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Foreign Ownership Second Report and Order

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Released: April 18, 2013

Federal Communications Commission

FCC 13-50

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Review of Foreign Ownership Policies for
)
IB Docket No. 11-133
Common Carrier and Aeronautical Radio
)
Licensees under Section 310(b)(4) of the
)
Communications Act of 1934, as Amended
)
)
)
)

SECOND REPORT AND ORDER

Adopted: April 18, 2013

Released: April 18, 2013

By the Commission: Chairman Genachowski and Commissioners Clyburn, Rosenworcel and Pai issuing
separate statements; Commissioner McDowell not participating.

TABLE OF CONTENTS

Heading
Paragraph #
I. INTRODUCTION.................................................................................................................................. 1
II. EXECUTIVE SUMMARY.................................................................................................................... 2
III. BACKGROUND.................................................................................................................................... 7
A. Section 310 of the Act...................................................................................................................... 7
B. Current Regulatory Approach to Section 310(b)(4) ...................................................................... 12
C. The NPRM, Forbearance Public Notice, and First Report and Order.......................................... 15
IV. DISCUSSION ...................................................................................................................................... 20
A. WTO and Non-WTO Investment................................................................................................... 20
B. Revised and Codified Standards for Public Interest Determinations............................................. 28
1. Prior Approval of Foreign Ownership Under Section 310(b)(3) Forbearance and
Section 310(b)(4)..................................................................................................................... 28
2. Issuing Section 310(b)(3) and (b)(4) Rulings to Named Licensees ........................................ 38
3. Approval of Named Foreign Investors.................................................................................... 40
4. The Aggregate Allowance for Unnamed Foreign Investors.................................................... 79
5. Expanding Beyond Carrier-Specific Rulings .......................................................................... 88
6. Introducing New Foreign-Organized Entities into the Vertical Ownership Chain ................. 97
7. Service- and Geographic-Specific Rulings ........................................................................... 105
C. Contents of Petitions for Declaratory Ruling............................................................................... 111
1. Information on Disclosable Interest Holders and Foreign Investor Interests........................ 111
2. Methodology for Calculating Disclosable Interests and Foreign Investor Interests.............. 117
3. Other Content Requirements ................................................................................................. 127
D. Filing and Processing of Petitions for Declaratory Rulings......................................................... 129
E. Continued Compliance with Section 310(b) Declaratory Rulings............................................... 134
F. Transition Issues .......................................................................................................................... 136
G. Other Issues.................................................................................................................................. 139
V. CONCLUSION .................................................................................................................................. 140

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VI. PROCEDURAL ISSUES ................................................................................................................... 141
A. Final Regulatory Flexibility Certification.................................................................................... 141
B. Paperwork Reduction Act of 1995............................................................................................... 146
C. Congressional Review Act........................................................................................................... 147
VII. ORDERING CLAUSES................................................................................................................... 148
APPENDIX A – List of Commenters
APPENDIX B – Rules

I.

INTRODUCTION

1.
Recognizing the need to review our foreign ownership policies and procedures and
reduce delay, uncertainty, and expense to facilitate further investment in our wireless networks, this
Second Report and Order in the above-captioned proceeding modifies the policies and procedures that
apply to foreign ownership of common carrier radio station licensees – i.e., companies that provide fixed
or mobile telecommunications service over networks that employ spectrum-based technologies, either in
whole or in part – pursuant to sections 310(b)(3) and 310(b)(4) of the Communications Act of 1934, as
amended (the “Act”).1 These new measures also will apply to foreign ownership of aeronautical en route
and aeronautical fixed (hereinafter, “aeronautical”) radio station licensees pursuant to section 310(b)(4) of
the Act.2 We believe the actions we are taking today will reduce the regulatory costs and burdens
imposed on common carrier and aeronautical radio station applicants, licensees, and spectrum lessees;3
provide greater transparency and more predictability with respect to the Commission’s foreign ownership
filing requirements and review process; and facilitate investment from new sources of capital at a time of
growing need for capital investment in this sector of our Nation’s economy, while continuing to protect
important interests related to national security, law enforcement, foreign policy, and trade policy.4 The
new rules that we adopt in this Second Report and Order will be codified in Parts 1 and 25 of the
Commission’s rules and are appended to this document.5

1 47 U.S.C. §§ 310(b)(3), (4).
2 For ease of reference, we refer to aeronautical en route and aeronautical fixed radio station licenses as
“aeronautical” radio station licenses. In using this shorthand, we do not include other types of aeronautical radio
station licenses issued by the Commission. See, e.g., 47 C.F.R. § 87.5 (defining various types of aeronautical radio
stations); 47 C.F.R. §§ 87.19(a), (b) (applying foreign ownership requirements to aeronautical en route and
aeronautical fixed station licenses).
3 For ease of reference, we refer to common carrier and aeronautical radio station applicants, licensees, and spectrum
lessees collectively in this Second Report and Order as “licensees” unless the context warrants otherwise.
“Spectrum lessees” are defined in section 1.9003 of Part 1, Subpart X (“Spectrum Leasing”), 47 C.F.R. § 1.9003.
4 This proceeding does not address our policies with respect to the application of sections 310(b)(3) and (b)(4) to
broadcast licensees. See Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio
Licensees under Section 310(b)(4) of the Communications Act, as Amended
, IB Docket No. 11-133, Notice of
Proposed Rulemaking, FCC 11-121, 26 FCC Rcd 11703, 11704, ¶ 1 n.3 (2011) (NPRM). Thus, we do not consider
the comments and ex parte statements filed by the Minority Media and Telecommunications Council asking the
Commission, in this proceeding, to change its policies and procedures with respect to foreign ownership of
broadcast licensees. See, e.g., Comments of the Minority Media and Telecommunications Council, IB Docket No.
11-133 (filed Dec. 1, 2011). Recently, the Media Bureau sought comment on a request for clarification of the
Commission’s policies and procedures under 47 U.S.C. § 310(b)(4) with respect to foreign investment in broadcast
licensees. See Media Bureau Announces Filing of Request for Clarification of the Commission’s Policies and
Procedures under 47 U.S.C. § 310(b)(4) by the Coalition for Broadcast Investment
, MB Docket No. 13-50, Public
Notice, DA 13-281, 28 FCC Rcd 1469 (MB 2013).
5 See infra Appendix B.
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II.

EXECUTIVE SUMMARY

2.
Wireless networks are critical components of the nation’s telecommunications
infrastructure. They provide mobile broadband Internet access, mobile voice and data services, and fixed
telecommunications services.6 Demand for wireless broadband services and the network capacity
associated with those services is surging. For example, the total number of mobile wireless connections
now exceeds the total U.S. population.7 As of the second quarter of 2012, 55 percent of U.S. mobile
subscribers owned smartphones, compared to 41 percent in July 2011.8 Tablet ownership among
Americans is also increasing. Pew Internet research surveys, as of the end of 2012, show that 25 percent
of American adults own a tablet computer, up from four percent in September 2010.9 Global mobile data
traffic is anticipated to grow thirteen-fold between 2012 and 2017.10 The Commission continues to work
to free up additional licensed and unlicensed spectrum to meet this demand. Of particular note, the
Commission is moving forward towards holding the world’s first incentive auction of repurposed
television broadcast spectrum.11 The Commission has also recently taken additional measures to free up
spectrum for mobile broadband, including 40 megahertz of AWS-4 spectrum and 30 megahertz of
Wireless Communications Services (WCS) spectrum.12 The Commission is also pursuing opportunities
for innovative sharing using small cells in 100 megahertz of spectrum in the 3.5 GHz band, and recently

6 See, e.g., Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 Annual Report and
Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile
Services
, WT Docket No. 11-186, Sixteenth Report, FCC 13-34 (rel. Mar. 21, 2013).
7 See CTIA – The Wireless Association® Wireless Industry Indices, Semi-Annual Data Survey Results, A
Comprehensive Report from CTIA Analyzing the U.S. Wireless Industry, Mid-Year 2012 Top-of-the-Line Survey
Results, Annualized Wireless Survey Results – Dec. 1985 to June 2012 (estimating 321,716,905 total U.S.
subscriber connections as of June 2012), available at http://files.ctia.org/pdf/CTIA_Survey_MY_2012_Graphics-
_final.pdf (visited Apr. 17, 2013). According to the Bureau of the Census, the combined population of the 50 states,
the District of Columbia, and Puerto Rico, as of July 1, 2012, was estimated to be 313.9 million. See U.S. Census
Bureau, http://www.census.gov/popest/data/national/totals/2012/index.html (visited Apr. 17, 2013).
8 Nielsen Newswire, The Nielsen Company, Two Thirds of New Mobile Buyers Now Opting for Smartphones, July
12, 2012, available at http://blog.nielsen.com/nielsenwire/online_mobile/two-thirds-of-new-mobile-buyers-now-
opting-for-smartphones/ (visited Apr. 17, 2013).
9 See Lee Rainie, Pew Internet & American Life Project, “25% of American Adults Own Tablet Computers” (Oct. 4,
2012), available at http://www.pewinternet.org/Reports/2012/Tablet-Ownership-August-2012.aspx (visited Apr. 17,
2013).
10 See Cisco White Paper, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012-2017,
Executive Summary at 3, February 6, 2013, available at
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf
(visited Apr. 17, 2013).
11 See Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, GN Docket
No. 12-268, Notice of Proposed Rulemaking, FCC 12-118, 27 FCC Rcd 12357 (2012) (Incentive Auctions NPRM).
12 See Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200 MHz Bands, WT Docket
No. 12-70, Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559 MHz and 1626.5-1660.5
MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200 MHz
, ET Docket No. 10-142,
Service Rules for Advanced Wireless Services in the 1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-
2180 MHz Bands
, WT Docket No. 04-356, Report and Order and Order of Proposed Modification, FCC 12-151, 27
FCC Rcd 16102 (2012) (AWS-4 Report and Order); Amendment of Part 27 of the Commission’s Rules to Govern the
Operation of Wireless Communications Services in the 2.3 GHz Band; Establishment of Rules and Policies for the
Digital Audio Radio Satellite Service in the 2310-2360 MHz Frequency Band
, WT Docket No. 07-293, IB Docket
No. 95-91, Order on Reconsideration, FCC 12-130, 27 FCC Rcd 13651 (2012).
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started a proceeding to potentially free up an additional 195 megahertz in the 5 GHz band suitable for
“Gigabit Wi-Fi.”13 All of these trends, including the growth in mobile data traffic, also create more
demand for network capacity and for capital to invest in the infrastructure, technology, and spectrum to
support this capacity.14 Investment in telecommunications infrastructure and capacity contributes
positively to economic growth and labor productivity in the United States. This investment will support
critical economic, public safety, health care, and other activities essential to U.S. leadership in
technological innovation, growing the U.S. economy and maintaining its global competitiveness.
3.
As discussed in the Notice of Proposed Rulemaking (NPRM) in this proceeding,15 foreign
investment has been and will continue to be an important source of financing for U.S.
telecommunications companies,16 fostering technical innovation, economic growth, and job creation.17 At
the same time, licensees seeking Commission approval of foreign ownership under section 310(b) have
faced significant difficulties and expense in: (1) ascertaining their percentages of foreign ownership,
whether existing or planned, from World Trade Organization (“WTO”) Member countries as
distinguished from non-WTO Member countries, as required by the Commission’s existing policies; (2)
compiling detailed information as to the citizenship and principal places of business of their investors,
which often hold their interests through multiple intervening investment vehicles and holding companies;
and (3) filing additional petitions for declaratory ruling after the licensee has already received a foreign
ownership ruling. Over the last 15 years, these proceedings have produced voluminous records consisting
of highly detailed information regarding the citizenship and principal places of business of even de
minimis
investors. Each case requires Commission staff to undertake an intensive, time-consuming
review of the ownership information, and even after a ruling, requires a licensee to return to the
Commission repeatedly when there are foreign ownership changes in excess of the parameters of the
ruling. For example, companies that already have received a foreign ownership ruling must nonetheless
return to the Commission to obtain prior approval to create a new subsidiary or affiliate with the same

13 Amendment of the Commission’s Rules with Regard to Commercial Operations in the 3550-3650 MHz Band, GN
Docket No. 12-354, Notice of Proposed Rulemaking and Order, FCC 12-148, 27 FCC Rcd 15594 (2012); Revision
of Part 15 of the Commission’s Rules to Permit Unlicensed National Information Infrastructure (U-NII) Devices in
the 5 GHz Band
, ET Docket No. 13-49, Notice of Proposed Rulemaking, FCC 13-22 (rel. Feb. 20, 2013).
14 See CTIA – The Wireless Association® Wireless Industry Indices, Semi-Annual Data Survey Results, A
Comprehensive Report from CTIA Analyzing the U.S. Wireless Industry, Mid-Year 2012 Top-of-the-Line Survey
Results, Annualized Wireless Survey Results (detailing growth in cumulative capital investment and cell sites),
supra note 7.
15 NPRM, 26 FCC Rcd 11703.
16 Id. at 11705, ¶ 2. See generally Reply Comments of CTIA – The Wireless Association®, IB Docket No. 11-133
(filed Jan. 4, 2012) at 2-4; see also id. at 3 (“Additional capital is critical for U.S. wireless providers that seek to
expand 4G network deployment, acquire needed additional spectrum, and participate in upcoming spectrum
auctions.”).
17 See, e.g., The Economic Benefits of New Spectrum for Wireless Broadband, Council of Economic Advisors (Feb.
2012) at 14-16, available at http://www.whitehouse.gov/sites/default/files/cea_spectrum_report_2-21-2012.pdf
(visited Apr. 17, 2013). See also U.S. Inbound Foreign Direct Investment, Council of Economic Advisors (June
2011) (U.S. affiliates of foreign-domiciled companies play an important role in crucial areas of U.S. economic
activity, accounting for over 14 percent of total U.S. private investment in research and development, employing
five percent of the U.S. private workforce, and accounting for over 11 percent of total U.S. private capital
investment), available at http://www.whitehouse.gov/sites/default/files/microsites/cea_fdi_report.pdf. (visited Apr.
17, 2013); Summary Estimates for Multinational Companies: Employment, Sales and Capital Expenditures for
2010
, News Release, Bureau of Economic Analysis (Apr. 18, 2012) (majority-owned U.S. affiliates of foreign
multinational companies employed 5.2 million workers in 2010), available at
http://www.bea.gov/newsrelease/international/mnc/2012/mnc2010.htm (visited Apr. 17, 2013).
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foreign ownership; introduce a new foreign-organized entity into the company’s approved vertical
ownership chain; provide a new service, or the same service in a new geographic area; or accept
additional investment by previously-approved foreign investors or other foreign investors.
4.
The Commission sought comment in the NPRM on measures to revise and simplify its
regulatory framework under section 310(b)(4) for authorizing foreign ownership in the controlling U.S.
parents of common carrier and aeronautical radio licensees. In addition, in the First Report and Order in
this proceeding that adopted our section 310(b)(3) forbearance approach for the class of common carrier
licensees subject to section 310(b)(3) forbearance, we stated that we would assess in this Second Report
and Order whether to apply any changes we adopt to the section 310(b)(4) policy framework to our
analysis of petitions for declaratory ruling under the section 310(b)(3) forbearance approach.18
5.
In this Second Report and Order, we adopt several of the proposals set forth in the NPRM
as well as other measures that respond to comments filed in this proceeding on the various options and
questions raised in the NPRM. We have revised certain of our initial proposals in light of the views of the
Executive Branch agencies,19 in order to ensure their continued ability to review proposed foreign
investment in advance (through either section 310(b) petitions or Title III license or spectrum lease
applications) and assess whether such investment is consistent with national security, law enforcement,
foreign policy, and trade policy concerns. Under our new rules and policies for authorizing foreign
ownership20 of common carrier and aeronautical radio station licensees, we will:
 Eliminate the distinction between foreign investment from WTO Member countries and
non-WTO Member countries, and instead apply an “open entry standard” in our public
interest assessment of all foreign investment under the section 310(b)(3) forbearance
approach we adopted in the First Report and Order and under our section 310(b)(4)
review;
 Continue to coordinate with the relevant Executive Branch agencies all petitions for
declaratory ruling and applications for licenses, transfers and assignments where the
applicant has foreign ownership exceeding the limits in section 310(b)(3) and/or section
310(b)(4), and continue to accord deference to the agencies’ views on matters related to
national security, law enforcement, foreign policy, and trade policy that may be raised by
a particular proceeding;

18 Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees under Section
310(b)(4) of the Communications Act, as Amended
, IB Docket No. 11-133, First Report and Order, FCC 12-93, 27
FCC Rcd 9832, 9844, ¶ 33 (2012) (First Report and Order). For purposes of this Second Report and Order, we
refer to the class of licensees eligible to file petitions seeking a declaratory ruling under our section 310(b)(3)
forbearance approach as “licensees subject to section 310(b)(3) forbearance.” See infra ¶¶ 9, 18.
19 Letter from Christine Bliss, Assistant United States Trade Representative For Services and Investment, USTR, to
Marlene H. Dortch, Secretary, FCC, IB Docket No. 11-133 (filed Nov. 8, 2012) (“USTR Letter”); Letter from
Richard C. Sofield, Director, Foreign Investment Review Staff, National Security Division, United States
Department of Justice, and Shawn Cooley, Director, Foreign Investment Risk Management, Office of Policy, United
States Department of Homeland Security, to Mindel De La Torre, Chief, International Bureau, FCC, IB Docket No.
11-133 (filed Mar. 7, 2013) (“DOJ/DHS Letter”); Comments of the Department of Justice and the Department of
Homeland Security, IB Docket No. 11-133 (filed Dec. 5, 2012); Comments of the Department of Defense, IB
Docket No. 11-133 (filed Dec. 5, 2012) (stating, inter alia, that “[t]he Department of Justice and Department of
Homeland Security appreciate the Commission’s continuing efforts to coordinate its actions in this proceeding in
order to support important interests related to national security, law enforcement, and public safety” and that “DOJ
and DHS do not intend to object” to the streamlining actions we are adopting here). See also infra note 99.
20 We use the term “ownership” in this Second Report and Order to refer to both equity and/or voting interests held
in a licensee or the controlling U.S. parent of a licensee.
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 Maintain the Commission’s ability to condition or disallow foreign investment that may
pose a risk of harm to important national policies;
 Codify the requirement for prior approval of foreign ownership under our section
310(b)(3) forbearance approach and under our section 310(b)(4) review;
 Continue to issue foreign ownership rulings in the name of the licensee, in order to
maintain uniformity between our section 310(b)(3) forbearance approach and section
310(b)(4) review;
 Continue to entertain petitions that request approval for named foreign investors to hold
specified percentages of equity and/or voting interests in the licensee, under our section
310(b)(3) forbearance approach, and in the licensee’s controlling U.S. parent, under our
section 310(b)(4) review; but adopt a streamlined approach that (1) no longer requires
petitioners to identify foreign equity and/or voting interests of five percent or less, and in
certain situations of ten percent or less; (2) allows petitioners to request specific approval
for any named foreign investor (even below these limits) to increase its equity and/or
voting interest up to and including a non-controlling 49.99 percent at some future time;
and (3) permits petitioners, under section 310(b)(4), to request specific approval for any
named foreign investor that proposes to acquire a controlling interest of less than 100
percent to increase the interest to 100 percent at some future time;
 In granting such petitions, adopt a 100 percent aggregate allowance for unnamed and
future foreign investors, provided that the licensee obtains approval before any foreign
investor acquires an interest that exceeds five percent (or, in certain situations, an interest
that exceeds ten percent) of the common carrier licensee’s equity and/or voting interests
under section 310(b)(3) forbearance, or of the controlling U.S. parent’s equity and/or
voting interests under section 310(b)(4);
 Allow the licensee’s “subsidiaries and affiliates,” as defined in the codified rules, to rely
on the licensee’s foreign ownership ruling – whether issued under section 310(b)(3)
forbearance or under section 310(b)(4) – rather than having to file a new petition for
declaratory ruling, provided that foreign ownership of the licensee and the subsidiary or
affiliate remains in compliance with the terms of the licensee’s ruling and the
requirements of our rules;
 Allow licensees to introduce new foreign-organized entities into the approved vertical
ownership chain above the licensee’s controlling U.S. parent (under section (b)(4)) or
above a non-controlling, U.S.-organized entity investing in the licensee (under section
310(b)(3)) without prior approval, provided that the new foreign-organized entity is
under 100 percent common ownership and control with a previously-approved foreign
investor;
 Eliminate the practice of issuing service- and geographic specific rulings, and instead
permit a licensee with a foreign ownership ruling to add new services and new
geographic service areas without filing a new petition for declaratory ruling;
 Establish content and filing requirements for petitions for declaratory ruling; and
 Allow, but not require, licensees with existing rulings to request modifications under the
new rules.
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6.
We estimate that the rule changes we are adopting will reduce the number of section
310(b) petitions for declaratory ruling filed with the Commission annually in the range of 40 to 70 percent
as compared to the current regulatory framework.21 We also conclude that the changes will reduce
substantially the number of hours that applicants and licensees will have to spend in preparing and
submitting the petitions that they will need to file under the new rules. Although the commenters in this
proceeding did not quantify the extent to which the costs and burdens of complying with the current
regulatory framework would be reduced by the proposals and other options raised in the NPRM, the
qualitative descriptions they provided in the record, and the sheer volume of information that petitioners
have had to produce in particular proceedings (and which the Commission has had to analyze in its
decisions), leave no doubt that the current requirements impose significant costs and burdens that the new
rules will reduce.

III.

BACKGROUND

A.

Section 310 of the Act

7.
Section 310 of the Act requires the Commission to review foreign investment in radio
station licenses.22 This section imposes specific restrictions on who may hold certain types of radio
licenses. The provisions of section 310 apply to applications for initial radio licenses,23 applications for
assignments and transfers of control of radio licenses, and spectrum leasing arrangements under the
Commission’s secondary market rules.24 The relevant provisions of section 310 are as follows:

21 This estimate is based on two reviews done by International Bureau staff. In the first review, based on the 21
section 310(b)(4) petitions filed with the Commission during a randomly-selected period (September 1, 2007
through August 31, 2008), staff concluded that adoption of the proposals and other options discussed in the NPRM
would result in a more than 70 percent reduction in the number of petitions for declaratory ruling filed with the
Commission annually, as compared to the current regulatory framework. In the second review, based on the 13
section 310(b)(4) petitions filed between January 1, 2011, and October 1, 2012, staff concluded that the rules
adopted in this Order would result in at least a 40 percent reduction. We note that a large proportion of the filings
during the first review period involved requests by licensees with existing foreign ownership rulings for approval,
under section 310(b)(4), to acquire licenses in new wireless services being auctioned. In the second review period,
these auctions had been completed and no auction-related petitions were filed. The lack of auction-related filings by
licensees with existing foreign ownership rulings during the second review period accounts in large part for the
difference between the higher 70 percent reduction figure and the 40 percent reduction figure for the two review
periods. Significantly, industry commenters in this proceeding broadly support elimination of the requirement that
licensees with existing rulings return to the Commission for a new ruling when they apply for a license in a new
service or geographic service area. See infra ¶¶ 105-110.
22 A “station license” is defined in section 3(42) of the Act as “that instrument of authorization required by [the] Act
or the rules and regulations of the Commission made pursuant to [the] Act, for the use or operation of apparatus for
transmission of energy, or communications, or signals by radio by whatever name the instrument may be designated
by the Commission.” 47 U.S.C. § 153(42). For example, the Commission issues radio station licenses for the
provision of broadcast, wireless personal communications services, cellular, microwave, aeronautical en route, and
mobile satellite services.
23 With respect to an applicant seeking to participate in a spectrum auction pursuant to section 1.2101 et seq. of the
Commission’s rules, the applicant must certify, as of the deadline for filing a short-form application, that it complies
with the foreign ownership provisions of section 310 or that it has a request for waiver or other relief from the
requirements of section 310 pending. See 47 C.F.R. § 1.2105(a)(2)(v), (vi).
24 See Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary
Markets
, WT Docket No. 00-230, Report and Order and Further Notice of Proposed Rulemaking, FCC 03-113, 18
FCC Rcd 20604 (2003), erratum, 18 FCC Rcd 24817 (2003) (Secondary Markets Report and Order), Second
Report and Order, Order on Reconsideration, and Second Further Notice of Proposed Rulemaking, FCC 04-167, 19
FCC Rcd 17503 (2004) (Secondary Markets Second Report and Order), Second Order on Reconsideration, FCC 08-
(continued….)
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Sec. 310. Limitation on Holding and Transfer of Licenses.
(a) The station license required under this Act shall not be granted to or held by any foreign
government or representative thereof.
(b) No broadcast or common carrier or aeronautical en route or aeronautical fixed radio station
license shall be granted to or held by—
(1) any alien or the representative of any alien;
(2) any corporation organized under the laws of any foreign government;
(3) any corporation of which more than one-fifth of the capital stock is owned of record or
voted by aliens or their representatives or by a foreign government or representative
thereof or by any corporation organized under the laws of a foreign country;
(4) any corporation directly or indirectly controlled by any other corporation of which more
than one-fourth of the capital stock is owned of record or voted by aliens, their
representatives, or by a foreign government or representative thereof, or by any
corporation organized under the laws of a foreign country, if the Commission finds that
the public interest will be served by the refusal or revocation of such license.25
8.
Section 310(a) of the Act expressly prohibits a foreign government or its representative
from holding any radio license.26 Section 310(a), however, does not prohibit indirect foreign government
control of licensees.27 As explained in the DT-VoiceStream Order, a foreign government or
(Continued from previous page)
243, 23 FCC Rcd 15081 (2008) (Second Order on Reconsideration). See also discussion of Commission precedent
on spectrum leasing arrangements in Foreign Ownership Guidelines for FCC Common Carrier and Aeronautical
Radio Licenses
, 19 FCC Rcd 22612, 22634-37 (Int’l Bur. 2004), erratum, 21 FCC Rcd 6484 (Foreign Ownership
Guidelines
), pet. for recon. pending. The Commission has extended its secondary market spectrum manager leasing
rules to any Mobile Satellite Service spectrum used for terrestrial services pursuant to the Commission’s Ancillary
Terrestrial Component rules. See Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559
MHz and 1626.5-1660.5 MHz, 1610-1626.5 MHz, and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200
MHz
, ET Docket No. 10-142, Report and Order, FCC 11-57, 26 FCC Rcd 5710 (2011).
25 47 U.S.C. §§ 310(a), (b).
26 47 U.S.C. § 310(a). This prohibition is absolute, and the Commission has no discretion to waive it. The
Commission has stated that, for purposes of section 310(a), a “‘representative’” is a person or entity that acts “‘in
behalf of’” or “‘in connection with’” the foreign government. See, e.g., QVC Network, Inc., Memorandum Opinion
and Order, 8 FCC Rcd 8485, 8490-91, ¶ 21 (1993) (quoting Letter from the Commission to Russell G. Simpson,
Esq.
, 2 F.C.C. 2d 640 (1966)).
27 In assessing whether a person or entity does or does not control a licensee, the Commission looks at both de jure
and de facto control. See, e.g., Rochester Telephone Corporation v. United States, 23 F. Supp. 634, 636 (W.D.N.Y.
1938), aff’d, 307 U.S. 125 (1939) (Congress intended the term “control” as used in the Act to “embrace every form
of control, actual or legal, direct or indirect, negative or affirmative”). De jure control (control as a matter of law) is
typically determined by whether a shareholder owns more than 50 percent of the voting shares of a corporation.
Applications For Consent to the Transfer of Corporate Control from John W. Kluge (De Facto Control) to John W.
Kluge (De Jure Control)
, Memorandum Opinion and Order, 98 F.C.C. 2d 300, 306 (1984). In determining whether
de facto control (control as a matter of fact) exists, the Commission has held that influence and control are not the
same. Rather, the influence necessary to constitute de facto control must be such that the minority shareholder is
able to determine some or all of the licensee’s core policies and operations, or dominate corporate affairs. See, e.g.,
News International
, Memorandum Opinion and Order, FCC 84-79, 97 F.C.C. 2d 349, 356, ¶ 16 (1984); WHDH,
Inc
., Memorandum Opinion and Order, FCC 69-543, 17 F.C.C. 2d 856, 863 (1969); Benjamin L. Dubb, 16 F.C.C.
274, 289 (1951). In the context of common carrier authorizations, a variety of factors have been found to be
relevant in determining whether a person or entity has de facto control over a company. See generally Applications
of Intermountain Microwave
, Public Notice, 12 F.C.C. 2d 559 (1963); Application of Ellis Thompson Corp., 10 FCC
Rcd 12554, 12555-56, ¶ 9 (ALJ 1995); see also NPRM, 26 FCC Rcd at 11727, ¶ 46 n.93; cf. Promoting Efficient
(continued….)
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representative may hold a controlling ownership interest in a U.S.-organized company that controls the
licensee pursuant to section 310(b)(4) of the Act, provided the Commission does not find that the public
interest would be served by the refusal or revocation of the license.28
9.
Section 310(b) of the Act contains four subsections that place specific restrictions on who
can hold a broadcast, common carrier, or aeronautical radio station license. Sections 310(b)(1) and (b)(2)
of the Act prohibit any alien or representative, and any foreign-organized corporation, respectively, from
holding a broadcast, common carrier, or aeronautical radio station license.29 As with section 310(a), these
provisions do not bar an alien or representative, or a foreign-organized entity, from holding a controlling
ownership interest in a U.S.-organized company that controls the licensee pursuant to the discretionary
authority afforded by section 310(b)(4). Section 310(b)(3) of the Act prohibits foreign individuals,
governments, and corporations from owning more than 20 percent of the capital stock of a broadcast,
common carrier, or aeronautical radio station licensee.30 In the First Report and Order in this proceeding,
we determined to forbear from applying the foreign ownership limitations in section 310(b)(3) to the class
of common carrier licensees in which the foreign investment is held in the licensee through U.S.-
organized entities that do not control the licensee, to the extent we determine such foreign ownership is
consistent with the public interest under the policies and procedures the Commission has adopted for the
public interest review of foreign ownership subject to section 310(b)(4) of the Act.31
10.
Section 310(b)(4) of the Act establishes a 25 percent benchmark for investment by
foreign individuals, governments, and corporations in U.S.-organized entities that directly or indirectly
control a U.S. broadcast, common carrier, or aeronautical radio station licensee.32 A foreign individual,
government, or entity may own, directly or indirectly, more than 25 percent (and up to 100 percent) of the
stock of a U.S.-organized entity that holds a controlling interest in a common carrier or aeronautical radio
licensee, unless the Commission finds that the public interest will be served by refusing to permit such
foreign ownership.
11.
Licensees must request Commission approval of their controlling U.S. parents’ foreign
ownership under section 310(b)(4), normally done by filing a petition for declaratory ruling.33 In order
(Continued from previous page)
Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets, WT Docket No. 00-
230, Report and Order and Further Notice of Proposed Rulemaking, FCC 03-113, 18 FCC Rcd 20604, 20626-30, ¶¶
46-53 (2003) (replacing Intermountain Microwave standard only in the context of spectrum leasing).
28 See Application of VoiceStream Wireless Corporation, Powertel, Inc., Transferors, and Deutsche Telekom AG,
Transferee, for Consent to Transfer Control of Licenses and Authorizations Pursuant to Sections 214 and 310(d) of
the Communications Act and for Declaratory Ruling Pursuant to Section 310 of the Communications Act
, IB Docket
No. 00-187, Memorandum Opinion and Order, 16 FCC Rcd 9779, 9805-06, ¶¶ 41-42 (2001) (DT-VoiceStream
Order
).
29 47 U.S.C. §§ 310(b)(1), (2). The prohibitions in sections 310(b)(1) and (b)(2) are absolute, and the Commission
has no discretion to waive them.
30 47 U.S.C. § 310(b)(3).
31 First Report and Order, 27 FCC Rcd 9832. Our forbearance authority does not extend to broadcast or
aeronautical radio station licensees covered by section 310(b)(3). See 47 U.S.C. § 160. The forbearance approach
we adopted in the First Report and Order applies only to foreign ownership in common carrier licensees held
through intervening U.S.-organized entities that do not control the licensee. First Report and Order, 27 FCC Rcd at
9833, ¶ 1. Foreign interests in a U.S.-organized parent that controls the licensee are subject to section 310(b)(4), not
section 310(b)(3), and we will continue to assess foreign ownership interests subject to section 310(b)(4) separately
from foreign ownership interests subject to section 310(b)(3). Id. at 9844, ¶ 28 n.63.
32 47 U.S.C. § 310(b)(4).
33 See 47 C.F.R. § 1.2.
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for the Commission to make the public interest findings required by that section of the Act, licensees
must file the petition and obtain Commission approval before direct or indirect foreign ownership of their
U.S. parent companies exceeds 25 percent.34 Similarly, the section 310(b)(3) forbearance approach
requires a licensee that falls within the class of licensees subject to section 310(b)(3) forbearance to obtain
Commission approval before foreign ownership of the licensee exceeds 20 percent of its equity and/or
voting interests.35 The Commission, or the International Bureau on delegated authority,36 will assess, in
each particular case, whether the foreign interests presented for approval by the licensee are in the public
interest, consistent with the Commission’s section 310(b)(4) policy framework. In determining the level
of its foreign equity interests and/or voting interests under section 310(b)(3), the licensee must count all
of its foreign interests, regardless of whether the interests are held in the licensee itself or through
intervening U.S.-organized entities that do not control the licensee.37 The licensee is not allowed to have
foreign ownership under section 310(b)(3) in excess of 20 percent unless and until the Commission has
granted the licensee’s petition for declaratory ruling or similar request.38 Under either provision, where
the petition is filed in connection with an application for an initial radio station license, an assignment or
transfer of control of a license, or a spectrum leasing arrangement, the Commission or the International
Bureau, on delegated authority, must act on the petition before or at the same time as the application is
granted.
B.

