ownership interests.P : {OA'ԍBBC Licenses Subsidiary L.P., Order, 10 FCC Rcd 10968, 10973,  22 (1995). The statute clearly requires that we calculate  !the percentage of outstanding shares of foreignowned stock in a parent corporation to determine  X 4 !whether the Section 310(b)(4) benchmark is exceeded.}Q 2 : {O' x ԍSee, e.g., Data Transmission Co., Order, 59 F.C.C. 2d 909, 910 (1976) (finding that Section 310(b) was  !! satisfied where a foreign investor owned 9.5 percent of the licensee's shares and 9.67 percent of the parent's shares,  {O7' !o despite providing additional funding through convertible debt); Westinghouse Radio Stations, Inc., Order, 19 F.C.C.  !H 2d 1359, 1451 (1955) (finding that 22.42 percent foreign ownership of shares issued by parent corporation was within the Section 310(b) benchmark).} Stock ownership in a corporation  !Igenerally measures an investor's beneficial ownership in that corporation, including voting rights  !and distributions of dividends, and generally reflects the amount of shareholder capital contributed  X}4 !to the corporation.*R}: {O ' x ԍSee Fox I, 10 FCC Rcd at 847273,  4647 (discussing judicial decisions demonstrating that the relative amounts of shareholder capital contributions are generally reflected in the stock certificates issued to shareholders).* That is, a prudent investor invests an amount of money that fairly reflects  !ythose benefits that it expects to receive in return for its investment. Where the ownership of  !corporate shares does not correspond to the capital contributed to the corporation, we consider  !both stock ownership and capital contributions in our determination of beneficial ownership  !interests under the foreign ownership benchmark of Section 310(b)(4) of the Communications  X 4Act.kS @: {O&'ԍFox I, 10 FCC Rcd at 8468,  36 & 8474,  48. k" S,N(N(ZZ"Ԍ X4 xԙ$37. Petitioners argue that NextWave's applications should be dismissed for violating the  X4 !25 percent foreign ownership benchmark.AT: yOb'ԍPetition at 37.A Specifically, Petitioners argue that ownership  !percentages must be calculated on the basis of both capital contributions and stock ownership,  !and whichever results in a higher foreign ownership percentage is the basis for determining  X4 !compliance with Section 310(b)(4).oUNX: {O' xR ԍPetition at 34 (citing Market Entry and Regulation of Foreignaffiliated Entities, Report and Order, IB  {Ow' ! Docket No. 9522, 10 FCC Rcd 3873, 3900 n.74 (1995) ("Foreignaffiliated Entities Report and Order") and Fox  {OA ' ! Television Stations, Inc., 10 FCC Rcd 8452 (1995)) ; Petitioners' Reply at 67 (quoting Foreignaffiliated Entities  {O ' !D Report and Order, 10 FCC Rcd at 3900 n.74); and Petitioners' Opposition to Restructuring Plan at 8 (citing same).  {O ' ! Footnote 74 of the Foreignaffiliated Entities Report and Order states that the Commission determines foreign  {O ' !& ownership in reliance on existing case law and cites Fox I and Wilner & Scheiner, 103 F.C.C.2d 511 (1985) as  ! examples of that existing case law. Our analysis in this decision is based on Commission case precedent, including  {O1 'Fox I and Wilner & Scheiner.o Petitioners assert that the percentage of foreign capital  X4 !contributions made to NTI causes NextWave to be in violation of Section 310(b)(4).Vn : yO' x" ԍPetition at 67; Petitioners' Reply at 610; Petitioners' Partial Response to 308 Filing at 18; and Petitioners' Opposition to Restructuring Plan at 3. Moreover,  !Petitioners assert that Commission precedent put NextWave on notice that compliance on the  X_4 !basis of capital contributions is required under Section 310(b)(4).CW_ : yO'ԍPetition at 5 n.4.C NextWave, however, asserts  !that it is now, and has been, in compliance with the benchmark because foreign investors hold  X14 !}less than 25 percent of NTI's stock.rX1V : yO8'ԍOpposition to Petition at 14; and LOI November 18 Response at 27.r In its Opposition to the Petition, NextWave contends that  !the approach that reflects the beneficial ownership interest in an applicant, either stock ownership  X 4or capital contributions, constitutes the basis for determining compliance.QY : yO'ԍOpposition to Petition at 1517.Q  x%38. Foreign investment in NTI has been made largely through ownership of Series A and  !VSeries B common stock, debt instruments convertible to Series B stock, warrants and options to  !ypurchase Series B stock, and nonconvertible debt instruments. Domestic investors own 99.6  X4 !percent of NTI's Series A stock.Zv: yO ' x ԍTwo of the 28 Series A shareholders are foreign investors who own 0.4 percent of the Series A stock. LOI November 18 Response at Sched. 4a. In its May 22 Form 600, NextWave reported that foreign  Xy4 !investors owned less than 23 percent of NTI's stock.[y: yO#' x ԍMay 22 Form 600, Ex. E at 7. In its May 22 Form 600, NextWave reported that it had an aggregate of  ! 139,779,706 shares of stock issued and outstanding, of which 55,760,000 shares were Series A stock and 84,019,706  {O%' ! shares were Series B stock. Id. In its Opposition to the Petition, NextWave stated that NTI had an aggregate of  !Q 139,114,136 shares of stock issued and outstanding, of which foreign investors held 31,996,250 of the issued and  !! outstanding shares and domestic investors held 107,117,886 shares issued and outstanding. Opposition to Petition"'Z,N(N('"  ! at 14. Using an aggregate of 139,779,706 shares, NTI's foreign stock ownership was 22.89 percent; using an aggregate of 139,114,136 shares, the foreignowned stock in NTI was 22.99 percent. NextWave more recently reports that"y [,N(N(ZZc"  X4 !foreign investors hold 21.28 percent of NTI's capital stock.T\ : yO' x ԍRestructuring Plan, Att. at 1. Based on its December 9 Form 600, NextWave currently has an aggregate  ! of 155,053,398 shares of Common Stock issued and outstanding, of which 41,820,738 shares are Series A Common  !D Stock and 113,232,660 shares are Series B Common Stock. December 9 Form 600, Ex. A at 56. NextWave reports  ! in its Restructuring Plan that foreign investors hold 32,996,250 or 21.28 percent of NTI's issued and outstanding shares. Restructuring Plan, Att. at 1. T In its Opposition to the Petition,  X4 !/NextWave stated that foreign investors had paid in 34.92 percent of NTI's capital contributions  X4 !has of the date it filed its May 22 Form 600.b]Z: yOS ' x< ԍOpposition to Petition at 14. In its Opposition to the Petition, NextWave stated that the total capital paid  ! into NTI was $273,243,037, of which domestic investors had paid in $177,824,430.25 and foreign investors had paid  {O 'in $95,418,606.75. Id.b While NextWave has not provided updated  !/percentages on foreign capital contributed to NTI, based on the aggregate capitalization figures  !<that NextWave reports in its December 9 Form 600 and stock ownership figures provided in its  !Restructuring Plan, foreign investors have currently paid in approximately 30.56 percent of NTI's  Xv4total capital.^ v : yO' x ԍDecember 9 Form 600, Ex. A at 5. NextWave reports in its December 9 Form 600 that it has raised  {O' ! $14,000,000 for the purchase of Series A stock and $308,000,000 for the purchase of Series B stock. Id. NextWave  ! reports in its Restructuring Plan that foreign investors hold 32,996,250 of NTI's issued and outstanding shares, an  !Q additional 1,000,000 shares from the 31,996,250 reported in NextWave's Opposition to the Petition. Restructuring  ! Plan, Att. at 1. Based on NTI's pricing of its Series B common stock at $3.00 per share, the additional 1,000,000  ! shares of stock issued to the new foreign investor increases the capital contributed by foreign investors to NTI to  ! $98,418,606.75. Based on NextWave's figures that the total capital paid into NTI for Series A and Series B stock  !x is $322,000,000, domestic investors have paid in $223,581,393.25 and foreign investors have paid in $98,418,606.75 or 30.56 percent of NTI's capital contributions.   x&39. NextWave argues that beneficial ownership is more accurately assessed on a count !ctheshares approach that reflects the Series A shareholders' "sweat equity" in NTI as a startup  X 4 !company.Q_ : yO'ԍOpposition to Petition at 1721.Q The Series A shareholders purchased stock between November 22, 1995, and May  !M1, 1996, at $0.25 per share, whereas Series B shareholders purchased stock between May 8, 1996,  X 4 !and November 8, 1996, for a price between $3.00 and $5.00 per share.W` T: yO 'ԍLOI November 18 Response at Sched. 4a.W NextWave argues that  !measuring compliance with Section 310(b)(4) based on capital contributions both understates the  X 4 !4relative value of the Series A stock and overstates the relative value in Series B stock.Qa : yOS$'ԍOpposition to Petition at 1819.Q " ta,N(N(ZZ "  !pPetitioners argue that any sweat equity applicable to Series A shareholders must not be counted  X4for purposes of the foreign ownership capital contributions test.b: yOb' xc ԍPetitioners' Reply at 1314; Petitioners' Partial Response to 308 Filing at 1718; and Petitioners' Opposition to Restructuring Plan at 89.  x~'40. Because foreign investors have paid a higher percentage of capital into NTI for a  !lesser portion of NTI's issued and outstanding stock, we will analyze both the stock ownership  !Eand the capital contributed to NTI in determining whether NextWave's beneficial ownership  !"interests exceed the foreign ownership benchmark in Section 310(b)(4) of the Communications  X_4 !Act. With respect to the valuation of sweat equity, in Fox I, the Commission recognized that the  !capital contributions test may not adequately value certain beneficial interests, including sweat  X34 !equity invested by shareholders.Zc3 : {O 'ԍFox I, 10 FCC Rcd at 8474,  49.Z The Commission indicated its intent to review such valuations  X 4 !Mon a casebycase basis.[d : {O'ԍFox I, 10 FCC Rcd at 8474,  49. [ NextWave does not include sweat equity in its percentage calculations  !pfor purposes of NTI's foreign capital contributions and we have not included sweat equity in our  X 4 !lreview of foreign investors' capital contributions to NTI. As a result, the issue of calculating  !NTI's foreign capital contributions to include any relevant sweat equity of NTI's Series A  !"shareholders is not before us in this case. We therefore need not decide whether sweat equity is relevant to valuing foreign beneficial interests in NTI.  X{4 x4(41. Finally, as the Commission concluded in Fox I, while Section 310(b)(4) clearly gives  !the Commission discretion with respect to foreign ownership in excess of the statutory  !benchmark, "[i]t is equally clear that the statute requires that the Commission be made aware  !whenever foreign ownership could exceed the benchmark level, so that it can exercise that  X!4 !discretion."be!D: {O'ԍFox I, 10 FCC Rcd at 8474,  52. b NextWave has provided percentage information on foreign stock ownership in NTI  X 4 !in its long form applications.f" : {O' x ԍSee, e.g., November 1 Form 600, Ex. E at 8 (stating that "[t]he total foreign ownership of NTI's capital  !t stock as of October 31, 1996 is less than 23%, represented by foreign investors' holdings of Series B Common  ! Stock"); December 9 Form 600, Ex. E at 8 (stating that "[t]he total foreign ownership of NTI's capital stock as of December 3, 1996 is less than 23%, represented by foreign investors' holdings of Series B Common Stock"). NextWave has provided information on the percent of foreign  !/capital contributed to NTI, however, only in its Opposition to the Petition and in response to our  !pLOI. In its Opposition to the Petition, NextWave states that "the foreign percentage of the total  X4 !lprice paid for the Series A and Series B shares of common stock issued is 34.92 percent."Ng : yO6$'ԍOpposition to Petition at 14.N  !cNextWave repeated the same percentage in its November 18 Response to our LOI, stating that  X4 !"[t]here [had] been no new foreign equity investments received by NextWave since it filed its"P g,N(N(ZZ"  X4 !opposition to the petition to deny on July 16, 1996."Ph: yOy'ԍLOI November 18 Response at 27.P In its December 9 Form 600, NextWave  !Rstates that it submitted the amendment to reflect equity investment, in part, by a new foreign  X4 !investor in NTI,UiX: yO'ԍDecember 9 Form 600 at Cover Letter.U but does not provide any adjusted percentages of NTI's foreign paidin capital.  !RAware that foreign capital contributions in NTI exceed the statutory benchmark, NextWave  !asserts that capital contributions do not reflect the foreign investors' beneficial ownership interest  X4 !in NTI and unilaterally concludes that information on NTI's foreign capital is irrelevant to our  Xv4determination under Section 310(b)(4).xjv: yO 'ԍOpposition to Petition at 1517; and LOI November 18 Response at 2728.x  XH4 x,)42. We reiterate that an applicant must specifically and directly inform us that an  !ownership structure under consideration may exceed the foreign ownership benchmark in Section  X 4 !310(b)(4) of the Communications Act.bk x: {OC'ԍFox I, 10 FCC Rcd at 8475,  53. b An applicant must provide specific information to us  !regarding a corporation's percentage of foreign stock ownership and percentage of foreign capital  X 4 !contributions where there is a possibility that either could exceed the statutory benchmark. As  X 4 !the Commission stated in Fox I, failure to do so violates the process under which we make  X 4Section 310(b)(4) determinations.lZ : {O{' x ԍSee Fox I, 10 FCC Rcd at 847576,  54 (stating that "because our process requires submission of the issue  ! [of determining whether foreign ownership in excess of the benchmark is consistent with the public interest] to the Commission, failure to do so violates that process even if it does not technically violate the statutory restriction").  X'` ` 2. Evaluation of NTI's Foreign Investment as Equity  Xd4 x*43. In Fox Television Stations, Inc., 11 FCC Rcd 5714 (1995) (Fox II), the Commission  !applied five factors that Congress suggested for distinguishing debt from equity under federal tax  X84 !law.m8, : {O'ԍFox II, 11 FCC Rcd at 5720,  16 (citing 26 U.S.C.  385(b) (Supp. 1995)). These five factors were used as guidelines, based on the totality of the circumstances, in  !udetermining whether alleged debt obligations were more properly classified as equity: (1)  !whether there is a written unconditional promise to repay the money on demand and to pay a  !Ifixed rate of interest; (2) whether there is subordination to or preference over any indebtedness  !<of the company; (3) the company's debt/equity ratio; (4) whether the alleged debt is convertible  X4 !to stock; and (5) the relationship between holdings of stock in the corporation and holdings of" m,N(N(ZZ1"  X4 !_the interest in question.n: {Oy' xR ԍFox II, 11 FCC Rcd at 5720,  16 (citing 26 U.S.C.  385(b) (Supp. 1995)). Based on our analysis in Fox  {OC' ! II, we found that the $1.4 billion debt interest in the licensee's parent corporation was more properly characterized  {O ' !t as a capital contribution and not as bona fide debt. Fox II, 11 FCC Rcd at 5719,  15. Finding the debt to be a  !b capital contribution, the Commission determined that Fox's 99 percent foreign beneficial ownership interest exceeded  {O'the Section 310(b)(4) benchmark. Id. at 572021,  1718. The objective of our inquiry is not to count factors, but to evaluate  X4them.o: {O' x ԍBauer v. Commissioner of Internal Revenue, 45 T.C.M. 910 (CCH) (1983), rev'd on other grounds, 748 F.2d  {O'1365 (9th Cir. 1985) (citing Tyler v. Tomlinson, 414 F.2d 844, 848 (5th Cir. 1969)).  X4 x+44. In examining NextWave's financial structure, we apply the Fox factors to NTI's debt  X4 !hinstruments to determine whether those instruments are bona fide debt or more properly  X4 !characterized as equity.+p: {O' x ԍSee Fox II, 11 FCC Rcd at 5719,  14 (emphasizing that  we examine the economic realities and substance of the transactions under review and not simply the labels that the parties attach to their corporate incidents).+ Where NTI's debt instruments are deemed to be equity, we include  !those obligations as equity in our analysis of whether NextWave meets the foreign ownership  Xc4 !benchmark. Although Fox II reached a distinction between debt and equity based on the five  !factors suggested by Congress, tax courts have identified as many as sixteen analytical  X74 !frameworks for making the same determination.q76 : {O' x ԍSee, e.g., Roth Steel Tube Co. v Commissioner of Internal Revenue, 800 F.2d 625, 630 (6th Cir. 1986) (11  {O' !g factors); Bauer v. Commissioner of Internal Revenue, 748 F.2d 1365, 1368 (9th Cir. 1985) (11 factors); Fin Hay  {O' !t Realty Co. v. United States, 398 F.2d 694, 696 (3d Cir. 1968) (16 factors); Kavich v. United States, 506 F. Supp.  {O|' ! 1339, 1343 (D. Neb. 1981) (10 factors); and Kadlec v. Commissioner of Internal Revenue, 71 T.C.M. (CCH) 2399  yOF'(1996) (16 factors).Ĭ From a review of federal tax cases, it is clear  !that no one single factor can provide a conclusive answer as to the nature of an instrument which  X 4 !is in the form of debt.r : {O' xc ԍScriptomatic, Inc. v. United States, 555 F.2d 364, 367 (3d Cir. 1977) (quoting Fin Hay Realty Co. v. United  {Or'States, 398 F.2d 694 (3d Cir. 1968)). To distinguish between NTI's debt and equity, we continue to use the  X 4 !/five factors enunciated in Fox II as guidelines to assist us in our evaluation of the totality of the  !circumstances of the economic reality and substance of these transactions, and we again rely on the analyses presented in federal tax cases to assist us in our application of those guidelines.  X4 x ,45. Petitioners argue that NTI's foreign warrants, options, and convertible debt must be  !counted as equity, further increasing NextWave's foreign ownership in violation of Section  Xj4 !310(b)(4).MsjJ: yOe#'ԍPetitioners' Reply at 1013.M Petitioners assert that we must assess future instruments now because there will be  XS4 !no requirement for further Commission "preexercise review."LtS: yO%'ԍPetitioners' Reply at 11. L NextWave contends that  !pPetitioners disregard consistent holdings of the Commission that future interests, such as options"<jt,N(N(ZZ"  X4 !and convertible rights, are not relevant to alien ownership determinations until converted. u : yOy' x ԍOpposition to Petition at 1213. Petitioners insist that we must either overrule the cases excluding future  ! instruments from foreign ownership calculations or certify this case to the full Commission. Petitioners' Partial  yO ' ! Response to 308 Filing at 14. Petitioners provide no support for either proposition. We are therefore unpersuaded that we should overrule existing case law or certify the issue to the full Commission.  In  X4 !}addition, NextWave argues that NTI's foreign debt is bona fide debt and should not be included  X4in calculating the equity in NTI.xv: yO5'ԍOpposition to Petition at 2125; and LOI November 18 Response at 2728.x  X4 x-46. We reaffirm that bona fide debt interests as well as bona fide future interests are not  X4 !'included in our analysis of foreign ownership interests under Section 310(b).w @: yO ' x ԍFuture interests are treated in a contrary manner for the purposes of determining eligibility for participation  ! in the Entrepreneurs' block. Pursuant to Section 24.709(b)(7) of the Commission's rules, "all agreements such as  !. warrants, stock options and convertible debentures will generally be treated as if the rights thereunder already have been fully exercised . . ." for the purposes of calculating eligibility.  We have  !previously determined that future interests including warrants, options, and convertible debt do  !Rnot constitute capital stock until exercised or converted and are therefore not relevant to our  XL4 !foreign ownership determinations.x^L( : {O%' x ԍSee DCR PCS, Inc., Order, DA 961816 (Nov. 4, 1996); BBC License Subsidiary L.P., 10 FCC Rcd at  {O' !t 10973 n.12 (citing Univision Holdings, Inc., Order, 7 FCC Rcd 6672, 6674,  8 (1992), recon. denied, 8 FCC Rcd  {O'3931 (1993)); and Univision Holdings, Inc., 7 FCC Rcd at 6673 n.6.  Moreover, a Commission licensee must remain in  X54 !compliance with statutory requirements and Commission rules throughout the term of its  X 4 !license.yZ N : {O' x ԍSee 47 U.S.C.  308(b) (authorizing the Commission, at any time after the filing of an original application  ! and during the term of licenses, to require an applicant or licensee to submit written statements of fact to allow the Commission to determine whether the original application should be granted or denied or such license revoked). Similarly, because creditors possess neither an ownership interest nor a voting interest  X 4 !through their bona fide debt relationship with a company, the Commission does not consider such  X 4 !debt interests in determining whether foreign ownership exceeds the statutory benchmark.z| p: {O' x ԍFox I, 10 FCC Rcd at 8483,  77 (citing Wilner & Scheiner, 103 F.C.C. 2d 511, 519,  14 (1985)). A  ! shareholder participates in a corporate venture taking the risks of loss in return for a portion of the profits and  ! management in the corporation. A creditor, on the other hand, merely lends capital to those who intend to take the  {Om' !M risk. See Bauer v. Commissioner, 748 F.2d at 1367 (citing A.R. Lantz Co. v. United States, 424 F.2d 1330, 1334  ! (9th Cir. 1970)) (stating that the determination of whether an advance is debt or equity depends on the distinction  !| between a creditor who seeks a definite obligation that is payable in any event, and a shareholder who seeks to make  yO!'an investment and to share in the profits and risks of loss in a venture).  The  X 4 !exception arises where debt instruments are not bona fide debt and are more properly characterized as equity.  X4 xN.47. Based on our analysis of NTI's capital structure applying the Fox II factors, we find  !that two classes of debt instruments, (1) the Convertible Promissory Notes, all held by foreign"z,N(N(ZZI"  !<investors; and (2) the Convertible Senior Subordinated Notes, approximately 44 percent held by  X4foreign investors, are more properly characterized as equity.  X'` ` a. Convertible Promissory Notes  X4 xv/48. Before and during the initial Cblock auction, NTI entered into subscription  !Vagreements with certain domestic and foreign investors ("Subscription Agreements"). Pursuant  !to the Subscription Agreements, investors subscribed to purchase Series B stock as well as  !warrants to purchase Series B stock in NTI. Sixteen of the foreign investors executed  !Subscription Agreements during the course of the initial auction between January 1, 1996, and  X 4 !May 3, 1996.{" : yO 'ЍLOI November 18 Response at Sched. 4a. The other two foreign investors executed Subscription Agreements prior to commencement of the initial Cblock auction. Pursuant to the terms of the Subscription Agreements, on May 8, 1996, NTI issued Series B shares to those investors for the full principal amount of their  {O 'subscription. Id., Sched. 4a at 1213. Upon meeting certain conditions precedent, the terms of the Subscription  !<Agreements required NTI to issue to each foreign investor (1) the maximum number of shares,  !<not to exceed the foreign ownership allowable under Section 310(b); and (2) a convertible note,  !which, upon conversion at $3.00 per share, would equal the balance of the Series B shares for  X 4 !which the foreign investor had subscribed ("Convertible Promissory Notes").f| : yO!'ԍSubscription Agreements  3(i) & (ii), at 23.f Between May  !8, 1996, and June 7, 1996, NTI, in fact, issued to the foreign investors, at the price of $3.00 per  !Eshare, Series B stock equal to approximately 60 percent of the aggregate foreign subscribed  Xy4 !Vprincipal amount and Convertible Promissory Notes in the aggregate principal of $38,912,478.}yB: yOl' x ԍLOI November 18 Response at Sched, 4b. Of the 16 Convertible Promissory Notes, NTI issued 14 notes  {O4'dated May 8, 1996, one note dated May 14, 1996, and one note dated June 7, 1996. Id.  !At $3.00 per share, that aggregate principal amount would convert to 12,970,478 Series B shares.  !The provisions requiring issuance of convertible notes were inapplicable to domestic subscribers.  !Foreign investors hold 100 percent of the aggregate principal amount in the Convertible Promissory Notes.  x4049. By their terms, the Convertible Promissory Notes are unsecured obligations payable  X4 !upon demand at any time after May 8, 1997, but prior to May 8, 2001.\~: yO% 'ԍConvertible Promissory Notes Recitals at 1.\ Interest begins to  X4 !accrue on the date of the Convertible Promissory Note at 6 percent per annum.[, : yO"'ԍConvertible Promissory Notes  4, at 4.[ NTI is not  X4 !obligated, however, to make interest payments on any principal converted prior to May 8, 1997.[ : yO%'ԍConvertible Promissory Notes  4, at 4.[  !The Convertible Promissory Notes automatically convert into the right to receive a number of  X|4 !Series B shares upon an event, i.e., a new issuance of stock, that NTI deems increases the"|L ,N(N(ZZ"  !number of shares available to foreign investors without exceeding the statutory foreign ownership  X4 !Ibenchmark.[: yOb'ԍConvertible Promissory Notes  2, at 3.[ NTI notifies the noteholder of the right to convert and the noteholder surrenders  !its Convertible Promissory Note. If NTI determines conversion of the full principal would cause  !NextWave to exceed the benchmark in Section 310(b), it issues only the number of shares  !allowed to maintain NTI's foreign ownership within the statutory benchmark. Concurrently, NTI  X4 !yissues a new note "of like tenor and date" for the remaining unconverted principal balance.[X: yO'ԍConvertible Promissory Notes  2, at 3.[  Xv4 !0Upon either full or partial conversion, the outstanding note is cancelled.[v: yO 'ԍConvertible Promissory Notes  2, at 3.[ Finally, the  !lConvertible Promissory Notes are subordinated to all debt, with the possible exception of the  XH4Convertible Senior Subordinated Notes described in detail below.VHx: {Oq'ԍSee infra at Section III.C.2.b.V  X 4 x150. Based on application of the five Fox factors to the Convertible Promissory Notes, we make the conclusions outlined below.  X 4 x#251. A written unconditional promise to repay the principal amount of the Convertible  X 4 !Promissory Notes on demand and to pay a fixed interest rate. NextWave contends that each of  !NTI's debt agreements obligates NTI unconditionally to repay the obligation at its stated maturity  X4 !and to pay a fixed interest rate.r : yOM'ԍOpposition to Petition at 23; and LOI November 18 Response at 29.r In Fox II, payment was secured by a promissory note bearing  X}4 !_a fixed 9.09 percent interest rate and the note was payable in ten years.[}: {O'ԍFox II, 11 FCC Rcd at 5720,  17.[ The terms of the  !"Convertible Promissory Notes, however, provide NTI with the opportunity to avoid all payment  !pof interest on the entire principal amount because principal converted prior to May 8, 1997, does  X84 !not bear interest.e8, : {O'ԍSee Convertible Promissory Notes  4, at 4.e Thus, if NTI converts the Convertible Promissory Notes on May 7, 1997,  !although interest has accrued for one year, that accrued obligation for interest will not be paid.  X 4 !The interest rate determines the compensation for risk on a bona fide loan and the ability to avoid  !/interest payments is a strong indication that the Convertible Promissory Notes are equity rather  X4 !than debt.s : {OM#' x+ ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (stating that the absences of a fixed rate of  ! interest and interest payments is a strong indication that the advances are capital contributions rather than loans); and  {O$' ! Kadlec v. Commissioner of Internal Revenue, 71 T.C.M. (CCH) 2399 (1996) (finding that a debt instrument that  ! contained provisions for interest but interest was never paid on any of the advances indicates the advances are capital contributions and not debt).s While a bona fide lender might agree to a delay in payment of interest for a period"r,N(N(ZZn"  !of time, we believe the fact that NTI could all together avoid interest payments on a $38,912,478 debt suggests that the Convertible Promissory Notes should be considered equity and not debt.  x4352. In addition, while the existing and outstanding Convertible Promissory Notes contain  !"a stated expiration date, NTI may replace partially converted outstanding notes with new notes  X4 !"of like tenor and date."[: yO'ԍConvertible Promissory Notes  2, at 3.[ This language raises a question of whether the new notes have the  !Convertible Promissory Notes' stated maturity date or terms of five years in perpetuity.  !Moreover, the Convertible Promissory Notes contain no amortization schedule for reduction in  !principal and, as a result, we find no reason to assume the new notes would include an  X14 !3amortization schedule. A bona fide lender would be concerned about the schedule for repayment  !_of its debt given the time value of money. The absence of a scheduled reduction in principal  !}payments in conjunction with the absence of a clearly stated maturity date are not characteristic  X 4 !of debt obligations. X: {O' x ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (finding that the absence of a fixed maturity date  {O' !p and a fixed obligation to repay indicated the advances were capital contributions and not loans); Bauer v.  {O' ! Commissioner, 748 F.2d at 1370 (finding that lack of a fixed date of maturity on the debt instruments, together with  {OU' ! continual growth of the debt, may suggest that there is no intention to make full repayment); and Kavich v. United  {O' ! States, 507 F. Supp. at 1344 (finding that the absence of fixed termination dates on certain guarantees and a  ! reasonable expectation of release by that date suggests the guarantee is more in the nature of an equity investment than of debt). Thus, the Convertible Promissory Notes should be viewed as longterm equity commitments and not debt.  X 4  X 4 x453. Whether there is subordination to or preference over any indebtedness of NTI.  X4 !&NextWave contends that each of NTI's debt instruments provides the lender with preference over  X{4 !NTI's equity interests creating a significant distinction between NTI's debt and equity.r{: yO'ԍOpposition to Petition at 23; and LOI November 18 Response at 29.r In a  !Vcorporation's capital structure, one of the risks of equity ownership is that equity is subordinated  !to debt. The issue, however, is not whether shareholders' equity ownership is subordinated to  !the corporation's debt obligations. Our review involves the extent to which the instrument  !alleged to be debt is subordinated to other indebtedness in the corporation and to what extent the  X4 !alleged debt has a repayment preference over any other indebtedness in the corporation.2 : {O'ԍFox II did not address subordination with respect to the $1.4 billion promissory note at issue in that case. We  X4 !also consider whether the debt is unsecured.