Current Regulatory Approach to Section 310(b)(4)

12.
Commission implementation of section 310(b)(4) since 1995 has evolved from a case-by-
case evaluation39 to a review of foreign ownership in the controlling U.S. parents of common carrier and
aeronautical licensees in accordance with a policy framework intended to promote liberalization of
telecommunications markets internationally. Under that framework, we apply an “open entry standard”
to foreign investment from WTO Member countries, and an effective competitive opportunities (“ECO”)

34 See NPRM, 26 FCC Rcd at 11710, ¶ 11.
35 First Report and Order, 27 FCC Rcd at 9837, ¶ 10. As explained in paragraph 9 above, we determined in the
First Report and Order to forbear from applying section 310(b)(3) to the class of common carrier licensees in which
the foreign investment is held in the licensee through U.S.-organized entities that do not control the licensee, to the
extent we determine such foreign ownership is consistent with the public interest under the policies and procedures
the Commission has adopted for its public interest review of foreign ownership under section 310(b)(4) of the Act.
See also infra ¶ 18. In the First Report and Order, we assumed that section 310(b)(3) of the Act applies where a
foreign government, individual, or entity holds interests in a licensee through an intervening U.S.-organized entity
that itself does not control the licensee, and we did not address commenters’ contrary argument that section
310(b)(4) applies to all “indirect” foreign interests in a common carrier licensee. See id. at 9837, ¶ 10 n.26. We
noted that to the extent commenters argued that indirect foreign interests are governed by section 310(b)(4) of the
Act, the regulatory treatment of common carrier licensees as a result of the First Report and Order would have been
the same: the application of the Commission’s section 310(b)(4) policies and procedures to indirect foreign interests,
whether held through an intervening U.S.-organized entity that controls or does not control such common carrier
licensees. See id. The NPRM here did not address that decision; nor has this Second Report and Order addressed or
changed it.
36 See 47 C.F.R. § 0.261.
37 Id. at 9843-44, ¶ 28.
38 Id. at 9844, ¶ 30.
39 See Market Entry and Regulation of Foreign-Affiliated Entities, IB Docket No. 95-22, Notice of Proposed
Rulemaking, FCC 95-53, 10 FCC Rcd 4844, 4851-53, ¶¶ 15-19 (1995). See also Foreign Carrier Entry Order, IB
Docket No. 95-22, Report and Order, FCC 95-475, 11 FCC Rcd 3973, 3943, ¶ 183 (1995) (noting that, prior to
adoption of the Foreign Carrier Entry Order, the Commission had exercised its section 310(b)(4) discretion
sparingly).
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standard to foreign investment from non-WTO Member countries, as a means to facilitate foreign
investment in the U.S. telecommunications market and encourage non-WTO Member countries to open
their telecommunications markets to competition and to join the WTO.40
13.
In the 1997 Foreign Participation Order, the Commission concluded that the public
interest would be served by permitting greater investment by foreign individuals and entities from WTO
Member countries in U.S. common carrier and aeronautical radio licensees pursuant to the discretionary
authority in section 310(b)(4).41 The Commission therefore adopted a rebuttable presumption by which it
presumes that foreign investment from WTO Member countries in such licensees does not pose
competitive concerns in the U.S. market.42 For purposes of determining whether foreign investors are
based in WTO Member countries and, thus, afforded greater investment opportunities under section
310(b)(4) of the Act, the Commission uses the “principal place of business” test to determine the
nationality or “home market” of foreign entities that seek to invest directly or indirectly in the U.S. parent
of a common carrier or aeronautical radio licensee.43 The Commission’s public interest analysis under
section 310(b)(4) also considers any national security, law enforcement, foreign policy or trade policy
concerns raised by the proposed foreign investment.44 In assessing the public interest, the Commission
takes into account the record developed in each particular case and accords deference to Executive
Branch agencies on issues related to national security, law enforcement, foreign policy and trade policy.45
14.
With respect to foreign investment from countries that are not Members of the WTO, the
Commission determined in the Foreign Participation Order to continue to apply the ECO test as part of

40 See Rules and Policies on Foreign Participation in the U.S. Telecommunications Market: Market Entry and
Regulation of Foreign-Affiliated Entities
, IB Docket Nos. 97-142 and 95-22, Report and Order and Order on
Reconsideration, FCC 97-398, 12 FCC Rcd 23891, 23944-45, ¶ 125, 23945, ¶ 127 (1997) (Foreign Participation
Order
), Order on Reconsideration, FCC 00-339, 15 FCC Rcd 18158 (2000).
41 See Foreign Participation Order, 12 FCC Rcd at 23893-97, ¶¶ 1-12, 23935-42, ¶¶ 97-118. The Commission
extended its foreign ownership policies that apply to common carrier radio licensees under section 310(b)(4) to
aeronautical radio licensees in the Foreign Participation Order, because it found that some aeronautical radio
services are basic telecommunications services that fall within the class of services covered by the WTO Basic
Telecommunications Agreement. See id. at 23942, ¶ 117.
42 Where there is a showing of a risk to competition in the U.S. market from foreign investments by an individual or
entity from a WTO Member country, the Commission may impose specific conditions on the licensee to address
such risks to competition. In addition, in the exceptional case where an application poses a very high risk to
competition in the U.S. market, where conditions imposed by the Commission would not satisfactorily address
competition concerns, the Commission could deny the application. Foreign Participation Order, 12 FCC Rcd at
23913-15, ¶¶ 51-54.
43 The Commission generally considers a foreign individual’s home market to be its country of citizenship. Where
the interest would be held by a foreign corporation, partnership, or other business organization, the petition must
establish the investing entity’s principal place of business by specifying the following information: (1) the country
of a foreign entity’s incorporation, organization, or charter; (2) the nationality of all investment principals, officers,
and directors; (3) the country in which the world headquarters is located; (4) the country in which the majority of the
tangible property, including production, transmission, billing, information, and control facilities, is located; and (5)
the country from which the foreign entity derives the greatest sales and revenues from its operations. Foreign
Participation Order
, 12 FCC Rcd at 23941, ¶ 116 (citing Foreign Carrier Entry Order, 11 FCC Rcd at 3951, ¶ 207).
44 Foreign Participation Order, 12 FCC Rcd at 23913-15, ¶¶ 59-66. The Commission has also identified public
safety and security of critical infrastructure as relevant to the Commission’s and Executive Branch agencies’ review
of foreign investment under section 310(b)(4). Secondary Markets Second Report and Order, 19 FCC Rcd at
17515, ¶ 22; Second Order on Reconsideration, 23 FCC Rcd at 15084, ¶ 6.
45 Foreign Participation Order, 12 FCC Rcd at 23918, ¶¶ 59, 23919, ¶¶ 61-66.
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its public interest analysis under section 310(b)(4).46 The Commission found in the Foreign Participation
Order
that the markets of non-WTO Member countries, in almost all cases, had not been liberalized since
adoption of the Foreign Carrier Entry Order, and continued to present legal and practical barriers to
entry.47 Thus, the Commission stated that it would deny an application if it found that more than 25
percent of the ownership of an entity that controls a common carrier radio licensee is attributable to
parties whose principal place(s) of business are in non-WTO Member countries that do not offer effective
competitive opportunities to U.S. investors in the particular service sector in which the applicant seeks to
compete in the U.S. market, unless other public interest considerations outweigh that finding.48 The
Commission concluded that its goals of increasing competition in the U.S. telecommunications service
market and opening foreign telecommunications service markets would continue to be served by opening
the U.S. market to investors from non-WTO Member countries only to the extent that the investors’ home
markets are open to U.S. investors.49

C.

The NPRM

, Forbearance Public Notice, and First Report and Order
15.
In the NPRM, the Commission sought comment on measures to revise and simplify the
regulatory framework under section 310(b)(4) for authorizing foreign ownership of common carrier and
aeronautical radio licensees. The Commission also proposed to codify whatever measures it ultimately
adopts in this proceeding to provide more predictability and ensure transparency of our section 310(b)(4)
filing requirements and review process.50 The Commission estimated that adopting the proposals and
other options discussed in the NPRM would result in a more than 70 percent reduction in the number of
section 310(b)(4) petitions for declaratory ruling filed with the Commission annually, as compared to the
current regulatory framework.51 The Commission also anticipated a reduction in the time and expense
associated with filing petitions under the proposed framework.

46 Foreign Participation Order, 12 FCC Rcd at 23944-46, ¶¶ 124-127, 131. The Commission adopted the ECO test
in 1995 as a part of its public interest determination under section 310(b)(4) for all foreign investment in U.S. parent
companies of common carrier radio licensees above the 25 percent benchmark. See Foreign Carrier Entry Order,
11 FCC Rcd at 3941-64, ¶¶ 179-238. In applying the ECO test, the Commission will consider the legal and practical
limitations on U.S. investment in the foreign investor’s home market for the particular wireless service (or
analogous service) in which the investor seeks to participate in the U.S. market. Id. at 3948, ¶¶ 197-98; see also id.
at 3952-53, ¶¶ 209-212 (the ECO analysis compares “restrictions on U.S. participation in the home market for the
particular wireless service in which the foreign investor seeks to participate in the U.S. market. If the services in the
U.S. and home markets are not precisely matched, we will use the most closely substitutable wireless service in the
home market, as determined from the consumers’ perspective.”); and id. at 3954, ¶¶ 213-215 (stating that the ECO
test considers first, the existence and extent of any legal restrictions on U.S. investment in the relevant market(s)
and, to the extent they are relevant, the practical limitations on U.S. participation, including the price, terms and
conditions of interconnection, competitive safeguards, and the regulatory framework of the relevant market(s)).
47 See Foreign Participation Order, 12 FCC Rcd at 23944-45, ¶ 125 (“Since 1995, our application of the ECO test
has provided incentives for foreign governments to allow U.S. participation in their markets, and it played a part in
the WTO negotiations that resulted in the Basic Telecom Agreement. We believe that continuing to apply the ECO
test to non-WTO Member countries may encourage some of those countries to take unilateral or bilateral steps
toward opening their markets to competition and may provide incentives for them to join the WTO.”).
48 Id. at 23946, ¶ 131.
49 Id.
50 NPRM, 26 FCC Rcd at 11706, ¶ 3.
51 This estimate was based on the International Bureau staff’s review of the 21 section 310(b)(4) petitions filed with
the Commission during a randomly-selected period (September 1, 2007 through August 31, 2008). See id. at 11706,
¶ 3 n.9.
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16.
Eleven comments and seven reply comments were filed in response to the NPRM.52 We
also received a letter from the U.S. Trade Representative (USTR) and a letter filed jointly by the
Department of Justice (DOJ) and the Department of Homeland Security (DHS) (together, the
“Departments”) supplementing the joint comments they filed in this proceeding.53 Several of the parties
that filed comments in response to the NPRM asked that the scope of this proceeding – which was limited
to section 310(b)(4) of the Act – be broadened to consider the relationship of section 310(b)(3) and
section 310(b)(4) as applied to foreign interests in a common carrier licensee held through an intervening
U.S.-organized entity that does not control the licensee. These commenters requested that the
Commission adopt an approach that analyzes such foreign interests under section 310(b)(4), and not
under section 310(b)(3).54
17.
On April 11, 2012, the International Bureau issued the Forbearance Public Notice, which
expanded the scope of the proceeding by requesting comment on the legal and policy implications of
forbearing under section 10 of the Act55 from applying section 310(b)(3) to certain foreign interests in
common carrier licensees held through an intervening U.S.-organized entity that itself holds non-
controlling equity and voting interests in the licensee.56 Four comments and one reply comment were
filed in response to the Forbearance Public Notice.57
18.
As noted in paragraph 9 above, in the First Report and Order we determined to forbear
from applying the 20 percent limit in section 310(b)(3) to the class of common carrier licensees in which
the foreign investment is held through U.S.-organized entities that do not control the licensee, to the
extent we determine such foreign ownership is consistent with the public interest under the policies and
procedures we use for assessing foreign ownership under section 310(b)(4).58 Under the section 310(b)(3)
forbearance approach adopted in the First Report and Order, we will approve foreign investment in a
common carrier licensee, held through U.S.-organized entities that do not control the licensee, if, upon the
licensee’s filing of a petition for declaratory ruling or similar request, the Commission finds the particular
foreign interests to be consistent with the public interest. We stated that we would evaluate petitions from

52 Appendix A of this Second Report and Order lists the parties filing comments and reply comments in this
proceeding.
53 See supra note 19.
54 Verizon, Vodafone, AT&T, and EABC filed comments urging consideration of the relationship of sections
310(b)(3) and (b)(4). See Vodafone NPRM Comments at 12-29; Verizon NPRM Comments at 18-19; AT&T
NPRM Comments at 5-8; EABC NPRM Comments at 3-6. Verizon, Vodafone, USTelecom, Sprint, OFII, ETNO,
and CTIA filed reply comments on this issue. See Verizon NPRM Reply at 3-4; Vodafone NPRM Reply at 7-9;
USTelecom NPRM Reply at 3; Sprint NPRM Reply at 4; OFII NPRM Reply at 5-6; ETNO NPRM Reply at 2; and
CTIA NPRM Reply at 6-7.
55 47 U.S.C. § 160.
56 International Bureau Seeks Further Comment on Foreign Ownership Policies: Forbearance from Section
310(b)(3) for Common Carrier Licensees
, IB Docket No. 11-133, Public Notice, DA 12-573, 27 FCC Rcd 3946
(Int’l Bur., 2012) (Forbearance Public Notice). A summary of the Forbearance Public Notice appeared in the
Federal Register on April 24, 2012. 77 Fed. Reg. 24452 (Apr. 24, 2012).
57 The filers uniformly urged adoption of a section 310(b)(3) forbearance approach. See Vodafone Public Notice
Comments at 10; Verizon Public Notice Comments at 15; AT&T Public Notice Comments at 5; USTelecom Public
Notice Comments at 9; DT/T-Mobile Public Notice Reply at 6.
58 First Report and Order, 27 FCC Rcd at 9837, ¶ 10.
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common carrier licensees subject to section 310(b)(3) forbearance consistent with the Commission’s
section 310(b)(4) foreign ownership policies established in the Foreign Participation Order.59
19.
In the First Report and Order, we deferred to this second phase of the proceeding a
decision on whether to apply any changes we adopt to the section 310(b)(4) policy framework to our
analysis of petitions for declaratory ruling or similar filings under our section 310(b)(3) forbearance
approach.60 We adopt in this Second Report and Order a comprehensive set of rules that will apply, as
detailed below, to common carrier radio station licensees subject to our section 310(b)(3) forbearance
approach that seek Commission approval to exceed the 20 percent foreign ownership limit in section
310(b)(3), and to common carrier and aeronautical radio station licensees that seek approval for the
foreign ownership of their controlling U.S. parents to exceed the 25 percent foreign ownership benchmark
in section 310(b)(4).

IV.

DISCUSSION

A.

WTO and Non-WTO Investment

20.
As discussed in the NPRM, the Commission determined in 1997, in the Foreign
Participation Order, to distinguish between WTO and non-WTO Member investment in exercising our
discretion under section 310(b)(4) to allow foreign investment in the controlling U.S.-organized parent
companies of U.S. common carrier and aeronautical licensees in excess of the 25 percent benchmark.61
Under these policies, the Commission denies a section 310(b)(4) petition that does not contain the
required ECO showing, in the absence of countervailing public interest considerations.62 The
Commission concluded in the Foreign Participation Order that its goals of increasing competition in the
U.S. telecommunications service market and opening foreign telecommunications service markets would
continue to be served by opening the U.S. market to investors from non-WTO Member countries only to
the extent that the investors’ home markets are open to U.S. investors.63 In the First Report and Order in
this proceeding, we applied our existing section 310(b)(4) policies, including our treatment of non-WTO
Member investment, to petitions for declaratory ruling by the class of common carrier licensees subject to
section 310(b)(3) forbearance.64
21.
The NPRM sought comment on whether there is a continuing policy basis for retaining
the distinction between WTO and non-WTO Member investment in its current form, modifying our
application of the distinction, or eliminating the distinction.65 AT&T asserts that continuation of the
distinction between WTO and non-WTO Member investment is necessary to maintain market-opening
incentives in non-WTO Member countries.66 However, SIA argues that the burdens associated with the

59 Id.
60 Id. at 9844, ¶ 33.
61 See NPRM, 26 FCC Rcd at 11710-11712, ¶¶ 12-14 (citing Foreign Participation Order, 12 FCC Rcd 23891). See
also supra
¶¶ 12-14.
62 See NPRM, 26 FCC Rcd at 11717, ¶ 25 (citing Foreign Participation Order, 12 FCC Rcd at 23946, ¶ 131).
63 See id.
64 First Report and Order, 27 FCC Rcd at 9837, ¶ 10.
65 NPRM, 26 FCC Rcd at 11717, ¶ 27.
66 AT&T NPRM Comments at 8-9. AT&T states that continuation of the distinction will provide incentives for
WTO Observer countries and other countries that are not WTO Members to make binding commitments to open
their telecommunications markets. Id. at 9. AT&T urges this approach as a means to further the goal of promoting
effective competition in the global market and to encourage new foreign market opportunities for U.S. carriers. At
(continued….)
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current WTO and non-WTO distinction far outweigh any purported benefits.67 Other commenters either
did not address the issue at all; or did not directly address the issue while appearing to assume that the
distinction would remain.68 USTR supports the Commission eliminating, in this proceeding, the
distinction between WTO and non-WTO Member investment in our treatment of foreign ownership in
common carrier licensees and the controlling U.S. parents of common carrier and aeronautical licensees
under section 310 of the Act, provided that the Executive Branch agencies, and, in particular, USTR,
continue to receive notice of applications and retain the ability to file comments in opposition to
applications where trade policy issues are implicated.69 USTR states that the current practice imposes a
non-trivial burden on applicants by requiring them to demonstrate whether foreign investors are from a
WTO Member or non-WTO Member.
22.
In deciding to treat WTO and non-WTO investment alike, we find, first, that the policy of
distinguishing between WTO and non-WTO Member investment plays a less relevant role today in
promoting competition in the U.S. telecommunications service market or in opening foreign markets to
U.S. investors than when it was adopted.70 There are now 158 countries that are Members of the WTO (in
addition to the European Union which is itself a WTO signatory), up from 132 countries in 1998 when the
WTO Basic Telecommunications Agreement went into effect.71 There also are 25 WTO Observer
countries that are in the process of joining, or acceding to, the WTO.72 Although approximately one-fifth
of all countries are WTO Observer countries or other non-WTO countries that have not opened up their
markets pursuant to WTO accords, the WTO Observer and non-WTO Member countries collectively
represent only about one percent of the world’s gross domestic product.73 We find these circumstances
persuasive in refuting the argument that applying the ECO requirement, as a general rule, to foreign
investment from non-WTO Member countries remains necessary to promote effective competition in the
global market for communications services and to encourage foreign market opportunities for U.S.
carriers.74 Significantly, the USTR supports eliminating our policy of distinguishing between WTO and
non-WTO Member investment, so long as we retain our long-standing policy of deferring to the
Executive Branch on matters relating to trade policy.
(Continued from previous page)
the same time, AT&T supports excluding interests of five percent or less from calculations of non-WTO investment.
Id.
67 SIA NPRM Comments at 5.
68 See generally CTIA NPRM Reply; EABC NPRM Comments; ETNO NPRM Reply; Sprint NPRM Reply; T-
Mobile NPRM Comments; USTelecom NPRM Reply; Verizon NPRM Comments; Vodafone NPRM Comments.
69 See USTR Letter, supra note 19.
70 See generally USTR Letter, supra note 19; SIA NPRM Comments at 5. See also NPRM, 26 FCC Rcd at 11717, ¶
25 (noting the Commission’s conclusion, in the Foreign Participation Order, that its goals would continue to be
served by opening the U.S. market to investors from non-WTO Member countries only to the extent that the
investors’ home markets are open to U.S. investors).
71 See http://wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm (visited Apr. 17, 2013).
72 See id.; see also http://www.state.gov/s/inr/rls/4250.htm (U.S. Department of State list of 195 independent states
in the world) (visited Apr. 17, 2013).
73 The Commission derived this estimate by comparing the aggregate gross domestic product (GDP) for WTO
Member countries to the aggregate GDP for WTO Member and non-WTO Member countries, using the most recent
(2011) GDP information from the World Bank Development Indicators Database,
http://databank.worldbank.org/data/views/variableselection/selectvariables.aspx?source=world-development-
indicators, accessible at http://data.worldbank.org/data-catalog (visited Apr. 17, 2013).
74 See AT&T NPRM Comments at 9.
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23.
Second, we find that our current policy – which requires licensees to calculate non-WTO
Member investment in their controlling U.S. parents to ensure that it does not exceed 25 percent unless
the licensee is able to make an ECO showing for the relevant non-WTO Member countries75 – imposes
significant costs and burdens on U.S. common carrier and aeronautical licensees and their U.S. parent
companies. The costs and burdens of calculating non-WTO Member investment also extend to common
carrier licensees subject to the section 310(b)(3) forbearance approach we adopted in the First Report and
Order
in this proceeding.76 Industry commenters state that U.S. companies face significant difficulties
and costs in attempting to determine the citizenship and principal places of business of investors, which
often hold their interests indirectly through multiple investment vehicles and holding companies.77 It also
has been our experience, in reviewing section 310(b)(4) petitions, that in many cases it is not possible for
companies to quantify with confidence their non-WTO Member investment, particularly where the
company is publicly traded or is owned in whole or in part by other publicly traded companies. SIA
comments that eliminating the distinction would significantly reduce the burden of preparing section
310(b)(4) filings.78 SIA notes that the burden of quantifying non-WTO Member investment is made even
more difficult, if not impossible, when the Commission requires filers to identify even minute non-WTO
investments.79 We agree that eliminating the distinction will significantly reduce the burdens associated
with filing petitions for declaratory ruling, particularly for publicly traded companies or companies that
are owned in whole or in part by other publicly traded companies.
24.
We also find that eliminating the distinction between WTO and non-WTO Member
investment for purposes of our section 310(b) public interest reviews will not pose a risk of harm to
competition in the U.S. market. Our experience since the Foreign Participation Order confirms the
Commission’s finding in that order that, because common carrier wireless markets are, “for the most part,
wholly domestic, there is no possibility of leveraging foreign bottlenecks in order to create advantages for
some competitors in U.S. markets.”80 And, we note that no commenter has argued that applying an open
entry standard to non-WTO Member investment in U.S. common carrier and aeronautical licensees, as we
apply it to WTO Member investment, will result in anticompetitive effects in the U.S. market.81

75 The section 310(b)(4) petitions we have received since the 1998 implementation of the Foreign Participation
Order
have contained a showing that non-WTO ownership of the licensee’s U.S. parent company does not exceed
25 percent. No petitioner has asked us to approve non-WTO ownership of the U.S. parent company based on an
ECO showing.
76 See First Report and Order, 27 FCC Rcd at 9837, ¶ 10.
77 See, e.g., USTelecom NPRM Reply at 5; Verizon NPRM Comments at 3; SIA NPRM Comments at 5-6.
78 See SIA NPRM Comments at 5. The Commission asked that commenters provide for the record quantification of
the costs and burdens currently associated with filing a section 310(b)(4) petition, complying with the limitations of
the ruling, and the extent to which a change in policy would result in cost savings to U.S. carriers and consumers. It
asked that commenters also address to what extent any costs and burdens have either deterred foreign investment or
added significant transaction costs to the flow of such investments. NPRM, 26 FCC Rcd at 11718, ¶ 28. No
commenters provided specific quantification of costs or burdens.
79 See SIA NPRM Comments at 5-6.
80 See NPRM, 26 FCC Rcd at 11718, ¶ 29 n.63 (quoting Foreign Participation Order, 12 FCC Rcd at 23940, ¶ 112).
In the NPRM, the Commission asked whether it is prudent to presume that non-WTO Member investment in U.S.
parent companies does not raise competitive concerns in the U.S. market and the circumstances, if any, that would
allow the leveraging of market power in foreign telecommunications services or facilities into U.S. wireless markets.
See NPRM, 26 FCC Rcd at 11718, ¶ 29.
81 SIA asserts that, because more nations have become WTO Members since the Commission adopted the distinction
in 1997, any risk associated with encouraging foreign investment broadly is much smaller today. SIA NPRM
Comments at 5.
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25.
While AT&T takes the view that maintaining the distinction between WTO and non-
WTO investment “remains necessary to encourage non-WTO Member countries to open their
telecommunications markets,”82 AT&T has also “recognized the potential benefits of aligning the market
entry rules applicable to U.S. domestic wireless and wireline carriers, as well as of reducing the
administrative burdens for applicants and Commission staff resulting from the current approach.”83
Moreover, as noted above, even collectively the non-WTO and WTO Observer countries represent only
about one percent of global GDP. We find particularly compelling the views of USTR on this trade
question, which confirm our concern about the need to focus Commission resources on the most pressing
international competitive concerns,84 particularly in light of the costs and delays associated with
continuing to maintain this distinction and the associated disincentives for needed investment in the
increasingly important wireless broadband sector of our economy. In this regard, we note that eliminating
the distinction between WTO and non-WTO Member investment for purposes of our section 310(b)
public interest reviews will also reduce administrative costs and burdens associated with staff review of
information that we find is no longer necessary to fulfill our statutory obligations under section 310(b).
SIA also asserts that eliminating the distinction would not raise national security or law enforcement
concerns because Executive Branch agencies would continue to review foreign investment.85 We agree.
26.
On balance, we find that the costs of maintaining the distinction between WTO and non-
WTO Member investment in common carrier and aeronautical licensees outweigh any remaining benefits
and therefore eliminate the distinction. Accordingly, we will treat non-WTO Member investment in
common carrier licensees subject to section 310(b)(3) forbearance, and in the controlling U.S. parents of
common carrier and aeronautical radio station licensees subject to section 310(b)(4), under the “open
entry standard” we have applied to WTO Member investment. Moreover, as discussed in Section IV.B,
we will continue to coordinate with the relevant Executive Branch agencies all petitions for declaratory
ruling and license applications where the applicant has foreign ownership exceeding the limits in section
310(b)(3) and/or section 310(b)(4). We will also continue to accord deference to the agencies’ views on
matters related to national security, law enforcement, foreign policy, and trade policy that may be raised
by a particular transaction.86 We do not adopt any change in policy that affects the Commission’s ability
to condition or disallow foreign investment that may pose a risk of harm to important national policies.
27.
The NPRM also sought comment on ways to reduce the costs and burdens of the
Commission’s policy on non-WTO investment.87 Because we have determined to treat all foreign
investment similarly by eliminating the distinction between WTO and non-WTO Member investment in

82 AT&T NPRM Comments at 8-9.
83 See Letter from James J.R. Talbot, General Attorney, AT&T, to Marlene H. Dortch, Secretary, FCC, IB Docket
No. 11-133 (filed Feb. 21, 2013).
84 See NPRM, 26 FCC Rcd at 11718, ¶ 30.
85 SIA NPRM Comments at 5.
86 See supra ¶ 13; see also NPRM, 26 FCC Rcd at 11721, ¶ 35.
87 Id. at 11719, ¶ 31. The Commission sought comment on allowing U.S. parent companies filing section 310(b)(4)
petitions to exclude from their calculations of non-WTO investment those equity and voting interests that are held
by a single non-WTO investor or “group” of non-WTO investors in an amount of five percent or less. Id. at 11719-
21, ¶¶ 31-34. We received comments supporting this approach and, as discussed below in Section IV.B, we are
adopting a modified version of this approach that will exempt all foreign interests of five percent or less (subject to
an exclusion for certain ten percent interests) from the requirement that licensees filing a petition for declaratory
ruling request specific approval of their foreign investors. See infra ¶¶ 40-68, ¶¶ 79-87.
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common carrier and aeronautical licensees, we do not need to consider in this section the various
questions raised in the NPRM on this issue.88

B.

Revised and Codified Standards for Public Interest Determinations

1.

Prior Approval of Foreign Ownership Under Section 310(b)(3) Forbearance
and Section 310(b)(4)

28.
In the NPRM, the Commission did not propose to modify the basic principles that govern
the calculation of foreign equity and voting interests in common carrier and aeronautical licensees and
their controlling U.S. parent companies for purposes of determining compliance with the foreign
ownership limits in section 310(b) of the Act.89 Commission policy requires that any equity or voting
interest held by an individual other than a U.S. citizen or by a foreign government or an entity organized
under the laws of a foreign government be counted in the application of the statutory limits.90 The list of
cognizable interests includes nearly all forms of equity and voting interests held in the licensee and its
controlling U.S. parent.91 While the NPRM did not propose to modify these long-standing basic
principles for calculation of foreign ownership interests, we did ask for comment on a limited set of issues
related to the calculation of foreign ownership interests held in or through limited partnerships, limited
liability companies, and registered limited liability partnerships.92 We address these issues in Section
IV.C of this Second Report and Order.93
29.
The NPRM did not propose to change the requirement that common carrier and
aeronautical radio station licensees file a petition for declaratory ruling under section 310(b)(4) of the Act
to obtain Commission approval before direct or indirect foreign ownership of their controlling U.S. parent
companies exceeds an aggregate 25 percent, measured as a percentage of the U.S. parents’ equity and/or
voting interests. The NPRM reiterated the Commission’s long held view that the 25 percent benchmark
may be exceeded only after the Commission affirmatively finds that the foreign ownership of a licensee’s

88 The NPRM also asked for comment on whether the Commission could simplify the principal place of business test
used to determine whether an investing entity’s equity and/or voting interests in a U.S. parent were properly treated
as non-WTO investment; whether the Commission should instead eliminate the principal place of business test in
favor of a different approach; and whether it was feasible and desirable to modify the ECO test to acknowledge and
further encourage the efforts of non-WTO Member countries to open their markets to foreign investment and
competition. NPRM, 26 FCC Rcd at 11721, ¶ 34. We received no comments specifically addressing these
questions.
89 See id. at 11721-22, ¶ 36, 11724, ¶ 42 n.85.
90 See Wilner & Scheiner I, 103 F.C.C. 2d 511, 514-15 (1985) (Wilner & Scheiner I), reconsidered in part, 1 FCC
Rcd 12 (1986) (Wilner & Scheiner II). See also Applications of BBC License Subsidiary, 10 FCC Rcd 10968,
10973-74, ¶¶ 22-25 (1995) (establishing the Commission’s methodology for calculating foreign equity and voting
interests in a licensee, under section 310(b)(3), and in the controlling U.S. parent of a licensee, under section
310(b)(4), where such foreign ownership interests are held through intervening entities).
91 In applying the statutory foreign ownership limits, the Commission has interpreted the term “capital stock,” as it
applies to non-corporate entities, to encompass the many alternative means by which equity and voting interests are
held in these entities, including partnership interests, policyholders of mutual insurance companies, church
members, union members, and beneficiaries of irrevocable trusts. See Wilner & Scheiner I, 103 F.C.C. 2d at 515-
16, ¶ 9; Applications of PrimeMedia, et al., Memorandum Opinion and Order, 3 FCC Rcd 4295 (1988).
92 NPRM, 26 FCC Rcd at 11738-40, ¶¶ 68-70. We will refer to “registered limited liability partnerships” as “limited
liability partnerships” for purposes of this Second Report and Order and the rules adopted herein.
93 See infra ¶¶ 117-126.
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U.S. parent company in excess of that amount is in the public interest.94 The NPRM proposed to codify
this requirement, as it applies to common carrier and aeronautical radio station licensees, as part of any
rules adopted in this proceeding.95 In adopting our section 310(b)(3) forbearance approach, we also
required that common carrier licensees subject to section 310(b)(3) forbearance seek and obtain
Commission approval by filing a petition for declaratory ruling or similar request before foreign
ownership of the licensee exceeds the 20 percent limit in section 310(b)(3).96 Moreover, in assessing
whether the section 310(b)(3) forbearance approach would meet the statutory requirements for
forbearance, we observed that the approach would protect consumers because the Commission would
give public notice of, and seek comment on, a petition for declaratory ruling or similar request asking for
approval of proposed foreign equity and/or voting interests in a common carrier licensee over 20 percent.
This notice and comment process would inform any Commission decision to grant a petition for
declaratory ruling to exceed section 310(b)(3)’s 20 percent limit and allow us to assess potential harms to
consumers.97
30.
We confirm the Commission’s long-standing policy that the statute requires us to review
and approve foreign ownership of licensees subject to section 310(b)(4) before that foreign ownership
exceeds the 25 percent statutory limit.98 The Departments state that the NPRM’s proposal to codify the
prior approval process ensures their ability to identify, review, and comment on foreign ownership in
common carrier and aeronautical applicants, licensees, and spectrum lessees that may be of national
security or law enforcement concern. 99 Verizon asserts that, because the Commission has determined that
foreign investment from WTO Member countries is presumptively in the public interest, the Commission
may dispense with the need to engage in an individual review of foreign ownership interests from WTO
Member countries.100 It suggests that the Commission can rely on its initial licensing and