$ : {Of"' x ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (stating that the absence of security for advances  {O0#' !| is a strong indication that the advances are capital contributions rather than loans); and Kavich v. United States, 507  ! F. Supp. at 1344 (finding consideration of the fact that a guarantor had no form of security relevant to the issue of whether certain guarantees were more in the nature of debt than equity). The Convertible Promissory Notes are unsecured  !obligations that occupy a junior level in NTI's debt structure and may be senior only to the  !Convertible Senior Subordinated Notes. The Convertible Senior Subordinated Notes, which have  !an aggregate principal of approximately $130 million, may be repaid after repayment of the",N(N(ZZ"  !Convertible Promissory Notes, but the Convertible Promissory Noteholders' only hope for  !crepayment would be after obligations to NTI's senior secured creditors, including the $4.2 billion  !ydebt to the Federal Government for NextWave's licenses, are satisfied. Subordination of the  !+Convertible Promissory Notes to claims of most of NTI's other debt amounting to billions of  X4dollars, indicates that the notes should be construed as equity and not debt.Z: {O' xR ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 63132 (finding that the creditor's only hope for  ! repayment would be after obligations to the debtor's other creditors were satisfied and that subordination of advances  yO'to all claims of all other creditors indicates that the advances are capital contributions and not debt).  Xv4 x554. NTI's debt/equity ratio. Examining the debttoequity ratio enables us to determine  !whether a corporation is so thinly capitalized that a business loss would result in an inability to  XH4 !repay the interests in question._H: {O 'ԍBauer v. Commissioner, 748 F.2d at 1369._ This is particularly true where thinness of capitalization is  X14 !<found along with subordination to other creditors.Z1|: {O^' x ԍSee Post Corp. v. United States, 640 F.2d 1296, 1307 (Ct.Cl. 1981) (stating that "historically, thinness of  ! capitalization has been most significant when found along with subordination to other creditors and has been least significant where sufficient cash flow to service the alleged debt has been demonstrated"). The risk of repayment to those creditors in  X 4 !the junior levels of a debt structure is increased where a corporation is thinly capitalized. In Fox  X 4 !II, we found that the debttoequity ratio of Fox's parent corporation of roughly 1400:1 was not  X 4 !bona fide debt.[ : {O?'ԍFox II, 11 FCC Rcd at 5721,  17.[ We also noted in Fox II that one court has found a debttoequity ratio of 21:1  X 4to be strong evidence that loans were not bona fide debt. 0 : {O'ԍFox II, 11 FCC Rcd at 5721,  17 (citing Berkowitz v. United States, 411 F.2d 818, 821 (5th Cir. 1969)).  X 4 x0655. NTI contends that its debttoequity ratio is 2:3, not including the $4.2 billion debt  X4 !that NextWave incurs upon award of its PCS licenses.r : yO 'ԍOpposition to Petition at 23; and LOI November 18 Response at 29.r We find no reason to exclude the debt  !that NTI would owe to the United States Federal government under the government's installment  !plan for payment of NextWave's PCS licenses in calculating NTI's debttoequity ratio. A  !Vmeaningful debttoequity ratio compares a company's total liabilities to the stockholders' equity,  X<4 !which includes both initial paidin capital and retained earnings.a<R : {O?!'ԍBauer v. Commissioner, 748 F.2d at 1368. a We calculate NTI's debtto X%4 !yequity ratio, including the Federal debt, to be approximately 14:1.>%: yO#' x/ ԍIn calculating NTI's debt to equity ratio, we have included as debt NextWave's federal debt, the principal  !x amounts from the Convertible Promissory Notes and Convertible Senior Subordinated Notes as reflected in NTI's  ! Form S1 Equity Offering filed with the United States Securities and Exchange Commission on June 10, 1996, as  ! well as the $50 million convertible note held by Hughes Network Systems not included in the Form S1. NTI's  !D total debt is $3.989 billion and NTI's total adjusted equity is $284 million. Form S1 Registration Statement Under"&,N(N(&" the Securities Act of 1933 of NextWave Telecom Inc., Prospectus at 2325 (USSEC June 10, 1996).> In this case, we find that"%X,N(N(ZZ"  !a 14:1 debttoequity ratio evidences a thinly capitalized venture, further suggesting that the  X4Convertible Promissory Notes are equity rather than debt. X: {O' xp ԍSee Bauer v. Commissioner of Internal Revenue, 45 T.C.M. (CCH) 910 (1983), rev'd on other grounds, 748  yO' !. F.2d 1365 (9th Cir. 1985) (stating that "[e]xcessive debt is particularly suspect where shareholder advances are made  ! during the formative stages of corporate existence; [p]urported loans which might otherwise withstand scrutiny have  ! been reclassified as equity investments where proceeds were used for meeting expenses needed to commence  {O' ! operations" (citing United States v. Henderson, 375 F.2d 36, 40 (5th Cir. 1967)). In this decision, we conclude that  ! NTI's debttoequity ratio of 14:1 evidences a thinly capitalized venture within the context of our other findings  ! regarding the Convertible Promissory Notes. We do not make any determination with respect to whether a 14:1 debt !; toequity ratio, standing alone, of a startup company in a startup industry of wireless telecommunications services would require reclassifying an alleged debt instrument as equity.  X4 xd756. Whether the alleged debt is convertible to stock. NextWave contends that NTI's  !convertible debt instruments are not relevant to foreign ownership determinations until converted  !}and that each of the agreements restricts conversion of the debt if such conversion would cause  Xv4 ! NextWave to exceed the foreign ownership benchmark.uv, : yOS'ԍOpposition to Petition at 2324; and LOI November 18 Response at 30.u Petitioners argue that because savings  !&clauses intended to ensure that NextWave never violates Section 310(b)(4) are included in various  !instruments that violate Commission rules, we should disregard the savings clauses and dismiss  X14 !NextWave's applications.1 : yO'ԍPetition at 78; Petitioners' Reply at 1922; and Petitioners' Partial Response to 308 Filing at 1516. NextWave argues that NTI's inclusion of savings and redemption  !@clauses in NTI's corporate and financial documents are enforceable internal mechanisms by which  X 4 !gNTI and its investors can ensure compliance with Section 310(b).X L : yO' xh ԍOpposition to Petition at 2528; and Supplemental Response at 89. NTI's Restated Certificate, the  !k Subscription Agreements, the Convertible Promissory Notes and the Convertible Securities Purchase Agreement include savings provisions that prohibit NTI from issuing stock in excess of the foreign ownership benchmark.  We have repeatedly accepted  X 4 !savings provisions in financial documents l: {O 'ԍSee DCR PCS, Inc., Order, mimeo at  24; Univision Holdings, Inc., 7 FCC Rcd at 6674,  12. and we find no reason to reject the savings provisions  X 4 !yincluded in NTI's financial documents.^ : {O' x ԍPetitioners rely on Algreg Cellular Engineering, 6 FCC Rcd 2921, corrected, 6 FCC Rcd 3547 (1991) and  {ON ' ! Algreg Cellular Engineering, 9 FCC Rcd 5098 (1994), pending Commission review, as support for their argument.  {O!'We defer analysis of the savings clauses in the Algreg case until the Commission concludes its pending review. The savings provisions included in NTI's corporate  ! documents are merely internal mechanisms that NTI and its investors may use to maintain foreign  !lownership within the Section 310(b)(4) benchmark. Those provisions in no way mitigate our  !_finding that the convertible terms of the Convertible Promissory Notes indicate the notes are  Xy4 !Zequity and not debt. As already discussed, bona fide convertible debt instruments are not relevant  !to our foreign ownership determinations until converted. Our inquiry here, however, is to analyze  XM4 !to what extent the ability to repay principal with stock affects the status of the obligation as bona  X84fide debt. "8$,N(N(ZZ"Ԍ xhԙ857. In the case of the Convertible Promissory Notes, conversion of the principal to stock  !is automatic upon NTI's determination that it can issue shares to foreign investors without  X4 !exceeding the foreign ownership benchmark in Section 310(b)(4).[: yOK'ԍConvertible Promissory Notes  2, at 3.[ NTI notifies the Convertible  !VPromissory Noteholders that it has stock available for conversion and the noteholders surrender  ! their outstanding notes. If NTI issues fewer shares than the full principal amount of the  !~outstanding notes, it concurrently issues entirely new notes for any remaining principal  Xv4 !cbalances.[vX: yO 'ԍConvertible Promissory Notes  2, at 3.[ The process of issuing new notes with increasingly reduced principal amounts may  !repeat until the entire principal of the Convertible Promissory Notes is converted to NTI stock.  !}This perpetual ability to repay principal amounts of the Convertible Promissory Notes with stock  !suggests that the noteholders expect repayment in stock rather than cash. Moreover, as we have  X 4 !already discussed, whether the new notes would expire on the Convertible Promissory Notes'  ![expiration date or be extended for fiveyear terms in perpetuity is unclear and neither the  !@Convertible Promissory Notes nor the new notes contain amortization schedules for the repayment  !dof principal. The perpetual conversion of the outstanding principal amount to stock, in  !conjunction with the absence of a clearly stated maturity date and the absence of a scheduled  !reduction in principal payments, supports a finding that the Convertible Promissory Notes are  X4longterm equity and not debt.: {O)' x ԍSee Bauer v. Commissioner, 748 F.2d at 1370 (finding that lack of a fixed maturity date together with continual growth of the debt may suggest that there is no intention to make full repayment).  Xb4 x958. Finally, with respect to conversion of the Convertible Promissory Notes, Petitioners  XK4 !assert that "as a quid pro quo for the preferred liquidation preference given to debt over equity,  !convertible debt converts at a higher price per share price than the thencurrent sales price for  X4 !straight equity."fB: yO'ԍPetitioners' Partial Response to 308 Filing at 89. f The initial conversion price included in the Convertible Promissory Notes is  !c$3.00 per share. According to Petitioners, because NTI was selling stock to domestic investors  X4 !at $3.00 per share at the time NTI executed the notes, the conversion price should be higher, i.e.,  X4 !}$4.00 per share.d: yO_'ԍPetitioners' Partial Response to 308 Filing at 89.d The absence of a conversion price higher than $3.00 per share, according to  X4 !Petitioners, creates immediate equity value.db : yO!'ԍPetitioners' Partial Response to 308 Filing at 89.d Petitioners provide no support for this assertion  !4and we therefore reject Petitioners' claim. As a matter of argument, however, the initial  !conversion price in the Convertible Promissory Notes of $3.00 per share is subject to adjustment  !in the event outstanding stock is subdivided, combined, or consolidated into a greater or lesser  !Enumber of shares of common stock. The principal of the Convertible Promissory Notes will  !convert at an indexed conversion price based on the fair market value of NTI's stock at the time"R ,N(N(ZZ"  !of issuance, not at a fixed price of $3.00 per share. Thus, further analysis fails to support Petitioners' claim.  X4 x:59. The relationship between the Convertible Promissory Noteholders' stock holdings in  X4 !NTI and holdings of the debt in question. In applying this factor, we must examine in full  !Ewhether the benefits normally reflected in corporate ownership are derived through the debt  Xv4 !obligations of the company. In Fox II, we found that the shareholder's rights to virtually all of  !the parent corporation's profits and, upon liquidation, its assets indicated the loan made by the  !minority shareholder was a capital contribution and not debt. NextWave contends that the  !holdings of stock in NTI and holdings of debt are related, consistent with reasonable commercial  X 4 !}practices.r : yO 'ԍOpposition to Petition at 24; and LOI November 18 Response at 30.r In assessing the shareholder/creditor relationship, we examine: (1) whether foreign  !investor loans are made in proportion to the foreign investors' stock ownership in NTI; (2)  !whether expectation of repayment depends solely on the success of NTI's business; (3) whether  !"the loan proceeds are used to purchase capital assets rather than to meet NTI's daily operating  !needs; (4) whether the debt in question, rather than the shareholders' ownership interests in NTI,  !reflects rights to profit distributions or liquidation preferences; (5) whether the creditor  !participates in management of the corporation; and (6) whether an outside commercial lender  !would have provided NTI a loan for the same principal amount under the same terms and  Xd4conditions as those provided in the debt instruments.dX: {Om' x ԍSee, e.g., Roth Steel Tube Co v. Commissioner, 800 F.2d at 63031; Bauer v. Commissioner, 748 F.2d at  {O7'1368; and Kavich v. United States, 507 F. Supp. at 1343.  X64 x;60. Each of the Convertible Promissory Noteholders is also a shareholder in NTI. We  !find no basis for concluding that the Convertible Promissory Notes were made in proportion to  X4 !the percentage of the noteholders' respective stock ownership in NTI.B&: {Om' x[ ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 630 (stating that "[i]f advances are made by  {O7' ! stockholders in proportion to their respective stock ownership, an equity contribution is indicated"); and Kavich v.  {O' !H United States, 507 F. Supp. at 134344 (finding that where purported loans are made in proportion to equity holdings is a factor for determining whether a given advance is more in the nature of an equity investment than debt).B Each noteholder's  !percent of ownership in NTI differs from its ownership percentage of the notes' aggregate  !principal amount. We find no evidence, nor was any presented by the Petitioners, that repayment  X4 ! of the Convertible Promissory Notes depends solely on NTI's success as a business.i: {O!' x ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (stating that "if the expectation of repayment  ! depends solely on the success of the debtor's business, the transaction has the appearance of a capital contribution");  {O"' ! and Kavich v. United States, 507 F. Supp. at 134344 (finding that whether repayment of a loan is predicated on the  !& success of the venture is a factor for determining whether a given advance is more in the nature of an equity investment than debt).i As Series  !B shareholders, the Convertible Promissory Noteholders are entitled to participate in dividends"V ,N(N(ZZ"  X4 !Rratably on a per share basis.Z: {Oy' x ԍDecember 9 Form 600, Ex. E at 5; and Restated Certificate  4, at 5. See Fox II, 11 FCC Rcd at 5721,   !D 18 (finding that a minority shareholder's entitlement to virtually all of the profits in an enterprise worth more than $1 billion provided evidence that the shareholder's loan of $1.4 billion was a capital contribution and not debt). In the event of liquidation or dissolution of NTI, the Series B  !shareholders will receive the price originally paid for each outstanding share of Series B stock  X4 !and an amount equal to declared but unpaid dividends on those shares.": {Om' x ԍDecember 9 Form 600, Ex. E at 6; and Restated Certificate  3, at 34. See Fox II, 11 FCC Rcd at 5721,  !  18 (finding that a minority shareholder's entitlement to virtually all of the assets, upon liquidation, of an enterprise  !^ worth more than $1 billion provided evidence that the shareholder's loan of $1.4 billion was a capital contribution and not debt). Moreover, we find that  !Convertible Promissory Noteholders do not participate in the daytoday affairs of NTI. A  !/creditor's participation in a debtor corporation's daily management indicates the loan is a capital  X4 !contribution and not debt.: {O' x ԍSee Fin Hay Realty Co., 398 F.2d at 696 (including participation in management as one of the factors for  {O' !! determining whether advances are capital contributions); Kavich v. United States, 507 F. Supp. at 1344 (finding that  ! a creditor's participation as a president and a director of the debtor corporation indicates the advances were capital  {On' !. contributions); and Post Corp. v. United States, 640 F.2d at 1308 n.9 (stating that, in general, creditors have no right  !Q to participate in the management of debtor corporations). Petitioners state that pursuant to a stockholder voting  ! agreement, certain foreign investors, including four of the Convertible Promissory Noteholders, have been guaranteed  ! seats on NTI's board of directors for a period of three years from the award of NextWave's PCS licenses.  ! Petitioners' Reply at 1112. Petitioners contend that these guarantees currently provide foreign entities "influence  {OX' !o based upon the percentage ownership of their respective future instruments." Id. at 12. The Convertible Promissory  !Z Notes, however, do not guarantee the board seats. Moreover, we have no basis upon which to conclude the noteholders now occupy any board seats. We therefore find no reason for including these rights in our analysis.  NextWave has stated that NTI's Series A shareholders will at all  ! times elect a majority of NTI's board of directors and the board exercises control over NTI's day X_4today management.x_<: yOL'ԍDecember 9 Form 600, Ex. E at 3; and Restated Certificate  2, at 3.x None of the Convertible Promissory Noteholders hold Series A stock.  x<61. On the other hand, we do find that NTI intends to use the proceeds of the Convertible  !Promissory Notes to purchase capital assets, including NextWave's PCS licenses, which suggests  X 4 !lthe notes are equity rather than debt.^ : {O' x ԍAmended and Restated Escrow Agreement dated January 10, 1996  3, at 34. See Roth Steel Tube Co.  {OJ' ! v. Commissioner, 800 F.2d at 630 (stating that use of advances to meet the daily operating needs of the corporation  {O 'rather than to purchase capital assets, is indicative of bona fide indebtedness). Finally, we examine whether an outside commercial  !lender would have provided NTI a loan for the same principal amount under the same terms and  !conditions as those provided in the Convertible Promissory Notes. If a prudent lender would not  !lmake a loan under the terms of the instrument in question, this would indicate that the loan is  X 4 !subject to the risks of the business and, as a result, is a capital contribution and not debt.u\ : {OJ%' x ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (finding that "[t]he fact that no reasonable  ! creditor would have acted in the same manner as the taxpayer is strong evidence that the advances were capital  {O&' ! contributions rather than loans"); Fin Hay Realty Co. v. United States, 398 F.2d at 697 (stating that "[u]nder an"&,N(N(&"  ! objective test of economic reality it is useful to compare the form which a similar transaction would have taken had  !. it been between the corporation and an outside lender, and if the shareholder's advance is far more speculative than  {O ' ! what an outside would make, it is obviously a loan in name only"); and Kavich v. United States, 507 F. Supp. at  !Z 1343 (finding that one pertinent factor to consider is whether a disinterested third party would have extended guarantees in favor of the debtor on the same basis as accepted by the guarantor).u " z,N(N(ZZu "  !VNextWave contends that the interest rates included in NTI's debt agreements are commercially  X4 !reasonable.Nz: yO'ԍOpposition to Petition at 23.N We disagree. We find that no commercial lender would have consented to a loan  !"that contained the interest rate provided in the Convertible Promissory Notes. The Convertible  !Promissory Notes occupy a junior level on NTI's debt structure subordinated to virtually all other  X4 !creditors. A bona fide lender would require some form of compensation, usually a high interest  !rate, for making such a high risk investment in a corporation. Other PCS Cblock applicants have  Xx4 !promissory notes in the highest position of their debt tranche, maturing at approximately the same  Xc4 !}time as the Convertible Promissory Notes, priced at market rates of 11.625 percentYXc : yO' xy ԍ Form S4 Registration Statement Under the Securities Act of 1933 of Omnipoint Corporation filed with  ! the United States Securities and Exchange Commission on October 12, 1996 (stating that the interest rate in the company's Senior Notes due 2006 is 11.625 percent)Y and 12.25  XL4 !percent~XL* : yO'' x" ԍForm 10Q Quarterly Report Under Section 13 or 15(d) of the Securities and Exchange Act of 1934 of CAI  ! Wireless Systems Inc. filed with the United States Securities and Exchange Commission dated October 24, 1996 (stating that the interest rate in the company's Senior Notes due 2002 is 12.25 percent).~ interest. By contrast, the 6 percent interest rate is incongruent with the repayment risk  !Nassociated with the Convertible Promissory Notes' junior level in the debt structure. The  !Noteholders' willingness to accept a commercially unreasonable rate on the return of such a high  !risk investment suggests the Convertible Promissory Notes should be construed as equity and not  X 4a debt obligation.  x=62. Petitioners also argue with respect to the Convertible Promissory Notes that  !NextWave cannot justify its foreign ownership levels under the effective competitive opportunities  !analysis ("ECO Test"), which in Petitioners' opinion requires "an applicant or licensee to justify  !a foreign ownership level in excess of 25 percent if (and to the extent that) the foreigners'  !country of origin allows U.S. ownership of its domestic PCS/cellular licensees in excess of 25  XO4 !percent," because NTI's foreign money comes from South Korea.cOJ : yOJ 'ԍPetitioners' Partial Response to 308 Filing at 19.c Because NextWave has  !_agreed to restructure its foreign ownership so as not to exceed the Section 310(b)(4) foreign  !ownership benchmark, an ECO analysis is not required at this time. The issue of whether NextWave would fail to meet the requirements of the ECO Test is, therefore, not before us.  X4 x>63. Conclusion. After analyzing the Convertible Promissory Notes, we conclude that the  X4 !}instruments are more properly characterized as equity rather than as bona fide debt. The terms  !of the Convertible Promissory Notes provide NTI with a oneyear opportunity to avoid all interest",N(N(ZZ"  !payments up to the entire aggregate principal amount. The perpetual automatic conversion of  !<principal to stock and the absence of a clear maturity date provides NTI with the opportunity to  !avoid payment of all principal and creates the inference that the lenders do not expect repayment  X4 !cin cash. A debttoequity ratio of 14:1 indicates a thinly capitalized venture and the Convertible  !Promissory Notes' subordination to virtually all of NTI's indebtedness suggests the notes are in  !fact equity and not debt. In addition, NTI intends to use the funds to purchase capital assets.  !Finally, the high risk of the investments in conjunction with the correspondingly low interest rates  !similarly create the inference that the lenders expect repayment of the principal in stock rather  !than cash. Accordingly, we will reanalyze NextWave's capital structure to include the  X14Convertible Promissory Notes as equity.L1: {O 'ԍSee infra at  78.L  X '` ` b. Convertible Senior Subordinated Notes  X 4  x?64. NTI entered into the Convertible Senior Subordinated Notes concurrently with and  !pursuant to the terms of the securities purchase agreement dated April 9, 1996 ("Securities  !<Purchase Agreement"), between NTI and certain foreign and domestic investors. Fourteen of  X4 !the investors are foreign and of those fourteen, three hold Convertible Promissory Notes.WZ: yO'ԍLOI November 18 Response at Sched. 4b.W NTI  Xy4 !issued Convertible Senior Subordinated Notes to investors in the aggregate principal amount of  Xb4 !$130,348,000.[b: yO'ԍLOI November 18 Response at 8 & Sched. 4b.[ Also on April 9, 1996, each investor transferred the principal amount of its  XK4 !"Convertible Senior Subordinated Note to an escrow account.dKz: yOv'ԍEscrow Agreement dated April 9, 1996,  2, at 1.d The foreign investors received  X44 !/Convertible Senior Subordinated Notes for approximately 44 percent of the principal amount.W4 : yO'ԍLOI November 18 Response at Sched. 4b.W Domestic investors hold the remaining Convertible Senior Subordinated Notes.  X4  x@65. Interest on the Convertible Senior Subordinated Notes begins to accrue on the amount  !released from escrow on the date of release at 2 percent until April 9, 1998, and at 12 percent  X4 !after that date.\: yO !'ԍConvertible Senior Subordinated Notes at 2.\ Principal and interest become due on the notes' maturity date, April 9, 2002.\* : yO"'ԍConvertible Senior Subordinated Notes at 1.\  !For the first three years, however, until April 9, 1999, NTI may avoid cash payment of interest  !by issuing additional Convertible Senior Subordinated Notes in a principal amount up to the full" ,N(N(ZZ"  X4 !lamount of payable interest.\: yOy'ԍConvertible Senior Subordinated Notes at 2.\ The additional notes are otherwise identical to the outstanding  X4note.\X: yO'ԍConvertible Senior Subordinated Notes at 2.\  X4 xA66. The Convertible Senior Subordinated Notes are unsecured obligations expressly  !subordinated to NTIs senior debt, which includes all purchase money financing, the Federal debt,  X4 !underwriter bridge financing, and vendor bridge financing (collectively "Senior Debt").: yO& 'ԍConvertible Senior Subordinated Notes  6, at 7; and Securities Purchase Agreement  7.1, at 37. The  !EConvertible Senior Subordinated Notes are convertible, with limitations, at the request of the  X_4 !noteholder.k_x: yO 'ԍConvertible Senior Subordinated Notes at 1 &  4, at 6.k Convertible Senior Subordinated Noteholders notify NTI when they want to  !convert all or part of the principal amount. In converting the principal to Series B stock, NTI  !limits the actual number of shares it will issue to prevent, in its opinion, foreign ownership in  !NTI from exceeding the statutory benchmark and issues a new Convertible Senior Subordinated  X 4 !Note in the amount of any remaining unconverted principal balance. : yO' x ԍConvertible Senior Subordinated Notes  4, at 6; and Securities Purchase Agreement  8.4, at 43 and  9.1 & 9.2, at 4344. The terms of the new  !note are not described in either the Securities Purchase Agreement or the Convertible Senior  !"Subordinated Notes. Finally, conversion of Convertible Senior Subordinated Notes is permitted  !if NTI defaults on payment and other terms and conditions of the Senior Debt, while cash  X 4payments on the notes are prohibited during default._ ` : yO'ԍSecurities Purchase Agreement  7.3, at 39._  x B67. By their terms, NTI may voluntarily prepay the Convertible Senior Subordinated  Xb4 !<Notes at any time with any source of funds.cb : yO'ԍSecurities Purchase Agreement  10.4, at 6062.c If NTI consummates a highyield financing, it is  !_required to prepay the Convertible Senior Subordinated Notes. At any time after October 7,  !1996, noteholders may elect to convert to stock the principal of the notes, rather than receive  X4 !/prepayment. : yON!'ԍSecurities Purchase Agreement  10.1(d), at 5556 and  10.4(e), at 6162. Upon the election to convert, NTI would issue shares to the extent the amount,  !in NTI's opinion, would not exceed the Section 310(b)(4) foreign ownership benchmark. NTI  !"would pay 100 percent of any remaining principal and interest in cash. If the notes are prepaid  !in connection with a highyield financing, the noteholders will receive warrants to purchase the  X4same number of shares that would otherwise be issuable upon conversion of the notes.m: yO&'ԍSecurities Purchase Agreement  10.1(b) & (c), at 55.m "!,N(N(ZZ\"Ԍ X4 xC68. While the terms and conditions of the Convertible Senior Subordinated Notes differ  !somewhat from the terms and conditions of the Convertible Promissory Notes, the two classes  X4 !yof notes raise virtually identical concerns under a Fox II analysis.: yOK' x/ ԍPetitioners offer no criticism of the Convertible Senior Subordinated Notes. Petitioners' Partial Response to 308 Filing at 1012. Moreover, NextWave's  X4 !larguments that application of the Fox II factors renders the Convertible Senior Subordinated  X4 !_Notes as bona fide debt are the same as those set forth in our discussion of the Convertible  !Promissory Notes. Based on our analysis set forth in the discussion on the Convertible  ![Promissory Notes, we make the following findings with respect to the Convertible Senior Subordinated Notes.  X74 x#D69. A written unconditional promise to repay the principal amount of the Convertible  X 4 !Senior Subordinated Notes on demand and to pay a fixed interest rate. NTI may issue additional  !notes in lieu of cash interest payments on the principal amounts of the Senior Subordinated  X 4 ! Notes.\ : yO'ԍConvertible Senior Subordinated Notes at 2.\ Thus, NTI has half of the term of the Convertible Senior Subordinated Notes to convert  !principal to stock, and can therefore altogether avoid cash interest payments on the aggregate principal amount of $130,348,000.  