94 See NPRM, 26 FCC Rcd at 11722, ¶ 37 & n.78, quoting Application of Fox Television Stations, Inc.,
Memorandum Opinion and Order, FCC 95-188, 10 FCC Rcd 8452, 8475, ¶ 53 (1995) (Fox I) (“Accordingly, we
hold 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 finding by the Commission that allowing the applicant to exceed the benchmark is in the public interest, an
applicant may not exceed the benchmark.”). See also NPRM, 26 FCC Rcd at 11710, ¶ 11 & n.22.
95 Id. at 11722, ¶ 37.
96 First Report and Order, 27 FCC Rcd at 9843, ¶ 28.
97 Id. at 9839-40, ¶ 17.
98 See Fox I, 10 FCC Rcd at 8474-77, ¶¶ 52-55 (stating that “[i]t is clear that section 310(b)(4) gives the Commission
discretion with respect to alien ownership in excess of the statutory benchmark. It 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 discretion” and citing to Moving Phones Partnership L.P. v. FCC, 998 F.2d 1051, 1057-58 (D.C.
Cir. 1993), cert. denied, 511 U.S. 1004 (1994) and Telemundo, Inc. v. FCC, 802 F.2d 513, 516 (D.C. Cir. 1986)).
See also Galesburg Broadcasting Company, FCC 91-131, 6 FCC Rcd 2210 (1991) (finding that the transfer of a
majority of the voting stock in the U.S.-organized parent of the licensee to a trustee wholly owned by a Canadian
bank without prior Commission approval “deprived the Commission of the opportunity to pass on the propriety of
alien ownership which Section 310(b)(4) of the Act contemplates”).
99 DOJ/DHS NPRM Comments at 2. The Department of Justice (DOJ) and Department of Homeland Security
(DHS) filed joint comments. The Department of Defense (DOD) generally supports the positions of DOJ/DHS to
the extent any changes to the process by which DOJ/DHS/DOD jointly review applications filed under section
310(b)(4) would negatively affect the ability of DOD to conduct reviews of those cases that impact DOD interests.
See DOD NPRM Comments at 1.
100 Verizon NPRM Comments at 8-12. See also CTIA NPRM Reply at 7-8 (supporting elimination of the petition
for declaratory ruling requirement for foreign investment in excess of 25 percent from WTO Member countries);
(continued….)
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transfer/assignment processes, and Executive Branch processes, to ensure that foreign investment is
consistent with national security, law enforcement, foreign policy, and trade policy concerns.101 For the
reasons discussed below, we find that Verizon’s argument is not persuasive and our long-standing policy
remains necessary to the discharge of our obligations under section 310(b).
31.
First, we note that the presumption that WTO Member investment is in the public interest
is simply that – a presumption that such foreign investment does not pose a risk of anticompetitive harm
that would justify denial. This presumption is rebuttable. Moreover, the Commission does not presume
that foreign WTO Member investment poses no other concerns – e.g., with respect to national security,
law enforcement, foreign policy or trade policy.102 Rather, the Commission considers these additional
concerns as part of its public interest analysis and independent of its review of competition issues.103 As
noted, the Commission accords deference to the expertise of Executive Branch agencies in identifying
and interpreting issues of concern in the context of such foreign investment.104
32.
Second, an applicant may have no foreign ownership – or its foreign ownership may be
below the section 310(b)(4) limit – when the applicant files for an initial license or files to acquire
licenses by assignment or transfer of control, but may seek to increase its foreign ownership after grant of
an initial license or following approval of an assignment or transfer of control. We disagree that our
review of foreign ownership interests from WTO Member countries that would exceed the statutory limits
should occur only in the context of these applications, as Verizon suggests.105 We confirm that the public
interest mandate set out in section 310(b)(4) requires that we engage in prior review and approval
regardless of whether the foreign investment would occur when an application is filed or at some point
after an application receives approval. As the Departments have noted, this is particularly relevant for
national security and law enforcement concerns.106
33.
Finally, we are not persuaded by Verizon’s suggestion that eliminating the requirement to
file a petition for declaratory ruling for foreign ownership from WTO Member countries will not
compromise the ability of the Commission and the relevant Executive Branch agencies to review
potentially problematic foreign investment. Verizon asserts this is so because the Commission would still
refer requests for initial licenses and renewals and applications for transfer of control and assignment of
licenses to the Executive Branch and at all other times the CFIUS process and “other Executive Agency
processes” would provide any necessary check to protect national security interests.107 CFIUS108 conducts
(Continued from previous page)
USTelecom NPRM Reply at 4 (agreeing with Verizon that the Commission can dispense with individual review of
investment from WTO Member countries, “thereby encouraging further investment by these entities”).
101 Verizon NPRM Comments at 12-17; Verizon NPRM Reply at 4-7.
102 See Foreign Participation Order, 12 FCC Rcd at 23920-21, ¶ 65.
103 Id.
104 Id. at 23920, ¶ 63, 23921, ¶ 65.
105 Verizon NPRM Comments at 12-14.
106 As a procedural matter, we could adopt a policy of dispensing with standalone petitions for declaratory ruling
when foreign ownership occurs at the time of a request for an initial license, renewal, transfer, or assignment.
However, because we do not accept Verizon’s premise that there is no statutory requirement to review foreign
ownership at any time other than upon initial licensing, renewal, transfer, or assignment, we find that the better
approach is to simplify and clarify the filing requirements by adopting the same procedures for all public interest
reviews of foreign ownership under section 310(b)(4) and under section 310(b)(3) forbearance.
107 Verizon NPRM Comments at 14-17; Verizon NPRM Reply at 5-6. See also Vodafone NPRM Reply at 13
(stating that the Executive Branch agencies’ objectives and ability to review foreign investments would not be
impacted by any rule changes or streamlined processes). Other than the CFIUS process, Verizon has not identified
(continued….)
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national security reviews of mergers, acquisitions, and takeovers by, or with, any foreign person that
could result in foreign control of a U.S. business (a “covered transaction”).109 This process, however,
does not review start-up (or “greenfield”) investments.110 Moreover, our experience has been that, for
telecommunications transactions, many parties will negotiate agreements to resolve national security and
law enforcement concerns with the relevant Executive Branch agencies and then file with CFIUS when
negotiations are nearly completed. This suggests that the two processes are complementary.111
(Continued from previous page)
the “other Executive Agency processes” that may be “independent” of Commission review, particularly where there
is a change in foreign ownership but no application for a license, renewal, transfer of control or assignment. See
Verizon NPRM Comments at 14; see also id. at 17 (referring to the Executive Branch agency process as
“independent” of Commission review in those instances where there are requests for an initial license or renewal, or
transfer of control or assignment applications). Verizon suggests that an additional option would be to adopt a
notice requirement for changes in foreign ownership, in which a licensee would certify to the Commission that it had
notified the relevant national security agencies. Verizon NPRM Reply at 6.
108 “CFIUS” or the “Committee” is the Committee on Foreign Investment in the United States. The members of
CFIUS include the heads of the following departments and offices: Department of the Treasury (chair); Department
of Justice; Department of Homeland Security; Department of Commerce; Department of Defense; Department of
State; Department of Energy; Office of the U.S. Trade Representative; Office of Science and Technology Policy.
See http://www.treasury.gov/resource-center/international/foreign-investment/Pages/cfius-members.aspx (visited
Apr. 17, 2013). The following offices also observe and, as appropriate, participate in CFIUS activities: Office of
Management and Budget; Council of Economic Advisors; National Security Council; National Economic Council;
Homeland Security Council. See id. The Director of National Intelligence and the Secretary of Labor are non-
voting, ex-officio members of CFIUS. Id. Section 721 of Title VII of the Defense Production Act of 1950 (“section
721”), as amended by the Foreign Investment and National Security Act of 2007 (“FINSA”), Public Law 110-49,
121 Stat. 246, authorizes the President to review mergers, acquisitions, and takeovers by, or with, any foreign person
that could result in foreign control of a U.S. business (which FINSA refers to as “covered transactions”) to
determine the effects of such transactions on the national security of the United States. Section 721, as amended by
FINSA, is codified at 50 U.S.C. App. 2170. The regulations implementing section 721, as amended by FINSA, are
codified in 31 C.F.R. Part 800 (hereinafter referred to as the “CFIUS Regulations”).
109 See 31 C.F.R. § 800.207. Where a covered transaction presents national security risks, FINSA provides the
statutory authority for CFIUS, or the lead agency acting on behalf of CFIUS, to enter into mitigation agreements
with parties to the transaction or to impose conditions on the transaction to address such risks. This authority
enables CFIUS to mitigate any national security risk posed by a transaction rather than recommending to the
President that the transaction be prohibited because it could impair U.S. national security. See Regulations
Pertaining to Mergers, Acquisitions and Takeovers by Foreign Persons, 73 Fed. Reg. 70702, 70703 (Nov. 21, 2008)
(Merger Regulations Summary). The CFIUS review process is based primarily on voluntary notices to CFIUS filed
by parties to transactions. Id., 73 Fed. Reg. at 70703. Section 800.401(f) of the CFIUS Regulations, 31 C.F.R. §
800.401(f), explicitly encourages parties to contact and engage with CFIUS before making a formal filing. Merger
Regulations Summary
, 73 Fed. Reg. at 70703. CFIUS is also authorized to review a transaction that has not been
voluntarily notified. See 31 C.F.R. §§ 800.401(b), (c).
110 The term “transaction” as defined in section 800.224 of the CFIUS Regulations, 31 C.F.R. § 800.224, excludes
start-up or “greenfield” investments. See 31 C.F.R. § 800.301(c), Example 3. See also Merger Regulations
Summary
, 73 Fed. Reg. at 70704.
111 The Commission’s coordination of petitions and any related license applications with the relevant Executive
Branch agencies provides the agencies the opportunity to negotiate security agreements with applicants or licensees
that resolve national security (and any law enforcement) concerns prior to initiation of the 30-day CFIUS review
period. See, e.g., Verizon Communications, Inc., Transferor, and América Móvil, S.A. de C.V., Transferee,
Applications for Authority to Transfer Control of Telecomunicaciones de Puerto Rico, Inc. (TELPRI)
, WT Docket
No. 06-113, Memorandum Opinion and Order and Declaratory Ruling, 22 FCC Rcd 6195, Appendix B (Executive
Branch Agreement) (2007) (América Móvil Order) (stating in Article 7 (FCC Condition and CFIUS Process) that
(continued….)
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34.
In any event, it is the Commission to which section 310(b) assigns the responsibility to
conduct public interest reviews of foreign ownership in excess of the statutory benchmark. While the
Commission has exercised its discretion to rely substantially on the views of Executive Branch agencies
for their expertise on matters of national security, law enforcement, foreign policy and trade policy in
cases involving foreign investment in U.S. common carrier and aeronautical licensees, we do not believe
it would be appropriate for us essentially to delegate this statutory responsibility to such agencies. At the
same time, and in response to the comments we have received, this order substantially streamlines our
exercise of that responsibility.
35.
Vodafone asserts that its proposal to replace the declaratory ruling process with a
“streamlined section 310(b)(4) notice procedure” for reviewing foreign investment in wireless licensees
would not compromise national security, law enforcement, foreign policy, or trade policy interests.112
This proposal would require a wireless licensee to submit a “section 310(b)(4) notice” to the Commission
whenever it believed foreign ownership in its controlling U.S. parent would exceed 25 percent.113
Vodafone proposes that the Commission have a defined period of time, such as 30 days, in which to
review the filing, refer the filing to the appropriate Executive Branch agencies, and act (or not act) on the
filing.114 We find that Vodafone’s proposed notice procedure would not, as a practical matter, result in
appreciable cost savings or reduced burdens on licensees, or expedite the existing review process. The
proposal would require licensees to notify the Commission in advance of foreign investment and would
provide the Commission and Executive Branch agencies the opportunity to conduct reviews. These are
characteristics of the existing petition for declaratory ruling process. To the extent that the proposal may
be intended to eliminate the need for the Commission to write a ruling approving the specific foreign
investment identified in a petition for declaratory ruling, we find that these rulings provide clarity, for the
petitioner, the Commission, and the public, as to the “approved” levels of foreign investment.115
(Continued from previous page)
“In consideration for the execution of this Agreement, the [United States Government] Parties will not make any
objection to CFIUS or the President concerning the Transaction.”).
112 Vodafone NPRM Comments at 30-34; Vodafone NPRM Reply at 10-12 (stating that it wholly supports the
Executive Branch’s interest in protecting the U.S.’s national security, law enforcement, trade and foreign policy
interests); see also id. (asserting that its proposed “notice” regime is designed to preserve the Commission’s ability
to determine whether and when additional scrutiny is needed, and that this proposal protects the Executive Branch’s
ability to identify, interpret, and impose conditions regarding matters of national security, law enforcement, foreign
policy, and trade policy). See also EABC NPRM Comments at 6-8 (supporting Vodafone’s proposal); Verizon
NPRM Reply at 6 (“Any concern that the Executive Branch agencies receive sufficient notice of changes in foreign
ownership could be addressed by adopting a notice requirement while eliminating the current, duplicative FCC
process.”).
113 Vodafone NPRM Comments at 30. The “covered licensee” would identify any individual or entity that holds a
direct or indirect interest of ten percent or more, or any “controlling” interest, in the U.S. parent, and indicate
whether such foreign investors were from WTO Member countries. Id. Once the “covered licensee” received
approval of an investment by a foreign entity, “it would not be required to provide further notice or information to
the Commission regarding that entity, even if the licensee acquired new wireless licenses or changed the amount of
its indirect interest in the licensee (within the scope of the initial notice).” Vodafone NPRM Reply at 11.
114 Vodafone NPRM Comments at 30-31. At the expiration of 30 days, the proposal contemplates one of the
following actions: (1) automatic approval; (2) a Commission finding that section 310(b)(4) does not apply; (3) a
Commission finding that the foreign investment poses a high risk to competition and cannot be granted; or (4) an
announcement that Commission action will be delayed because of national security, law enforcement, foreign
policy, or trade policy concerns expressed by the Executive Branch agencies. Id. at 31. See also Vodafone NPRM
Reply at 11.
115 We note that petitions for declaratory ruling may not clearly specify the foreign interests for which licensees seek
approval, requiring the submission of follow-up information. Moreover, a specific ruling provides licensees, the
(continued….)
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Furthermore, as discussed below, we also adopt rules that will reduce the need to file a petition for
declaratory ruling in “every instance.”116
36.
As urged by commenters in this proceeding, we are adopting rules that treat foreign
investment under section 310(b)(4) and section 310(b)(3) forbearance consistently.117 In applying these
rules to the class of common carrier licensees subject to section 310(b)(3) forbearance, we take notice of
our finding in the First Report and Order that the prior review and approval process informs any
Commission decision to grant a petition for declaratory ruling to exceed section 310(b)(3)’s 20 percent
limit and allows us to assess any potential harms to consumers.118
37.
For the reasons set forth above, we adopt the NPRM proposal to retain and codify the
requirement that common carrier and aeronautical radio station licensees seek and obtain prior
Commission approval of their U.S. parents’ foreign ownership under section 310(b)(4), and we codify the
same requirement for common carrier licensees subject to section 310(b)(3) forbearance to obtain prior
Commission approval before foreign ownership in the subject licensee exceeds 20 percent of its equity
interests and/or 20 percent of its voting interests.119
2.

Issuing Section 310(b)(3) and (b)(4) Rulings to Named Licensees

38.
The Commission’s practice has been to issue section 310(b)(4) rulings in the name of the
licensee(s) that are the subject of the petition for declaratory ruling. In the NPRM, the Commission
proposed to change this practice and issue section 310(b)(4) rulings in the name of the controlling U.S.-
organized parent of the subject licensee(s).120 The Commission proposed that, where there are successive,
controlling U.S. parents in the vertical ownership chain of the licensee, it would issue the ruling in the
name of the lowest-tier, controlling U.S. parent.121 The Commission proposed this change for two
reasons: first, to ensure that the Commission issues the foreign ownership ruling to the particular entity
whose aggregate, direct and/or indirect foreign ownership would trigger the applicability of section
310(b)(4) to the extent it exceeds 25 percent, based on the company’s ownership structure at the time the
ruling is granted; and second, to accommodate other aspects of the proposed modified framework.122 The
(Continued from previous page)
Commission, and the public with greater certainty that, going forward, a particular foreign investment is in
compliance with the statutory requirements.
116 See Vodafone NPRM Reply at 6 (seeking framework that reduces need for obtaining foreign ownership ruling
“in every instance” where indirect foreign investment from WTO Member countries exceeds 25 percent). See, e.g.,
Section IV.B.6 (introducing new, foreign-organized entities into the previously approved vertical ownership chain).
117 See First Report and Order, 27 FCC Rcd at 9837, ¶ 10 (applying the same foreign ownership policies and
procedures); see id. at 9844, ¶ 32 (commenters urged the Commission to simplify the section 310(b)(4) requirements
and apply those revised requirements to the evaluation of foreign interests in a common carrier licensee held through
U.S.-organized entities that do not control the licensee). See also infra Sections IV.B.2-IV.B.7 (applying other
changes we adopt to the section 310(b)(4) policy framework to our analysis of petitions for declaratory ruling to
exceed the 20 percent foreign equity and voting limits in section 310(b)(3)).
118 First Report and Order, 27 FCC Rcd at 9839-40, ¶ 17.
119 See NPRM, 26 FCC Rcd at 11710, ¶ 11 & n.22, 11722, ¶ 37 & n.78; First Report and Order, 27 FCC Rcd at
9837, ¶ 10.
120 NPRM, 26 FCC Rcd at 11723, ¶ 39.
121 Id.
122 Id. As explained in Section IV.B.5 below, the Commission proposed that a U.S. parent’s section 310(b)(4) ruling
automatically cover any of its subsidiaries or affiliates, whether existing at the time of the ruling or formed or
acquired subsequently, provided that foreign ownership of the U.S. parent remains in compliance with the terms of
its ruling. As discussed in Section IV.B.6 below, the Commission also requested comment on whether to allow new,
(continued….)
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Commission also stated that, because the purpose of its section 310(b)(4) review is to evaluate foreign
ownership of the U.S. parent before it exceeds 25 percent, it was appropriate to issue the rulings in the
name of the U.S. parent rather than the licensee.123
39.
Commenters generally supported this approach.124 Some of these commenters also asked
us to apply the section 310(b)(4) policies and procedures to foreign investment held in a common carrier
licensee through intervening U.S.-organized entities that do not control the licensee.125 In light of the
section 310(b)(3) forbearance approach adopted in the First Report and Order, we find that the simplest
approach is for the Commission to issue foreign ownership rulings in the name of the licensee regardless
of whether the ruling authorizes the licensee to have foreign ownership in excess of the 20 percent limit in
section 310(b)(3) or authorizes foreign ownership of the licensee’s controlling U.S. parent to exceed the
25 percent benchmark in section 310(b)(4). Parties filing comments in response to the Forbearance
Public Notice
also sought consistency in the Commission’s public interest review of foreign ownership
under section 310(b)(3) forbearance and section 310(b)(4).126 We find that continuing to issue our rulings
in the name of the licensee, as we do now, will help to provide such consistency.127
3.

Approval of Named Foreign Investors

40.
As discussed in Section IV.B.1 above, we do not in this order change Commission policy
requiring that licensees obtain Commission approval before their aggregate direct or indirect foreign
ownership exceeds the relevant statutory limits in section 310(b)(3) or section 310(b)(4).128 Nor do we
change our requirement that, in calculating compliance with those limits, licensees must count any equity
or voting interest of whatever size held by a non-U.S. citizen or foreign entity, and must take reasonable
(Continued from previous page)
foreign-organized controlling parent companies to be inserted into the approved vertical ownership chain above the
controlling U.S. parent without prior Commission approval provided that foreign ownership of the U.S. parent
complies in all other respects with the terms of its ruling.
123 NPRM, 26 FCC Rcd at 11723, ¶ 40. While Commission practice has been to issue section 310(b)(4) rulings in
the name of the subject licensee(s), the Commission has evaluated in its decisions the direct and indirect foreign
ownership of the licensee’s controlling U.S. parent company. See, e.g., Mobile Satellite Ventures Subsidiary LLC
and SkyTerra Communications, Inc.
, Order and Declaratory Ruling, FCC 08-77, 23 FCC Rcd 4436, 4441, ¶ 13
(2008) (MSV-SkyTerra Order).
124 See, e.g., AT&T NPRM Comments at 10; SIA NPRM Comments at 3-4; T-Mobile NPRM Comments at 3;
Verizon NPRM Comments at 5; Vodafone NPRM Comments at 6 n.25; CTIA NPRM Reply at 5; Sprint NPRM
Reply at 3. Verizon, Vodafone, CTIA and Sprint ask that we modify the NPRM proposal and issue the section
310(b)(4) ruling in the name of the licensee’s highest-tier controlling U.S. parent, rather than the lowest-tier U.S.
parent, in order to “remove redundant and unnecessary filings for companies whose ultimate foreign ownership has
previously been reviewed and approved by the Commission.” Verizon NPRM Comments at 5; see also Vodafone
NPRM Comments at 6 n.25; CTIA NPRM Reply at 5; Sprint NPRM Reply at 3. We find that the commenters’
objective to remove unnecessary filings will be achieved by the “automatic extension” rule discussed in Section
IV.B.5 below, which will extend a licensee’s foreign ownership ruling to cover all of its subsidiaries and affiliates as
defined in the new rules. See infra ¶¶ 88-96.
125 See supra ¶¶ 16-17.
126 See, e.g., AT&T Public Notice Comments at 1; USTelecom Public Notice Comments at 3-4; Verizon Public
Notice Comments at 12; Vodafone Public Notice Comments at 1-2; DT/T-Mobile Public Notice Reply at 5.
127 We address in Section IV.C below the content requirements for petitions for declaratory ruling, including joint
petitions filed by affiliated applicants, licensees, and spectrum lessees. See infra ¶¶ 111-128.
128 See supra ¶¶ 29-37.
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steps, such as periodic random surveys of shareholders of public companies, to ensure that they are and
remain in compliance with the applicable limits.129
41.
Under established procedures, the Commission requires petitions that seek approval to
exceed the statutory limits to disclose the citizenship of all known and knowable foreign equity and
voting interests in the licensee, whether direct or indirect, and of whatever size.130 In the NPRM, the
Commission asked for comment on several key changes to the Commission’s current framework for
authorizing ownership of a licensee’s controlling U.S. parent by named foreign investors and by other
potential foreign investors.131 The Commission’s objectives were two-fold. First, it sought to limit the
requirement to identify specific foreign owners (among the total foreign ownership for which the petition
sought approval) to those of sufficient size that the Commission considered to be relevant to its section
310(b)(4) foreign ownership concerns applicable to common carrier and aeronautical licensees.132
Second, the Commission proposed ways of reducing the need for licensees and their controlling U.S.
parents to return to the Commission, after receiving an initial ruling, to obtain prior approval for
subsequent changes in foreign ownership, including increased interests by foreign investors that the
Commission had already approved in the parent’s initial ruling and interests to be acquired by new
foreign investors.133
42.
We address below the proposals and other options raised in the NPRM, the comments we
received, and the modified framework that will apply in authorizing foreign ownership of licensees and
U.S. parent companies by named foreign investors. Briefly stated, we adopt a new framework that
requires licensees seeking approval of aggregate foreign ownership in excess of the statutory limits to
identify and seek further specific approval in their petitions only of those individual foreign interests that
would exceed five percent of the controlling U.S. parent of a common carrier or aeronautical radio station
licensee, under section 310(b)(4), and/or exceed five percent of a common carrier licensee, under our
section 310(b)(3) forbearance approach, with an exception for certain interests in excess of five percent
and up to ten percent. In addition, we will permit licensees to identify and seek specific approval of
foreign interests of less than and including five percent.134 At the same time, we will permit licensees, at

129 See supra ¶ 28.
130 See, e.g., Vizada Services LLC and Vizada, Inc., Order and Declaratory Ruling, DA 10-357, 25 FCC Rcd 2029,
2036, ¶ 12, 2041-51 (Appendix B – Summary of Analysis) (Int’l Bur., 2010); MSV-SkyTerra Order, 23 FCC Rcd at
4442-43, ¶ 15, 4449-63 (Appendix B – Section 310(b)(4) Foreign Ownership Analysis); Stratos Global
Corporation, Transferor and Robert M. Franklin, Transferee
, WC Docket No. 07-73, Memorandum Opinion and
Order and Declaratory Ruling, FCC 07-213, 22 FCC Rcd 21328, 21365-70, ¶¶ 91-101 (2007) (Stratos Global
Order
); América Móvil Order, 22 FCC Rcd at 6218-25, ¶¶ 52-68.
131 NPRM, 26 FCC Rcd at 11723, ¶ 41.
132 Id. at 11723-24, ¶¶ 41-42 & n.85.
133 Id. at 11723, ¶ 41; see also id. at 11725-31, ¶¶ 43-54. Under its current framework, the Commission generally
issues foreign ownership rulings that authorize the U.S. parent to accept, in addition to any foreign ownership
interests approved specifically in the ruling, up to and including an additional, aggregate 25 percent equity interest
and/or 25 percent voting interest from the approved foreign investors and from other foreign investors without prior
Commission approval. This 25 percent aggregate allowance, however, is subject to certain limitations. As relevant
to this discussion, the U.S. parent may not use the aggregate allowance to permit any single foreign investor to
acquire an equity and/or voting interest in the U.S. parent that exceeds 25 percent. Id. at 11723, ¶ 41 n.84.
134 That is, our standards for the level of individual foreign investor holdings for which we require specific approval
do not preclude licensees from filing petitions seeking specific approval for a foreign investor’s holdings below this
level. We are providing in this order the opportunity for petitioners to seek and obtain approval for such smaller
holdings, together with preclearance to increase those holdings substantially in the future. See infra ¶¶ 69-75.
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the time of the initial ruling, to request prior approval for future changes in foreign ownership by these
named foreign investors. Specifically, we will allow licensees to request specific approval for any of their
named foreign investors to increase its equity and/or voting interest, at some future time, up to and
including a non-controlling 49.99 percent equity and/or voting interest held directly or indirectly in the
controlling U.S. parent (under section 310(b)(4)), or held indirectly in a licensee through an intervening
U.S.-organized entity that does not control the licensee (under our section 310(b)(3) forbearance
approach). We also will permit licensees to request specific approval for a foreign investor that holds, or
proposes to acquire, a controlling interest in the U.S. parent of the licensee, but that does not or would not
wholly own the U.S. parent at the time of the initial ruling, to increase its interests, at some future time,
up to and including 100 percent of the U.S. parent’s equity and voting interests, under section 310(b)(4).
43.
This new framework is designed to reduce both the current complexities petitioners face
in identifying and obtaining approval for their foreign interest holders and the need for licensees to return
to the Commission to obtain prior approval for future changes in foreign ownership, including increased
investments by foreign investors the Commission has already approved. These changes should provide
greater flexibility to U.S. parents and licensees in attracting new investment and substantially reduce the
current costs and burdens associated with filing multiple petitions with the Commission.
a.

Investment Level Triggering Specific Approval of Named Foreign
Investors

44.
The Commission proposed, first, to require a petitioner to name and request specific
approval in its section 310(b)(4) petition only for foreign individuals or entities that hold, or would hold
upon closing of any transactions contemplated by the petition, a direct or indirect equity and/or voting
interest in the U.S. parent in excess of 25 percent or a controlling interest. The Commission stated that,
under this proposal, the petitioner would not be required to include a request for specific approval of a
non-controlling foreign investor’s interest of 25 percent or less.135
45.
Comments addressing this proposal were divided between those from filers representing
commercial interests and those submitted by the Departments. Vodafone, AT&T, SIA, and Sprint
expressed support for a requirement that petitions include requests for specific approval of only those
foreign investors that hold at the time of filing, or would hold upon consummation of any transactions
contemplated by the petition, an interest exceeding 25 percent of the U.S. parent’s equity and/or voting
interests.136 Industry commenters generally agree with the assessment in the NPRM that U.S. parent
companies face significant difficulties and costs in trying to ascertain the citizenship and principal places
of business of their investors, which often hold their interests indirectly through multiple investment
vehicles and holding companies.137 USTelecom, for example, states that the ways in which a company

135 NPRM, 26 FCC Rcd at 11724, ¶ 42. However, the Commission also proposed to require that the U.S. parent
disclose in its section 310(b)(4) petition all of its ten percent or greater direct or indirect interest holders, regardless
of citizenship. Id. at 11724, n.85. As discussed in Section IV.C, we are adopting that proposal here.
136 See Vodafone NPRM Comments at 5-6. AT&T, SIA, and Sprint express their support for a 25 percent exclusion
in connection with the Commission’s proposal to issue declaratory rulings with a 100 percent aggregate allowance
for future foreign investment, subject to the requirement that the petitioner obtain Commission approval before a
foreign investor that has not received specific approval acquires an interest that exceeds 25 percent. See AT&T
NPRM Comments at 10; SIA NPRM Comments at 7-8; Sprint NPRM Reply at 2. Because it does not support
requiring petitions for declaratory ruling, Verizon does not address at what level specific approval should be
required in a petition. See Verizon NPRM Comments at 8-17.
137 See, e.g., USTelecom NPRM Reply at 5 (citing NPRM, 26 FCC Rcd at 11716, 22); Verizon NPRM Comments
at 3; Intelsat NPRM Comments at 2; T-Mobile NPRM Comments at 2; AT&T NPRM Comments at 9 (noting
burdens for U.S. companies associated with calculations of non-WTO investment).
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must currently demonstrate ownership are unnecessarily complex and burdensome and suggests that
“[r]ather than maintaining the tortuous process of identifying each ultimate shareholder, the Commission
should simplify its process” by, for example, permitting the identification of a U.S. parent’s investors at a
more general level, such as naming the parent’s investing mutual funds or the place of business of a
general partner.138
46.
The Departments, by contrast, opposed the NPRM’s specific approval threshold of 25
percent for individual, named foreign investors.139 The Departments expressed the view that eliminating
specific approval of individual, named investors would deny the Departments the opportunity to review
these acquisitions. In light of the Departments’ concerns with the NPRM’s 25 percent specific approval
threshold, we adopt a modified approach to requiring that petitions for declaratory ruling include requests
for specific approval of certain foreign investors. The specific approval requirements will apply to
petitions filed by common carrier and aeronautical licensees that seek authority for foreign ownership of
their controlling U.S. parent companies to exceed the aggregate 25 percent benchmark in section
310(b)(4) and to petitions filed by common carrier licensees subject to section 310(b)(3) forbearance that
seek authority to exceed the aggregate 20 percent foreign ownership limit in section 310(b)(3). As
explained below, our modified approach is designed to reduce the regulatory costs and burdens associated
with foreign investment in common carrier and aeronautical licensees while continuing to ensure that the
relevant Executive Branch agencies are afforded a meaningful opportunity to review proposed foreign
investment for national security, law enforcement, and public safety concerns. We believe that the
specific approval requirements adopted here will preserve a meaningful opportunity for the Departments
to review foreign investments and, where appropriate, recommend denial or limitations on such
approvals, by preserving the Departments’ opportunity to request from petitioners, and to evaluate prior to
Commission action, additional information to inform the Departments’ views.140
47.
Specific Approval Requirements. We will require common carrier and aeronautical
licensees to identify and request specific approval in their section 310(b)(4) petitions for any foreign
individual or entity, or “group” of foreign individuals or entities,141 that holds or would hold directly, or
indirectly through one or more intervening U.S.- or foreign-organized entities, more than five percent of
the U.S. parent’s total outstanding capital stock (equity)142 and/or voting stock, or a controlling interest in

138 USTelecom NPRM Reply at 5-6.
139 See DOJ/DHS NPRM Comments at 3-5. The Departments stated that the names and related identifying
information of individual foreign investors are essential for an adequate and complete public interest review. Id. at
5. They also stated that they “must receive full and complete information on the ownership of the applicants/license
holders.” Id. at 2. However, the Departments did not oppose limiting the required disclosure of a company’s
shareholders – whether U.S. or foreign – to five percent interest holders. The Commission proposed in the NPRM to
require disclosure of all of a U.S. parent company’s ten percent interest holders, whether U.S. or foreign, consistent
with the existing disclosure requirements that apply to most common carrier wireless applicants under Commission
licensing rules. See NPRM, 26 FCC Rcd at 11735, ¶ 62. In commenting on this proposal, the Departments asked us
to require disclosure of five percent interest holders, but not of lesser holdings. See DOJ/DHS NPRM Comments at
9-10.
140 See DOJ/DHS Letter, supra note 19.
141 We discuss the term “group” in ¶ 68 below.
142 The Commission has consistently interpreted the term “capital stock” in section 310(b) to include interests held
not only in corporations but also in non-corporate entities, such as partnerships and limited liability companies
(LLCs). See, e.g., Wilner & Scheiner I, 103 F.C.C. 2d at 516; see also supra note 91.
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the U.S. parent. We also adopt a five percent identification and specific approval requirement for
common carrier licensees subject to section 310(b)(3) forbearance.143
48.
In certain limited circumstances described below, however, we will presumptively
require identification and specific approval of a foreign investor’s non-controlling interest only when it
would exceed, directly or indirectly, ten percent of the equity and/or voting interests of a U.S. parent (for
section 310(b)(4) petitions) or licensee (for petitions filed under our section 310(b)(3) forbearance
approach). Under the new rules, we will presume, subject to rebuttal in a particular case, that a non-
controlling foreign interest of ten percent or less in a U.S. parent or licensee is exempt from the specific
approval requirements in the following circumstances:
i) Where the relevant licensee, controlling U.S. parent, or entity holding a direct or indirect
equity and/or voting interest in the licensee or U.S. parent, is a U.S. or foreign “public
company,” as defined in the rules,144 provided that the foreign holder is an institutional
investor that is eligible to report its beneficial ownership interests in the company’s voting
securities in excess of five percent (not to exceed ten percent) pursuant to Exchange Act Rule
13d-1(b) or a substantially comparable foreign law or regulation;145
(ii) Where the relevant licensee, controlling U.S. parent, or entity holding a direct or indirect

143 Although we have decided to eliminate our WTO/non-WTO distinction, this approach is similar to the alternative
proposal, for which the NPRM sought comment, to allow U.S. parents to exclude from their non-WTO calculations
those equity and voting interests held by a single non-WTO investor or “group” in an amount that constitutes five
percent or less of the U.S. parent’s total capital stock (equity) and/or voting stock. NPRM, 26 FCC Rcd at 11719, ¶
31, 11721, ¶ 34. As the Commission observed in that context, an equity and/or voting interest of five percent or less
may be sufficiently non-influential as a general rule that it could be disregarded without posing a realistic potential
to affect the core operations of the parent or licensee or, in turn, a risk of harm to competition, national security, law
enforcement, foreign policy, or trade policy. See id. The Commission also asked whether the exclusion amount
would be more properly set at ten percent, which is the current level at which the Commission requires disclosure of
ownership interests in common carrier wireless licensees generally, or at some other level. Id. at 11721, ¶ 34,
11735, ¶ 62 & n.125. As is the case with the five percent specific approval rule adopted here, the NPRM’s five
percent exclusion option was designed to reduce the burden of ascertaining citizenship of small investors based on
their lack of potential influence. AT&T and USTelecom supported allowing U.S. parents to exclude five percent or
lesser interests in calculating their level of non-WTO investment. See AT&T NPRM Comments at 9-10;
USTelecom NPRM Reply at 4. No other commenter addressed this issue.
144 See infra ¶ 58 and Appendix B (§ 1.990(d)).
145 17 C.F.R. § 240.13d-1(b). The “Exchange Act” referenced herein is the Securities Exchange Act of 1934, as
amended, 15 U.S.C. §§ 78a et seq. An institutional investor reporting its beneficial ownership interests pursuant to
Exchange Act Rule 13d-1(b) must certify in Schedule 13G that the institutional investor has acquired the voting
securities of the company in the ordinary course of its business and not with the purpose nor with the effect of
changing or influencing the control of the company. See infra ¶¶ 59-60. The following example illustrates how the
ten percent exception applies in the case of a publicly traded U.S. parent: Assume that common carrier applicant
(“Applicant”) is preparing a petition for declaratory ruling to request Commission approval for foreign ownership of
its controlling, U.S.-organized parent (“U.S. Parent”) to exceed the 25 percent benchmark in section 310(b)(4).
Applicant does not currently hold any FCC licenses. Shares of U.S. Parent trade publicly on the New York Stock
Exchange. Based on a shareholder survey and a review of its shareholder records, U.S. Parent has determined that
its aggregate foreign ownership on any given day may exceed an aggregate 25 percent, including a six percent
common stock interest acquired by a foreign-organized mutual fund (“Foreign Fund”) and reported to the SEC and
the company pursuant to Exchange Act Rule 13d-1(b). Applicant has confirmed that Foreign Fund does not hold
any other equity or voting interests in U.S. Parent. Applicant may, but is not required to, identify and request
specific approval in its petition of Foreign Fund’s six percent interest in U.S. Parent.
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equity and/or voting interest in the licensee or U.S. parent, is a U.S. or foreign “privately
held” corporation, as defined in the rules, provided that a shareholders’ agreement, or similar
voting agreement, prohibits the foreign holder from becoming actively involved in the
management or operation of the corporation, and limits the foreign holder’s voting and
consent rights, if any, to the minority shareholder protections listed in the rules;146
(iii) Where the relevant licensee, controlling U.S. parent, or entity holding a direct or indirect
equity and/or voting interest in the licensee or U.S. parent is privately held and organized as a
limited partnership, limited liability company (“LLC”), or limited liability partnership
(“LLP”), provided that the foreign holder is “insulated” in accordance with the criteria
specified in the rules.147
We discuss the policy basis for the specific approval requirements in paragraphs 52-67 below.
49.
The specific approval requirements will apply to both equity and voting interests,
reflecting the statute’s concern, in section 310(b), with both foreign economic interests and foreign voting
interests in licensees and their U.S. parent companies. Thus, we do not adopt Verizon’s suggestion that
we modify our rules to focus only on voting power.148 We emphasize again that licensees must include
all of their foreign ownership interests in determining whether their aggregate foreign ownership is at or
below the statutory limits in sections 310(b)(3) and 310(b)(4). As discussed in Section IV.B.1,
Commission policy requires that any equity or voting interest held by an individual other than a U.S.
citizen or by a foreign government or an entity organized under the laws of a foreign government be
counted in the application of the statutory limits.149 At the same time, once a petitioner has determined
that it should file a petition under the new rules because its aggregate foreign ownership may exceed the
statutory limits, it will not need to identify the citizenship or principal places of business of any of its five
percent or lesser interest holders.
50.
We believe our new rule strikes a reasonable balance between our twin objectives to
reduce the regulatory costs and burdens associated with foreign investment in common carrier and
aeronautical licensees – a concern held broadly by industry commenters – and to protect important
interests related to national security, law enforcement, and public safety, as the Departments urge us to
do. The new rule will require companies to request specific approval of only those foreign investors that
the company should reasonably be able to identify and whose interests rise to the level that may be
relevant to the actual concerns applicable to our section 310(b) review of foreign ownership in common
carrier and aeronautical licensees. Further, because we will no longer distinguish between WTO and non-
WTO foreign investment, companies will not be required to determine the principal places of business of
their foreign investors.150 We believe these changes will reduce substantially the costs and burdens
imposed by our current policies.