x#E70. In addition, NTI's right to replace partially converted outstanding notes with new  !notes for any remaining unconverted principal amount raises the question of whether the new  !notes would expire on the Convertible Senior Subordinated Notes' stated maturity date or have  !Eterms of six years in perpetuity. Likewise, a question arises regarding the term of additional  X:4 !Inotes issued in lieu of cash interest payments of whether the additional notes have a term of six  !Vyears in perpetuity or have the same maturity date as the outstanding note, which may be either  !a Convertible Senior Subordinated Note or a new note. Moreover, the Convertible Senior  !Subordinated Notes contain no amortization schedule and, as a result, we find no reason to  !cassume the new notes or additional notes would include an amortization schedule. The absence  !cof a scheduled reduction in principal payments and the absence of a clearly stated maturity date  !Ain conjunction with avoidance of interest payments evidences that the Convertible Senior  X4Subordinated Notes are longterm equity commitments and not debt.k: {O' x ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (finding that the absence of a fixed maturity date  ! and a fixed obligation to repay indicates the advances are capital contributions and not loans and that the absence  ! of a fixed rate of interest and interest payments is a strong indication that the advances are capital contributions rather  {OT!' !M than loans); Bauer v. Commissioner, 748 F.2d at 1370 (finding that lack of a fixed date of maturity on the debt  ! instruments, together with continual growth of the debt, may suggest that there is no intention to make full  {O"' !7 repayment); Kavich v. United States, 507 F. Supp. at 1343 (finding that the absence of fixed termination dates on  !; certain guarantees and a reasonable expectation of release by that date suggests the guarantee is more in the nature  {Ox$' ! of an equity investment than of debt); and Kadlec v. Commissioner of Internal Revenue, 71 T.C.M. (CCH) 2399  !k (1996) (finding that a debt instrument that contained provisions for interest but interest was never paid on any of the advances indicates the advances are capital contributions and not debt).k ""P ,N(N(ZZz"Ԍ X4 x F71. Whether there is subordination to or preference over any indebtedness of NTI. The  !}Convertible Senior Subordinated Notes are unsecured obligations occupying the most junior debt  !tranche in NTI's capital structure subordinated to all other debt, including the Federal Debt,  ![equipment or vendor financing arrangements and all other secured debt, amounting in the  X4 !daggregate to billions of dollars.: yO'ԍConvertible Senior Subordinated Notes  6, at 7; and Securities Purchase Agreement  7.1, at 37. No preference for repayment of Convertible Senior  !Subordinated Notes exists over any other NTI indebtedness. Subordination of the unsecured  !Convertible Senior Subordinated Notes to claims of all of NTI's other debts indicates that the  X_4notes resemble equity rather than debt._X: {Oh ' x/ ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (finding that the subordination of advances to  yO2 ' ! all claims of all other creditors indicates that the advances are capital contributions and not debt and that the absence  !^ of security for advances is a strong indication that the advances are capital contributions rather than loans); and  {O ' ! Kavich v. United States, 507 F. Supp. at 1344 (finding consideration of the fact that a guarantor had no form of security relevant to the issue of whether certain guarantees were more in the nature of debt than equity).  X14 xG72. NTI's debt/equity ratio. As discussed above, a 14:1 debttoequity ratio in this case  X 4 !evidences a thinly capitalized venture.jZ : {O' x ԍSee infra at  5455; Bauer v. Commissioner, 748 F.2d at 1369 (stating that a debttoequity ratio allows  ! for a determination of whether a corporation is so thinly capitalized that a business loss would result in an inability to repay the interests in question).j We find that NTI's 14:1 debttoequity ratio further  X 4 !suggests that the Convertible Senior Subordinated Notes are equity rather than debt.` . : {O'ԍSee supra note 149 and accompanying text.` This is  !particularly true where the debt instrument in question occupies the most junior debt tranche in  X 4a corporation's capital structure.Z : {OF' x/ ԍSee Post Corp. v. United States, 640 F.2d at 1307 (stating that "historically, thinness of capitalization has  ! been most significant when found along with subordination to other creditors and has been least significant where sufficient cash flow to service the alleged debt has been demonstrated").  X 4 x H73. Whether the alleged debt is convertible to stock. The Convertible Senior  !Subordinated Notes are convertible to Series B stock, and, under certain circumstances, to  Xy4 !}warrants to purchase Series B stock.y: yO ' x ԍConvertible Senior Subordinated Notes at 1 &  4, at 6; and Securities Purchase Agreement 10.1(b) & ((c), at 55. If NTI issues fewer shares than the amount requested,  Xb4 !NTI issues a new note for the reduced principal balance.b:: yOM#'ԍSecurities Purchase Agreement  8.4, at 43 and  9.1 & 9.2, at 4344. The perpetual ability to repay the  !Convertible Senior Subordinated Notes with stock suggests that the noteholders expect repayment  !in stock rather than cash. Moreover, as we have already discussed, whether the new notes or  !additional notes issued in lieu of cash interest payments would expire on the Convertible Senior  !ISubordinated Notes' stated maturity date or extend for sixyear terms is unclear and neither the"#,N(N(ZZ"  !IConvertible Senior Subordinated Notes, new notes, nor the additional notes contain amortization  !schedules for repayment of principal. Stated maturity dates and amortization schedules reducing  !Eprincipal amounts are measures designed to eliminate firm loan obligations normally found in  !arms' length lending obligations. The absence of both suggests that the Convertible Senior  X4Subordinated Notes are intended as longterm equity commitments and not debt.: {O' x ԍSee Bauer v. Commissioner, 748 F.2d at 1370 (finding that lack of a fixed maturity date together with  ! continual growth of the debt may suggest that there is no intention to make full repayment). Moreover, if NTI  ! defaults on Senior Debt, NTI is prohibited from making cash payments on the notes, but conversion of stock is still  ! permitted, creating the additional likelihood of conversion and suggesting that lenders favor payment of principal in stock rather than cash. Securities Purchase Agreement  7.3, at 39.  xI74. In addition, the terms of the Securities Purchase Agreement permit noteholders to  !preceive warrants to purchase the same number of shares that would otherwise be issuable upon  !Iconversion of the Convertible Senior Subordinated Notes if NTI prepays the Convertible Senior  X14 !Subordinated Notes.1z: {O\' xV ԍ Securities Purchase Agreement 10.1(b) & ((c), at 55. See Restructuring Plan, Att. at 3 n.3 (summarizing prepayment provisions of the Securities Purchase Agreement). A warrant is generally considered an equity equivalent because a warrant  !has an exercise price that entitles the holder to convert that warrant into stock. The ability to  !completely replace the convertible debt principal obligation upon repayment with a warrant further indicates the Convertible Senior Subordinated Notes are not intended to be debt.  X 4 xdJ75. The relationship between the Convertible Senior Subordinated Noteholders' stock  X 4 !holdings in NTI and holdings of the debt in question. Based on information provided by  !NextWave, three of the Convertible Senior Subordinated Noteholders also hold Convertible  Xy4 !Promissory Notes.Wy: yO'ԍLOI November 18 Response at Sched. 4b.W While other Convertible Senior Subordinated Noteholders may have  Xb4 !converted principal to NTI stock, at least the three Convertible Senior Subordinated Noteholders  !that hold Convertible Promissory Notes are currently Series B shareholders in NTI. As to those  !Convertible Senior Subordinated Noteholders who are also shareholders, we find no basis for  !Rconcluding that the Convertible Senior Subordinated Notes were made in proportion to those  X4 !noteholders' respective stock ownership.B&d : {O' x[ ԍSee Roth Steel Tube Co. v. Commissioner, 800 F.2d at 630 (stating that "[i]f advances are made by  {O' ! stockholders in proportion to their respective stock ownership, an equity contribution is indicated"); and Kavich v.  {O ' !H United States, 507 F. Supp. at 134344 (finding that where purported loans are made in proportion to equity holdings is a factor for determining whether a given advance is more in the nature of an equity investment than debt).B Those Convertible Senior Subordinated Noteholders  X4 !/do not participate in the management of NTI's daily operations.R : {O#' x ԍSee Fin Hay Realty Co., 398 F.2d at 696 (including participation in management as one of the factors for  {O$' !! determining whether advances are capital contributions); Kavich v. United States, 507 F. Supp. at 1344 (finding that  ! a creditor's participation as a president and a director of the debtor corporation indicates the advances were capital  {ON&' ! contributions); Post Corp. v. United States, 640 F.2d at 1308 n.9 (stating that, in general, creditors have no right to  !D participate in the management of debtor corporations); December 9 Form 600, Ex. E at 3; and Restated Certificate,"',N(N('"  !k Art. VIII at 19 (stating that NTI's Series A shareholders will at all times elect a majority of NTI's board of directors and the board exercises control over NTI's daytoday management). In addition, we find no basis"$ ,N(N(ZZC"  !for concluding that those Convertible Senior Subordinated Noteholders' rights to profits or assets  X4 !in the event of liquidation exceed their ownership interest in NTI} : {O' xl ԍSee December 9 Form 600, Ex. E at 5 (stating that as Series B shareholders, the Convertible Promissory  {O' !@ Noteholder's are entitled to participate in dividends ratably on a per share basis); id., Ex. E at 6; and Restated  ! Certificate  3, at 34 (providing that in the event of liquidation or dissolution of NTI, the Series B shareholders will  ! receive the price originally paid for each outstanding share of Series B stock and an amount equal to declared but unpaid dividends on those shares).} nor does repayment of the  X4notes depend solely on NTI's success as a business.MZ: {OW ' x ԍKavich v. United States, 507 F. Supp. at 134344 (finding that whether repayment of a loan is predicated  ! on the success of the venture is a factor for determining whether a given advance is more in the nature of an equity investment than debt). M  xzK76. On the other hand, we find no basis for concluding that NTI intends to use the  X4 !proceeds of the Convertible Senior Subordinated Notes to meet its daily operating needs. : yO4' x ԍNTI intends to use the proceeds of the Convertible Senior Subordinated Notes to purchase capital assets,  !D including NextWave's PCS licenses. Securities Purchase Agreement  2.2(f) & (g), at 1316; Escrow Agreement  {O' !  dated April 9, 1996  3, at 25. See Roth Steel Tube Co. v. Commissioner, 800 F.2d at 630 (stating that use of  !H advances to meet the daily operating needs of the corporation rather than to purchase capital assets, is indicative of  {OV'bona fide indebtedness).   !Moreover, no commercial lender would have consented to a loan that contained the interest rates  X_4 !of the Convertible Senior Subordinated Notes.AF_: {O' x ԍSee Fin Hay Realty Co. v. United States, 398 F.2d at 697 (stating that "[u]nder an objective test of economic  ! reality it is useful to compare the form which a similar transaction would have taken had it been between the  !7 corporation and an outside lender, and if the shareholder's advance is far more speculative than what an outside  {O' !Q would make, it is obviously a loan in name only"); Roth Steel Tube Co. v. Commissioner, 800 F.2d at 631 (finding  ! that "[t]he fact that no reasonable creditor would have acted in the same manner as the taxpayer is strong evidence  {O' ! that the advances were capital contributions rather than loans"); and Kavich v. United States, 507 F. Supp. at 1343  !! (finding that one pertinent factor to consider is whether a disinterested third party would have extended guarantees in favor of the debtor on the same basis as accepted by the guarantor).A The Convertible Senior Subordinated Notes  !}contain interest rates that do not reflect the risk associated with a debt instrument occupying the  !most junior level of the debt structure. The loans are unsecured with a belowmarket interest rate  !of 2 percent for a twoyear period a crucial period during which NextWave will be trying to  !Ienter the PCS market for the first time. The 2 percent interest rate over a period of two years,  ![even when escalated to a 12 percent interest rate, is incongruent with the repayment risk  !associated with such a junior position in the debt structure of a startup company in a new  X 4business.  : {O'%' xc ԍSee supra notes 172 &173 and accompanying text (describing other PCS Cblock applicants' interest rates  {O%'in promissory notes in the highest position of their debt tranche).  " %,N(N(ZZu "Ԍ X4 xL77. Conclusion. After analyzing the Convertible Senior Subordinated Notes, we conclude  !Vthat these instruments are not intended as debt, but equity. The terms of the Convertible Senior  !Subordinated Notes provide NTI with the opportunity to avoid cash interest payments for half  !of the notes' sixyear terms. The perpetual automatic conversion of principal to stock, the  !cabsence of an apparent maturity date, and the absence of an amortization schedule for reducing  !Eprincipal provides NTI with the opportunity to avoid payment of all principal. NTI's debtto !Eequity ratio of 14:1 suggests a thinly capitalized venture and subordination of the Convertible  !Senior Subordinated Notes to all of NTI's other indebtedness suggests the notes are equity and  !not debt. In addition, NTI does not intend to use the funds to meet its daily operations.  !Moreover, the high risk of the investments in conjunction with the correspondingly low interest  !rates similarly creates the inference that the lenders expect repayment of the principal in stock  !rather than cash. Finally, issuance of stock warrants for the principal amount of the Convertible  !Senior Subordinated Notes upon prepayment a real likelihood in light of the pending initial  !public offering ("IPO") further indicates the Convertible Senior Subordinated Notes are  !intended to be equity and not debt. Accordingly, we will analyze NextWave's capital structure to include the Convertible Senior Subordinated Notes.  xM78. Our conclusions that both the Convertible Promissory Notes and Convertible Senior  !Subordinated Notes are equity requires that we reevaluate NextWave's capital structure both in  !terms of foreign stock ownership and foreign capital contributions. NextWave reported that upon  !pfull conversion of the principal of both the Convertible Promissory Notes and Convertible Senior  !pSubordinated Notes, NTI's total number of shares outstanding would increase to 200,611,224, of  !cwhich 60,272,826 shares, representing 30.04 percent of the outstanding stock, would be foreign X4 !owned.O: yOh'ԍRestructuring Plan, Att. at 1.O Until conversion actually takes place, the percentage of paidin capital is not fixed.  !Based, however, on NextWave's figures in its Restructuring Plan and the initial conversion price  !included in both instruments, $3.00 per share for the Convertible Promissory Notes and $4.00 per  !share for the Convertible Senior Subordinated Notes, we calculate that the percentage of foreign  X4 !capital paid into NTI would increase to 39.59 percent of NTI's total capital contributions. X: yO' x@ ԍIf the actual market value of the stock is higher than the initial conversion price, foreign capital contributions  !3 in NTI would be higher than the 39.59 percent. Assuming the actual market value of stock is $0.01 per share,  ! foreign capital paid into NTI would be 30.6 percent of NTI's total capital contributions upon conversion of both the Convertible Promissory Notes and the Convertible Senior Subordinated Notes.   !"Accordingly, we conclude that foreign voting and ownership interests in NextWave exceed the 25 percent benchmark established in Section 310(b)(4) of the Communications Act.  X7' D. Restructuring Plan  X ' 1.` ` Analysis of Allowing NextWave the Opportunity to Restructure (#`  xN79. We must now determine whether we should allow NextWave the opportunity to  !proceed with a Restructuring Plan which, if successful, would bring its capital structure within" &@,N(N(ZZH"  !the Section 310(b)(4) foreign ownership benchmark. Petitioners' argue that NextWave should  !Inot be given the opportunity to implement the Plan. We disagree, and conclude that NextWave  X4should have such an opportunity. : yOK' x ԍWhile we find that it is in the public interest to allow NextWave an opportunity to restructure, we note that this rationale is separate and distinct from the public interest showing required under a Section 310(b)(4) analysis.   X4 x0O80. NextWave points out that the Commission, in exercising its authority to condition  X4 !Ilicenses, at times has granted licenses to applicants that exceeded the Section 310(b)(4) foreign  !ownership benchmark, conditioned upon the applicants undertaking a restructuring to reduce their  X_4 !level of foreign ownership. For example, in Fox I, the Commission renewed the license of an  !8existing licensee who had exceeded the foreign ownership benchmark, conditioned upon the  !licensee either restructuring, or making a showing that maintaining its existing structure was in  X 4 !the public interest. Moreover, in the related cases of Seven Hills Telephone CompanyG : yO 'ԍ2 FCC Rcd 6867 (1987).G and  X 4 !Spanish International Communications Corporation,G : yOh'ԍ2 FCC Rcd 3336 (1987).G the Commission also renewed the licenses  !Iof licensees that exceeded the foreign ownership benchmark, in one case to allow the licensees to transfer their licenses to third parties and, in the other, subject to certain conditions.  X 4 x4P81. Petitioners argue that these precedents are distinguishable, because they involve the  !ICommission renewing licenses that were not subject to competing applications. In contrast, the  X4 !case here involves grant of an initial license subject to competing applications.@@: yOp' x& ԍAlthough Petitioners do not seem to question the Bureau's general authority to grant licenses conditionally,  ! we note that there can be no question in this regard. Section 303(r) of the Communications Act authorizes the  ! Commission to "prescribe such restrictions and conditions" as may be necessary to carry out its duties. 47 U.S.C.  !.  303(r). Thus, the Commission's PCS rules state that the Commission may "grant any application in part, or subject  ! to any terms or conditions other than those normally applied to applications of the same type." 47 C.F.R.   !Q 24.823(d). Moreover, under the Commission's CMRS spectrum aggregation rule, the Commission grants licenses  ! to applicants that, upon winning at auction, exceed maximum permissible spectrum limits, conditioned upon divestiture to come into compliance with the rule within 90 days. 47 C.F.R.  20.6(e). Specifically,  !Petitioners argue that providing NextWave an opportunity to restructure harms other Cblock  XQ4 !applicants because NextWave gained an unfair advantage in the selection process.lQH : yOJ 'ԍPetitioners' Opposition to Restructuring Plan, at 23, 78.l In support  !of their argument, Petitioners rely on several broadcast and cellular cases, where the Commission  !has not allowed certain mutually exclusive applicants an opportunity to cure defects in their  X 4 !Vapplications. In one of these cases in particular, Algreg Cellular Engineering,k : {O$'ԍAlgreg Cellular Eng'g, Order, 6 FCC Rcd 2921 (1991).k the Common  !cCarrier Bureau did not allow applicants that won lotteries for cellular licenses to cure a violation  !Nof a Commission rule that prohibits an applicant from having an interest in more than one application per market, in part because the violation skewed the lottery results."'j,N(N(ZZ1"Ԍ X4 xԙQ82. The cases relied upon by the Petitioners, however, do not take into account the  X4 !differences in the licensing scheme for resolving mutual exclusivity by auction, as opposed to  X4 !&using comparative hearings or lotteries.: yOM' xt ԍIn addition, the authorities relied upon by Petitioners do not take into account that this case at hand involves  ! the application of Section 310(b)(4) of the Communications Act, which grants the Commission considerable  ! flexibility in licensing an applicant the corporate parent of which exceeds the 25 percent foreign ownership  !b benchmark. If it finds that the public interest so requires, the Commission has discretion to license, and, for example,  {Om' ! in Fox and other cases has exercised its discretion to license, an applicant that has a capital structure that far exceeds  {O7' ! the statutory benchmark. This contrasts sharply with one of the authorities relied upon by Petitioners, Moving  {O ' !Z Phones L.P. v. FCC, 998 F.2d 1051 (D.C. Cir. 1993), which involves the application of Section 310(b)(3), which  {O ' ! expressly prohibits the Commission from licensing an applicant that is organized under the laws of a foreign country, or 20 percent of more of which is owned by aliens. In the broadcast cases cited by the Petitioners, Classic  X4 !tVision: {O 'ԍClassic Vision, Inc., Memorandum Opinion and Order, 104 F.C.C. 2d 1271 (1986). and South Florida Broadcasting,2 : {O'ԍSouth Florida Broadcasting Co., Inc., Memorandum Opinion and Order, 99 F.C.C. 2d 840 (1986). the Commission did not allow applicants that did not  X4 !have "reasonable assurance" of transmission facilities at the time of filing their applications the  !opportunity to cure these deficiencies. Similarly, in the cellular cases cited by the Petitioners,  !the Commission applied its "letter perfect" application standard, which generally did not permit  !happlicants that did not substantially comply with its rules the opportunity to cure defective  XN4 !Iapplications.(N : {O' x ԍSee Moving Phones Partnership L.P. v. FCC, 998 F.2d 1051 (D.C. Cir. 1993); Algreg Cellular Eng'g,  {O' !D Order, 6 FCC Rcd 2921 (1991) (on appeal before the Commission); In re Petitioners for Reconsideration of Round  {OW' !I IV Cellular Applications for Failure to Demonstrate Availability of Sufficient Net Liquid Assets, Order on  {O!'Reconsideration, 103 F.C.C. 2d 26 (1986). The Commission's primary concern in these cases was on "making the window  !filing and 'first come/first serve' process work smoothly and with minimal delay in processing  X 4 ![large numbers of applications."\ : yO' x ԍProcessing of FM and TV Broadcast Applications, MM Docket 84750, 50 Fed. Reg. 19936, 19940 (1984)  {OM' ! ("FM and TV"). See also, Johnstown Cellular Communications Co., Order, 1 FCC Rcd 1164 (1986); and Pacific  {O'Mobile Access, Order, FCC 86496 (FCC 1986) (1986 WESTLAW 292238, FCOMFCC library). Likewise, the Commission believed that its "hard look"  !cstandard in the cases was appropriate in these instances to process expeditiously applications of  !}"serious candidates" who were "ready, able and willing to rapidly bring service to the public" and  X 4to promote the Commission's overall efficiency. : {Od ' x ԍFM and TV, 50 Fed. Reg. 19936 at 19940, citing Storer Broadcasting Co., 43 FCC 2154, 1256 (1953). Cf.  {O.!'George Cameron, Jr. 71 F.C.C. 2d 460, 467 (1979).  X 4 xR83. In the auctions context, however, the Commission expressly declined to adopt a  X4 !"letter perfect" standard.\4: yO{%' x ԍIn the Matter of Implementation of Section 309(j) of the Communications Act Competitive Bidding,  {OC&' ! Second Report & Order, 9 FCC Rcd 2348, 2377 (1994); and In the Matter of Implementation of Section 309(j) of  {O ''the Communications Act Competitive Bidding, Fifth Report & Order, 9 FCC Rcd 5532, 5559 (1994). Rather, in a marketdriven auctions context, the upfront and down"(X,N(N(ZZR"  !payment provisions in Section 24.711 of the Commission's rules, and the requirement that such  !<payments be made on a timely basis, act as a builtin mechanism to screen applicants and deter  X4 !}speculative or unqualified bidders, and thus maintain the integrity of the auction and the licensing  !Vprocess. Specifically, such payments, timely tendered, signal to the Commission the sincerity of  X4 !cthe bidder and its ability to meet its obligations.i: {O'ԍSecond Report & Order, 9 FCC Rcd at 237778.i If a bidder fails to satisfy these requirements,  !the Commission is not without recourse. If the applicant fails to satisfy its upfront payment, it  Xv4 !will be ineligible to bid and its application will be dismissed.JvZ: yO 'ԍ47 C.F.R.  1.2106(c).J Similarly, if the applicant or  !licensee fails to make its required down payment, its application will be dismissed and subject  XH4 !Vto a default payment.JH: yO 'ԍ47 C.F.R.  1.2109(b).J Moreover, these payments also serve as a mechanism to ascertain the financial viability of the applicant and its ability to bring service to wireless consumers.  xSS84. While we have found that NextWave's capital structure exceeded the foreign  ! ownership benchmark, we do not believe that Petitioners have shown that this aspect of  !cNextWave's capital structure skewed the auction results, and prevented it or other bidders from  !winning licenses. NextWave met its initial eligibility requirements to participate in the auction,  X 4 !i.e., its upfront payments, without the capital from the Convertible Promissory Notes or the  !Convertible Senior Subordinated Notes. The Subscription Agreements that gave rise to the  !Convertible Promissory Notes were executed at various dates after the start of the auction. The Convertible Senior Subordinated Notes were executed on April 9, 1996.  xqT85. In addition, as previously explained, in counting the Convertible Promissory Notes  !and Convertible Senior Subordinated Notes as equity instruments, the Bureau found that  !cNextWave's total capital contributions were approximately $75 million in excess of the statutory  !benchmark. By contrast, the aggregate value of NextWave's high bids at auction was $4.2  X4 !billion. Thus, NextWave's foreign capital contributions that exceeded the benchmark were a tiny  !fraction, considerably less than one percent, of the amount it bid at auction and will ultimately need to pay the U.S. Treasury for the licenses.  xU86. With respect to Petitioners specifically, they also have not shown that NextWave's  !participation prevented them from winning licenses. We note that Petitioners actually bid for  XR4 !<only 20 of the 63 licenses NextWave won at auction. Further, in the majority of these markets,  !NextWave placed its high bids many rounds after Petitioners submitted their last bids, and only  !Vafter at least several other auction participants had placed multiple intervening bids. In addition,  !in the majority of the twenty markets for which NextWave won the licenses and in which  X4 !Petitioners bid, the amount of NextWave's high bid was several times that of Petitioners' last bid.  !Given these facts, Petitioners have not shown that NextWave's foreign ownership interests")z,N(N(ZZ"  !yprevented Petitioners from winning Cblock licenses, or that the auction did not fairly resolve  X4mutual exclusivity.%$: yOb' x ԍSimilarly, in the context of cases involving government contracts, courts have found that losing bidders do  ! not have standing to challenge contract awards unless they are able to show that they in fact would have won the  {O' !k contract if the winner had been disqualified. See, e.g., Nat'l Maritime Union of America v. Commander, Military  {O'Sealift Command, 824 F.2d 1228, 1236 (D.C. Cir. 1987) (citations omitted). %  X4 xV87. In the instant matter, we do not find that there is any reliable evidence that NextWave  !devised its capital structure in bad faith to exceed the foreign ownership benchmark, or  !Adeliberately attempted to deceive the Commission or evade its rules. Rather, NextWave  !3cooperated in the LOI process, and produced facts and information the Bureau deemed necessary  !to resolve its concerns. NextWave, however, unilaterally concluded that information about NTI's  !foreign capital was irrelevant to our determination under Section 310(b)(4). We reiterate that  !failure to inform us specifically that a capital structure exceeds the foreign ownership benchmark,  !at any point during the auction, licensing process, or even as a Commission licensee, is  !Vinconsistent with the manner in which the Commission makes Section 310(b)(4) determinations.  !Accordingly, we affirm that "[a]n applicant must specifically and directly inform the Commission  !pthat the ownership structure under consideration may exceed the foreign ownership benchmark,  !}and that absent such explicit notification and an express finding by the Commission that allowing  !<the applicant to exceed the benchmark is in the public interest, an applicant may not exceed the  X4 !benchmark."Z: {O'ԍFox I, 10 FCC Rcd at 8475,  53.Z Further, we note that an applicant's failure to comply with its duty to disclose  Xy4 !'such information, may, in certain circumstances, raise issues regarding the candor of the applicant's disclosure to the Commission.  xW88. Given the foregoing, we grant NextWave the opportunity to implement its  !Restructuring Plan. Our decision is premised on the specific facts before us, where we have no  !Ievidence that the applicant was not eligible to participate in the auction, and no evidence that its  !capital structure in excess of the statutory benchmark interfered with or jeopardized the auction.  !If in the future we are presented with facts that an applicant compromised the integrity of the auction and violated Commission rules, we will take all actions we deem appropriate.  X' 2.` ` Analysis of The Restructuring Plan (#`  Xe4 x9X89. Based upon the unique circumstances of this case, we granted NextWave an  XN4 !opportunity to restructure its foreign ownershipTNF: {OE#'ԍSee supra at Section III.D.1.T and on December 30, 1996, NextWave  !presented a Restructuring Plan to come within the 25 percent benchmark in Section 310(b)(4).  !Under the Plan, NextWave proposes, that within nine months of the Public Notice issued January  X 4 ! 3, 1997 granting NextWave all 63 licenses, NextWave will undertake several measures, discussed  !in detail below, so that its foreign ownership levels do not exceed the Section 310(b)(4)"*,N(N(ZZ"  X4 !@benchmark.^: {Oy'ԍPublic Notice, DA 9712 (Jan. 3, 1997).