146 See infra ¶ 123 (discussing the minority shareholder protections). This presumption would not apply where a
U.S. parent or licensee has actual knowledge of material involvement by the foreign interest holder, including, for
example, efforts to influence control of the company.
147 See infra ¶ 122 (discussing the required insulation criteria).
148 Verizon NPRM Comments at 18.
149 See supra ¶ 28.
150 As noted below, we will require petitioners to identify and provide the citizenship and other information with
respect to all investors (whether or not foreign) holding ten percent of more of the direct or indirect equity and/or
voting interests in the licensee or its controlling U.S. parent. See infra ¶¶ 113-115.
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51.
As discussed below, our decision to require specific approval of foreign ownership
interests exceeding five percent, subject to a presumptive exclusion for certain ten percent interests, is
based on a number of considerations, including other statutory and regulatory requirements applicable to
companies that hold, or may seek to acquire, common carrier or aeronautical licenses. The five percent
and 10 percent thresholds should reduce the need for petitioners to collect and analyze ownership
information other than in the normal course of business. On balance, and upon review of the record in
this proceeding, we find that the specific approval requirements we adopt today are not unduly
burdensome and are necessary to ensure we have the information we need to carry out our statutory duties
under section 310(b) of the Act.
52.
The Five Percent Threshold for Specific Approval. The Commission has long
maintained, in the context of its media attribution rules, a five percent voting stock benchmark for
broadcasters based on its finding that, as a general rule, a stockholder with a smaller interest does not
have the ability to influence or control core decisions of the licensee, regardless of whether the licensee is
a widely held or closely held company.151 We also find support for a five percent specific approval
threshold, as applied to widely held companies, in section 13(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), which informed the Commission’s decision to adopt the five percent
threshold for attribution of ownership interests in the mass media context.152
53.
In general, section 13(d) of the Exchange Act requires a person or “group” that becomes,
directly or indirectly, the “beneficial owner” of more than five percent of a class of equity securities
registered under section 12 of the Exchange Act to report the acquisition to the Securities and Exchange
Commission (SEC).153 The purpose of the disclosure requirements in section 13(d) of the Exchange Act
is to ensure that investors are alerted to potential changes in control.154 While the reporting requirements

151 Reexamination of the Commission’s Rules and Policies Regarding the Attribution of Ownership Interests in
Broadcast, Cable Television and Newspaper Entities
, MM Docket No. 83-46, Report and Order, FCC 84-115, 97
F.C.C. 2d 997, 1002-12, ¶¶ 6-29 (1984) (1984 Attribution Order) (establishing a five percent voting stock interest as
the benchmark amount for attributing ownership of a broadcast licensee’s facilities to an individual corporate
shareholder); 47 C.F.R. § 73.3555, Note 2a to § 73.3555 (codifying the five percent attribution standard). Prior to
the 1984 Attribution Order, the Commission had determined that for a “widely-held” corporation (fifty or more
stockholders), an interest constituting one percent or more of the outstanding voting stock would be cognizable,
whereas for a “closely-held” corporation (less than fifty stockholders), any voting interest would be cognizable. See
id
., 97 F.C.C. 2d at 999, ¶ 3 (citing Amendment of Multiple Ownership Rules, Docket No. 8967, 18 F.C.C. 288
(1953)). See also NPRM, 26 FCC Rcd at 11720, ¶ 33.
152 See 1984 Attribution Order, 97 F.C.C. 2d at 1006-07, ¶ 16.
153 See 15 U.S.C. § 78m(d)(1). Exchange Act Rule 13d-1(i) defines the term “equity security” as any equity security
of a class which is registered pursuant to section 12 of that Act as well as certain equity securities of insurance
companies and equity securities issued by closed-end investment companies registered under the Investment
Company Act of 1940. The term “equity security,” however, does not include securities of a class of non-voting
securities. 17 C.F.R. § 240.13d-1(i). Exchange Act Rule 13d-3 defines the term “beneficial owner” to include any
person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has
or shares voting power, including the power to vote, or to direct the voting of, an equity security; and/or investment
power, including the power to dispose, or to direct the disposition of, such security. 17 C.F.R. § 240.13d-3. Thus,
the disclosure requirements in section 13(d) of the Exchange Act will not necessarily apply to persons that hold only
the pecuniary interest in an equity security issued by a public company. As noted above, because section 310(b)
applies to both voting rights and equity interests, our five percent exclusion extends only to those interests that do
not exceed five percent of either voting rights or equity interests, calculated consistent with Commission rules. See
infra
Section IV.C, ¶¶ 117-126.
154 See Securities and Exchange Commission v. Savoy Industries, Inc., 587 F.2d 1149, 1166 (D.C. Cir., 1978), cert.
denied sub nom. Zimmerman v. Securities and Exchange Commission
, 440 U.S. 913 (1979), cited in 1984
(continued….)
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are expressly intended for the protection of a company’s shareholders and for the informational purposes
of issuers and participants in the stock market generally, they are directed at identifying interests with the
potential for significant influence or control – the same interests at which the Commission has noted that
its media attribution rules are directed.155 In most cases, Exchange Act Rule 13d-1(a)156 will obligate the
acquiring person or group to file a Schedule 13D with the SEC, including the identity and citizenship of
the direct and indirect beneficial owners of the equity securities and the purpose of the transaction –
including whether it is to acquire control – within ten days after the acquisition that triggered the
reporting requirement.157 By contrast, the Exchange Act does not require beneficial owners of registered
equity securities to report their acquisition of interests of five percent or less. We find that the absence of
a reporting requirement under the Exchange Act for such interest holders supports adopting a specific
approval requirement that excludes interests held by a foreign individual, entity, or “group” of foreign
individuals or entities in an amount that does not exceed five percent of the equity and/or voting interests
in a U.S. parent company (for petitions filed under section 310(b)(4)), or in a licensee (for petitions filed
under our section 310(b)(3) forbearance approach).158
54.
The absence of a reporting requirement under the Exchange Act for beneficial owners of
five percent or less of a class of voting securities also means that neither the identity nor citizenship of
such smaller shareholders may be readily available to the issuing company. While such information is
likely to be more readily ascertainable in closely held companies, we conclude that the five percent
exclusion should apply regardless of whether shares of a licensee or U.S. parent, or of any entity holding
a direct or indirect ownership interest in them, are widely held or closely held. As the Commission has
previously concluded, “The holder of a small percentage of voting stock in a small company can be just
as powerless and uninfluential as one in a large company, and often will be more so due to the greater
occur[r]ence of larger shareholders.”159 Based on the Commission’s experience in the context of
broadcast attribution, we find that we can exclude a closely held company’s five percent or less interest
holders from our prior approval requirements with little risk of overlooking a foreign investor that
possesses a realistic potential for influencing or controlling a licensee.160 Of course, in any case where a
foreign investor would acquire a de facto controlling interest in a licensee or its U.S. parent company, the
(Continued from previous page)
Attribution Order, 97 F.C.C. 2d at 1006-07, ¶ 16 n.18; Regulations Governing Attribution of Broadcast and
Cable/MDS Interests, Regulation and Policies Affecting Investment in the Broadcast Industry and Reexamination of
the Commission’s Cross Interest Policy
, MM Docket No. 94-150, Report and Order, FCC 99-207, 14 FCC Rcd
12559, 12567, ¶ 15 n.34 (1999) (1999 Broadcast Attribution Order), recon. granted in part, 16 FCC Rcd 1097
(2001) (Broadcast Attribution Reconsideration Order), stayed, 16 FCC Rcd 22310 (2001).
155 See 1984 Attribution Order, 97 F.C.C. 2d at 1006-07, ¶ 16; see also 1999 Broadcast Attribution Order, 14 FCC
Rcd at 12567-68, ¶ 15.
156 17 C.F.R. § 240.13d-1(a).
157 See John C. Coffee, Jr. & Hillary A. Sale, Securities Regulation 721 (2009).
158 We set the exclusion amount at five percent or less (not at less than five percent as under the media attribution
rules) so that the exclusion amount is aligned with the reporting requirement under Exchange Act Rule 13d-1(a).
We would not expect licensees or U.S. parents, however, to rely solely on the absence of a filing under Exchange
Act Rule 13d-1 because that reporting requirement may not apply to all of the voting rights or equity interests held
in the company. We anticipate that companies will still need to use their shareholder records, questionnaires, and
other means to determine whether any foreign individual, entity, or “group” holds an equity and/or voting interest
that requires specific approval under the new rules.
159 1984 Attribution Order, 97 F.C.C. 2d at 1007, ¶ 18.
160 Id. at 1007-08, ¶¶ 18-19 (finding that a five percent attribution benchmark “seems the most appropriate for those
corporations heretofore considered ‘closely-held’” and that “few significant shareholders are likely to escape
attribution”).
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licensee must seek prior Commission approval of that interest regardless of the percentage of the foreign
investor’s equity or voting interests.
55.
The Ten Percent Limited Investment Exception. We also believe, however, that the
purposes of our section 310(b) review support a larger exclusion from our specific approval requirements
for certain ten percent or lesser foreign interests held directly or indirectly in a U.S. parent (for section
310(b)(4) petitions) or licensee (for petitions filed under our section 310(b)(3) forbearance approach).
We find it appropriate generally to exclude ten percent or lesser interests where the foreign investor does
not hold its ownership interests with the purpose or effect of changing or influencing the control of the
entity in which the foreign investor holds its interest, whether that entity is the licensee, the U.S. parent,
or an intervening entity. As stated in paragraph 48, we will presume, subject to rebuttal in a particular
case, that a foreign interest of ten percent or less that is held directly or indirectly in a U.S. parent (for
section 310(b)(4) petitions) or licensee (for petitions filed under our section 310(b)(3) forbearance
approach) is exempt from the specific approval requirements as meeting this standard so long as the
foreign investor’s interest satisfies the criteria specified in one of three categories, which are specific to
the type of business entity in which the foreign investor holds its interest: specifically, a public company;
a privately held corporation; or a privately held limited partnership, limited liability company, or limited
liability partnership.
56.
Our decision to adopt a ten percent limited investment exception is again informed by
“ownership benchmarks utilized in other regulatory frameworks.”161 In the context of section 310(b)
reviews of common carrier and aeronautical licensees, these include not only Exchange Act Rule 13d-1
but also the CFIUS regulations, which also apply to foreign investments in U.S. firms and govern a
review process by Executive Branch agencies in assessing national security risks that is conducted in
parallel with and substantially related to our analysis of foreign ownership in common carrier and
aeronautical licensees under section 310(b). We have also considered the Commission’s media
attribution benchmarks. While they do not include an analogous ten percent limited investment
exception, we take into account, as the Commission did in 1984 in developing those benchmarks, the very
different factors underlying the attribution benchmarks and the application of section 310(b) to common
carrier and aeronautical licensees. First, section 310(b) “differs significantly from our multiple ownership
rules in its scope and effect.”162 Whereas the attribution benchmarks restrict ownership in more than a
given number of media outlets by a single individual or entity, section 310(b) prescribes only an
aggregate limit on the foreign ownership of covered licensees.163 Its focus is therefore not on any specific
individual foreign investor, at least not one holding less than the relevant statutory limit or benchmark.
Second, “the Commission has historically taken a cautious approach” in “establishing appropriate
attribution levels” for purposes of multiple ownership of broadcast facilities, in light of the importance of
ensuring a “diversity of viewpoints from antagonistic sources.”164 In contrast, the Commission’s adoption
of foreign ownership policies for common carrier and aeronautical licensees has involved a balancing,
under the public interest standard of section 310(b), of potential trade, national security, or law
enforcement concerns against enhanced opportunities for technological innovation and promotion of
economic growth and potential job creation in the telecommunications sector.165

161 Id. at 1006, ¶ 16. See also supra ¶¶ 52-54 (discussing the five percent specific approval threshold).
162 Id. at 1009, ¶ 22.
163 Id.
164 Id. at 1004, ¶ 11. While moving from a one percent to a five percent attribution standard was an effort to avoid
being “unnecessarily restrictive” in this regard, it continued to be informed by “unique First Amendment concerns.”
Id. at 1006, ¶ 16.
165 See supra ¶¶ 12-14.
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57.
We review below the regulatory frameworks and underlying policies that have guided our
decision to presumptively exclude from our specific approval requirements those foreign interests of ten
percent or less held directly or indirectly in a U.S. parent or licensee where the foreign investor’s interest
satisfies the qualifying criteria for the type of business entity in which the foreign investor holds its
interest. We establish specific qualifying criteria for three categories of business entities: (1) public
companies; (2) privately held corporations; and (3) privately held limited partnerships, limited liability
companies, and limited liability partnerships.
58.
Public Companies Institutional Investors Holding in the Ordinary Course. We adopt a
rebuttable presumption that a non-controlling foreign interest of ten percent or less in a U.S. parent or
licensee is exempt from the specific approval requirements where the relevant licensee, U.S. parent, or
entity holding a direct or indirect equity and/or voting interest in the licensee or U.S. parent, is a U.S. or
foreign “public company,” provided that the foreign holder is an institutional investor that is eligible to
report its beneficial ownership of the company’s equity securities in excess of five percent (not to exceed
ten percent) pursuant to Exchange Act Rule 13d-1(b) or a substantially comparable foreign law or
regulation. We find ample support for this presumption in Exchange Act Rule 13d-1(b), the CFIUS
regulations, and in the record of this proceeding. We will define “public company” for this purpose as a
U.S.- or foreign-organized company that has issued a class of equity securities for which beneficial
ownership reporting is required by security holders and other beneficial owners under sections 13(d) or
13(g) of the Exchange Act and corresponding Exchange Act Rule 13d-1, 17 C.F.R. § 240.13d-1, or a
substantially comparable foreign law or regulation.166
59.
Exchange Act Rule 13d-1(b) allows certain institutional investors to use an abbreviated
“short-form” disclosure statement, known as Schedule 13G, to report their beneficial ownership in excess
of five percent of a voting class of equity securities, including amounts in excess of ten percent, to the
SEC, and to furnish the report to the issuer, when the investor acquires its shares “in the ordinary course
of [its] business and not with the purpose nor with the effect of changing or influencing the control of the
issuer….”167 Where an institutional investor’s beneficial ownership exceeds five percent, but not 10
percent, of a voting class of equity securities in a given calendar year, the Schedule 13G need not be filed
until 45 days after the end of the calendar year (and only then if the investor or “group” continues to own
more than five percent at year end).168 Exchange Act Rule 13d-1(b) covers a broad range of institutional
investors, such as registered brokers and dealers, banks, insurance companies, investment companies,
investment advisers, employee benefit plans, and savings associations.169
60.
Exchange Act Rule 13d-1(b) – with its less onerous calendar year reporting provisions
afforded institutional investors for acquisitions made in the ordinary course – supports a finding in this
proceeding that such institutional investments are unlikely as a general rule to convey to their holders a
realistic potential to control or influence control of a licensee or its U.S. parent. Such institutional
investors must certify in the Schedule 13G that they have acquired their interest in the ordinary course of
business and not with the purpose nor with the effect of changing or influencing the control of the
issuer.170 In these circumstances, we find that excluding the ten percent interests of such institutional
investors from our specific approval requirement poses little risk that a foreign investor’s interest that
would be likely to raise national security, law enforcement or trade issues relevant to our section 310(b)

166 See infra Appendix B (§ 1.990(d)).
167 17 C.F.R. § 240.13d-1(b).
168 Id. § 240.13d-1(b)(2).
169 Id. § 240.13d-1(b)(ii).
170 Id. § 240.13d-102 (Schedule 13G).
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analysis would escape our review.171 We also note that the majority of public companies’ shares
(particularly shares of the largest public companies) are owned by such institutional investors holding in
the ordinary course.172 Thus, because of the extended reporting deadline applicable to such holdings,
public companies may not be readily able to determine on a current basis, for the majority of their
aggregate shareholdings, the identity or citizenship of shareholders that own interests of ten percent or
less.
61.
The ten percent exception that we adopt for institutional investors holding interests in
public companies in the ordinary course is a limited one. If at any time there is a change in the purpose or
effect of an institutional investor’s shareholdings in a company, such that the investor holds its shares
“with a purpose or effect of changing or influencing control of the issuer,” the investor would
immediately become subject to the requirement in Exchange Act Rule 13d-1(a) to report the acquisition
within ten days.173 In the case of a foreign institutional investor for which the petitioner has elected to
avail itself of the ten percent exception, the petitioner would be obligated to amend its petition to request
specific approval for that investor,174 and to take other appropriate action to ensure continued compliance
with our rules (such as the exercise of stock ownership restrictions to permit advance Commission
approval of such investor prior to any point at which the ten percent exception no longer applies).175 We
also note that an institutional investor’s reporting under Exchange Act Rule 13d-1(b) does not relieve a
beneficial owner on whose behalf the institutional investor may be holding shares of its independent
obligation to report its beneficial ownership under Exchange Act Rule 13d-1 to the extent it exceeds five
percent of a voting class of the issuer’s equity securities.176 Such a beneficial owner generally would be

171 We recognize that an institutional investor may hold equity securities or otherwise have beneficial ownership of a
public company and thus become subject to beneficial ownership reporting under Exchange Act Rule 13d-1, as well
as beneficial ownership of, or economic interests in, the company that are not subject to such reporting. In such a
case, we will allow aggregation of the investor’s total equity interests and aggregation of its total voting interests in
the company and treat them as exempt from our 5 percent specific approval requirement so long as the aggregate
amount of the institutional investor’s equity and/or voting interests does not exceed ten percent and the investor is
eligible to certify under Exchange Act Rule 13d-1(b) that it has acquired its beneficial ownership interests in the
ordinary course of business and not with the purpose nor with the effect of changing or influencing the control of the
company. We note that, in calculating foreign equity and voting interests, the Commission does not consider
convertible interests such as options, warrants and convertible debentures until converted, unless specifically
requested by the petitioner, i.e., where the petitioner is requesting approval so those rights can be exercised in a
particular case without further Commission approval. See, e.g., Stratos Global Order, 22 FCC Rcd at 21363, ¶ 84
(citing Applications of NextWave Personal Communications, Inc., Memorandum Opinion and Order, DA 97-328, 12
FCC Rcd 2030, 2056, ¶ 46 (WTB 1997)); BBC License Subsidiary L.P., Memorandum Opinion and Order, 10 FCC
Rcd 10968, 10973, n.12 (1995) (citing Univision Holdings, Inc., Order, 7 FCC Rcd 6672, 6674, ¶ 8 (1992), recon.
denied
, 8 FCC Rcd 3931 (1993)) (“ We have ruled that convertible instruments are not relevant to our [section
310(b)] determinations until converted....”).
172 See Ben W. Heineman, Jr. & Stephen Davis, Are Institutional Investors Part of the Problem or Part of the
Solution?, Millstein Center for Corporate Governance and Performance and Committee for Economic Development,
pp. 8-9, October 2011, available at
http://millstein.som.yale.edu/sites/millstein.som.yale.edu/files/80235_CED_WEB.pdf (visited Apr. 17, 2013). See
also
Securities Regulation, supra note 157, at 39.
173 17 C.F.R. § 240.13d-1(e).
174 See 47 C.F.R. § 1.65.
175 These same obligations would also extend to petitioners seeking to avail themselves of the analogous ten percent
exception applicable to interests held in privately held corporations or privately held limited partnerships, limited
liability partnerships, or limited liability companies, described in paragraph 66 below.
176 17 C.F.R. § 240.13d-1(b)(1)(iii).
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required to report its interest under Exchange Act Rule 13d-1(a) within ten days of acquiring it (assuming,
for example, that the beneficial owner was not itself an institutional investor eligible to report its interest
under Exchange Act Rule 13d-1(b)). In such event, the petitioner would be required to request specific
approval for a foreign beneficial owner’s interest to the extent it would exceed five percent of the equity
and/or voting interests of the U.S. parent (for section 310(b)(4) petitions) or the licensee (for petitions
filed under our section 310(b)(3) forbearance approach).
62.
In adopting the ten percent exception for qualified institutional investor interests in public
companies, we take note of the Commission’s media attribution rules that apply a 20 percent (rather than
a five percent) voting stock benchmark to a limited class of institutional investors which the Commission
has found to be “passive” investors, specifically, bank trust departments, insurance companies and mutual
funds.177 The Commission has declined to broaden the category of passive investors for purposes of such
attribution rules, finding insufficient evidence that other types of investors lack the interest and/or ability
to actively participate in the affairs of the firms in which they invest.178 By contrast, the ten percent
exception that we adopt here applies more broadly to include all institutional investors enumerated in
Exchange Act Rule 13d-1(b)(ii). However, the exception is expressly limited to those institutional
investors that are eligible to report their ten percent or lesser holdings under Exchange Act Rule 13d-1(b)
or a substantially comparable foreign law or regulation, which requires that the institutional investor
certify to the regulator that the investor has acquired its interests in the ordinary course and not with the
purpose or effect of changing or influencing control of the company.179 These qualifying criteria will
provide reasonable assurance that petitioners exclude from our general five percent prior approval
requirement only those investments that pose no realistic potential to exert substantial influence over a
licensee or its U.S. parent company. Given these safeguards, and the distinct policy objective of our
public interest analysis under section 310(b) to balance trade, national security, and law enforcement
concerns against the benefits of facilitating foreign investment in U.S. telecommunications companies, we
find the “passive” institutional investor exception in the media attribution rules to be unnecessarily
limited here. On the other hand, we have restricted our presumptive exclusion to a ten percent rather than
20 percent level, and only in circumstances where such institutional investors are entitled under Exchange
Act rules to certify that they are not holding with the purpose or effect of changing or influencing control
of the issuer, in light of the concerns raised by the Departments about the need to identify and approve
specific investors at this level.
63.
As noted in paragraph 58 above, we also find support for the ten percent exception in
section 800.302(b) of the CFIUS regulations.180 Because the purpose of the CFIUS review process is to
address national security concerns raised by particular foreign investments in U.S. businesses, we have
considered the CFIUS regulations in establishing the framework for our section 310(b) reviews of foreign
investment in common carrier and aeronautical licensees and their U.S. parent companies. Section
800.302(b) provides that an acquisition of ten percent or less of the outstanding voting interest in a U.S.
business by a foreign person is not a “covered transaction” and thus is not the type of transaction that is
subject to review and investigation by CFIUS, provided that the foreign person holds the interest “solely
for the purpose of passive investment” as defined in the regulations.181

177 47 C.F.R. § 73.3555, Note 2b to § 73.3555.
178 See 1999 Broadcast Attribution Order, 14 FCC Rcd at 12572-72, ¶ 25.
179 As discussed below, the ten percent exception will also apply to investments in privately held companies,
provided they satisfy the qualifying criteria contained in section 1.991 of the new rules.
180 31 C.F.R. § 800.302(b).
181 Id. As discussed in paragraph 33, which includes an overview of the CFIUS regulations, the CFIUS review
process is based primarily on voluntary notices to CFIUS filed by parties to transactions. See supra note 109.
(continued….)
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64.
Section 800.223 of the CFIUS regulations lays out the test for whether an interest is held
solely for the purpose of passive investment.182 Under that test, an interest is held solely for the purpose
of passive investment if the foreign person has no plan or intent to control the entity, neither possesses nor
develops any purpose other than passive investment, nor takes any action that is inconsistent with an
intent to hold the interest solely for the purpose of passive investment. The rule applies to all types of
investors equally: it does not assume that certain types of institutions are passive investors.183
65.
The “carve out” in the CFIUS regulations184 for passive foreign investments that
constitute ten percent or less of an entity’s outstanding voting interests supports our finding here that we
can presumptively exclude from the specific approval requirement those ten percent interests that satisfy
our qualifying criteria without compromising the Commission’s ability to carry out its statutory duties
under section 310(b) of the Act. We note that, to the extent the Departments need additional information
about a particular licensee’s or U.S. parent’s ownership, they will have the opportunity, during their
review of the petition, to request the information directly from the licensee and the U.S. parent.185 We
find that this approach will ensure that the Departments will have the information they need for their
review, while reducing the costs and burdens imposed by requiring all petitioners to identify all of their
direct and indirect foreign interest holders regardless of whether the Departments ultimately determine
they need such information in the case of a particular licensee or U.S. parent.
66.
Investments in Privately Held Companies. We further conclude that we should adopt an
analogous ten percent exception to the general five percent specific approval requirement for ownership
interests in privately held companies, regardless of whether the investing entity is an institutional
investor. We will define a “privately held” company for this purpose as any company that is not a “public
company” as defined under the new rules: that is, a U.S.- or foreign-organized company that has not
issued a class of equity securities for which beneficial ownership reporting is required under Exchange
(Continued from previous page)
Section 721 of title VII of the Defense Production Act of 1950, as amended, authorizes the President to review
mergers, acquisitions, and takeovers by, or with, any foreign person which could result in foreign control of a U.S.
business (referred to as a “covered transaction”) to determine the effects of such transactions on the national security
of the United States. While the touchstone of CFIUS review is thus “control” of the U.S. business, section
800.204(a) of the CFIUS regulations “allows CFIUS wide discretion” in making the determination of control. See
George S. Everly III, Sovereign Wealth Funds and Shareholder Democratization: A New Variable in the CFIUS
Balancing Act, 25 Md. J. Int’l L. 374, 381 (2010) (A New Variable in the CFIUS Balancing Act). Section
800.204(a) of the CFIUS regulations defines “‘control’ in functional terms as the ability to exercise certain powers
over important matters affecting an entity.” See Merger Regulations Summary, 73 Fed. Reg. at 70704; see also id.
at 70706 (“The Committee approaches its analysis of whether a transaction could result in foreign control on a case-
by-case basis, considering the level of ownership interest, the rights that emanate from such ownership, other rights
held, restrictions on the exercise of such rights, and all other relevant facts and circumstances. . . . As a result of this
approach, the regulations provide no ownership threshold or other bright lines above which CFIUS would find
control in all circumstances.”).
182 31 C.F.R. § 800.223.
183 See Merger Regulations Summary, 73 Fed. Reg. at 70705.
184 See George S. Everly III, A New Variable in the CFIUS Balancing Act, supra note 181, at 392.
185 Under our current filing and processing procedures, Commission staff ensures that the appropriate Executive
Branch agencies receive a copy of all petitions. The agencies contact petitioners directly, request any additional
information the agencies deem necessary to their review, and, in particular cases, will engage in discussions and the
negotiation of a security agreement or other arrangement, such as a letter of assurances, with the petitioner and
affiliated entities. See NPRM, 26 FCC Rcd at 11740, ¶ 73 n.143. We will continue to coordinate all petitions filed
under the new rules with the Executive Branch agencies.
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Act Rule 13d-1 or a substantially comparable foreign law or regulation.186 We find, as discussed below,
that we can safely exclude interests of ten percent or less in such companies where the investor does not
hold its interest with the purpose or effect of changing or influencing control of the company. We will
presume, subject to rebuttal in a particular case, that a ten percent or lesser interest in a privately held
company qualifies as meeting this standard for exclusion from the five percent specific approval
requirement in the following circumstances:
(i) Where the relevant licensee, controlling U.S. parent, or entity holding a direct or indirect
equity and/or voting interest in the licensee or U.S. parent, is a U.S. or foreign “privately
held” corporation, as defined in the rules, provided that a shareholders’ agreement, or similar
voting agreement, prohibits the foreign holder from becoming actively involved in the
management or operation of the corporation, and limits the foreign holder’s voting and
consent rights, if any, to the minority shareholder protections listed in the rules;187
(ii) Where the relevant licensee, controlling U.S. parent, or entity holding a direct or indirect
equity and/or voting interest in the licensee or U.S. parent is privately held and organized as a
limited partnership, LLC, or LLP, if the foreign holder is “insulated” in accordance with the
criteria specified in the rules.188
67.
We have established the qualifying criteria for the ten percent exception, as applied to
ownership interests in privately held and public companies, to cover only ownership interests that do not
present a realistic potential to control or influence control of the U.S. parent or licensee.189 We emphasize
that petitioners are responsible for ensuring that only ten percent interests that satisfy (and continue to
satisfy) the qualifying criteria (or interests of five percent or less) are excluded from their requests for
specific approval of foreign investors’ direct or indirect equity and/or voting interests in the U.S. parent
(for petitions filed under section 310(b)(4)) or the licensee (for petitions filed under our section 310(b)(3)
forbearance approach). Petitioners will need to determine first, which, if any, of the U.S. parent’s or
licensee’s direct foreign investors requires specific approval because the foreign investor’s interest
exceeds five percent of the equity and/or voting interests of the U.S. parent or licensee and does not
qualify for the ten percent exception (either because the foreign investor’s interest exceeds ten percent or
does not satisfy the applicable presumption). Petitioners will then need to determine, as to each direct
investor (U.S.- and foreign-organized), whether the investing entity itself has direct foreign investors that
require specific approval because the foreign investor’s indirect interest in the U.S. parent or licensee
exceeds five percent and does not qualify for the ten percent exception (either because the foreign
investor’s indirect interest in the U.S. parent or licensee exceeds ten percent or does not satisfy the

186 See infra Appendix B (§ 1.990(d)).
187 See infra ¶ 123 (discussing the minority shareholder protections). This presumption would not apply where a
U.S. parent or licensee has actual knowledge of material involvement by the foreign interest holder, including, for
example, efforts to influence control of the company.
188 We will treat an interest as “insulated” only where the governance documents of the limited partnership, LLC, or
LLP prohibit the interest holder from becoming actively involved in the management or operation of the partnership,
LLC, or LLP and limit the interest holder’s consent rights to the minority investor protections listed in the rules.
This presumption shall not apply if the U.S. parent or licensee has actual knowledge of material involvement by a
limited partner or member of a limited partnership, LLC or LLP. See infra ¶ 122 (discussing the required insulation
criteria).
189 Consistent with our approach to attribution of ownership in the broadcast context, adopting the same percentage
thresholds for requiring specific approval of foreign interests held in public and private companies will also simplify
the rules and eliminate potentially discriminatory effects on the ability of privately held companies to attract foreign
investment.
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applicable presumption). As a practical matter, foreign interests held in a U.S.- or foreign-organized
entity that itself holds an interest of five percent or less in the U.S. parent or licensee will not require
identification or specific approval. Similarly, foreign interests held in a U.S.- or foreign-organized entity
that itself holds an interest in the U.S. parent or licensee that satisfies the criteria for the ten percent
exception will also satisfy the criteria for the ten percent exception and will not require specific
approval.190 Thus, once a petitioner identifies a qualified ten percent interest holder in the U.S. parent’s or
licensee’s vertical ownership chain (whether the interest holder is a U.S- or foreign-organized entity), the
petitioner need not inquire further as to that holder’s foreign ownership.191 We recommend that, in
making the necessary investor inquiries (for example, by sending investors a questionnaire), petitioners
obtain in writing (and retain for their records) information from their direct and, as necessary, indirect
interest holders that will allow the petitioner to determine whether a foreign individual, entity or group
holds a direct or indirect ownership interest in the respondent that requires specific approval.192 As