^ NextWave has proposed a baseline and two alternative measures to implement the  !restructuring of its foreign ownership. NextWave's baseline measure is to infuse additional  !domestic capital in NTI through private placement and successful completion of NTI's IPO. One  !palternative measure is to reform the terms of the Convertible Promissory Notes and Convertible  X4 !Senior Subordinated Notes so that they represent bona fide debt or to sell the notes to domestic  X4 !investors. A second alternative measure is to prepay the Convertible Senior Subordinated Notes  !upon obtaining highyield financing in conjunction with the infusion of domestic capital from  !lprivate placement and successful completion of NTI's IPO. Petitioners oppose NextWave's  XJ4 !Restructuring Plan, arguing that the Plan fails to cure the violation.dJZ: yOU 'ԍPetitioners' Opposition to Restructuring Plan at 3.d Specifically, Petitioners  !/state that NextWave's foreign ownership appears to be "between 40 percent and 50 percent of  !NextWave's contributed capital," and that NextWave's capital contributions must be below 25  X 4 !percent.g : yO'ԍPetitioners' Opposition to Restructuring Plan at 89. g Petitioners provide no support for this statement. As discussed below, until  !NextWave completes the measures in its Plan, the percentage of foreign capital paid into NTI is  !Aspeculative. Based on the information that NextWave has provided us regarding foreign  !ownership, however, NextWave should be able to come within the foreign ownership benchmark upon successful completion of its Restructuring Plan. We therefore reject Petitioners' claim.  X{4 xY90. NextWave proposes to secure additional financing through private and public stock  !offerings. NextWave expects to issue additional domestic equity through the conversion to equity  !of a convertible note in the principal amount of $50,000,000 held by Hughes Network Systems  !to 11,000,000 Series B shares ("Hughes Note"). In addition, NTI proposes to issue 30,576,738  !shares of stock, 25,000,000 shares to domestic investors in private and public equity offerings and  !5,576,738 shares to NextWave's control group which, based on information provided by  !8NextWave, would dilute NTI's foreignowned shares to 24.88 percent of its total issued and  X4 !outstanding shares. z: yO' x" ԍNextWave further acknowledges that including shares issuable upon conversion of NTI's two remaining  ! convertible notes would require NTI to issue and additional 32,746,349 shares to domestic investors, of which  !7 27,200,000 share would be Series B stock and 5,576,738 shares would be Series A stock. Restructuring Plan, Att. at 2 n.2. NextWave states that the number of shares to be issued in NTI's IPO  !would exceed the shares required to bring NextWave's capitalization within the foreign ownership  X4benchmark.Sb : yO"'ԍRestructuring Plan, Att. at 12. S  X~4 xZ91. Until the IPO is completed, the percentage of paidin capital is speculative.  !/Estimating the purchase price of the additional shares to be between $3.00 and $7.00, based on"g+ ,N(N(ZZ"  X4 !purchase prices in NextWave's existing financial documents,": {Oy' x ԍSee, e.g., Subscription Agreements (stating original subscription price for Series B stock at $3.00 per share);  !. MCI Telecommunications Corporation Warrant for the Purchase of Shares of Series B Common Stock dated August  ! 22, 1996  3(g), at 20 (adjusting the exercise price if the price per share of Series B stock issued in the IPO is less than $7.00). NTI's foreign capital contribution  X4 !Zpercentage would decrease to between 25.75 percent and 30.73 percent. NTI would need to raise  !approximately $287 million dollars in domestic capital to bring NextWave under the foreign  !ownership benchmark for capital contributions. NTI proposes to raise $300 million through the  X4 !}sale of common stock in its IPO.X: yO ' xR ԍForm S1 Registration Statement Under the Securities Act of 1933 of NextWave Telecom Inc. at Cover  ! Sheet (USSEC June 10, 1996). In its LOI November 18 Response, NextWave states that it intends to raise between $500 and $600 million dollars in its proposed public offerings. LOI November 18 Response at 14. Successful completion of NTI's IPO as currently proposed,  !combined with private equity offerings, should infuse enough domestic capital and result in  !issuance of stock to a sufficient proportion of domestic interest holders for NextWave to come within the Section 310(b)(4) benchmark.  X14 xF[92. If NTI is unable to raise additional capital and issue additional shares of stock  !through NTI's IPO, it proposes to reform the terms of the Convertible Promissory Notes and  X 4 !Convertible Senior Subordinated Notes so that both sets of instruments meet the criteria for bona  X 4 !Mfide debt.Q : yOq'ԍRestructuring Plan, Att. at 23.Q NextWave states that it would consult with the Commission, as necessary, to identify  X 4 !the appropriate changes and contends that as bona fide debt, the instruments would not be  X 4 !counted for Section 310(b)(4) purposes.Q b : yO'ԍRestructuring Plan, Att. at 23.Q Reforming the Convertible Promissory Notes and  !Convertible Senior Subordinated Notes is necessary if the instruments are to be considered as  X4 !bona fide debt. Successful reformation of all of the Convertible Promissory Notes and  !pConvertible Senior Subordinated Notes would return NTI's capital structure to its current status:  !21.28 percent foreignowned stock and 30.56 percent paidin capital. While, upon successful  !reformation, NextWave would come within the statutory benchmark with respect to stock  !8ownership, we calculate that NTI would need to raise approximately $72 million in domestic  !capital to bring NextWave within the statutory benchmark for capital contributions. We find that  !reformation of NTI's notes, standing alone, is insufficient to bring NextWave within the statutory  !/benchmark. Assuming NextWave reforms the terms of the Convertible Promissory Notes and  !}Convertible Senior Subordinated Notes and successfully infuses additional domestic capital from  !private placement and completion of NTI's IPO, we will then reevaluate whether NextWave exceeds the Section 310(b)(4) benchmark.  X4  X4 x~\93. In addition, NextWave proposes that, if necessary, NTI will work with its existing  !domestic investors to facilitate their purchase of a portion of the Convertible Promissory Notes"m, ,N(N(ZZq"  X4 !and Convertible Senior Subordinated Notes from foreign investors.O: yOy'ԍRestructuring Plan, Att. at 3.O While NextWave does not  !describe the terms of any potential sale, we consider this proposal as a sale of equity to domestic  X4 !investors. Unless the terms of the instruments are reformed as bona fide debt, we will consider  !Vthe Convertible Promissory Notes and Convertible Senior Subordinated Notes to be equity even  !upon selling the instruments to domestic investors. If NTI sells the entire principal amounts of  !the Convertible Promissory Notes and Convertible Senior Subordinated Notes at face value to  !Rdomestic investors, upon conversion at $3.00 and $4.00 per share of principal to stock of the  !cConvertible Promissory Notes and Convertible Senior Subordinated Notes respectively, foreign !owned stock would be 16.45 percent of NTI's outstanding stock and foreign capital contributions would be approximately 20.05 percent of the NTI's total capital.  X 4 x[]94. NTI further proposes to proceed with a highyield debt offering concurrently with its  X 4 !planned public offering of equity securities.Q X: yO'ԍRestructuring Plan, Att. at 34.Q NTI would use a portion of the proceeds from the  !&debt offering to repay the Convertible Senior Subordinated Notes, which NextWave asserts would  !/eliminate the notes from our foreign ownership calculations and reduce the amount of domestic  X 4 !linvestment needed to bring NextWave within the statutory benchmark.O : yOB'ԍRestructuring Plan, Att. at 4.O Including only the  !yConvertible Promissory Notes as equity, NTI's total outstanding stock would be 27.3 percent  !foreignowned and foreign paidin capital would be 38.09 percent of NTI's total capital contributions.  x^95. Recognizing that repaying the Convertible Senior Subordinated Notes would not bring  !NextWave fully within the foreign ownership benchmark, NextWave states that in conjunction  !8with its highyield debt financing, NTI would issue an additional 4,000,000 shares of stock to  !domestic investors and 906,416 shares to NextWave's control group to bring NextWave within  X4 !the benchmark.Ox: yO'ԍRestructuring Plan, Att. at 4.O Although not stated, this calculation of additional shares to be issued to  !domestic investors presumes conversion of the Hughes Note to 11,000,000 shares of common  X4 !Nstock as set forth above.L: {Oe 'ԍSee supra at  90.L We calculate that upon repayment of the Convertible Senior  !"Subordinated Notes and assuming the Convertible Promissory Notes remain equity, NTI would  !need to raise approximately $281 million in domestic capital to bring NextWave within the statutory benchmark for capital contributions.  x _96. Finally, NextWave has agreed to establish and strengthen internal procedures to  X"4 !monitor financial transactions to ensure adherence with the foreign ownership benchmark.I": yOm''ԍRestructuring Plan at 4.I ""-* ,N(N(ZZ""  X4 !NextWave will assign one of its corporate officers with the primary responsibility for tracking  !"foreign investment in NextWave; question each private investor in NTI to determine the extent  !/of foreign ownership interests in the investor and make those files available to the Commission;  !and undertake to conduct periodic surveys of its public shareholders to determine the percentage  X4of its foreignowned publicly traded shares.: yO' x& ԍRestructuring Plan at 4. NextWave also states that it will include savings provision in any warrants, options  {O'or convertible debt instruments. Id.  x`97. Petitioners argue that to reform the terms of the Convertible Promissory Notes and  !Convertible Senior Subordinated Notes, NTI must modify the conversion price from $3.00 and  !$4.00 per share respectively, to at least $7.00 per share so that the purchase price of both the  !&Convertible Promissory Notes and Convertible Senior Subordinated Notes is not below the current  X 4 !market price.d ": yO 'ԍPetitioners' Opposition to Restructuring Plan at 9.d Petitioners base the $7.00 conversion price on NTI's estimated market value of  X 4 !Mits shares for its proposed IPO.d : yOf'ԍPetitioners' Opposition to Restructuring Plan at 9.d We disagree. The conversion price relative to the market price  X 4 !is not the determining factor in whether the convertible debt instruments are bona fide debt.  !Moreover, we will not require use of a set market price, which we leave to the parties in a  !position to negotiate market terms. In the event the Convertible Promissory Notes and  !pConvertible Senior Subordinated Notes are reformed under NextWave's Restructuring Plan, we will revisit the statutory foreign ownership issue.  xa98. Petitioners also argue that any sale of the Convertible Promissory Notes or  !Convertible Senior Subordinated Notes to domestic investors at market value after NextWave  !receives its licenses would allow foreign owners to reap a profit in contravention of the ECO  X4 !TesteB: yO'ԍPetitioners' Opposition to Restructuring Plan at 10.e on an equity investment that causes NextWave to be in violation of the foreign ownership  !ybenchmark. Again, this argument is speculative because no market value of NTI's stock yet  !exists. Given the riskiness of the investment, the value of the Convertible Promissory Notes and  !Convertible Senior Subordinated Notes in a secondary market might just as easily be less than their face value, resulting in a loss to the foreign investors.  x b99. Once NTI successfully completes its IPO, which proposes to raise $300 million in  !Ndomestic capital, and infuses domestic capital from private placement in conjunction with  !dreforming all or a portion of the Convertible Promissory Notes and Convertible Senior  !"Subordinated Notes and repaying all or a portion of the Convertible Senior Subordinated Notes,  ! should bring NextWave within the Section 310(b)(4) benchmark. NextWave's Restructuring Plan  !relies heavily on success of NTI's IPO. NextWave must, therefore, concurrently with its IPO begin to implement the other measures of the Plan to come within the statutory benchmark. ".,N(N(ZZ"Ԍ x c100. NextWave will have six months from the date of the Public Notice to meet the  !Section 310(b) benchmark in accordance with the terms of its Restructuring Plan. We are  X4 !allowing six months rather than nine in accordance with our stated goal of rapidly deploying  X4 !broadband Personal Communications Services.$: {O4' x ԍSee In the Matter of Amendment of the Commission's Rules to Establish New Personal Communications  {O' ! Services, Third Memorandum Opinion and Order, 9 FCC Rcd 6908, 6908,  1(listing the four primary goals with  !7 respect to broadband PCS as : competitive delivery, a diverse array of services, rapid deployment, and widearea coverage). We emphasize, however, that NextWave must  !Rcome within the Section 310(b) benchmark at the earliest opportunity. Beginning one month  !from January 3, 1997, NextWave must report to the Bureau on a monthly basis regarding the  !}steps it is taking to meet the Section 310(b)(4) benchmark. In addition, NextWave will promptly  !provide the Bureau with copies of any correspondence received during the sixmonth period to  !}or from the United States Securities and Exchange Commission in connection with the proposed  X14 !IPO described in the Restructuring Plan.Z1: {O' x ԍSee Letter from H. Roger Schwall, Branch Chief, Division of Corp. Finance, United States Securities and  ! Exchange Commission to Allen B. Salmasi, Chairman, President and Chief Executive Officer of NextWave Telecom Inc. (July 12, 1996) (seeking additional information regarding NTI's Form S1 Equity Offering filed June 10, 1996). NextWave will submit a final report to the Bureau  !documenting how its ownership and debt structure brings NextWave within the foreign ownership  !benchmark of Section 310(b)(4). This report will include a detailed listing of the individual and  !'aggregate percentage of foreignowned shares and foreign capital contributed to NTI or  X 4NextWave and all foreign debt interests in NTI or NextWave.  : yO\' x ԍNextWave must present foreign ownership percentages without including any valuation of sweat equity in  !Q its calculations. If NextWave wishes also to present foreign capital contribution percentages that include sweat  !t equity in the calculation, it may do so as long as the value assigned to the sweat equity and the basis for that valuation is clearly set forth in its presentation.  x#d101. We will reanalyze NTI's foreign ownership upon completion of its restructuring  !cwithin the allotted six month period. If NextWave chooses to retain the Convertible Promissory  !cNotes and Convertible Senior Subordinated Notes in their current form, upon reanalysis, we will  !Iconsider each set of instruments as equity and not debt. NextWave's failure to bring its foreign  !cinvestment within the foreign ownership benchmark of Section 310(b)(4) will result in automatic  !cancellation of NextWave's licenses, absent a showing that it is in the public interest to permit  X4 !NextWave to exceed the benchmark.| : {O ' xy ԍSee Fox II, 11 FCC Rcd at 5722,  21 (stating that "[a]lthough the statute charges the Commission with  ! finding that the public interest favors denial of a license where the benchmark is exceeded, in practice an applicant  {O"' ! wishing to exceed the benchmark must provide us with justification to do so"); and Fox I, 10 FCC Rcd at 8475,   ! 