190 As discussed in Section IV.C.1, however, we will require that all petitions for declaratory ruling identify any
individual or entity, regardless of citizenship, that directly or indirectly holds or would hold, after effectuation of any
planned ownership changes described in the petition, at least ten percent of the equity or voting interests or a
controlling interest in the controlling U.S. parent (for section 310(b)(4) petitions) or licensee (for petitions filed
under our section 310(b)(3) forbearance approach), in addition to any foreign individual or entity required to be
identified under our specific approval requirements.
191 As an example, assume that U.S. Corp. files an application for a common carrier license. U.S. Corp. is wholly
owned and controlled by U.S. Parent, which is a newly formed, privately held Delaware corporation in which no
single shareholder has de jure or de facto control. A shareholders’ agreement provides that a five-member board of
directors shall govern the affairs of the company; five named shareholders shall be entitled to one seat and one vote
on the board; and all decisions of the board shall be determined by majority vote. The five named shareholders and
their respective equity interests are as follows: Foreign Entity A, which is wholly owned and controlled by a foreign
citizen (5%); Foreign Entity B, which is wholly owned and controlled by a foreign citizen (10%); Foreign Entity C,
a foreign public company with no controlling shareholder (20%); Foreign Entity D, a foreign pension fund that is
controlled by a foreign citizen and in which no individual or entity has a pecuniary interest exceeding one percent
(21%); and U.S. Entity E, a U.S. public company with no controlling shareholder (25%). The remaining 19 percent
of U.S. Parent’s shares are held by three foreign-organized entities as follows: F (4%), G (6%), and H (9%). Under
the shareholders’ agreement, voting rights of F, G, and H are limited to the minority shareholder protections listed in
section 1.991 of the rules. Further, the agreement expressly prohibits G and H from becoming actively involved in
the management or operation of U.S. Parent and U.S. Corp.
For purposes of preparing its section 310(b)(4) petition, U.S. Corp. does not need to inquire as to the ownership of,
or request specific approval for, the interests held in U.S. Parent by Foreign Entities F, G, or H, because F holds no
more than five percent of U.S. Parent’s equity or voting interests; and the six and nine percent interests held
respectively by G and H satisfy the presumptive criteria for the 10 percent exception. As required by the rules, U.S.
Corp. files its section 310(b)(4) petition concurrently with its application. The petition identifies and requests
specific approval for the ownership interests held in U.S. Parent by Foreign Entity A and its sole shareholder (5%
equity and 20% voting interest); Foreign Entity B and its sole shareholder (10% equity and 20% voting interest),
Foreign Entity C (20% equity and 20% voting interest), and Foreign Entity D and its fund manager (21% equity and
20% voting interest). Because each of Foreign Entity C and U.S. Entity E has determined that none of its
shareholders holds a percentage of its equity or voting interests that, when multiplied by 20 percent or 25 percent,
respectively, would constitute a greater-than-five percent equity or voting interest in U.S. Parent, U.S. Corp. does
not need to make further inquiries as to the citizenship of either entity’s shareholders. We discuss the methodology
for calculating foreign interests held indirectly in licensees and their controlling U.S. parent companies, including
use of the “multiplier,” in Section IV.C.2 of this Second Report and Order.
192 We note that section 208 of the Act authorizes the Commission to inquire into the management of the business of
all common carriers subject to the Act and to “obtain from such carriers and persons directly or indirectly
controlling or controlled by, or under direct or indirect common control with, such carriers full and complete
information necessary to enable the Commission to perform the duties and carry out the objects for which it was
(continued….)
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discussed in paragraph 126 below, we will rely on the petitioner’s certification that it has identified in its
petition all U.S. and foreign interest holders required to be disclosed based on its review of the
Commission’s rules, and that it has identified and requested specific approval for its direct and indirect
foreign interest holders as required by the pertinent standards and criteria in the rules. A petitioner that
relies on the ten percent exception for purposes of determining its direct or indirect foreign investors that
require identification and specific approval will need to file a new petition for prior approval if, after grant
of its initial ruling, a previously unapproved foreign investor would no longer qualify for the ten percent
exception.193
68.
Definition of a “Group.” We will treat two or more interest holders as a “group” when
the investors have agreed to act together for the purpose of acquiring, holding, voting, or disposing of
their equity and/or voting interests in the relevant licensee, controlling U.S. parent, or entity holding a
direct or indirect equity and/or voting interest in the licensee or U.S. parent.194 We will also subject any
individual or entity that, directly or indirectly, creates or uses a trust, proxy, power of attorney, or any
other contract, arrangement, or device with the purpose or effect of divesting itself, or preventing the
vesting, of an equity interest or voting interest in the U.S. parent or licensee as part of a plan or scheme to
evade the application of our foreign ownership rules and policies under section 310(b) to enforcement
action by the Commission, including an order requiring divestiture of the investor’s direct or indirect
interests in the licensee and/or U.S. parent.195 The Departments support adopting a broad definition of
“group” to “ensure as complete and accurate a review as possible and help prevent companies or investors
from engaging in questionable arrangements to avoid otherwise required reviews.”196 No other
commenter addressed this issue. We agree with the Departments and find that treating two or more
investors as a “group” when they have agreed to act in concert is a necessary and reasonable measure to
ensure that our foreign ownership policies are not purposely evaded. While we will not require licensees
to file with the Commission any such arrangements affecting ownership or voting rights, we expect
petitions relying on the foregoing exceptions to our identification and specific approval requirements to
be supported by diligent efforts to comply with this requirement, and we reserve the right to seek
production of any documents that may relate to any such arrangements.
b.

The Non-Controlling 49.99 Percent Approval Option for Named
Foreign Investors

69.
In the NPRM, the Commission proposed to provide the U.S. parent with the option of
requesting specific approval in its section 310(b)(4) petition for any named foreign investor to increase its
equity and/or voting interest in the U.S. parent from existing levels (or levels that would exist upon
(Continued from previous page)
created.” 47 U.S.C. § 208. See also, e.g., 47 U.S.C. §§ 308(b), 403. We reserve the right to request, at any time,
information as to the direct and indirect foreign ownership of licensees.
193 See supra note 175 and accompanying text.
194 SEC Rule 13d-5 takes a similar approach to defining the parameters of a “group” for purposes of implementing
sections 13(d) and (g) of the Exchange Act, 15 U.S.C. § 78m(d) & (g). See 17 C.F.R. § 240.13d-5(b)(1).
195 Cf. Order to Show Cause Directed Against Mario J. Gabelli, Order to Show Cause, 7 FCC Rcd 5594 (1992)
(cease and desist order proceeding directed against investment in violation of multiple ownership rules). SEC Rule
13d-3 contains a similar provision to address any plan or scheme to evade the reporting requirements of section
13(d) or (g) of the Exchange Act. See 17 C.F.R. § 240.13d-3(b). We will codify this provision in section 1.994 of
the rules as one of the routine terms and conditions of our foreign ownership rulings.
196 DOJ/DHS NPRM Comments at 8. The Departments addressed this issue in the context in which it was raised in
the NPRM, which asked whether the Commission should treat two or more non-WTO investors as a “group” in the
circumstances described in the NPRM, which we adopt and will apply broadly to all investors, regardless of
citizenship, to implement the foreign ownership policies of this Second Report and Order.
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closing of any related transactions) up to a non-controlling 49.99 percent equity and/or voting interest.197
The purpose of this proposal was to eliminate the need for U.S. parent companies to return to the
Commission to allow an already-approved foreign investor to increase its minority investments
incrementally. The Commission stated that it would not, as a general matter, require the petitioner to
demonstrate that the foreign investor has a contractual right or obligation, or that it has any plan to
acquire additional interests in the U.S. parent. However, the Commission proposed to reserve the right to
require petitioners to submit supplemental information as to any matter that Commission staff, in its
discretion, deems relevant to our public interest determination.198 The Commission did not propose to
limit the number of named foreign investors for which the parent could request approval of non-
controlling 49.99 percent interests – even if the aggregate of such interests would exceed 100 percent.199
70.
Industry commenters addressing this issue express support for the proposal200 or
recommend that we adopt additional measures to reduce further the need for licensees to file multiple
petitions.201 The Departments raised the concern that de facto transfers of control would escape review if
we adopted the non-controlling 49.99 percent approval option.202 They also noted that, even without de
facto
control, “a primary stakeholder can nonetheless exert influence or obtain access sufficient to raise
potential national security, law enforcement, or public safety concerns.”203 SIA and CTIA observed that

197 NPRM, 26 FCC Rcd at 11725, ¶ 43. The NPRM provided the following example to illustrate how the non-
controlling 49.99 percent approval option would work: Assume that the U.S. parent of a common carrier applicant
files a section 310(b)(4) petition for declaratory ruling that includes a request to approve a 15 percent equity and
voting interest held in the U.S. parent by foreign citizen A. The petition also requests authority for foreign citizen A
to acquire additional interests, up to and including a non-controlling 49.99 percent equity and voting interest. Upon
the completion of coordination with relevant Executive Branch agencies and in the absence of any countervailing
public interest concerns, the Commission grants the petition, including the request to allow A to acquire additional
interests, up to and including a non-controlling 49.99 percent interest in the U.S. parent. Two years after the grant,
A acquires additional shares of the licensee’s U.S. parent from another shareholder, which results in A holding a
non-controlling 35 percent equity and voting interest in the U.S. parent. Because the section 310(b)(4) ruling
included specific approval for A to acquire up to and including a non-controlling 49.99 percent interest in the parent,
A could complete its acquisition without the U.S. parent incurring the regulatory expense and delay associated with
filing a new section 310(b)(4) petition.
198 The NPRM noted, as an example, that Commission staff may find it necessary to request additional information
in circumstances where the record in a particular proceeding raises a question as to whether an equity investment
may result in an unauthorized transfer of control of a wireless licensee. The Commission also noted that the “49.99
percent approval option” would not apply to non-WTO investors in the U.S. parent company if we ultimately
determined in this proceeding to retain the current distinction between WTO and non-WTO Member investment,
which prohibits U.S. parent companies from accepting non-WTO investment that exceeds an aggregate 25 percent.
NPRM, 26 FCC Rcd at 11725, ¶ 43 nn.89-90. In light of our decision to eliminate that distinction, there is no need
for any such non-WTO exception.
199 Id. at 11725, ¶ 43.
200 See, e.g., AT&T NPRM Comments at 10; Vodafone NPRM Comments at 5-6; SIA NPRM Comments at 6; CTIA
NPRM Reply at 6.
201 See Verizon NPRM Comments at 7-8; CTIA NPRM Reply at 7-8; USTelecom NPRM Reply at 5; Sprint NPRM
Reply at 3-4.
202 DOJ/DHS NPRM Comments at 6. The Departments expressed concern that, because the proposed option, if
adopted, would allow U.S. parent companies to request 49.99 percent approval for any number of foreign investors,
they “would not know which foreign owners actually might come to hold a 49.99 percent interest. Thus, because
this proposal potentially deprives the Departments of an effective public interest review, the Commission should not
adopt it.” Id. at 7.
203 Id. at 6.
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regardless of whether a transfer of control is de facto or de jure, the parties must comply with the transfer
of control requirements of section 310(d).204 SIA also notes that our section 310(b)(4) rulings already
provide licensees the flexibility to acquire an additional, aggregate 25 percent foreign ownership from
specifically approved (and new) foreign investors.205
71.
Upon consideration of the record, we adopt the proposed non-controlling 49.99 percent
approval option with certain modifications to accommodate our forbearance decision in the First Report
and Order.
The rules will allow common carrier and aeronautical licensees to request specific approval
for any named foreign investor to increase its equity and/or voting interest held directly or indirectly in
the licensee’s controlling U.S. parent from existing levels (or levels that would exist upon closing of any
transactions contemplated by the petition) up to and including a non-controlling 49.99 percent equity
and/or voting interest. Similarly, the rules will permit common carrier licensees subject to section
310(b)(3) forbearance to request specific approval for any named foreign investor to increase its equity
and/or voting interest in the licensee, held through intervening U.S. entities that do not control the
licensee, from existing levels (or levels that would exist upon closing of any transactions contemplated by
the petition) up to and including a non-controlling 49.99 percent equity and/or voting interest in the
licensee. As the NPRM proposed, the rules will permit the licensee to request such approval for named
foreign investors to acquire on a going-forward basis up to and including a non-controlling 49.99 percent
interest – even if the aggregate of such interests would exceed 100 percent.206
72.
To preserve a meaningful opportunity for the Departments to conduct their “public
interest” reviews, Commission staff will continue to coordinate all petitions for declaratory ruling with
the relevant Executive Branch agencies and defer action on such petitions when requested by the
agencies. This will enable the Departments to review applications, request additional information from
petitioners to inform the Departments’ views and, where appropriate, to recommend denial of, limitations
on, or conditions to such approvals.207 For example, under the current rules, the Departments sometimes

204 SIA NPRM Comments at 6; CTIA NPRM Reply at 6.
205 See SIA NPRM Comments at 6.
206 For example, assume that Applicant files a petition for declaratory ruling at the same time that it files an
application for an initial common carrier radio license. Applicant files its petition under our section 310(b)(3)
forbearance approach because its aggregate foreign ownership (45%), which is held through U.S.-organized entities
that do not control the Applicant, exceeds the 20 percent limit in section 310(b)(3). The remaining 55 percent of
Applicant’s ownership interests is held directly in the Applicant by U.S. citizens. In its petition, Applicant requests
specific approval for the 15 percent equity and voting interests that are held indirectly in Applicant by each of three
foreign individuals (Foreign Citizen A, Foreign Citizen B, and Foreign Citizen C) not acting as a group, each of
which, in turn, holds its interests through a U.S.-organized entity that it wholly owns (A Corp., B Corp., and C
Corp., respectively, each of which holds a 15 percent equity and voting interest directly in Applicant). Applicant
also requests specific approval to allow each of the three foreign individuals to increase its indirect equity and voting
interests in the Applicant from 15 percent up to and including a non-controlling 49.99 percent equity and/or voting
interest. Upon the completion of coordination with relevant Executive Branch agencies and in the absence of any
countervailing public interest concerns, the Commission grants the petition, including the request to allow each of
the approved foreign individuals to acquire additional indirect interests in the Applicant, up to and including a non-
controlling 49.99 percent interest, through U.S.-organized entities that do not control the Applicant. Under such a
ruling, the three approved foreign individuals could not, as a practical matter, each hold a non-controlling 49.99
percent equity and voting interest indirectly in the Applicant at the same time (e.g., through the acquisition of
additional interests by their respective wholly-owned, U.S. subsidiaries), given that the sum of the capital stock
interests of the U.S. subsidiaries would exceed 100 percent of Applicant’s total capital stock (i.e., 49.99% x 3 =
149.97%). However, the three U.S. subsidiaries could each acquire, for example, up to a non-controlling 33.33
percent interest in the Applicant without the Applicant’s returning to the Commission to seek prior approval.
207 See DOJ/DHS Letter, supra note 19.
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recommend conditioning approvals on compliance with security agreements. The Departments might
also request limiting the pre-approval grant to less than 49.99 percent interest. As noted elsewhere, we
will continue to accord deference to the expertise of the Executive Branch agencies on issues related to
national security, law enforcement, foreign policy, and trade policy.
73.
We find that existing statutory requirements of section 310(d) of the Act and the
Commission’s enforcement powers under the Act208 address the Departments’ concern that de facto
transfers of control would escape review if we adopted the non-controlling 49.99 percent approval
option.209 As SIA and CTIA note, Commission precedent requires parties to comply with the transfer of
control requirements of section 310(d) regardless of whether a transfer of control is de facto or de jure.210
Additionally, there is no record evidence that the flexibility currently afforded licensees under our section
310(b)(4) rulings – i.e., to acquire an additional, aggregate 25 percent foreign ownership from specifically
approved (and new) foreign investors – has adversely affected the ability of the Commission or of the
relevant Executive Branch agencies to maintain effective oversight of increased interests in licensees
and/or their U.S. parents by foreign investors whose identities the licensee disclosed in its initial
petition.211 Moreover, the Commission’s licensing rules require that most common carrier wireless
applications disclose the identity of any person or entity that holds, directly or indirectly, a ten percent or
greater voting interest in the applicant.212
74.
With regard to the Departments’ concern that, even without de facto control, “a primary
stakeholder can nonetheless exert influence or obtain access sufficient to raise potential national security,
law enforcement, or public safety concerns,”213 we determine that the non-controlling 49.99 percent
approval option would require the petitioner to specify the maximum percentages of equity and voting
interests for which it seeks approval for a particular named investor to acquire in the future. We find that
this requirement will provide the Commission and the relevant Executive Branch agencies the opportunity
to review whether any particular foreign interest may present an unacceptable level of influence or allow
the investor to obtain access sufficient to raise potential national security, law enforcement, or public
safety concerns.214

208 See, e.g., 47 U.S.C. §§ 312(a), 312(b), 401, 501-03.
209 DOJ/DHS NPRM Comments at 6.
210 SIA NPRM Comments at 6; CTIA NPRM Reply at 6. See supra note 27 (discussing Commission case precedent
on de facto and de jure control).
211 See SIA NPRM Comments at 6.
212 Id. (“The FCC, moreover, would retain the ability to ascertain foreign ownership after the initial investment, as
licensees must provide ownership information in applications for new licenses and renewals.”). See also infra note
296 and accompanying text.
213 DOJ/DHS Comments at 6.
214 See id. We note the Departments’ recommendation that, if we adopt the non-controlling 49.99 percent approval
option, we should limit the option to foreign investors with an actual intent to acquire the additional interests within
18 months of the filing of the company’s section 310(b)(4) petition and that that intent be indicated in the petition.
See id. at 7. The Departments’ alternative approach would “allow the Departments to consider any issues raised by
a large minority ownership interest in a licensee that actually expects that the transaction or transactions will take
place in the near term rather than at some unspecified time in the future, or not at all.” Id. SIA opposed the
Departments’ recommended approach as limiting flexibility and undercutting the goal of promoting investment.
SIA NPRM Comments at 6 n.15. Because we will continue to coordinate all petitions with the relevant Executive
Branch agencies, we anticipate that licensees will request pre-approval for increased interests by particular named
foreign investors only where the carrier has a reasonable expectation of needing such approval, in order to secure
timely action on its petition.
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75.
Separately, Verizon proposed that we approve all reviewed foreign investors to hold up to
and including 100 percent of a licensee’s ownership interests, rather than distinguishing between
controlling and non-controlling interests.215 Verizon argues that “[a]ll material changes in the ownership
of a licensee would continue to be reported in transfer of control applications, which will provide
adequate opportunity for public comment and Commission review under Section 310(d) of the
Communications Act.” 216 We do not adopt Verizon’s proposal as it would require the Commission to
make a speculative and premature determination, in acting on a licensee’s petition for declaratory ruling,
as to whether a named foreign investor’s acquisition of a controlling interest in the licensee at some
unspecified point in time would or would not raise public interest concerns with respect to potential
effects on competition, national security, law enforcement, foreign policy, or trade policy. We also find
that this approach would be impractical and inconsistent with our statutory obligation to engage in a
meaningful review of foreign investment in U.S. licensees. Moreover, even assuming, as Verizon appears
to suggest, that the Commission could, as a legal matter, subsequently reverse its section 310(b) public
interest findings in a section 310(d) transfer of control proceeding involving the same foreign investor, we
are concerned that the prior findings under section 310(b) could be viewed as pre-judging the merits of
the foreign investor’s subsequent transfer of control application, should the investor file such an
application. These considerations outweigh any incremental cost savings that may accrue to licensees and
other parties to an acquisition from eliminating the need to file a petition at the same time as a transfer of
control application.
c.

The 100 Percent Approval Option for Controlling Foreign Investors

76.
The Commission noted in the NPRM that it is not uncommon for a petition to be filed in
connection with an application for consent to transfer control of a licensee where a named foreign
investor (the “transferee”) proposes to acquire a controlling interest in the U.S. parent company of the
licensee at a level that constitutes less than 100 percent of the U.S. parent’s total capital stock or voting
stock.217 In some cases, the grant of the section 310(b)(4) ruling by its terms limits the foreign
transferee’s equity and voting interests in the U.S. parent to the precise levels proposed in the transfer of
control application.218 As a result, the U.S. parent must return to the Commission for additional prior
approval under section 310(b)(4) should the transferee later seek to increase its direct or indirect equity or
voting stake in the U.S. parent. Similar to the “non-controlling 49.99 percent approval option” discussed
in Section IV.B.3.b above, the NPRM proposed to provide foreign transferees with the option of seeking
approval at the outset, in the section 310(b)(4) petition that is filed in connection with the transfer
application, to acquire in the future up to 100 percent of the equity and/or voting interests in the licensee’s
U.S. parent company.219

215 See Verizon NPRM Comments at 7-8. See also Sprint Nextel NPRM Reply at 3-4 (supporting Verizon’s
proposal to eliminate the need for a filing under section 310(b)(4) that is “duplicative” of the filing required under
section 310(d)); CTIA NPRM Reply at 6 (stating that we should carefully consider Verizon’s proposal to approve
foreign investment greater than 49.99 percent, and that the section 310(d) process would continue to provide a
meaningful opportunity for public comment and Commission review).
216 Verizon NPRM Comments at 7-8.
217 NPRM, 26 FCC Rcd at 11726, ¶ 45.
218 See, e.g. Global Crossing Transfer Order, 18 FCC Rcd at 20328-29, ¶ 35 (approving under sections 310(b)(4)
and 310(d) the acquisition of a 61.5 percent indirect controlling ownership interest in licensed subsidiaries of Global
Crossing by Singapore-organized ST Telemedia; and denying under section 310(b)(4) ST Telemedia’s request for
approval to make additional “unlimited” indirect investments in the licensed subsidiaries).
219 NPRM, 26 FCC Rcd at 11726, ¶ 45.
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77.
Industry commenters that addressed this issue support the 100 percent approval option
proposed in the NPRM.220 The Departments stated that allowing Commission pre-approval of up to 100
percent ownership would mean that the Departments might often have to assess the national security or
law enforcement concerns that could arise with complete foreign ownership, even though no such
ownership might be intended or occur.221 In such cases, the Departments would need to “consider a wide
range of hypothetical scenarios and potentially execute security agreements, or add provisions to
agreements, to address those hypothetical scenarios, thus resulting in greater burden to applicants than the
current regulation.”222 We believe that this rule will preserve the Departments’ ability to conduct public
interest reviews because Commission staff will continue to coordinate all petitions with the relevant
Executive Branch agencies, including petitions that request pre-approval for increased interests by a
named controlling foreign investor, would defer acting on such petitions when requested by the agencies,
and would accord deference to the agencies’ recommendations to deny, limit or condition approval on
compliance with security agreements. In order to better inform their views, the Departments may
continue to request separately from petitioners such additional information as may be necessary.223 Under
this new rule, the Departments might also recommend in a particular case that we limit preapproval for
controlling foreign investors to a level below 100 percent to address potential national security or law
enforcement concerns. We anticipate that a licensee will request pre-approval for increased interests in its
U.S. parent by a controlling foreign investor only where the licensee and its controlling U.S. parent have a
reasonable expectation of needing such approval, in order to secure timely action on the petition. Such
requests already are filed with the Commission and codifying the foregoing approach will provide clarity
as to Commission practice.
78.
Based on our review of the record, we adopt the 100 percent approval option for foreign
investors that seek to hold a controlling interest in the controlling U.S. parent of a common carrier or
aeronautical radio licensee. We clarify that the rule, as adopted, will apply only to section 310(b)(4)
petitions filed in connection with applications for an initial license or spectrum leasing arrangement as
well as applications for consent to assign or transfer control of a license or spectrum leasing
arrangement.224 Thus, where the controlling U.S. parent of the licensee or spectrum lessee named in the
application is controlled (in the case of an initial application), or would be controlled (in the case of a
transfer/assignment application) by a foreign individual, entity or “group,” the new rules will allow the
petitioner to include a request for the controlling foreign investor or group to hold up to and including 100
percent of the U.S. parent’s equity and voting interests, directly or indirectly, to the extent the controlling
foreign investor’s equity and/or voting interests at the time of filing the petition and application are less
than 100 percent.
4.

The Aggregate Allowance for Unnamed Foreign Investors

79.
The Commission sought comment in the NPRM on whether it should, as a general rule,
issue section 310(b)(4) rulings to allow the licensee’s U.S. parent to have, on a going-forward basis, 100

220 See, e.g., AT&T NPRM Comments at 10; SIA NPRM Comments at 6; Vodafone NPRM Comments at 5.
221 See DOJ/DHS NPRM Comments at 4.
222 Id.
223 See DOH/DHS Letter, supra note 19.
224 In other words, this rule will apply only with respect to proposed controlling foreign interests in the U.S. parent
that controls, or would control, the licensee. As discussed above, for petitions filed under our section 310(b)(3)
forbearance approach, we will permit the petitioner to request advance approval for foreign individuals or entities
named in the petition to increase their ownership interests in the licensee, held through U.S.-organized entities that
do not control the licensee, up to and including a non-controlling 49.99 percent interest. See supra ¶ 71.
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percent aggregate foreign ownership, including by foreign investors for which the petitioner did not
request specific approval. Such a ruling would be subject to the condition that no single foreign investor
or “group” of foreign investors would be allowed to acquire, directly or indirectly, an ownership interest
that exceeds 25 percent of the parent’s equity interests or 25 percent of its voting interests, or a
controlling interest, without the Commission’s prior approval.225
80.
As explained in the NPRM, the current 25 percent allowance generally has operated as a
ceiling on the aggregate percentage of change in the foreign ownership of the U.S. parent that is permitted
after issuance of a section 310(b)(4) ruling.226 The Commission’s purpose in including the 25 percent
allowance in section 310(b)(4) rulings has been to accommodate ownership interests in a licensee’s
controlling U.S. parent for which it is unable to obtain citizenship information and foreign investments
made in the U.S. parent after issuance of the ruling. The 25 percent allowance, however, may not afford
U.S. parent companies, or their controlling or minority stakeholders (particularly publicly traded
companies), sufficient flexibility to market or permit the resale of their equity securities; may create an
unnecessary impediment to foreign investment; and may be unnecessary to protect against potential
harms to competition or other relevant public interest concerns. The NPRM asked commenters to address
any burdens the current 25 percent allowance may impose on U.S. licensees and whether we could
mitigate any such burdens by increasing the allowance in a manner that would not compromise our
statutory obligations under the Act.227 It also sought comment on whether adopting a 100 percent
allowance, subject to a lower ceiling on interests held by a single foreign investor, would achieve parity in
treatment of U.S. parent companies whether they are owned in whole or in part by U.S public companies
or by foreign public companies which are substantially owned, on any given day, by foreign citizens and
entities.228
81.
Industry commenters addressing this issue uniformly support a 100 percent aggregate
allowance subject to a 25 percent limit on investments or acquisitions by a single foreign investor or
“group.”229 SIA argues that such an allowance for new foreign investment strikes a fair balance between
the need to provide flexibility and the Commission’s need to review proposed investments in appropriate
circumstances.230 SIA and Vodafone, among others, assert that foreign investments below 25 percent can
be addressed in security agreements reached with the Executive Branch.231 SIA agrees with the statement
in the NPRM that there is no evidence that the 100 percent allowance, which we have applied previously
in certain rulings subject to a 25 percent ceiling on interests by a single foreign investor, has presented
any problems or generated objections in the context of any particular proceedings.232 The Departments

225 See NPRM, 26 FCC Rcd at 11726-27, ¶¶ 46-47.
226 Id. at 11727, ¶ 47.
227 Id.
228 Id.
229 See, e.g., AT&T NPRM Comments at 10; Vodafone NPRM Comments at 6 & n.24; SIA NPRM Comments at 7-
8; Sprint NPRM Reply at 2-3. According to SIA, the current 25 percent aggregate allowance does not provide
companies – particularly (but not solely) publicly traded companies – with sufficient flexibility and hinders
investment. See SIA NPRM Comments at 7 (stating that the Commission should apply the NPRM’s 100 percent
aggregate allowance to U.S. parents that are either wholly owned or partially owned by foreign companies, in order
to provide a level playing field with respect to their opportunities to attract investment).
230 See SIA NPRM Comments at 7 (stating there is no need for further review where a single foreign investor or
group acquires an insubstantial interest and that a 25 percent trigger for prior review of such interests is consistent
with section 310(b)(4)).
231 See, e.g., SIA NPRM Comments at 8; Vodafone NPRM Reply at 15-16.
232 See SIA NPRM Comments at 7-8 (citing NPRM, 26 FCC Rcd at 11729, ¶ 50).
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opposed a 100 percent aggregate allowance based on their concern that it could hinder their ability to
conduct a thorough public interest review.233 We have carefully considered the concerns of industry
commenters and the Departments and we adopt, with certain modifications, a 100 percent allowance to
accommodate foreign investment in a licensee and/or its U.S. parent for which the licensee did not receive
specific approval in an initial foreign ownership ruling. As we concluded in adopting the specific
approval requirements for initial petitions, we believe a properly balanced approach to permitting foreign
ownership after grant is to allow, in addition to the foreign interests specifically approved in a licensee’s
initial ruling, unlimited foreign ownership of the licensee and any controlling U.S. parent subject to prior
approval requirements for any additional foreign equity and/or voting interest that would exceed five
percent, with the exception of ten percent or lesser interests that satisfy the criteria for exclusion from the
five percent specific approval requirement.234 We will codify the 100 percent allowance in section 1.994
of the rules as one of the routine terms and conditions of our foreign ownership rulings.
82.
We believe that this approach strikes an appropriate balance between the competing
interests. To preserve a meaningful opportunity for the Departments to conduct their “public interest”
reviews, Commission staff will continue to coordinate all petitions for declaratory ruling with the relevant
Executive Branch agencies and defer action on such petitions when requested by the agencies. This will
enable the Departments to review applications, request additional information from petitioners to inform
the Departments’ views and, where appropriate, to recommend denial of, limitations on, or conditions to
such approvals.235 For example, under the current rules, the Departments sometimes recommend
conditioning approvals on compliance with security agreements. Under the new rule, the Departments
might also recommend in a particular case that we limit preapproval to an aggregate level below 100
percent to address potential national security or law enforcement concerns.
83.
Section 1.994 will provide that, in addition to the foreign ownership interests approved
specifically in the licensee’s section 310(b)(4) ruling, the controlling U.S. parent named in the ruling (or a
U.S.-organized successor-in-interest formed as part of a pro forma reorganization) may be 100 percent
owned directly, or indirectly through one or more U.S- or foreign-organized entities, on a going-forward
basis (i.e., after issuance of the ruling) by other foreign investors without prior Commission approval.
The aggregate allowance for unnamed investors will be subject to the requirement that the licensee seek
and obtain Commission approval before any foreign individual, entity, or “group” not previously
approved acquires, directly or indirectly, more than five percent of the U.S. parent’s outstanding capital

233 See DOJ/DHS NPRM Comments at 5. The Departments’ comments expressed their concern that substantial
ownership interests acquired in a licensee’s U.S. parent by a new foreign investor after the Commission has issued a
section 310(b)(4) ruling – including a new foreign investor’s acquisition of an interest below 25 percent – might
present public interest concerns warranting prior review and possible disallowance or modification of the parent’s
existing security agreement or similar arrangement with the Executive Branch agencies. See id. (citing NPRM, 26
FCC Rcd at 11729, ¶ 50); see also id. at 10 (“depending on the structure of the ownership, company owners between
five and ten percent may have the potential to exert influence on company operations sufficient to raise possible law
enforcement or national security concerns”). The Departments also raised the concern that issuing rulings with a
100 percent allowance for foreign investors for which the parent did not request specific approval in a petition could
permit a foreign investor or “group” to avoid review by delaying the legal steps necessary to effectuate the entire
ownership interest until after the Commission has granted a petition. Id. at 5 (“The proposal would allow new
investors/owners to obtain a potential 25 percent ownership interest without FCC and Executive Branch knowledge
or opportunity to review the transaction for associated public interest concerns.”).
234 See supra ¶¶ 47-67. A controlling foreign interest in a licensee’s controlling U.S. parent would require prior
approval under section 310(b)(4) and section 310(d). 47 U.S.C. §§ 310(b)(4), 310(d).
235 See DOJ/DHS Letter, supra note 19.
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stock (equity) and/or voting stock (or more than ten percent, where the criteria for exclusion are satisfied),
or a controlling interest.236
84.
Similarly, for common carrier licensees that have received a ruling under our section
310(b)(3) forbearance approach, section 1.994 will provide that, in addition to the foreign ownership
interests approved specifically in the licensee’s ruling, the licensee may be 100 percent owned on a going
forward basis by other foreign investors holding interests in the licensee through U.S.-organized entities
that do not control the licensee without prior Commission approval. The aggregate allowance for
unnamed investors will be subject to the requirement that the licensee seek and obtain Commission
approval before any foreign individual, entity, or “group” not previously approved acquires directly, or
indirectly through one or more U.S.-organized entities that do not control the licensee, more than five
percent of the licensee’s outstanding capital stock (equity) and/or voting stock. The five percent prior
approval requirement will not apply to any foreign individual, entity, or “group” that acquires an equity
and/or voting interest of ten percent or less, provided that the interest satisfies the criteria for exclusion
from the five percent specific approval requirement.237
85.
We believe that setting the threshold limit lower than 25 percent for pre-approval of
single foreign investor holdings is more consistent with the Departments’ concerns and with the most
analogous existing measures of foreign influence and control. As noted above, the Departments have
expressed concern as a general matter that a 25 percent or lesser interest may provide the interest holder
with the ability to exert substantial influence or de facto control over a U.S. parent and licensee,
depending on the relative holdings of, and relationships among, the company’s shareholders.238 For the
reasons stated above, we believe that establishing approval requirements for ownership interests in excess
of five percent (or, in limited cases, ten percent) more appropriately responds to the Departments’
concerns and is consistent with measures of potential influence in analogous regulatory contexts. We
acknowledge that security agreements have and could be conditioned on the licensee providing notice of
ownership changes to the signatory agencies, but observe that the Executive Branch agencies that review

236 See supra ¶¶ 47-67. As an example, assume the same facts as in note 191, supra. As required by the rules, U.S.
Corp.’s section 310(b)(4) petition identifies and requests specific approval for the ownership interests held in its
U.S. parent (“U.S. Parent”) by Foreign Entity A and its sole shareholder (5% equity and 20% voting interest);
Foreign Entity B and its sole shareholder (10% equity and 20% voting interest), Foreign Entity C (20% equity and
20% voting interest), and Foreign Entity D (21% equity and 20% voting interest) and its fund manager (20% voting
interest). The Commission’s ruling specifically approves these foreign interests. The ruling also provides that, on a
going-forward basis, U.S. Parent may be 100 percent owned in the aggregate, directly or indirectly, by other foreign
investors, provided that U.S. Corp. obtains Commission approval before any previously unapproved investor
acquires an equity and/or voting interest that exceeds five percent (with the exception of qualifying interests of ten
percent or less). In this case, foreign entities F, G, and H would each be considered a previously unapproved foreign
investor (along with any “new” foreign investors) because their interests in U.S. Parent were not subject to our prior
approval requirements, and U.S. Corp. did not otherwise choose to request prior approval for their interests in its
initial petition. U.S. Corp. would also need Commission approval before Foreign Entities A, B, C, or D increase
their respective interests in U.S. Parent and before Foreign Entity D appoints a new fund manager that is a non-U.S.
citizen. See also infra Appendix B (§ 1.994(a), Example 1, which provides further detail as to changes in direct and
indirect foreign ownership of U.S. Parent that would require prior Commission approval).
237 Foreign interests held directly in a licensee may not exceed an aggregate 20 percent of its equity and/or voting
interests. See supra ¶ 9; see also First Report Order, 27 FCC Rcd at 9842, ¶ 24 (stating that section 310(b)(3)
forbearance “does not apply to foreign interests held in a common carrier licensee where there is no intervening
U.S.-organized entity between the licensee and the foreign owner” and that foreign interests held directly in the
licensee “will continue to be bound by section 310(b)(3) and our precedent thereunder”).
238 See supra note 233 and accompanying text.
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petitions for declaratory ruling do not enter into a security agreement or similar arrangement with every
petitioner.
86.
The NPRM also asked, if the Commission were to adopt a 100 percent aggregate
allowance, whether it should include the allowance in every section 310(b)(4) ruling regardless of
whether, under the proposed rules, the petitioner is required to, or, if not, otherwise chooses to, request
specific approval for any named foreign investors.239 No commenter addressed this issue. We find that
licensees may find it necessary or desirable to file a petition to exceed the foreign ownership limits in
sections 310(b)(3) and/or (b)(4) in circumstances where no foreign investor holds or proposes to acquire
at the time of filing an interest that would require specific approval under the new rules – particularly
where the licensee or U.S. parent is, or is owned in whole or in part, by a public company. Accordingly,
the new rules will permit licensees to file petitions for declaratory ruling requesting approval to exceed
the foreign ownership limits in section 310(b)(3) and/or section 310(b)(4) in circumstances where the
licensee is not required to, and otherwise does not choose to, request specific approval for any named
foreign investor. The standard terms and conditions in section 1.994 of the new rules, including the 100
percent aggregate allowance, will apply to Commission grant of such petitions unless the Commission
finds it necessary to specify otherwise in a particular ruling.
87.
We emphasize that, under the new rules, licensees that have received a foreign ownership
ruling will still have an obligation to monitor and stay ahead of changes in foreign ownership to ensure
that the licensee obtains Commission approval before such a change renders the licensee out of
compliance with its ruling(s) or our rules.240 Thus, as is the case under our current regulatory framework,
licensees, their controlling parent companies, and other entities in the licensee’s vertical ownership chain
may also need to place restrictions in their bylaws or other organizational documents to enable the
licensee to ensure such continued compliance with the terms of its ruling. As we noted in the NPRM,
stock ownership restrictions are a common means of ensuring compliance with the foreign ownership
limitations in section 310(b) of the Act and other federal statutory provisions that restrict foreign
ownership of U.S. companies and assets.241

239 NPRM, 26 FCC Rcd at 11727, ¶ 47.
240 For example, assume that the Commission issues a section 310(b)(4) ruling that specifically approves 100 percent
ownership of Licensee’s U.S. Parent by a publicly traded foreign corporation (“Foreign Parent”). Six months later,
one of Foreign Parent’s shareholders – itself a foreign corporation – plans to acquire additional shares that would
increase its equity and voting interests in Foreign Parent and, indirectly, in U.S. Parent, from 4 percent to a non-
controlling 12 percent equity and voting interest. To the extent Licensee has not previously received specific
approval for the foreign corporation to hold an equity and/or voting interest in U.S. Parent of at least 12 percent,
Licensee would be required to file a new petition to obtain Commission approval before the foreign corporation
acquires the additional shares.
241 See NPRM, 26 FCC Rcd at 11724, ¶ 42 (citing Applications of Kentucky Central Television, Inc., Lexington, Ky.,
Memorandum Opinion and Order, FCC 66-362, 5 F.C.C. 2d 33 (1966); Leonard Egan and James B. Ellis II, Federal
Restrictions in the United States Maritime Industries
, § 18.10, Manual of Foreign Investment in the United States,
3rd Edition, J. Eugene Marans et al., eds., Thomson West (2009-2010 Supplement) (stating that, in order to comply
with the statutory citizenship requirements for ownership of vessels operating in the coastwise trade, “[s]everal
public companies have made the necessary amendments to their certificates of incorporation and arrangements with
their transfer agents whereby their stockholders represent whether they are such citizens and no transfers of citizen-
owned stock are permitted that would make the noncitizen percentage exceed a set threshold”); Finkelstein, Stock
Transfer Restrictions Upon Alien Ownership Under Section 202 of the Delaware General Corporation Law, 38 Bus.
Law. 573 (1982-1983)). No commenter addressed the question in the NPRM whether a need for stock ownership
restrictions would present any new issues for U.S. common carrier and aeronautical radio licensees.
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5.

Expanding Beyond Carrier-Specific Rulings

88.
As explained in the NPRM, the Commission issues foreign ownership rulings to cover
only the licensee(s) named in the underlying petition.242 An affiliated entity generally is not permitted to
rely on a ruling issued to a parent, subsidiary or sister company for purposes of filing an application for a
license or for consent to acquire a license by assignment from another carrier, or for purposes of entering
into a spectrum leasing arrangement. The affiliated entity must submit its own petition for declaratory
ruling.243 Similarly, in circumstances where a licensee is the subject of a transfer of control application
under section 310(d) of the Act, the fact that the Commission has previously approved the transferee’s
foreign ownership in the context of an earlier proceeding does not relieve the transferee of the obligation
to obtain section 310(b)(4) approval in the name of the licensees in which it proposes to acquire a
controlling interest.244
89.
In the NPRM, the Commission proposed to address the potential delays and
administrative costs associated with carrier-specific rulings by issuing section 310(b)(4) rulings in the
name of the U.S. parent of the licensee that is the subject of the petition and providing for automatic
extension of the U.S. parent’s ruling to cover any subsidiary or affiliate of the U.S. parent, whether
existing at the time of the ruling or formed or acquired subsequently.245
90.
Industry commenters generally support the automatic extension of the U.S. parent’s
ruling to cover its subsidiaries and affiliates as proposed in the NPRM. 246 The Departments stated in their
comments that adoption of the automatic extension rule would affect adversely their ability to evaluate
whether a newly-formed or acquired subsidiary or affiliate might present new national security or law
enforcement concerns that did not exist previously, when the licensee first received its ruling. The
Departments provided as an example of their concern that “an acquired subsidiary might have existing
contracts with the U.S. Government, while the U.S. parent, which purchased the entity, may never have
had such contracts.”247 They stated that the presence of such contracts could raise public interest concerns
that the Departments would have been unable to predict or evaluate absent the opportunity to evaluate the
newly-formed or acquired subsidiary.248

242 See NPRM, 26 FCC Rcd at 11731-32, ¶ 55; see also id. at 11715, ¶ 21.
243 Id. at 11731-32, ¶ 55, 11715, ¶ 21.
244 Id.
245 Id. at 11732, ¶ 56.
246 See SIA NPRM Comments at 3-4 (“The Commission should clarify that parent company rulings cover
subsidiaries and affiliates that are in existence at the time of the ruling, as well as those that are subsequently formed
or acquired, provided that the U.S. parent remains in compliance with the terms of its foreign ownership ruling. Any
additional Section 310(b)(4) review would be duplicative and unnecessary as those entities are under common
ownership and control with the U.S. parent.”); T-Mobile NPRM Comments at 3 (noting that the Commission has
long permitted wholly-owned subsidiaries to operate under the international section 214 authority of their parent
companies without obtaining a new authorization, citing 47 C.F.R. § 63.21(h)). See also CTIA NPRM Reply at 5;
Sprint NPRM Reply at 3; Verizon NPRM Reply at 9; Vodafone NPRM Reply at 16.
247 DOJ/DHS NPRM Comments at 6.
248 Id. Verizon and Vodafone argued in their reply comments that potential government contracts issues are more
efficiently addressed either in the contracting process or at the time of the initial licensure of, or investment in, a
particular contractor. See Verizon NPRM Reply at 9 (stating that directed reporting conditions could be written into
the contract or specific notice requirements imposed on a case-by-case basis); Vodafone NPRM Reply at 16 (stating
that the contract itself could require the designated contractor to give notice to, or seek consent from, the applicable
(continued….)
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91.
We believe that this proposal should still preserve a meaningful opportunity for the
Departments to review applications for national security and law enforcement concerns in the context of
our Title III licensing proceedings under sections 308 and 310(d) of the Act, provided that foreign
ownership of the licensee and its subsidiaries and affiliates that are relying on the licensee’s foreign
ownership ruling remains within the parameters of the ruling. Specifically, after Commission issuance of
a public notice accepting a subsidiary’s or affiliate’s application for filing (e.g., an application filed under
section 308 for a new common carrier license), we would defer action at the request of the Departments
until they have had an opportunity to request further information from the applicants to inform the
Departments’ views, and request, as may be appropriate, that we limit our approval or condition grant of
the application on a security agreement.249 Furthermore, before a licensee acquires control of a new
subsidiary with existing licenses, the licensee will still be required to file an application to obtain our prior
consent to the transfer of control under section 310(d), which will then be forwarded to the Departments
for their review, opportunity to request additional information from the applicants to inform the
Department’s views, and comment prior to Commission action. We recognize, however, that there may
be some instances (e.g., where a new subsidiary is inserted into the chain of ownership of the licensee as
part of a pro forma internal reorganization) in which the Departments will be unable to engage in prior
review of the changed circumstances, but believe that the impact of such internal reorganizations should
be negligible given that the ultimate foreign ownership levels will not have changed beyond the
parameters of the licensee’s ruling.
92.
We therefore adopt the automatic extension rule proposed in the NPRM, with certain
modifications. Under the modified automatic extension rule, we will issue foreign ownership rulings
under our section 310(b)(3) forbearance approach and/or section 310(b)(4) to cover all of the petitioning
licensee’s subsidiaries and affiliates, whether existing at the time the ruling is issued or formed or
acquired subsequently, provided that foreign ownership of the licensee and its subsidiaries and affiliates
that are relying on the licensee’s ruling remains within the parameters of the ruling and our new rules, as
described below. We emphasize that the new rules will require that all affiliated entities that
contemporaneously hold, or are filing applications for, common carrier or aeronautical licenses or
common carrier spectrum leasing arrangements, and that would have foreign ownership exceeding the
limits in section 310(b)(3) and/or section 310(b)(4), be named as joint petitioners in a petition for
declaratory ruling seeking approval for the affiliated entities’ foreign ownership. To the extent an
affiliated entity does not contemporaneously hold, or is not filing an application for, a covered license or
spectrum leasing arrangement, it need not be named as a joint petitioner. If the entity later files a covered
application — after issuance of a ruling to an affiliate — the automatic extension rule will permit the
entity to rely on the affiliate’s ruling for purposes of filing its own applications.250 However, as noted
(Continued from previous page)
U.S. government agency before consummating a transfer of control of the designated contractor and require the
designated contractor to meet certain ownership reporting obligations on a periodic basis”).
249 See DOJ/DHS Letter, supra note 19.
250 As an example of how the automatic extension rule would work, assume that a common carrier earth station
licensee (“Licensee”) has previously received a section 310(b)(4) ruling that approves the 100 percent foreign
ownership of its U.S. Parent (“U.S. Parent A”) by a foreign-organized company (“Foreign Company”).
Subsequently, Foreign Company establishes a new, U.S.-organized subsidiary (“U.S. Parent B”) to hold all of the
shares of another U.S.-organized subsidiary (“New U.S. Subsidiary”). The proposed automatic extension rule would
permit New U.S. Subsidiary to apply for a common carrier earth station license without filing a section 310(b)(4)
petition requesting approval of U.S. Parent B’s 100 percent ownership by Foreign Company, provided that any
changes in the direct or indirect foreign ownership of Licensee since issuance of its ruling are permissible under the
terms of the ruling and our new rules (e.g., the requirement of identification and prior approval of any new foreign
investor with interests that would exceed the relevant five or ten percent limit). The proposed rules would instruct
New U.S. Subsidiary to cite to Licensee’s ruling in the application and attach a certification signed by Licensee and
(continued….)
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above, those applications will continue to be subject to review and comment by the Executive Branch
agencies.
93.
The NPRM proposed to define “subsidiary or affiliate,” for purposes of issuing section
310(b)(4) rulings, as “any entity that is wholly owned and controlled by, or is under 100 percent common
ownership and control with,” the U.S. parent of the licensee.251 We find a requirement of 100 percent
common ownership to be unnecessarily restrictive in light of our determination to tailor our reviews and
the associated expense and delay only to those foreign holdings that implicate potential concerns under
section 310(b). We will define “subsidiary” as any entity in which the licensee holds, directly or
indirectly, more than 50 percent of the total voting power of the outstanding voting stock of the entity,
where no other individual or entity has de facto control.252 We will define “affiliate” as any entity that is
under common control with the licensee, again defined by reference to the holder, directly or indirectly,
of more than 50 percent of total voting power, where no other individual or entity has de facto control.
Once a licensee has received a foreign ownership ruling, any “subsidiary” or “affiliate” of the licensee, as
so defined, will not be required to file a petition for declaratory ruling in connection with its own common
carrier or aeronautical license applications, but can instead rely on the licensee’s ruling, provided that the
foreign ownership of the licensee and its subsidiary or affiliate complies with the terms and conditions of
the licensee’s foreign ownership ruling and our new rules. Thus, for the reasons discussed in Section
IV.B.4 above, compliance will require that the licensee and any subsidiary or affiliate obtain Commission
approval before any previously unapproved foreign investor acquires an ownership interest in the licensee
or subsidiary/affiliate in excess of the five percent (or ten percent) limits established in the new rules. We
will codify the “automatic extension” rule in section 1.994 as one of the standard terms and conditions of
our foreign ownership rulings. We will require the subsidiary or affiliate to state in its application the
name of the affiliated licensee that has received a ruling(s), provide a citation to the ruling(s), and attach
to the application a certification, signed by the applicant and licensee (or by a controlling parent
company), stating that the applicant and licensee are in compliance with the terms and conditions of the
licensee’s foreign ownership ruling(s) and the requirements of our rules.
94.
We find that adopting the automatic extension rule will eliminate the filing of duplicative
petitions for declaratory ruling while preserving the opportunity for Executive Branch review and
mitigation, to the extent necessary, before the Commission issues a common carrier or aeronautical
license to a subsidiary or affiliate of a licensee that has already received a foreign ownership ruling. As
explained below, even where the filing of a petition for declaratory ruling will no longer be required, the
relevant Executive Branch agencies will continue to receive public notice of section 308 license
applications and section 310(d) transfer/assignment applications filed by a subsidiary or affiliate. The
rules that we adopt here will preserve the agencies’ ability to review and file comments on, including
petitions to condition or limit grant of, those applications prior to Commission action.
95.
We note, first, that the modified automatic extension rule will eliminate the current
requirement that commonly owned and controlled entities each file a petition for declaratory ruling at the
same time that the entity files an application for an initial common carrier or aeronautical license, for
consent to acquire such a license by assignment from another carrier, or for consent to lease spectrum
(Continued from previous page)
New U.S. Subsidiary stating that their foreign ownership complies with Licensee’s foreign ownership ruling and the
rules adopted in this Second Report and Order.
251 NPRM, 26 FCC Rcd at 11732, ¶ 56.
252 We will define “voting stock” to mean an entity’s corporate stock, partnership or membership interests, or other
equivalents of corporate stock that, under ordinary circumstances, entitles the holders thereof to elect the entity’s
board of directors, management committee, or other equivalent of a corporate board of directors.
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from another carrier.253 In all of these situations, the subsidiary or affiliate acquiring a license or entering
into a spectrum leasing arrangement will need to be controlled by, or under common control with, a
licensee in order to rely on that licensee’s ruling. Even if the subsidiary or affiliate has government
contracts that are not otherwise covered by an existing security agreement – e.g., between the relevant
Executive Branch agencies and a company that controls both the licensee and its subsidiary or affiliate –
the Departments will have the opportunity to raise any concerns and to negotiate an agreement or
modifications to an existing agreement in the section 308 licensing proceeding or section 310(d)
assignment proceeding.254 Second, the automatic extension rule will eliminate the requirement that,
where a licensee has received a ruling under section 310(b)(3) forbearance and/or under section
310(b)(4), the licensee (in the former case) or its U.S. parent (in the latter case) must nonetheless file a
new petition for declaratory ruling to accompany its application for consent to acquire control of another
common carrier licensee (or an aeronautical licensee in the latter case only) pursuant to section 310(d) of
the Act. The Departments, in either case, will have the opportunity to raise any concerns with respect to
the proposed acquisition of the new company – which may have government contracts to which the
licensee or U.S. parent is not a party – and to negotiate an agreement or modifications to an existing
agreement in the section 310(d) transfer of control proceeding.255
96.
However, in order to fully preserve such opportunities, we will maintain the current
requirement that applicants with foreign ownership exceeding the section 310(b) limits will qualify for the
Commission’s “immediate approval” procedures, adopted in the Secondary Markets proceeding, only

253 Some assignments may be part of an internal restructuring and pro forma in nature: for example, where a
licensee’s U.S. parent forms a new, wholly-owned subsidiary to hold some of the licensee’s assets, including its
common carrier licenses. Other assignments may involve a substantial assignment: for example, where the
licensee’s U.S. parent forms a new, wholly-owned subsidiary to acquire licenses from an unaffiliated, third-party
carrier. See, e.g., 47 C.F.R. § 1.948(c) (requiring prior approval of assignments and transfers of control of wireless
radio services with the exception that applications may be filed post-closing in certain circumstances where the
transaction is non-substantial (pro forma)). We note that, to the extent a common carrier licensee subject to section
310(b)(3) forbearance has received a ruling approving its foreign ownership in excess of 20 percent, neither it nor
any subsidiary or affiliate may rely on that ruling for purposes of an application to acquire aeronautical licenses,
because our forbearance authority does not extend to such licenses. See supra note 31.
254 In addition, we note that security agreements generally contain (and can be negotiated to include) provisions that
bind existing and subsequently formed entities over which the named companies have de facto or de jure control.
See, e.g., America Movil Order, 22 FCC Rcd 6195, Appendix B (Executive Branch Agreement) (defining in Article
1 the term “Domestic Companies” to include TELPRI and “all existing and post-Agreement subsidiaries, divisions,
departments, branches and other components of TELPRI, or any other entity over which TELPRI has de facto or de
jure
control….”). The Commission also routinely conditions the grant of any license or assignment or transfer of
control thereof on “compliance with the commitments set forth in the Executive Branch Agreement.” Id. at 6227-
28, ¶¶ 76, 78.
255 The Commission has previously held that, regardless of the applicability of sections 310(a) and 310(b), the
Commission considers, pursuant to sections 308 and 310(d) of the Act, national security, law enforcement, foreign
policy and trade policy concerns when analyzing an application in which foreign ownership is involved. See e.g.,
Intelsat Holdings, Ltd., Transferor, and Serafina Holdings Limited, Transferee, Consolidated Application for
Consent to Transfer Control of Holders of Title II and Title III Authorizations
, IB Docket No. 07-181, Memorandum
Opinion and Order, FCC 07-220, 22 FCC Rcd 22151, 22160, ¶ 26 (2007); Constellation, LLC, Carlyle PanAmSat I,
LLC, Carlyle PanAmSat II, LLC, PEP PAS, LLC, and PEOP PAS, LLC, Transferors, and Intelsat Holdings, Ltd.,
Transferee, Consolidated Application to Transfer Control of PanAmSat Licensee Corp. and PanAmSat H-2 Licensee
Corp
., IB Docket No. 05-290, Memorandum Opinion and Order, FCC 06-85, 21 FCC Rcd 7368 (2006);
Amendment of the Commission’s Regulatory Policies to Allow Non-U.S. Licensed Space Stations to Provide
Domestic and International Satellite Service in the United States
, Report and Order, 12 FCC Rcd 24094, 24170-71,
¶¶ 178-79 (1997).
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where the applicant itself has already received a service-specific and geographic-specific ruling that
covers the spectrum leasing arrangements or licenses that are the subject of the application, and where
there has been no change in foreign ownership since that ruling.256 Thus, applications for consent to a
spectrum leasing arrangement or for consent to a transfer or assignment of licenses or spectrum leasing
arrangements filed by a licensee’s subsidiaries or affiliates will not be eligible for immediate approval.
We make no change to the Commission’s rules in this respect because the immediate approval procedures
do not provide an opportunity for Commission or Executive Branch review prior to grant of an eligible
application.257 These applications are granted upon filing and, thus, there is no public notice of the
application or opportunity for the filing of comments or oppositions.258
6.

Introducing New Foreign-Organized Entities into the Vertical Ownership
Chain

97.
The Commission sought comment in the NPRM on whether we should permit, without
prior Commission approval, the insertion of new, controlling foreign-organized companies at any level in
the vertical ownership chain above the U.S. parent that has received a foreign ownership ruling, provided
that any new foreign-organized company(ies) are under 100 percent common ownership and control with
the controlling foreign parent for which the U.S. parent has received prior Commission approval.259 It is
our experience that the controlling U.S. parent of a licensee may itself have one or more controlling
foreign-organized parent companies situated above it in the vertical chain of ownership. As a result of
internal reorganizations, new foreign-organized parent companies may be added to the vertical chain of
ownership over time. In the NPRM, the Commission noted that it would appear reasonable to allow these
internal reorganizations to proceed without requiring that the U.S. parent return to the Commission, after
receiving an initial ruling, for specific approval under section 310(b)(4). The Commission also requested
comment on whether to permit a U.S. parent company’s approved, non-controlling foreign investors to
insert new, foreign-organized companies into their vertical chains of ownership without the U.S. parent
having to return to the Commission for prior approval, provided that the new foreign company is under
100 percent common ownership and control with the approved foreign investor.260
98.
As noted above, in the First Report and Order in this proceeding, we adopted a section
310(b)(3) forbearance approach for the class of common carrier licensees subject to section 310(b)(3)

256 See generally Second Order on Reconsideration, 23 FCC Rcd at 15082, ¶ 3 (summarizing the immediate
approval policies adopted in the Secondary Markets Second Report and Order, 19 FCC Rcd 17503). See also
Second Order on Reconsideration
, 23 FCC Rcd at 15084-85, ¶ 7 (declining to address T-Mobile USA’s argument
on reconsideration that the immediate approval procedures should apply where the applicant is, or would become, a
wholly-owned direct or indirect subsidiary of a U.S. parent whose foreign ownership the Commission has already
approved).
257 For the same reasons, a subsidiary’s or affiliate’s notification to the Commission of a “spectrum manager”
leasing arrangement, which does not require the filing of an application, will not be eligible for “immediate
processing.” See Secondary Markets Second Report and Order, 19 FCC Rcd at 17525-28, ¶¶ 46-50 (adopting
immediate processing procedures for qualifying spectrum manager leasing arrangements).
258 Applications granted under the immediate approval procedures, however, are subject to the Commission’s
reconsideration procedures. See 47 C.F.R. §§ 1.948(j)(2)(iii) (assignments/transfers of control); 1.9030(e)(2)(iii)
(long-term de facto transfer leasing arrangements); 1.9035(e)(3) (short-term de facto transfer leasing arrangements).
Notifications of spectrum manager leasing arrangements that are filed pursuant to the Commission’s immediate
processing procedures are also subject to reconsideration. Id. § 1.9020(e)(2)(iii).
259 NPRM, 26 FCC Rcd at 11733, ¶ 57.
260 Id.
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forbearance.261 We deferred consideration of applicable rules to this Second Report and Order.262 As we
consider whether and how to apply our proposal to permit the insertion of new, foreign-organized
companies into the vertical ownership chain above controlling U.S. parents of common carrier and
aeronautical radio station licensees, under section 310(b)(4), we also consider whether and how to permit
the insertion of new, foreign-organized companies in the vertical ownership above the intermediary U.S.-
organized entities that do not control common carrier licensees subject to section 310(b)(3) forbearance.
99.
Industry commenters on the NPRM support adopting a rule for section 310(b)(4) public
interest reviews permitting, without prior Commission approval, the insertion of new, controlling foreign-
organized companies at any level in the vertical ownership chain above the U.S. parent that has received a
foreign ownership ruling, provided that any new foreign-organized company(ies) are under 100 percent
common ownership and control with the controlling foreign parent for which the U.S. parent has received
prior Commission approval.263 Commenters on the Forbearance Public Notice support applying the same
rules to the class of common carrier licensees subject to section 310(b)(3) forbearance as we apply to
common carrier and aeronautical radio station licensees under section 310(b)(4).264 The Departments do
not oppose allowing the insertion of new foreign-organized companies into the vertical ownership chains
above U.S. parents or their non-controlling foreign investors, “but strongly believe that the U.S. parent
companies should be required to notify the Commission of the changes in ownership within 30 days.”265
100.
Based on our review of the record, we will issue foreign ownership rulings to permit,
without prior Commission approval, the insertion of new, controlling foreign-organized companies in the
vertical ownership chain above the controlling U.S. parent of a common carrier or aeronautical radio
station licensee, under section 310(b)(4), or above a U.S.-organized entity that does not control the
common carrier licensee, under section 310(b)(3) forbearance. Authorization under this rule will require
any new foreign-organized companies to be under 100 percent common ownership and control with the
controlling foreign parent of the licensee’s controlling U.S. parent, under section 310(b)(4), or with the
controlling foreign parent of the U.S.-organized entity that does not control the licensee, under section
310(b)(3) forbearance, for which the licensee has received prior approval.266

261 First Report and Order, 27 FCC Rcd 9837, ¶ 10.
262 Id. at 9844, ¶ 33.
263 Verizon NPRM Comments at 6; AT&T NPRM Comments at 10; DOJ/DHS NPRM Comments at 9; T-Mobile
NPRM Comments at 3; SIA NPRM Comments at 2-3; CTIA NPRM Reply at 6.
264 Vodafone Public Notice Comments at 8-9; Verizon Public Notice Comments at 13; DT/T-Mobile Public Notice
Reply at 5.
265 DOJ/DHS NPRM Comments at 9.
266 For a section 310(b)(4) example, assume that a U.S.-organized corporation (“U.S. Corp. A”) holds a controlling,
56 percent equity and voting interest in a common carrier licensee (“Licensee”). U.S. Corp. A is wholly owned by a
foreign-organized company (“Foreign Company I”) that is, in turn, wholly owned by a foreign citizen. The
remaining 44 percent of Licensee’s equity and voting interests are held by another U.S.-organized corporation
(“U.S. Corp. B”). U.S. Corp. B is wholly owned by a U.S. citizen. Licensee has received a section 310(b)(4) ruling
approving Foreign Company I’s 56 percent controlling interest in Licensee’s U.S. parent, U.S. Corp. A. After
issuance of the section 310(b)(4) ruling, Foreign Company I forms a wholly-owned, foreign-organized subsidiary
(“Foreign Company II”) to hold all of Foreign Company I’s shares in U.S. Corp. A. The insertion of Foreign
Company II into the vertical ownership chain above U.S. Corp. A would not require prior Commission approval.
For a section 310(b)(3) forbearance example involving the same Licensee, assume the same vertical ownership
chain, except that a foreign citizen wholly owns U.S. Corp. B. Licensee has received, in addition to its section
310(b)(4) ruling, a ruling under our section 310(b)(3) forbearance approach approving the foreign citizen’s 44
percent indirect interest in Licensee, held through the foreign citizen’s wholly-owned, U.S.-organized subsidiary,
(continued….)
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101.
We will also issue foreign ownership rulings to permit, without prior Commission
approval, the insertion of new, non-controlling foreign-organized companies in the vertical ownership
chain above the controlling U.S. parent of a common carrier or aeronautical radio station licensee, under
section 310(b)(4), or above a U.S.-organized entity that does not control the common carrier licensee,
under section 310(b)(3) forbearance. Authorization under this rule will require any new, foreign-
organized companies to be under 100 percent common ownership and control with a previously approved
foreign investor.267 Commenters on the NPRM support adopting such a rule for section 310(b)(4) public
interest reviews,268 and commenters on the Forbearance Public Notice support applying the same rules to
the class of common carriers subject to section 310(b)(3) forbearance as we apply to common carrier and
aeronautical radio station licensees under section 310(b)(4).269 In addition, to the extent a licensee subject
to section 310(b)(3) forbearance obtains specific approval in its ruling of a foreign investor’s direct
ownership interest in the licensee (subject to the 20 percent aggregate limit on direct foreign investment),
we will permit the licensee to insert, without prior Commission approval, a new foreign-organized entity
in the vertical ownership chain of the approved foreign investor, provided that any new foreign-organized
entity is under 100 percent common ownership and control with the approved foreign investor.270
(Continued from previous page)
U.S. Corp. B. Two years after Licensee receives its ruling approving foreign citizen’s indirect interest in Licensee,
foreign citizen forms a foreign-organized company (“Foreign Company III”) to hold all of its shares of U.S. Corp.
B. The insertion of Foreign Company III above U.S. Corp. B. would not require prior Commission approval.
267 For a section 310(b)(4) example, assume U.S.-organized corporation (“U.S. Corp. A”) holds a controlling 56
percent equity and voting interest in a common carrier licensee (“Licensee”). U.S. Corp A. is minority-owned (30
percent) by a foreign-organized company (“Foreign Company I”) that is, in turn, wholly owned by a foreign citizen.
The remaining 44 percent of Licensee’s equity and voting interests are held by another U.S.-organized corporation
(“U.S. Corp. B”). U.S. Corp. B is wholly owned by a U.S. citizen. Licensee has received a section 310(b)(4) ruling
approving Foreign Company I’s 30 percent non-controlling interest in Licensee’s U.S. parent, U.S. Corp. A. After
issuance of the section 310(b)(4) ruling, Foreign Company I forms a wholly-owned, foreign-organized subsidiary
(“Foreign Company II”) to hold all of Foreign Company I’s shares in U.S. Corp. A. The insertion of Foreign
Company II into the vertical ownership chain above U.S Corp. A would not require prior Commission approval.
For a section 310(b)(3) forbearance example involving the same Licensee, assume the same vertical ownership
chain, except that a foreign citizen owns a non-controlling 49 percent interest in U.S. Corp. B (which holds 44
percent of Licensee’s equity and voting interests). Licensee has received a ruling under our section 310(b)(3)
forbearance approach approving the foreign citizen’s 22 percent indirect interest in Licensee, held through U.S.
Corp. B (49% x 44% = 22%). Two years after Licensee receives its ruling approving foreign citizen’s indirect
interest in Licensee, foreign citizen decides to form a foreign-organized company (“Foreign Company III”) to hold
all of its shares of U.S. Corp. B. Licensee would not require prior Commission approval for the insertion of Foreign
Company III above U.S. Corp. B.
268 Verizon NPRM Comments at 6; AT&T NPRM Comments at 10; DOJ/DHS NPRM Comments at 9; T-Mobile
NPRM Comments at 3; SIA NPRM Comments at 2-3; CTIA NPRM Reply at 6.
269 Vodafone Public Notice Comments at 8-9; Verizon Public Notice Comments at 13; DT/T-Mobile Public Notice
Reply at 5.
270 As discussed in Sections IV.B.3.a and IV.B.4 above, a common carrier licensee filing a petition for declaratory
ruling to exceed the aggregate 20 percent foreign ownership limit in section 310(b)(3) must identify and request
specific approval in its petition of any foreign individual, entity, or “group” that holds or would hold directly, or
indirectly through one or more U.S.-organized entities that do not control the licensee, more than five percent of the
licensee’s outstanding capital stock or voting stock (with an exception for certain interests in excess of five percent
and up to ten percent). Foreign interests held directly in the licensee, however, may not exceed an aggregate 20
percent of the licensee’s equity and/or voting interests. See supra ¶ 9 and note 236 (citing First Report Order, 27
FCC Rcd at 9842, ¶ 24).
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102.
We find it reasonable to allow these internal reorganizations to proceed without requiring
the licensee to return to the Commission, after receiving an initial ruling, for specific approval to insert
the new, foreign-organized company in the previously approved vertical ownership chain. The new,
foreign-organized company will remain under 100 percent common ownership and control with the
previously approved foreign investor. Under other circumstances, the Commission has acknowledged
that non-substantial changes in corporate organization merit streamlined treatment.271 We caution,
however, that while as noted above we have previously streamlined or forborne in many situations from
enforcement of the separate requirement under section 310(d) for prior Commission approval of such
internal reorganizations that do not involve “a substantial change in ownership or control,”272 our action in
this Second Report and Order extends only to our requirements in enforcing the foreign ownership
restrictions of section 310(b) and does not eliminate any continuing section 310(d) approval requirements.
103.
In the NPRM, the Commission also asked whether, if it determined to allow post-ruling
changes in foreign ownership, the U.S. parent company should be required to notify the Commission
about the changes in ownership and, if so, whether 30 days would be a reasonable timeframe within
which to require the U.S. parent to notify the Commission.273 As noted, the Departments support
requiring notice to the Commission of ownership changes within 30 days.274 Verizon asserts that
insertion of new foreign entities into the approved vertical chain of ownership should not be subject to a
notice requirement.275 T-Mobile states that the Commission need not require notification when
notifications for the reorganization would have been filed under section 214 and section 310(d) filing
requirements for pro forma changes in ownership or control.276
104.
We adopt a requirement, in section 1.994, that licensees file a letter to the attention of the
Chief, International Bureau, within 30 days after introduction of a new, foreign-organized entity in the
vertical ownership chain above the controlling U.S. parent, under section 310(b)(4), or above the licensee,

271 See, e.g., Federal Communications Bar Association's Petition for Forbearance from Section 310(d) of the
Communications Act Regarding Non-Substantial Assignments of Wireless Licenses and Transfers of Control
Involving Telecommunications Carriers
, Memorandum Opinion and Order, FCC 98-18, 13 FCC Rcd 6293 (1998)
(forbearing from prior review of transfers and assignments of certain wireless licenses that do not cause a substantial
change in control of the licensee as provided in section 309(c)(2)(B) of the Act); 1998 Biennial Regulatory Review-
Review of International Common Carrier Regulations
, IB Docket No. 98-118, Report and Order, FCC 99-51, 14
FCC Rcd 4909 (1999) (adopting streamlined processing of non-substantial assignments and transfers of control of
international section 214 authorizations). Corporate reorganizations of wireless telecommunications carriers that
constitute non-substantial assignments or transfers of control generally no longer require prior Commission approval
under section 310(d) of the Act. See 47 C.F.R. § 1.948(c) (assignments and transfers of control of wireless radio
services licenses); but see id. § 25.119 (generally requiring prior approval for assignments and transfers of control of
satellite radio service licenses). They do not alter the ultimate parent of the licensee, and, as noted in paragraph 99
above, the Departments do not oppose eliminating the section 310(b) approvals for them subject to a notice
requirement, which we here adopt. See infra ¶¶ 103-104.
272 See supra note 271. See also 47 U.S.C. §§ 160(a), 309(c)(2)(B), 310(d). The NPRM did not propose any
changes to service-specific licensing rules that may require licensees to obtain prior approval or notify the
Commission of pro forma transfers of control pursuant to section 310(d) of the Act. NPRM, 26 FCC Rcd at 11733,
¶ 57 n.119.
273 Id. at 11733, ¶ 58.
274 DOJ/DHS NPRM Comments at 9. See also supra ¶ 99.
275 Verizon NPRM Reply at 6 n.19 (stating that, to the extent the Executive Branch agencies think notifications are
necessary for changes in foreign ownership that occur within the same corporate family as approved previously, they
can stipulate as such in a security agreement).
276 T-Mobile NPRM Comments at 4 n.11.
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under our section 310(b)(3) forbearance approach, certifying that the new, foreign-organized entity
complies with our 100 percent common ownership and control requirement and referencing the
underlying ruling by the International Bureau Filing System (IBFS) File No. and FCC Record citation, if
available. We believe that it is important to maintain complete and current records of approved foreign
ownership, including the insertion of new, foreign-organized entities in the approved vertical ownership
chain above the controlling U.S. parent, under section 310(b)(4), or above the licensee, under our section
310(b)(3) forbearance approach. We will not require such separate notification if the ownership change is
instead the subject of a pro forma application or pro forma notification already filed with the Commission
via the Universal Licensing System (ULS) (for wireless licensees) or IBFS (for satellite radio
licensees).277
7.