53 (holding that an applicant must specifically and directly inform the Commission that the ownership structure under  ! consideration may exceed the foreign ownership benchmark, and that absent such explicit notification and an express  !H finding by the Commission that allowing the applicant to exceed the benchmark is in the public interest, an applicant  yO@%'may not exceed the benchmark).Ī Should such a showing be made, we will then determine"/,N(N(ZZo"  X4 ! whether it is in the public interest to allow NextWave to exceed the foreign ownership benchmark  X4in Section 310(b)(4) of the Communications Act.": {Ob' xV ԍSee Fox I, 10 FCC Rcd at 8475,  54 (stating that once the issue is squarely presented by an applicant, the  ! Commission is charged with determining whether foreign ownership above the benchmark is or is not consistent with  ! the public interest, and in either case, make a determination of the public interest and grant or deny the license application based on that determination).  X' E. Remaining Procedural Issues  X'` ` 1. Request for an Oral Hearing  Xv4  X_4 x e102. Petitioners request, as an alternative to dismissing NextWave's application, that we  !designate this matter for an oral hearing to determine Qualcomm's control. Petitioners also  !suggest that we conduct a hearing to determine the extent of NextWave's foreign ownership.  !<Given the factual record developed, we find that there are no substantial and material questions of fact outstanding, and therefore deny the request.  xf103. In making a determination as to whether a hearing is warranted, the Commission  X 4 !is governed by the clear mandate of Section 309(d) of the Act.  : {O!' x ԍ47 U.S.C.  309(d)(1) and (2); Astroline Communications Co., L.P., 857 F.2d 1556, 156162 (D.C. Cir.  {O'1988) ("Astroline"); Centel Corp., Order, 8 FCC Rcd 1829, 1831 (Com. Car. Bur. 1993).  As a preliminary matter, a  !"party requesting a hearing must proffer specific allegations of fact sufficient to show that grant  X4 !of the application would be prima facie inconsistent with the public interest, convenience, and  X{4 ! necessity.S{: {O:'ԍAstroline, 857 F.2d at 1561.S If the Commission is satisfied that the party has alleged a prima facie inconsistency  !with the public interest, the Commission must next determine whether, on the basis of such  XO4pleadings filed, a "substantial and material question of fact is presented."O: {O'ԍAstroline, 857 F.2d at 1561 (citing Gencom, Inc. v. FCC, 832 F.2d 171 (D.C. Cir. 1987)).  xg104. In applying the first prong of the hearing standard, the Commission is limited to a  X 4 !consideration of the facts of the request for the hearing and accompanying affidavits.X 2 : {O'ԍAstroline, 857 F.2d at 1561X In such  !instances, we have been instructed to proceed "on the assumption that the specific facts set forth  X4 ![in the request] are true."^ : {OQ#' xl ԍAstroline, 857 F.2d at 1561 (citing Citizens for Jazz on WRVR v. FCC, 775 F.2d 392, 397 (D.C. Cir. 1985)  {O$' !H ("Jazz")). At this point the relevant inquiry is whether "a reasonable factfinder could conclude that the ultimate fact  {O$'in dispute had been established." Id. (citing Jazz, 775 F.2d at 397). In determining whether a party has raised a "substantial and material  X4 !question of fact," the Commission has broad discretion.o: {O`''ԍGencom, Inc. v. FCC, 832 F.2d 171, 181 (D.C. Cir. 1987).o Therefore, the Commission "may draw"0|,N(N(ZZ1"  X4 !factual and legal inferences from undisputed evidentiary facts and it may determine how much  X4 !weight to accord disputed facts based on the record before it.":: {Ob'ԍId.: From its assessment of the  !contested issues, the "Commission must [then] determine whether the totality of the evidence  X4arouses a sufficient doubt on the point that further inquiry is called for.":Z: {O'ԍId.:  X4 xh105. We conclude that Petitioners have not met the requirements for which the  !Commission must conduct an oral evidentiary hearing regarding Qualcomm's role or NextWave's  !'foreign ownership level. Petitioners have not established specific allegations of fact that  !Qualcomm has an attributable interest in NextWave. Rather, the Petitioners' pleadings regarding  !the role of Qualcomm in NextWave are purely speculative and contain no factual basis that Qualcomm has control over NextWave.  xi106. We likewise conclude that Petitioners have not established that "a substantial and  !material question of fact" exists regarding the extent of NextWave's foreign ownership. The  !"documents and information NextWave produced are sufficient for the Bureau to determine the  !level of foreign ownership accurately. With respect to the Petitioners' claim that NextWave's  !"foreign ownership level has continually changed throughout the post auction period, it should be  !noted that NextWave constantly obtained additional financing and properly submitted amendments to its long form application to the Commission.  xJj107. In sum, given the facts derived from the Bureau's investigation through the LOI  !Vprocess, and there being no evidence established by Petitioners that dispute the facts before the  !Bureau, we conclude that there are no further substantial and material issues of fact outstanding that would warrant granting a hearing under Section 309 of the Communications Act.  X4` ` 2. Ex Parte Issues  X4 xk108. During the course of this proceeding, NextWave made ex parte presentations to  !Commission personnel. Specifically, on November 18, 1996, NextWave contacted the Bureau  !Chief in one telephone conversation and the General Counsel in another, and generally expressed  !concern about the breadth of the Bureau's LOI, and the length of time for processing the Petition.  X:4 !Pursuant to Commission's rules,R :: yO!'ԍ47 C.F.R.  1.1212(a)(c).R on November 19, 1996, the General Counsel prepared a  X#4 !memorandum to the Commission's Managing Director about the call, and on November 22, 1996,  X 4 !the Bureau chief did the same. Pursuant to Commission rules,I  |: yO9%'ԍ47 C.F.R. 1.1212(e).I on November 26, 1996, the  !Commission's Secretary sent these memoranda to the parties. In response, on December 6, 1996,"1  ,N(N(ZZ"  ! Petitioners filed comments, and urged that the Commission sanction NextWave either by rejecting its Cblock applications, or by assessing a monetary penalty.  X4  X4 xl109. Although both ex parte conversations went beyond mere status inquiries, both  !involved little more than issues of timing, and neither involved the merits of Petitioners'  !Rallegations. Moreover, the Bureau Chief, the decisionmaker at this stage in the proceeding,  !stated in her memorandum that the Bureau had already planned to take swift action on all  !qremaining Cblock license disputes, and that NextWave would not receive any special  !consideration. Under these circumstances, no sanction is warranted. Petitioners' reliance on  X34 !cases in which the Commission assessed a sanction against a party whose ex parte  X 4communications went to the merits of a restricted proceeding are distinguishable.! & : {O ' x ԍPress Broadcasting Co., Inc. v. FCC, 59 F.3d 1365 (D.C. Cir. 1995) (ex parte communication involved  {Oa ' !o meeting where "substance" discussed; no sanction imposed); Jacksonville Broadcasting Corp. v. FCC, 348 F.2d 75  {O+ ' ! (1965) (ex parte communication involved "merits"); and Elkhart Telephone Co., 11 FCC Rcd. 1165 (1995) (ex parte communication addressed "merits or outcome" of proceeding). !  X '_} IV. CONCLUSION c  x~m110. For the foregoing reasons, we grant NextWave the 63 Cblock PCS licenses for  X 4which it was the high bidder at auction, conditioned on NextWave taking the following actions:  : {O' x ԍPublic Notice, DA 9712 (Jan. 3, 1997). As reflected in the Public Notice, NextWave's obligations began on the date it was released.  X}4 ( (1)` ` coming within the Section 310(b)(4) benchmark, in accordance with the terms of  ( its December 30, 1996 Restructuring Plan, within six months of January 3, 1997,  ( the date on which the Bureau issued the Public Notice conditionally granting the licenses;(#`  X 4 ( 5(2)` ` reporting to the Bureau, on a monthly basis, about the steps it is taking to meet  X4the Section 310(b)(4) benchmark; and(#`  X4 ( B(3)` ` providing the Bureau with copies of any correspondence to or from the United  ( States Securities and Exchange Commission in connection with the proposed public offering described in its December 30, 1996 Restructuring Plan.(#`  Xi'E6 V. ORDERING CLAUSES c  X;4 xAn111. Accordingly, IT IS ORDERED that, pursuant to the authority delegated by Section  !0.331 of the Commission's rules, 47 C.F.R.  0.331, NextWave's applications for the 63 licenses  !for which it was the high bidder are GRANTED, CONDITIONED on NextWave's restructuring  !to reduce its foreign ownership to less than 25 percent within six months, in accordance with this MO&O."2 ,N(N(ZZk"Ԍ xJԙo112. IT IS FURTHER ORDERED that, pursuant to 47 U.S.C.  309(d), Petitioners' Petition to Dismiss or Deny, or Alternatively, to Designate for Oral Hearing is DENIED.  x[p113. IT IS FURTHER ORDERED that NextWave's Motion to Strike Petitioners' Reply is DENIED, and its Motion to Accept its Supplemental Response is GRANTED.  xq114. IT IS FURTHER ORDERED that Petitioners' Suggestion that NextWave Be Required to Supply Redacted Material is DENIED.  X14 xr115. IT IS FURTHER ORDERED that Petitioners' Comments on Prohibited Ex Parte Communications, wherein Petitioner suggest that NextWave be sanctioned, is DENIED.  xs116. IT IS FURTHERED ORDERED that, in light of the Bureau's decision to grant  !RNextWave's applications conditionally, NextWave's motion for a waiver of Section 319(d) is  X 4DISMISSED AS MOOT.  X{4` `  ,hh]TN"oI N"oI T  Xd'` `  ,hh] Michele C. Farquhar  XM'` `  ,hh]Chief, Wireless Telecommunications Bureau "M3 ,N(N(ZZg"  X'u APPENDIX A Licenses Conditionally Granted to NextWave Personal Communications, Inc.   X'c Market` `  CallSignhh]File NumberppName ` `   X4B007` `  KNLF669hh]00341CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XH4B010` `  KNLF674hh]00351CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B020` `  KNLF681hh]00364CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B027` `  KNLF671hh]00345CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xy4B029` `  KNLF652hh]00307CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X44B036` `  KNLF801hh]00558CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B047` `  KNLF695hh]00378CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B051` `  KNLF646hh]00294CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xe4B056` `  KNLF692hh]00375CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B059` `  KNLF698hh]00381CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B074` `  KNLF656hh]00315CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X"4B081` `  KNLF654hh]00311CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XQ%4B084` `  KNLF649hh]00301CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC. "#'4 ,N(N(ZZ%"Ԍ X'ԙ Market` `  CallSignhh]File NumberppName  X4B093` `  KNLF699hh]00382CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B095` `  KNLF660hh]00323CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XH4B106` `  KNLF666hh]00335CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B110` `  KNLF802hh]00566CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B128` `  KNLF676hh]00355CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xy4B135` `  KNLF682hh]00365CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X44B159` `  KNLF693hh]00376CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B174` `  KNLF665hh]00333CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B179` `  KNLF689hh]00372CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xe4B189` `  KNLF690hh]00373CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B196` `  KNLF648hh]00299CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B204` `  KNLF662hh]00327CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X"4B212` `  KNLF667hh]00337CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XQ%4B220` `  KNLF696hh]00379CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC. "#'5 ,N(N(ZZ%"Ԍ X'ԙ Market` `  CallSignhh]File NumberppName  X4B226` `  KNLF655hh]00313CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B235` `  KNLF694hh]00377CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XH4B239` `  KNLF686hh]00369CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B244` `  KNLF697hh]00380CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B252` `  KNLF672hh]00347CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xy4B261` `  KNLF803hh]00567CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X44B262` `  KNLF645hh]00291CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B263` `  KNLF661hh]00325CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B268` `  KNLF685hh]00368CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xe4B274` `  KNLF678hh]00359CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B289` `  KNLF687hh]00370CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B298` `  KNLF804hh]00568CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X"4B318` `  KNLF670hh]00343CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XQ%4B319` `  KNLF688hh]00371CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC. "#'6 ,N(N(ZZ%"Ԍ X'ԙ Market` `  CallSignhh]File NumberppName  X4B321` `  KNLF644hh]00203CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B324` `  KNLF657hh]00317CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XH4B329` `  KNLF663hh]00329CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B331` `  KNLF805hh]00569CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B336` `  KNLF664hh]00331CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xy4B350` `  KNLF650hh]00303CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X44B357` `  KNLF683hh]00366CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B358` `  KNLF812hh]00570CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B361` `  KNLF684hh]00367CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xe4B364` `  KNLF659hh]00321CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B374` `  KNLF668hh]00339CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B376` `  KNLF677hh]00357CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X"4B401` `  KNLF658hh]00319CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  XQ%4B402` `  KNLF651hh]00305CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC. "#'7 ,N(N(ZZ%"Ԍ  X' Market` `  CallSignhh]File NumberppName  X4B408` `  KNLF680hh]00363CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xv4B412` `  KNLF675hh]00353CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X14B413` `  KNLF813hh]00571CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B428` `  KNLF679hh]00361CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X 4B440` `  KNLF653hh]00309CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  Xy4B441` `  KNLF691hh]00374CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X44B461` `  KNLF647hh]00297CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.  X4B480` `  KNLF673hh]00349CWL96ppNEXTWAVE PERSONAL ` `  ,hh]ppCOMMUNICATIONS INC.