Service- and Geographic-Specific Rulings

105.
The Commission asked for comment in the NPRM whether to retain the general practice
of issuing rulings on a service-specific and geographic-specific basis.278 The Commission observed that
section 310(b)(4) rulings typically cover only the particular wireless service(s) referenced in the petition
for declaratory ruling, and that the scope of the ruling may also be limited to the geographic service area
of the licenses or spectrum leasing arrangements referenced in the petition.279 As a result, although the
ruling authorizes the foreign ownership of the licensee, the licensee is required to file additional petitions
for declaratory ruling to “extend” its existing ruling to cover licenses or spectrum leasing arrangements in
different services and/or in different geographic service areas. The Commission noted in the NPRM the
Commission’s previous finding, in the Secondary Markets Second Report and Order, that service-specific
and geographic-specific rulings might require carriers to make multiple filings for section 310(b)(4)
approval, resulting in increased transaction costs and regulatory delay.280
106.
In the NRPM, the Commission sought input on the public interest costs and benefits of
issuing section 310(b)(4) rulings on a service-specific and geographic-specific basis. The Commission
also requested that commenters advocating a change in policy include specific proposals as to the
appropriate service and geographic limitations of section 310(b)(4) rulings, if any.281
107.
Industry commenters support eliminating the Commission’s general practice of issuing
rulings on a service-specific and geographic-specific basis, while the Departments supported continuing
the practice.282 T-Mobile argues, for example, that requiring a company to file, and Commission
personnel to process, petitions for each new service and/or location the company intends to serve would
negate the efficiencies of the NPRM proposals to streamline and simplify the section 310(b)(4) process.283

277 See, e.g., 47 C.F.R. §§ 1.948, 25.119.
278 NPRM, 26 FCC Rcd at 11731-32, ¶¶ 55-56.
279 For example, in the case of a petition filed by an existing licensee, the section 310(b)(4) ruling may cover only
the particular wireless service (e.g., Personal Communications Service) authorized under the petitioner’s existing
license(s) and only within the geographic service area of the license(s).
280 See NPRM, 26 FCC Rcd at 11734, ¶ 60 (citing Secondary Markets Second Report and Order, 19 FCC Rcd at
17515, ¶ 22).
281 See NPRM, 26 FCC Rcd at 11734-35, ¶ 61.
282 See AT&T NPRM Comments at 10; SIA NPRM Comments at 3; T-Mobile NPRM Comments at 4-5; Verizon
NPRM Comments at 6-7; Vodafone NPRM Comments at 31. See also CTIA NPRM Reply at 8; USTelecom
NPRM Reply at 6; Verizon NPRM Reply at 8.
283 See T-Mobile NPRM Comments at 4-5 (stating that “a new ruling should not be required each time a company
acquires a different type of wireless service license or a license that covers a new geographic area, particularly if the
license will be used for augmenting or expanding the company’s current business”).
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According to T-Mobile, the fact that a company with previously-approved foreign ownership is
“acquiring a license for a different type of wireless service or a license in a different market would not
have a material impact on the Commission’s prior analysis or conclusions.”284 T-Mobile also states that
requiring new rulings would unreasonably discriminate against foreign-owned companies, which would
face needless delay in acquiring new licenses and deploying services.285 AT&T supports providing
“blanket” section 310(b)(4) approval that authorizes the licensee to enter into future spectrum leasing
arrangements and acquire new licenses by assignment and transfer of control without seeking additional
section 310(b)(4) approvals.286
108.
The Departments expressed concern that allowing carriers to change services and service
areas without prior Commission approval would prevent them from evaluating accurately whether public
interest concerns might be raised by the provision of expanded services,287 and that “[w]hile de minimis
changes … would be unlikely to affect the Departments’ analysis, the Commission’s proposal is quite
broad, and could be interpreted to permit a licensee to change completely its line of business and
geographic area of coverage….”288 We believe that eliminating the practice of issuing service- and
geographic-specific rulings should still preserve a meaningful opportunity for the Departments to review
applications for national security and law enforcement concerns prior to Commission action, because we
will continue to issue public notice of applications filed by licensees that have received a section 310(b)
foreign ownership ruling under the new rules, including applications that would be required to be filed
under other provisions of the Act (e.g., section 308) authorizing the expansion of the licensee’s authorized
services and/or service areas. In such cases, the Departments will continue to have the opportunity to
review such applications prior to Commission action, to request additional information from the
applicants to inform the Departments’ views, and to request that we deny, limit or condition grant of the
applications for the expansion of the licensee’s authorized services and/or service areas.289
109.
We will eliminate the current practice of issuing rulings on a service-specific and
geographic-specific basis. This change in practice will apply to petitions filed under our section 310(b)(3)
forbearance approach and under section 310(b)(4). We find that the Commission and the Departments
will have sufficient opportunities during the Title III licensing process to consider whether a licensee’s
proposed expansion of service or coverage area raises concerns with respect to national security, law

284 Id. at 5. See also Verizon NPRM Reply at 8 (asserting that the Departments’ concerns can and should be
addressed “by more limited and narrowly-tailored means” than requiring “duplicative filings from every entity with
foreign ownership”).
285 See T-Mobile NPRM Comments at 4-5 (stating that “[th]e plain language of Section 310(b)(4) requires only that
the Commission make a public interest determination to allow foreign ownership in amounts greater than 25 percent,
and does not require service-specific and geographic-specific rulings”); USTelecom Reply at 6 (accord).
286 See AT&T NPRM Comments at 10. Under current policy enunciated in the Secondary Markets proceeding, the
Commission will entertain petitions that seek “blanket” approval under section 310(b)(4) to allow the petitioning
licensee to enter into future spectrum leasing arrangements and acquire new licenses by assignment and transfer of
control without seeking additional section 310(b)(4) approvals. See Secondary Markets Second Report and Order,
19 FCC Rcd at 17515, ¶ 22. In order to discourage the filing of speculative petitions, however, the Commission
stated that it will entertain petitions for such “blanket” rulings only in conjunction with a spectrum leasing or
assignment/transfer application that would be covered by the requested ruling. Id.
287 DOJ/DHS NPRM Comments at 2-3. The Departments note that an expansion of service into a new geographic
service area might include military or other government facilities with national security or law enforcement equities
at stake.
288 Id. at 3.
289 See DOJ/DHS Letter, supra note 19.
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enforcement, foreign policy and trade policy due to the licensee’s foreign ownership. As we found in
adopting the “automatic extension rule” – so that a licensee’s ruling will also cover, on a going-forward
basis, any of its subsidiaries or affiliates (as defined in the new rule) – the Departments will have the
opportunity to raise any concerns with respect to a licensee’s acquisition of new licenses during the
section 308 licensing proceeding or, in the case of the acquisition of licenses by assignment or transfer of
control, during the section 310(d) proceeding.290
110.
We will maintain the current requirement, adopted in the Secondary Markets proceeding,
that applicants with foreign ownership exceeding the section 310(b) limits will qualify for the
Commission’s “immediate approval” procedures only where the applicant is able to certify in its
application that it has already received a service-specific and geographic-specific ruling that covers the
spectrum leasing arrangements or licenses that are the subject of the application and that there has been
no change in its foreign ownership in the meantime.291 Thus, unless an applicant has already received a
foreign ownership ruling for the same wireless service in the same geographic service area specified in its
application for consent to a spectrum leasing arrangement, or for consent to a transfer or assignment of
licenses or spectrum leasing arrangements (e.g., the application involves a request only for additional
spectrum in the same service(s) and the same area(s)), the application will not be eligible for immediate
approval.292 We make no change to the Commission’s rules in this respect because, as discussed above,293
the immediate approval procedures do not provide an opportunity for Commission or Executive Branch
review prior to grant of an eligible application. These applications are granted upon filing and, thus, there
is no public notice of the application or opportunity for the filing of comments or oppositions.294

C.

Contents of Petitions for Declaratory Ruling

1.

Information on Disclosable Interest Holders and Foreign Investor Interests

111.
The Commission proposed in the NPRM to require that all section 310(b)(4) petitions for
declaratory ruling contain the name, address, citizenship, and principal business(es) of any individual or
entity, regardless of citizenship, that directly or indirectly holds or would hold, after effectuation of any
planned ownership changes described in the petition, at least ten percent of the equity or voting interests
in the controlling U.S. parent of a common carrier or aeronautical radio station licensee or a controlling

290 See supra Section IV.B.5, ¶¶ 88-96.
291 As discussed above, supra ¶ 96, eligibility for the immediate approval procedures adopted in the Secondary
Markets
proceeding requires that a spectrum lessee or assignee/transferee be able to certify in its application either
that: (1) it does not have foreign ownership exceeding the 25 percent limit in section 310(b)(4); or (2) it has
previously obtained a declaratory ruling that covers the same type of service and geographic coverage area, and that
there has been no change in foreign ownership in the meantime. See generally Second Order on Reconsideration,
23 FCC Rcd at 15082, ¶ 3 (summarizing the immediate approval policies adopted in the Secondary Markets Second
Report and Order
, 19 FCC Rcd 17503). See also 47 C.F.R. § 1.948(j)(2)(i)(C).
292 For example, a licensee’s application for consent to a spectrum leasing arrangement with another licensee would
not be eligible for immediate approval in the following circumstances: Assume the licensee has received an initial
section 310(b)(4) ruling under the new rules. The common carrier licenses it held at the time it received the ruling
authorized the provision of Personal Communications Services (PCS) in several cities along the mid-Atlantic coast.
Because licensee’s spectrum leasing application, if granted, would authorize it to operate using the leased spectrum
in several cities along the coast of California and in Hawaii, its application would not be eligible for immediate
approval.
293 See supra ¶ 96.
294 As noted above, however, applications granted under the immediate approval procedures are subject to the
Commission’s reconsideration procedures. See supra note 258.
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interest.295 The NPRM explained that this proposed ten percent ownership threshold would mirror the
ownership disclosure requirements that currently apply to most common carrier applicants under the
Commission’s licensing rules.296 The Commission also asked whether a lower disclosure threshold, such
as an interest that exceeds five percent, may be appropriate.297 The NPRM also proposed to require
similar ownership information for each foreign entity for which the petition seeks specific approval.298
112.
The Departments requested that we adopt a five percent disclosure requirement, stating
that “[i]dentifying owners between five and ten percent provides a greater opportunity to ensure that
unaffiliated foreign investors are not acting in concert with each other.”299 They also stated that,
depending on a company’s ownership structure, “company owners between five and ten percent may have
the potential to exert influence on company operations sufficient to raise possible law enforcement or
national security concerns.”300 Industry commenters oppose a lower threshold.301 Verizon, however,
suggested that we require disclosure of only those investors with voting power in a licensee. Verizon
argues that “an individual or entity’s equity interest in a company is not meaningful as a measure of
control because without voting power, the entity has limited – if any – authority to influence decisions.”302
113.
To ensure that the disclosure requirement in the context of foreign ownership of common
carrier and aeronautical radio station licensees is consistent with the ownership disclosure requirements
that currently apply to most common carrier applicants under the Commission’s licensing rules, we adopt

295 See NPRM, 26 FCC Rcd at 11735, ¶ 62.
296 NPRM, 26 FCC Rcd at 11735, ¶ 62. See 47 C.F.R. §§ 1.919, 1.948, 1.2112(a) (specifying, inter alia, ownership
disclosure requirements for Wireless Radio Services applicants), FCC Form 175 (Application to Participate in an
FCC Auction), & FCC Form 602 (Ownership Disclosure Information for the Wireless Telecommunications
Services, Schedule A). With respect to Satellite Radio Services, applicants for new satellite space station licenses
must disclose their ten percent interest holders, while applicants for new satellite earth station licenses must file
discrete ownership information only to the extent they have foreign ownership in excess of the 25 percent
benchmark in section 310(b)(4). Applications to assign or transfer control of space and earth station licenses must
also include discrete ownership information for the assignee/transferee. See FCC Form 312 (Application for
Satellite Space and Earth Station Authorizations, Main Form – Questions 34 & 40; Schedule A – Question A8.).
Applicants for aeronautical fixed and aeronautical en route station licenses are required to provide ownership
information only to the extent they have foreign ownership in excess of the 25 percent benchmark in section
310(b)(4). See 47 C.F.R. § 87.19; FCC Form 601 (Main Form – Question 48b).
297 NPRM, 26 FCC Rcd at 11736, ¶ 62 & n.126.
298 Id. at 11736, ¶ 63.
299 DOJ/DHS NPRM Comments 10.
300 Id.
301 See, e.g., T-Mobile NPRM Comments at 6 (stating that the vast majority of companies already track and report
this information as part of the wireless licensing process, that complying with a lower reporting threshold would be
unnecessarily burdensome, especially for widely held companies, and that it would offer no corresponding benefits);
Verizon NPRM Comments at 18 (asserting that a five percent threshold could greatly increase the number of entities
from which information must be gathered and reported without providing any meaningful information to the
Commission). See also SIA NPRM Comments at 9-10 (asking the Commission to refrain from requiring disclosure
of non-controlling interests held in widely-held publicly traded companies, pension funds, and investment funds,
except where a single non-U.S. investor or group of investors would have an ownership or voting interest in the
licensee of 25 percent or more).
302 Verizon NPRM Comments at 18; see also USTelecom NPRM Reply at 4 (urging the Commission to consider
Verizon’s proposal as a means to streamline the foreign ownership review process and thereby increase foreign
investment potential).
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the ten percent disclosure threshold proposed in the NPRM. Specifically, all section 310(b)(4) petitions
for declaratory ruling must contain the name, address, citizenship, and principal business(es) of any
individual or entity, regardless of citizenship, that directly or indirectly holds or would hold, after
effectuation of any planned ownership changes described in the petition, at least ten percent of the equity
or voting interests in the controlling U.S. parent of a common carrier or aeronautical radio station licensee
or a controlling interest. We also require that petitions for declaratory ruling filed by common carrier
licensees subject to section 310(b)(3) forbearance contain the same information for such interests in the
common carrier licensee. Petitioners will also be required to provide the percentage of equity and voting
interest held or to be held by each such “disclosable interest holder” (to the nearest one percent). It is
our view that this ownership information is necessary for the Commission to verify the principal
stakeholders and ultimate control of the U.S. parent company of a common carrier or aeronautical
licensee, in the case of section 310(b)(4) review, and in a common carrier licensee, in the case of petitions
filed under our section 310(b)(3) forbearance approach, and that requiring its submission would impose a
minimal burden on petitioners.303
114.
We do not adopt a lower, more stringent ownership disclosure threshold, such as a five
percent threshold as requested by the Departments. We find that adopting a ten percent disclosure
threshold is reasonable, and observe that, under a separate provision of the rules, licensees will be
required to identify and seek specific approval for foreign investors holding interests greater than five
percent (subject to an exception for certain ten percent interests).304 We find that this specific approval
requirement for foreign investors addresses the Departments’ concern that we should require petitioners
to disclose all five percent interest holders, regardless of citizenship. For this reason, we believe this
proposal should preserve a meaningful opportunity for the Departments to review applications for
national security and law enforcement concerns. We also do not adopt Verizon’s suggestion that we
require disclosure of only those investors with voting power in a licensee. We are not convinced on the
basis of this record that we should limit our disclosure requirements to include only those investors that
possess voting rights in a company. Such an approach would depart from Commission precedent that
reads section 310(b) to evince Congress’ separate concern with the scope of foreign equity interests in a
licensee and its parent company regardless of whether they confer control. In addition, we are concerned
that non-voting equity investors may have the interest and ability in a particular case to actively
participate in the affairs of companies in which they invest.305
115.
We will require petitions to include a percentage estimate of the licensee’s and/or U.S.
parent’s aggregate direct and indirect foreign equity and voting interests, a general description of the
methods used to determine the percentages, and a statement addressing the circumstances that prompted
the filing of the petition for declaratory ruling and demonstrating that the public interest would be served
by grant of the petition. The rules will also require petitioners to describe the ownership and control
structure of the U.S. parent, under section 310(b)(4), and of the common carrier licensee, under our
section 310(b)(3) forbearance approach, including an ownership diagram and identification of the real

303 T-Mobile, for example, states that a ten percent information disclosure requirement is reasonable. T-Mobile
NPRM Comments at 5-6.
304 See supra Section IV.B.3.a.
305 For example, in adopting the equity/debt plus (EDP) rule in the context of the mass media attribution rules, the
Commission observed, inter alia, that preferred stockholders which do not have voting rights in an entity “might
exert significant influence through contractual rights or other methods of access to a licensee,” such as negotiating
for the right to select the persons who will run for the board of directors. See Broadcast Attribution Reconsideration
Order
, 16 FCC Rcd at 1104, ¶ 14 (citing 1999 Broadcast Attribution Order, 14 FCC Rcd at 12582-83, ¶ 48).
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party-in-interest disclosed in any companion licensing or spectrum leasing applications.306 Many
applicants and licensees already provide ownership diagrams in their petitions and applications. This
practice has proven to be useful to Commission staff in clarifying relationships among different entities
and individuals holding ownership interests, particularly in applicants or licensees that have a complex
organizational structure. We find that requiring an ownership diagram will impose a minor burden on
petitioners which will be more than offset by the significant benefits that will accrue to the Commission
in processing petitions as expeditiously as possible.
116.
We also adopt the proposal in the NPRM that section 310(b)(4) petitions include
ownership information for each foreign individual or entity for which the petition seeks specific approval:
specifically, their names, citizenship, principal businesses, and the percentage of equity and/or voting
interest held or to be held by the foreign investor (to the nearest one percent).307 This same requirement
will apply to petitions for declaratory ruling filed by common carrier licensees subject to section
310(b)(3) forbearance. Where the named foreign investor is a corporation or other business entity, the
petition shall identify each of the named foreign investor’s direct or indirect ten percent interest holders,
specifying each by name, citizenship, principal businesses, and percentage of equity and/or voting interest
held in the named foreign investor.308 We find that this ownership information is necessary for the
Commission to verify the identity and ultimate control of the foreign investor for which the petitioner
seeks specific approval.309
2.

Methodology for Calculating Disclosable Interests and Foreign Investor
Interests

117.
In support of the ownership disclosure rules discussed above, we codify in sections 1.992
and 1.993 of the new rules our established methodology for calculating a petitioner’s disclosable interest
holders, in order to make that methodology more readily available to the public. We will also require that
petitioners requesting specific approval for named foreign investors use the same methodology to
calculate the foreign investors’ equity and voting interests in the controlling U.S. parent of a common
carrier and aeronautical licensee, under section 310(b)(4), and in a common carrier licensee subject to
section 310(b)(3) forbearance. The rules reflect the established Commission methodology for
determining the level of foreign equity and voting interests that are held directly and/or indirectly in the
U.S. parent of a common carrier or aeronautical licensee that is the subject of a section 310(b)(4)
petition.310 We also clarify here, however, the insulation standard for limited partners of a common

306 See NPRM, 26 FCC Rcd at 11736, ¶ 62. See also DOJ/DHS NPRM Comments at 10 (supporting the NPRM
proposal to require a description of the control structure of the U.S. parent, including an ownership diagram and/or
identification of the real party-in-interest disclosed in any companion licensing or spectrum leasing applications).
307 See NPRM, 26 FCC Rcd at 11736, ¶ 63.
308 See id. No commenter objected to this proposal. The Departments supported the proposal but requested that we
adopt a five percent disclosure threshold. DOJ/DHS NPRM Comments at 10. Given our decision to require that
licensees seek specific approval for a foreign investor or “group” that would itself hold an interest of greater than
five percent in a licensee or its U.S. parent (subject to an exception for certain ten percent interests), we find it
unnecessary and unduly burdensome to require petitioners to disclose the foreign investor’s five percent interest
holders. See supra ¶¶ 44-68.
309 See NPRM, 26 FCC Rcd at 11736, ¶ 63. See also DOJ/DHS NPRM Comments at 10 (concurring that this
information is necessary to verify the identity and ultimate control of the foreign investors for which the petitioner
seeks approval). We find that the Commission’s statutory obligation to pass upon the propriety of foreign
investment under section 310(b)(3) and section 310(b)(4) amply justifies this information collection. See NPRM, 26
FCC Rcd at 11736, ¶ 63 n.127.
310 Foreign Ownership Guidelines, 19 FCC Rcd at 22627-31 (Section E - Use of the “Multiplier”). See also NPRM,
26 FCC Rcd at 11736-37, ¶¶ 64-66.
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carrier or aeronautical licensee or its U.S. parent, or of any intermediate entity in their vertical chains of
ownership, that is organized as a limited partnership.311 We also clarify the appropriate methodology for
calculating voting interests held in U.S. parent companies of common carrier or aeronautical licensees
through intervening limited liability companies, and in a common carrier licensee through intervening
limited liability companies.312 We discuss each of these issues below.
118.
The rules we codify today for calculating interests were established in the Commission’s
case law. In Wilner & Scheiner and its progeny, the Commission set forth a standard for calculating both
foreign equity interests and foreign voting interests held in a licensee under section 310(b)(3), and in a
licensee’s U.S. parent under section 310(b)(4), where such interests are held through intervening
entities.313 In calculating foreign equity interests, the Commission uses a multiplier to dilute the
percentage of each investor’s equity interest when those interests are held through intervening companies.
The multiplier is applied to each link in the vertical ownership chain, regardless of whether any particular
link in the chain represents a controlling interest in the company positioned in the next lower tier.314 The
resulting product yields the pro rata equity holdings of the investors in the licensee, under section
310(b)(3), or in the controlling U.S. parent company, under section 310(b)(4), separate from the voting
power associated with the investors’ shareholdings.315
119.
By contrast, in calculating foreign voting interests, the multiplier is not applied to any
link in the vertical ownership chain that constitutes a controlling interest in the company positioned in the
next lower tier.316 In circumstances where voting interests are held through one or more intervening
partnerships, the multiplier is not applied to dilute a general partnership interest or uninsulated limited
partnership interest held by a foreign individual or entity. A general partner is considered to hold the
same voting interest as the partnership holds in the company situated in the next lower tier of the vertical
ownership chain. Similarly, in the absence of a specific demonstration that a limited partner effectively is
insulated from active involvement in partnership affairs, a limited partner will be deemed to hold the

311 See id. at 11736, ¶ 64.
312 Id.
313 Id. at 11736-37, ¶¶ 65-66 (citing Wilner & Scheiner I, 103 F.C.C.2d 511; Wilner & Scheiner II, 1 FCC Rcd 12;
BBC License Subsidiary L.P., Memorandum Opinion and Order, 10 FCC Rcd 10968, 10973-74, ¶¶ 22-25 (1995)
(BBC License Subsidiary)).
314 See NPRM, 26 FCC Rcd at 11737, ¶¶ 65 (citing BBC License Subsidiary, 10 FCC Rcd at 10973-74, ¶¶ 24-25).
For example, where a foreign entity holds a 20 percent equity and voting interest in Company A and Company A, in
turn, holds a 40 percent equity interest in Company B, but has voting control of Company B, the percentage of
Company B’s equity capital supplied by Company A is 40 percent even if Company A controls Company B. The
Commission has found that, in these circumstances, the percentage of that 40 percent equity capital reasonably
attributable to the foreign investor is proportionate to the foreign investor’s contribution to Company A, and use of
the multiplier (20% x 40% = 8%) properly discounts the investor’s participation in Company B. See BBC License
Subsidiary
, 10 FCC Rcd at 10973-74, ¶¶ 23-25 (overruling Wilner & Scheiner II insofar as it established a method
of calculating foreign equity ownership or contributed capital interests which directly tracked the method used to
determine foreign voting interests).
315 NPRM, 26 FCC Rcd at 11737, ¶¶ 65 (citing BBC License Subsidiary, 10 FCC Rcd at 10973-74, ¶ 25).
316 NPRM, 26 FCC Rcd at 11737, ¶ 66. Thus, in the example in note 314 above, the 20 percent foreign voting
interest in Company A, which has voting control of Company B, would flow entirely to the next tier, and be
attributed to Company B. Counting all of Company A’s foreign interest is appropriate because, as the Commission
has found, “actual control over the business … is unlikely to be significantly attenuated through intervening
companies.” BBC License Subsidiary, 10 FCC Rcd at 10973, ¶ 23. See also Wilner & Scheiner I, 103 F.C.C. 2d at
522, ¶ 19.
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same voting interest as the partnership holds in the company in the next lower tier of the vertical
ownership chain.317
120.
Where a foreign investor holds an ownership interest indirectly in the U.S. parent
company of a common carrier or aeronautical licensee through an intervening limited partnership, and the
investor is effectively insulated from active involvement in partnership affairs, the U.S. parent may apply
the multiplier in calculating the foreign investor’s voting interest in the U.S. parent under section
310(b)(4).318 Thus, in such a case, the foreign investor’s voting interest will be calculated as equal to its
equity interest in the U.S. parent.319 Similarly, where the U.S. parent of a common carrier or aeronautical
licensee is itself organized as a limited partnership, an insulated limited partner’s voting interest in the
U.S. parent will be calculated as equal to the limited partner’s equity interest in the parent. A limited
partner will be treated as insulated where the petitioner can demonstrate that the limited partner is
effectively insulated “from active involvement in partnership affairs.”320
121.
The NPRM requested comment on whether the insulation standard used to calculate
limited partnership interests in U.S. parents of common carrier and aeronautical licensees “is sufficient to

317 NPRM, 26 FCC Rcd at 11737, ¶ 66 (citing Intelsat, Ltd., Transferor, and Zeus Holdings Limited, Transferee,
Order and Authorization, IB Docket No. 04-366, DA 04-4034, 19 FCC Rcd 24820, 24829-30, ¶¶ 23-34 (Int’l
Bur./WTB/OET 2004) (Intelsat-Zeus); Applications of XO Communications, Inc., Memorandum Opinion, Order and
Authorization, IB Docket No. 02-50, DA 02-2512, 17 FCC Rcd 19212, 19221 ¶ 22 (Int’l Bur./WTB/WCB 2002)
(XO Communications); and decisions cited in the Foreign Ownership Guidelines, 19 FCC Rcd at 22628-29). As the
Commission has recognized in the context of adopting its mass media attribution rules, “[t]he partners in a limited
partnership, through contractual arrangements, largely have the power themselves to determine the rights of the
limited partners. As a consequence, certain limited partners may be insulated from material involvement in
partnership affairs whereas other limited partners may actually have the power to participate in the control of the
company.” Reexamination of the Commission’s Rules and Policies Regarding the Attribution of Ownership
Interests in Broadcast, Cable Television and Newspaper Entities
, Memorandum Opinion and Order, MM Docket
No. 83-46, FCC 86-410, 1 FCC Rcd 802, 803-04, ¶ 9 (1986) (footnotes omitted). See also id., 1 FCC Rcd at 804, ¶
10 (stating that “unlike the powers of a voting stockholder, the powers of a limited partner are not necessarily
dependent upon the extent of his or her equity holdings”).
318 NPRM, 26 FCC Rcd at 11738, ¶ 67 (citing Intelsat-Zeus, 19 FCC Rcd at 24829-30, ¶ 24; XO Communications,
17 FCC Rcd at 19221, ¶ 22, 19222-23, ¶ 25; Foreign Ownership Guidelines, 19 FCC Rcd at 22628-29).
319 For example, assume that U.S. Parent Corporation wholly owns and controls a common carrier licensee
(“Licensee”). U.S. individuals hold 80 percent of U.S. Parent Corporation’s total capital stock and voting stock,
with the remaining 20 percent held by foreign individuals. U.S. Limited Partnership plans to acquire a 20 percent
interest in U.S. Parent Corporation from an existing U.S. shareholder. All of U.S. Limited Partnership’s constituent
partners are U.S. individuals, with the exception of one foreign limited partner that holds a 40 percent partnership
interest. Licensee files a petition for declaratory ruling in advance of closing to obtain Commission approval for
foreign ownership of U.S. Parent Corporation to exceed the 25 percent benchmark in section 310(b)(4). Assuming
U.S. Parent Corporation demonstrates in its petition that the foreign limited partner’s interest in U.S. Limited
Partnership is effectively insulated, the foreign limited partner’s post-closing equity and voting interest in U.S.
Parent Corporation would be calculated, using the multiplier, to be 8 percent (40% x 20% = 8%). If U.S. Parent
Corporation is unable to make an insulation showing, the multiplier would not apply in calculating the foreign
limited partner’s voting interest in U.S. Parent Corporation. As a result, the foreign limited partner would be
deemed to hold, post-closing, a 20 percent voting interest in U.S. Parent Corporation (i.e., the same voting interest as
U.S. Limited Partnership would hold).
320 XO Communications, 17 FCC Rcd at 19221, ¶ 22. While a licensee has flexibility in the manner in which it
chooses to demonstrate insulation, the Commission assumes effective insulation of a foreign limited partner for
purposes of calculating compliance with the section 310(b) foreign ownership limits if the licensee or applicant
demonstrates that the foreign limited partner conforms to the specific insulation criteria for exemption from
attribution under the media ownership attribution rules. Id. n.66.
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support a presumption that an insulated limited partner will not be materially involved in managing
partnership affairs.”321 It also sought comment on whether the same principles should govern our
consideration of limited liability companies (“LLCs”) and limited liability partnerships (“LLPs”). We did
not receive any comments on either of these issues. In the absence of any such comments, we do not
believe it is appropriate to revise our current insulation standard, which applies to limited partnership
interests held in a common carrier or aeronautical licensee or its U.S. parent, or in any intermediate entity
in their vertical chains of ownership.
122.
However, we take this opportunity to clarify the insulation, or “active involvement,”
standard. We will treat an interest as insulated only where the governance documents of the limited
partnership prohibit the limited partner from becoming actively involved in the management or operation
of the partnership and limit the limited partner’s voting or consent rights to the investor protections in
section 1.993 of the new rules. Notwithstanding the inclusion of such limitations, a petitioner shall not
treat a limited partner as insulated if the U.S. parent or licensee has actual knowledge of material
involvement by the limited partner. We will maintain current policy that treats an insulated limited
partner as having a voting interest in the limited partnership that is equal to its equity interest. No
commenter addressed whether we should change this aspect of current policy and afford an insulated
limited partner treatment akin to that of a holder of non-voting stock in a corporation.322
123.
The NPRM also asked whether the Commission should codify a list of investor
protections which would not, in themselves, result in a limited partner being deemed an uninsulated
limited partner.323 No commenter addressed this issue. We find that the matters listed in the NPRM are
properly considered usual and customary investor protections, and we incorporate these matters in the
new rules for calculating equity and voting interests held in or through a limited partnership.324 These
matters will consist of the following: (1) the power to prevent the sale or pledge of all or substantially all
of the assets of the limited partnership or a voluntary filing for bankruptcy or liquidation; (2) the power to
prevent the limited partnership from entering into contracts with majority investors or their affiliates; (3)
the power to prevent the limited partnership from guaranteeing the obligations of majority investors or
their affiliates; (4) the power to purchase an additional interest in the limited partnership to prevent the
dilution of the partner’s pro rata interest in the event that the limited partnership issues additional
instruments conveying interests in the partnership; (5) the power to prevent the change of existing legal
rights or preferences of the limited partners, as provided in the limited partnership agreement or other
operative agreement; (6) the power to vote on the removal of a general partner in situations where the
general partner is subject to bankruptcy, insolvency, reorganization, or other proceedings relating to the

321 NPRM, 26 FCC Rcd at 11738-39, ¶ 68.
322 Id. at 11738-39, ¶ 68 (requesting comment on this issue).
323 Id. at 11739, ¶ 69.
324 These matters are consistent with the minority investor protections the Commission has found permissible in the
context of its mass media attribution rules. The Commission has generally permitted nonattributable investors to
hold certain minority investor protection rights, including the right to approve certain corporate matters that would
alter, fundamentally, the nature and value of their investments. See, e.g., Paxson Management Corporation and
Lowell W. Paxson (Transferors) and CIG Media LLC (Transferee)
, Memorandum Opinion and Order, FCC 07-233,
22 FCC Rcd 22224, 22231, ¶ 19 (2007) (“Approval rights permitted in the past have included such fundamental
corporate matters as issuance of stock; amendments to the certificate of incorporation; acquisition or disposition of
assets constituting more than 10% of the company’s market or book value; merger, sale, liquidation, bankruptcy or
winding-up of any entity; and certain transactions outside the ordinary course of business.”) (citations omitted). As
discussed in Section IV.B.3.a, we adopt substantially the same list of investor protections for purposes of the ten
percent exception from our specific approval requirements as applied to foreign interests held directly or indirectly
in a privately held corporation. See supra ¶ 66.
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relief of debtors; adjudicated insane or incompetent by a court of competent jurisdiction (where the
general partner is a natural person); convicted of a felony; or otherwise removed for cause, as determined
by an independent party; (7) the power to prevent the amendment of the limited partnership agreement or
other organizational documents of the partnership with respect to the matters described above. Under the
new rules, the Commission may consider, on a case-by-case basis, whether investor protections other than
those listed in the rule should be permissible in the context of a particular licensee’s petition for
declaratory ruling.
124.
We will apply to LLCs and LLPs the same principles that we are adopting for the
calculation of voting interests in limited partnerships.325 Thus, for example, where a foreign investor
holds an interest indirectly in the U.S. parent of a common carrier or aeronautical licensee through an
intervening LLC, and the investor is effectively insulated from active involvement in the affairs of the
LLC, the U.S. parent may apply the multiplier in calculating the foreign investor’s voting interest as well
as its equity interest in the U.S. parent.326 An ownership interest in an LLC or LLP will be treated as
insulated where the governance documents of the LLC or LLP prohibit the interest holder from becoming
actively involved in the management or operation of the LLC or LLP and limit the holder’s voting or
consent rights to the investor protections in section 1.993 of the new rules.327 Notwithstanding the
inclusion of such limitations, a petitioner shall not treat the interest holder as insulated if the U.S. parent
or licensee has actual knowledge of material involvement by the interest holder.
125.
As discussed in the NPRM, the Commission’s broadcast attribution rules treat LLCs and
LLPs in the same manner as limited partnerships.328 The Commission found in its 1999 Broadcast
Attribution Order
that LLCs were comparable to limited partnerships in terms of organization flexibility
and that, even where a company elected a “corporate form” of governance, owners of the enterprise were
still afforded sufficient discretion under state law to retain some level of operational control on their own
part.329 The Commission thus declined to differentiate its treatment of LLCs based on whether their
management form is centralized or decentralized. It also concluded in the 1999 Broadcast Attribution
Order
that it would treat LLPs in the same manner as limited partnerships and LLCs.330 We similarly find
no basis in the record of this proceeding to differentiate between these alternative forms of business

325 NPRM, 26 FCC Rcd at 11739, ¶ 70.
326 For example, assume that U.S. Parent Corporation wholly owns and controls a common carrier licensee
(“Licensee”). A foreign individual holds a 40 percent, non-managing membership interest in U.S. LLC, which plans
to acquire 20 percent of the total capital stock and voting stock of U.S. Parent Corporation from an existing U.S.
shareholder. (U.S. individuals hold all other membership interests in U.S. LLC.) Existing foreign shareholders
would continue to hold an aggregate 20 percent of the equity and voting interests in U.S. Parent Corporation.
Licensee files a petition for declaratory ruling in advance of closing to obtain Commission approval for foreign
ownership of U.S. Parent Corporation to exceed the 25 percent limit in section 310(b)(4). Assuming the foreign
LLC member’s interest in U.S. LLC is properly insulated, the foreign member’s post-closing equity and voting
interest in U.S. Parent Corporation would be calculated, using the multiplier, to be 8 percent (40% x 20% = 8%). If
the foreign LLC member’s interest in U.S. LLC is not properly insulated, the multiplier would not apply in
calculating the foreign member’s voting interest in the U.S. parent. As a result, the foreign member would be
deemed to hold, post-closing, a 20 percent voting interest in the U.S. parent (i.e., the same voting interest as U.S.
LLC).
327 See supra ¶¶ 122-123.
328 NPRM, 26 FCC Rcd at 11739, ¶ 70 (citing 1999 Broadcast Attribution Order, 14 FCC Rcd 12559, 12619-20, ¶¶
138-140 (1999), recon. granted on other grounds, 16 FCC Rcd 1097 (2001), stayed, 16 FCC Rcd 22310 (2001)).
329 Id. at 11739, ¶ 70.
330 Id.
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association for purposes of calculating voting interests held in common carrier and aeronautical licensees
and their U.S. parent companies.331
126.
We additionally find that it is reasonable for the Commission to rely on a petitioner’s
certification that it has calculated the ownership interests disclosed in its petition based upon its review of
the Commission’s rules and that the interests disclosed satisfy each of the pertinent standards and criteria
required by the rules.332 As noted in the NPRM, the Commission relies on certifications of compliance
with its rules in numerous licensing and related contexts, including compliance with the foreign
ownership limitations in section 310(b), reporting of disclosable interest holders under common carrier
licensing rules, and disclosure of attributable interests under the media ownership rules.333 SIA supports
use of a certification, which it states is a “well-established practice, and avoids imposing additional
burdens on filers (to proactively produce evidence of compliance) and Commission staff (to review such
evidence to confirm compliance, even in circumstances where compliance is not in doubt).334 No
commenter opposed reliance on certifications. We will therefore include in section 1.991 of the rules a
provision allowing petitioners to certify to compliance with our ownership disclosure rules in their
petitions for 310(b)(3) forbearance review and section 310(b)(4) review.
3.

Other Content Requirements

127.
As discussed in paragraph 92 above, the rules will require applicants, licensees, and
spectrum lessees to file a joint petition for declaratory ruling where the entities are under common control
and contemporaneously hold, or are contemporaneously filing applications for, common carrier or
aeronautical licenses or spectrum leasing arrangements. Where the joint petitioners have different
disclosable interest holders and/or request specific approval for different foreign investors, such
information should be set out separately for each joint petitioner.335 In addition, section 1.991 of the rules
will require all petitioners to state whether they request a ruling under our section 310(b)(3) forbearance
policy and/or under section 310(b)(4).
128.
We have also modified section 1.991, as proposed in the NPRM, to eliminate the
requirement that petitions list all of a petitioning licensee’s or lessee’s call signs and spectrum leasing file
numbers. T-Mobile observes that some wireless companies hold hundreds or even thousands of wireless
licenses and asserts that complying with this requirement would impose substantial burdens on them

331 Where the petitioner is organized as an LLC or an LLP and demonstrates in its petition that it is governed in a
manner similar to a corporation, we will entertain the request of a petitioner that we treat the LLC or LLP in the
same manner as a corporation. Such a request must be accompanied by a copy of the governance documents of the
LLC or LLP and a description of the members’ respective voting rights and roles in managing the affairs of the
company.
332 See NPRM, 26 FCC Rcd at 11740, ¶ 71.
333 Id. at 11740, ¶ 71 & n.142 (citing, as examples, FCC Form 312, Application for Satellite Space and Earth Station
Authorizations, Main Form – Questions 29-33 (foreign ownership certification); FCC Form 601, Application for
Radio Authorization: Wireless Telecommunications Bureau, Public Safety and Homeland Security Bureau, Main
Form – Questions 44-48 (foreign ownership certification); FCC Form 602, FCC Ownership Disclosure Information
for the Wireless Telecommunications Services, Main Form – p. 1 (requiring certification of applicant’s disclosable
interest holders); FCC Form 301, Application for Construction Permit for Commercial Broadcast Station, p. 2,
Section II, Legal (requiring certification that the application satisfies each of the pertinent standards and criteria set
forth in the application instructions and worksheets, including identification of all parties to the application and
compliance with the foreign ownership limitations in section 310 of the Act)).
334 See SIA NPRM Comments at 10.
335 Joint petitioners may have different disclosable interest holders because, although they would be under 100
percent common control, they may not share 100 percent common ownership.
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without producing any tangible benefits.336 We agree that it is unnecessary to require the listing of call
signs and spectrum leasing file numbers and have eliminated this provision from the rules.

D.

Filing and Processing of Petitions for Declaratory Rulings

129.
The Commission proposed in the NPRM to continue to place section 310(b)(4) petitions
on public notice as accepted for filing after International Bureau staff has reviewed the petition for
completeness; ensure that the appropriate Executive Branch agencies receive a copy of the petition; and
act on the petition after the agencies have completed their review and in light of any comments or
objections that the agencies or other interested parties file for the record.337 The Commission stated that it
would continue to act on section 310(b)(4) petitions by public notice or formal written order, and, unless
otherwise specified in the ruling, the ruling would be issued subject to the standard terms and conditions
adopted in this proceeding and codified in the Commission’s rules.338 At the same time, the Commission
sought comment on whether the Commission should extend its current “streamlined” processing
procedures to include a broader range of section 310(b)(4) petitions.339 The Commission also asked
whether there may be additional ways to accelerate the section 310(b)(4) review process.340
130.
In the Foreign Participation Order, the Commission adopted “streamlined” processing
procedures for certain types of section 310(b)(4) petitions, including any petition for declaratory ruling
that it would not serve the public interest to deny (1) a Title III common carrier license to a particular
entity; (2) permission for an existing common carrier radio licensee to exceed 25 percent indirect foreign
ownership; and (3) permission to increase a licensee’s level of non-controlling indirect foreign ownership
when permission to exceed 25 percent has already been granted.341 The Commission stated that it would
not streamline petitions that also involve an assignment of license or a transfer of control or any initial
licensing applications, which involve service-specific rules and other portions of Title III of the Act.342
Commission staff retained the discretion to deem a petition ineligible for streamlined processing either
because it raises market power concerns or because an Executive Branch agency raises concerns with
respect to issues within its expertise.343 The Commission observed in the NPRM that, as a practical

336 T-Mobile NPRM Comments at 6, citing to the NPRM’s Appendix, proposed 47 C.F.R. § 1.991(b)(1). T-Mobile
states that “[i]t would be more reasonable to simply require the disclosure of the parent company’s licensee
subsidiaries and affiliates to which the Section 310(b)(4) ruling would apply” and that “interested parties would
have sufficient information to search the Commission’s Universal Licensing System for the licenses and leases
held.” Id. at 6-7.
337 NPRM, 26 FCC Rcd at 11740, ¶ 73. Typically, the Executive Branch agencies contact the petitioner directly,
request any additional information the agencies deem necessary to their review, and, in particular cases, engage in
discussions and the negotiation of a security agreement or other arrangement, such as a letter of assurances, with the
petitioner and affiliated entities. These procedures are not subject to notice and comment or modification in this
proceeding. Id. at 11740, n.143.
338 Id. at 11740, ¶ 73.
339 Id. at 11741, ¶ 75. Streamlined petitions have a 14-day public notice period and, unless a formal opposition is
filed or the petition is removed from streamlined processing at the discretion of Commission staff, they are granted
automatically, effective on the 15th day after public notice. Petitions that are not eligible for streamlined processing
have a 28-day public notice period. Non-streamlined petitions and petitions that are removed from streamlined
processing within the 14-day public notice period are granted by public notice or order. See id. at 11741, ¶ 74
n.144.
340 Id. at 11741, ¶ 76.
341 Foreign Participation Order, 12 FCC Rcd at 24033, ¶ 323.
342 Id.
343 Id. at 24033, ¶ 324.
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matter, very few section 310(b)(4) petitions are eligible for streamlined processing under the standards
established in the Foreign Participation Order because most petitions are filed in connection with an
application for an initial license or to assign or transfer control of a license, or in connection with a
spectrum leasing arrangement.344
131.
Many industry commenters ask that we extend our streamlined processing procedures
and further modify our procedures to reduce the period of time between the filing of a petition and
Commission action on it. SIA supports extending the current streamlined procedures to all section
310(b)(4) petitions, with further review permitted in the event the Executive Branch raises national
security concerns.345 Vodafone recommends, as part of its proposed “notice framework,” that all notices
of foreign ownership be deemed automatically approved 30 days after receipt, unless the Commission
blocks the investment or indicates that Commission action will be delayed because of concerns raised by
the Executive Branch.346 USTelecom asks that we establish a specific timeline, such as 90 days, for
Executive Branch review.347 The Departments ask that any extension of the streamlined procedures be
accompanied by “an extended timeframe which would allow the Departments adequate time, as
necessary, to seek further information from petitioners and to properly evaluate that information.”348 The
Departments state that they otherwise may not be able to meet shorter deadlines despite their best
efforts.349
132.
We are concerned that the proposed changes offered by industry commenters would
compromise the ability of the Commission and relevant Executive Branch agencies to engage in a
meaningful review of petitions for national security and law enforcement concerns and to remedy those
concerns as needed. We find that several considerations weigh in favor of retaining the Commission’s
current approach to streamlining section 310(b)(4) petitions and extending that approach to petitions filed
under our section 310(b)(3) forbearance approach. First, we anticipate that adoption of the rules set out in
this Second Report and Order will reduce the number of petitions that licensees will need to file after
issuance of an initial ruling and reduce the amount of information required to be submitted in petitions.350

344 NPRM, 26 FCC Rcd at 11741, ¶ 75.
345 SIA NPRM Comments at 9 (stating that this change will “provide filers and investors with a greater level of
predictability regarding the Section 310(b)(4) process, and will ease an unnecessary administrative burden on
Commission staff”).
346 See Vodafone NPRM Comments at 30-31. See also supra Section IV.B.1, ¶ 35. Vodafone emphasizes that the
Commission should not block an investment, or delay action, except on grounds recognized in the Foreign
Participation Order
. Vodafone NPRM Comments at 31 (citing Foreign Participation Order, 12 FCC Rcd at 23898,
¶ 13 (stating that the Commission reserves the right to block an investment in the exceptional case where the
Commission finds the investment poses a very high risk to competition) and id. at 23920-21, ¶¶ 63-66 (stating that
the Commission will accord deference to Executive Branch expertise with respect to national security, law
enforcement, foreign policy and trade policy)).
347 USTelecom NPRM Reply at 6-7 (stating that one of the “major hurdles” in seeking foreign ownership approval is
“the substantial time it takes for companies to prepare their application and for the Commission to complete its
review”).
348 DOJ/DHS NPRM Comments at 11 (stating that “[i]n order to adequately review these complex [petitions], the
Departments frequently require further information from petitioners, and petitioners need some amount of time to
properly respond to those requests”).
349 Id.
350 See, e.g., Section IV.B.5 (allowing a licensee’s subsidiaries and affiliates, as defined in the rules, to rely on the
licensee’s foreign ownership ruling, rather than filing petitions in their own names); Section IV.B.6 (allowing the
insertion of new, foreign-organized entities into the licensee’s approved vertical ownership chain under certain
circumstances without requiring the filing of a new petition for declaratory ruling); Section IV.B.7 (eliminating the
(continued….)
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Thus, we expect that, overall, the effect of the rules adopted in this Second Report and Order will be to
reduce substantially the costs and burdens, including the regulatory delay, associated with foreign
investment in common carrier and aeronautical licensees. Second, where a petition is filed in connection
with an application for an initial license or a transfer/assignment of license, we believe it would be
imprudent to allow for automatic grant of the petition 14 days after issuing public notice under our
streamlined procedures.351 The pleading cycle in the licensing proceeding may extend beyond the 14-day
pleading period for streamlined petitions, and comments or oppositions filed in the licensing proceeding
may raise issues relevant to the petition. Third, we believe it would be difficult and unreasonable for the
Commission to adopt a uniform period within which the Commission must act on a petition regardless of
whether the Executive Branch has completed its review. As the Departments state, the review process
involves the participation of the relevant Executive Branch agencies as well as the petitioners, which, we
note, may require varying amounts of time to respond to the agencies’ request for additional
information.352 And, we note that each case presents particular circumstances that may require
negotiation of a security agreement among the parties. We therefore will maintain our current
streamlining procedures for processing section 310(b)(4) petitions and the existing categories of section
310(b)(4) petitions subject to streamlined processing. We will also apply the same procedures to the
processing of petitions for declaratory ruling under our section 310(b)(3) forbearance approach.
133.
As a final matter, we adopt a general rule to provide guidance as to a licensee’s
obligation to obtain a section 310(b)(3) ruling when it has already received a section 310(b)(4) ruling and
vice versa. Section 1.990 of the rules will provide that, where a common carrier licensee obtains a section
310(b)(4) ruling to allow foreign ownership of its U.S. parent to exceed 25 percent, but then seeks to
accept foreign investment that would be held in the licensee through U.S.-organized entities that do not
control the licensee, the licensee must file a petition for declaratory ruling under our section 310(b)(3)
forbearance approach before such additional foreign interests, aggregated with any foreign interests held
directly in the licensee, exceed 20 percent of the licensee’s equity and/or voting interests.353 Conversely,
where the licensee first obtains a foreign ownership ruling under our section 310(b)(3) forbearance
approach and then, for example, a foreign-organized company seeks to acquire all of the capital stock of
the licensee’s controlling U.S. parent, the licensee must file (in conjunction with a section 310(d)
application) a petition to obtain prior approval for its U.S. parent’s foreign ownership under section
310(b)(4).354
(Continued from previous page)
practice of issuing service- and geographic-specific rulings to minimize the need for licensees to file new petitions
for declaratory ruling); Sections IV.B.1-4 (adopting streamlined requirements for identifying and obtaining prior
approval of investments by named foreign investors).
351 See supra note 339.
352 DOJ/DHS NPRM Comments at 11.
353 For example, assume that a common carrier licensee (“Licensee ”) obtains a section 310(b)(4) ruling (in
conjunction with a section 310(d) application) that its controlling U.S. Parent (“U.S. Parent”), which holds 75
percent of Licensee’s equity and voting interests, may be wholly owned and controlled by Foreign Company X.
Foreign Company Y then seeks to acquire 100 percent ownership and control of U.S. Entity A, which holds a non-
controlling 25 percent equity and voting interest in Licensee. Licensee will need a separate ruling, under our section
310(b)(3) forbearance approach, before Foreign Company Y acquires indirectly, through U.S. Entity A, the 25
percent interest in Licensee. See also First Report and Order, 27 FCC Rcd at 9843-44, ¶ 28 & nn.62-63.
354 In this example, the chronological order of the transactions in the prior footnote is reversed. That is, assume that
Licensee’s controlling U.S. Parent (“U.S. Parent”) holds 75 percent of Licensee’s equity and voting interests, and
U.S. Entity A holds a non-controlling 25 percent equity and voting interest in Licensee. Both U.S. Parent and U.S.
Entity A are wholly owned by U.S. individuals. Licensee obtains a ruling under our section 310(b)(3) forbearance
approach allowing Foreign Company Y to acquire indirectly a non-controlling 25 percent equity and voting interest
(continued….)
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E.

Continued Compliance with Section 310(b) Declaratory Rulings

134.
In the NPRM, the Commission also requested comment whether a licensee’s controlling
U.S. parent should be required to file periodically with the Commission a certification to demonstrate that
it is in compliance with its foreign ownership ruling. The Commission asked whether, for example, it
should require the U.S.-organized parent company that has received the section 310(b)(4) ruling to file a
certification of compliance every four (4) years after the anniversary of the effective date of the ruling.
Alternatively, the Commission asked whether it should require that licensees include a certification in
their license renewal applications.355 SIA supports initial certifications, but not periodic certifications on a
going-forward basis.356 Verizon also does not support periodic certifications.357 The Departments, on the
other hand, stated that requiring the filing of periodic certification to demonstrate compliance with foreign
ownership rulings will remind licensees of their obligations, ensure accountability, and inform the
Commission and licensees of any potential divergences from their rulings.358
135.
We will not require periodic certification of compliance with our rulings, but we will
require certification whenever a licensee files an application with the Commission for a new license, a
transfer of control, or an assignment of license that does not also require the filing of a petition for
declaratory ruling under our section 310(b)(3) forbearance approach or under section 310(b)(4). We will
also require certification in renewal applications.359 Based upon our experience, we believe that such a
requirement is sufficient to remind licensees of their obligations, ensure accountability, and inform the
Commission and licensees of any potential divergences from their rulings. In addition, we will give
deference to Department requests that we require more frequent certifications as a condition on the
granting of a license on a case-by-case basis, where appropriate to address law enforcement or national
security concerns. We will make changes to the relevant FCC Forms (Forms 312, 601, 603, and 608) to
the extent necessary so that this aspect of the applicant’s certification to the information in the application
is clear. We agree with commenters that there is no need to require certification of compliance outside of
the application process. We remind licensees that they have a continuing obligation to monitor their
foreign ownership and ensure that they remain compliant with the requirements of the Act, the rules we
adopt today, and a licensee’s particular foreign ownership ruling.360
(Continued from previous page)
in Licensee by acquiring 100 percent ownership and control of U.S. Entity A. Foreign Company X then seeks to
acquire 100 percent ownership and control of U.S. Parent. Licensee would need to obtain a separate section
310(b)(4) ruling (in conjunction with a section 310(d) application) before Foreign Company X acquires 100 percent
ownership and control of U.S. Parent.
355 See NPRM, 26 FCC Rcd at 11741-42, ¶ 77.
356 SIA NPRM Comments at 10 (supporting reliance on a certification of a petitioner that it has calculated and
reported its ownership interests in accordance with the rules, but stating that the Commission should not require the
submission of subsequent certifications on a going-forward basis).
357 Verizon NPRM Comments at 19 (stating that there is no need to require periodic certification because “licensees
have an obligation to comply with all elements of their authorizations” and, in a license renewal proceeding, “a
licensee will need to certify to compliance with all aspects of the authorization”).
358 DOJ/DHS NPRM Comments at 11. The Departments recommend a shorter timeframe, such as every two years,
stating that certification would not impose a burden so long as companies are in compliance with their rulings. Id. at
11-12.
359 As SIA points out, licensees are already required to make certifications regarding their foreign ownership in order
to acquire or renew licenses. SIA Comments at 10.
360 See supra ¶ 87.
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F.

Transition Issues

136.
The NPRM did not propose to change retroactively the terms and conditions of any
section 310(b)(4) ruling issued prior to the effective date of the rules adopted in this proceeding. The
Commission in the NPRM, however, did propose to permit the controlling U.S. parent companies of
licensees with an existing ruling to file a new petition for declaratory ruling under the rules adopted in this
proceeding.361 The Commission also sought comment on alternative approaches that would extend the
benefits of the rules adopted in this proceeding to U.S. parent companies in a way that minimizes the need
for them to return to the Commission for a new ruling. It asked, for example, whether, to the extent it
modified or eliminated current policy with respect to non-WTO Member investment, it should adopt a
rule that modifies all existing section 310(b)(4) rulings to incorporate the new policies. The Commission
also asked whether, if it adopted a 100 percent aggregate allowance, we should adopt a rule that would
incorporate this provision in all wireless carriers’ section 310(b)(4) rulings in place of the current,
standard 25 percent aggregate allowance. The Commission sought comment on whether there are public
policy reasons to require in all cases that a U.S. parent company return to the Commission for a new
ruling to obtain the benefits of the rules adopted in this proceeding.362
137.
The Departments believe there are “strong public policy reasons” to require the filing of
new petitions for declaratory ruling if licensees and their controlling U.S. parents seek to obtain the
benefits of the new rules.363 Industry commenters favor modifying existing rulings to incorporate the
changes we adopt without requiring the licensee or U.S. parent to request a new ruling, or suggest
adopting simplified procedures that enable licensees with an existing ruling to take advantage of the new
rules we adopt in this proceeding.364
138.
We do not adopt a rule that changes the terms and conditions of existing foreign
ownership rulings issued prior to the effective date of the rules adopted in this proceeding. Given the
scope of the changes we are making to our foreign ownership rules and policies, we believe it is important
to afford the Commission and the relevant Executive Branch agencies the opportunity to evaluate the
potential effect of applying the new rules in each case where a licensee has already received a ruling.
Thus, we will permit licensees that have received a ruling prior to the effective date of the new rules to
file a new petition for declaratory ruling under the new rules, but we will not require them to do so. We
will continue to apply our existing foreign ownership policies and procedures to such licensees within the
parameters of their existing rulings. We will also afford them flexibility in the manner in which they
request a new ruling from the Commission, should they decide to do so. For example, a licensee could
request a new ruling as part of an application for a new license or spectrum leasing arrangement, or an

361 NPRM, 26 FCC Rcd at 11742, ¶ 78.
362 Id.
363 DOD/DHS NPRM Comments at 12. See also id. (stating that “[t]he Departments need an opportunity to review
any proposed changes that may affect ownership and the products and services provided, since these factors may not
have been evaluated in prior public interest determinations”).
364 AT&T NPRM Comments at 10 (stating that the Commission should modify all existing rulings to incorporate
any new policies without requiring licensees to request new rulings); SIA NPRM Comments at 8 (same); see also id.
(stating, in the alternative, that the Commission should issue a Public Notice providing licensees that have a ruling
the opportunity to “opt in” to the new rules and, under any procedure, “the FCC should enable existing holders of
Section 310(b)(4) rulings automatically to replace the current standard 25 percent aggregate allowance with a new
100 percent aggregate allowance); T-Mobile NPRM Comments at 7 (suggesting that we provide, at a minimum, a
reasonable transition period during which a licensee’s U.S. parent could notify the Commission of the names of all
of the U.S. parent’s subsidiaries and affiliates to which the licensee’s existing ruling would apply, even if the terms
of the ruling remain the same).
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application for consent to a transfer of control or assignment of license. Alternatively, the licensee could
file a stand-alone petition for declaratory ruling at any time. We believe this flexibility, and the modified
content requirements in the new rules, will minimize the costs and burdens associated with any new
filing.

G.

Other Issues

139.
Intelsat and SIA ask that we relieve non-common carrier space station applicants from
the requirement to respond to the section 310(b)-related questions in FCC Form 312 because section
310(b) does not apply to non-common carrier radio station licenses.365 The rules applicable to non-
common carrier space station applicants are outside the scope of this proceeding. Thus, we do not
address Intelsat’s and SIA’s requests to amend FCC Form 312 in the context of this Second Report and
Order.

V.

CONCLUSION

140.
We adopt rules that apply to foreign ownership of common carrier radio station licensees
and the controlling U.S. parents of common carrier radio station licensees. We also adopt rules that apply
to foreign ownership of the controlling U.S. parents of aeronautical radio station licensees. We find that
today’s actions will continue to protect important interests related to national security, law enforcement,
foreign policy and trade policy, while reducing regulatory burdens and costs, providing greater
transparency and predictability, and facilitating investment U.S. telecommunications carriers and our
nation’s telecommunications infrastructure.

VI.

PROCEDURAL ISSUES

A.

Final Regulatory Flexibility Certification

141.
The Regulatory Flexibility Act of 1980, as amended (RFA),366 requires that a final
regulatory flexibility analysis be prepared for notice-and-comment rule making proceedings, unless the
agency certifies that “the rule will not, if promulgated, have a significant economic impact on a
substantial number of small entities.”367 The RFA generally defines the term “small entity” as having the
same meaning as the terms “small business,” “small organization,” and “small governmental
jurisdiction.”368 In addition, the term “small business” has the same meaning as the term “small business
concern” under the Small Business Act.369 A “small business concern” is one which: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).370

365 Intelsat NPRM Comments at 4; SIA NPRM Comments at 4-5. All space station and earth station applications are
filed on FCC Form 312. 47 C.F.R. § 25.110(b).
366 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. § 601-612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
367 5 U.S.C. § 605(b).
368 5 U.S.C. § 601(6).
369 5 U.S.C. § 601(3) (incorporating by reference the definition of “small business concern” in the Small Business
Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definitions(s) in the Federal Register.”
370 15 U.S.C. § 632.
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142.
In this Second Report and Order, the Commission adopts rules that will apply to foreign
ownership of common carrier and certain aeronautical radio station applicants, licensees and spectrum
lessees (hereinafter referred to collectively as “licensees”). These rules will simplify the policies and
procedures the Commission currently applies in reviewing foreign ownership of these licensees’
controlling U.S. parent companies under the discretionary provisions in section 310(b)(4) of the Act, 47
U.S.C. §§ 310(b)(4), while continuing to ensure that we have the information we need to carry out our
statutory duties. The new rules will simplify to the same extent the policies and procedures that currently
apply to Commission review of foreign ownership in common carrier licensees pursuant to the section
310(b)(3) forbearance policy that the Commission adopted in the First Report and Order in this
proceeding.371 The rules are designed to reduce to the extent possible the regulatory costs and burdens
that our current foreign ownership policies and procedures impose on common carrier and aeronautical
licensees, including those that are small entities; provide greater transparency and more predictability
with respect to the Commission’s filing requirements and review process; and facilitate investment in U.S
carriers from new sources of capital, while continuing to protect important interests related to national
security, law enforcement, foreign policy, and trade policy.
143.
We estimate that the rule changes we are adopting will reduce the number of section
310(b) petitions for declaratory ruling filed with the Commission annually in the range of 40 to 70 percent
as compared to the current regulatory framework.372 We also anticipate a significant reduction in the time
and expense associated with filing petitions. For example, licensees filing petitions for declaratory ruling
under our section 310(b)(3) forbearance approach or under section 310(b)(4) will no longer be required to
demonstrate the percentage of their equity and voting interests that are, or may be, held by investors from
non-WTO Member countries.373 As another example, under the new rules licensees filing petitions will
no longer be required to include requests for specific approval of named foreign investors unless a foreign
investor would hold, in the licensee (in the case of a petition filed under section 310(b)(3) forbearance) or
in the U.S. parent (in the case of a petition filed under section 310(b)(4)), an interest exceeding five
percent, subject to an exception for certain ten percent interests.374

371 27 FCC Rcd 9832.
372 This estimate is based on two reviews done by International Bureau staff. In the first review, based on the 21
section 310(b)(4) petitions filed with the Commission during a randomly-selected period (September 1, 2007
through August 31, 2008), staff concluded that adoption of the proposals and other options discussed in the NPRM
would result in a more than 70 percent reduction in the number of petitions for declaratory ruling filed with the
Commission annually, as compared to the current regulatory framework. In the second review, based on the 13
section 310(b)(4) petitions filed between January 1, 2011, and October 1, 2012, staff concluded that the rules
adopted in this Order would result in at least a 40 percent reduction. We note that a large proportion of the filings
during the first review period involved requests by licensees with existing foreign ownership rulings for approval,
under section 310(b)(4), to acquire licenses in new wireless services being auctioned. In the second review period,
these auctions had been completed and no auction-related petitions were filed. The lack of auction-related filings by
licensees with existing foreign ownership rulings during the second review period accounts in large part for the
difference between the higher 70 percent reduction figure and the 40 percent reduction figure for the two review
periods. Significantly, industry commenters in this proceeding broadly supported elimination of the requirement
that licensees with existing rulings return to the Commission for a new ruling when they apply for a license in a new
service or geographic service area. See supra ¶ 107.
373 As USTR observes, this requirement imposes a “non-trivial burden on applicants by requiring them to
demonstrate whether foreign investors are from a WTO or non-WTO Member.” USTR notes that the requirement
“also imposes a not insignificant burden on FCC staff to evaluate the information.” See USTR Letter, supra note
19.
374 Industry commenters generally agree that, under our current requirements, companies face significant difficulties
and costs in trying to ascertain the citizenship and principal places of business of their investors, which often hold
(continued….)
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144.
Although the commenters in this proceeding did not quantify the extent to which current
costs and burdens would be reduced by the proposals and other options raised in the NPRM, the
qualitative descriptions they provided in the record, and the sheer volume of information that petitioners
have had to produce in particular proceedings (and which the Commission has had to analyze in its
decisions), leave no doubt that the current requirements impose significant costs and burdens that the new
rules will reduce.
145.
In summary, we believe that the new rules will reduce costs and burdens currently
imposed on licensees, including those licensees that are small entities, and accelerate the foreign
ownership review process, while continuing to ensure that we have the information we need to carry out
our statutory duties. Therefore, we certify that the rules adopted in this Second Report and Order will not
have a significant economic impact on a substantial number of small entities. The Commission will send
a copy of this Order, including a copy of this Final Regulatory Flexibility Certification, to the Chief
Counsel for Advocacy of the SBA.375 This final certification will also be published in the Federal
Register.376
B.

Paperwork Reduction Act of 1995

146.
This Second Report and Order does not contain new or modified information collection
requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. The information
collection requirements for the section 310(b) foreign ownership approval process are contained in OMB
Control No. 3060-1163.377 In addition, therefore, this document does not contain any new or modified
information collection burden for small business concerns with fewer than 25 employees, pursuant to the
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. § 3506(c)(4).

C.

Congressional Review Act

147.
The Commission will include a copy of this Second Report and Order in a report to be
sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act.
See 5 U.S.C. § 801(a)(1)(A).

VII.

ORDERING CLAUSES

148.
Accordingly, IT IS ORDERED, pursuant to the authority contained in Sections 1, 2, 4(i),
4(j), 10, 303(r), 309, 310, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
152, 154(i), 154(j), 160, 303(r), 309, 310 and 403, that this Second Report and Order IS ADOPTED and
Parts 1 and 25 of the Commission rules ARE AMENDED as set forth in Appendix B to this Second
Report and Order. The rule revisions in Appendix B will take effect 30 days after a summary of this
Second Report and Order is published in the Federal Register.
149.
IT IS FURTHER ORDERED that the Commission’s Consumer and Governmental
Affairs Bureau, Reference Information Center SHALL SEND a copy of this Second Report and Order,
including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
(Continued from previous page)
their interests indirectly through multiple investment vehicles and holding companies. See supra ¶ 45. USTelecom
describes our current requirement as a “tortuous process of identifying each ultimate shareholder.” USTelecom
NPRM Reply at 5-6.
375 5 U.S.C. § 605(b).
376 Id.
377 The Office of Management and Budget preapproved the information collection requirements at the NPRM stage
of this proceeding, and the information collection requirements are adopted with nonsubstantial modification in this
Second Report and Order.
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Business Administration, in accordance with Section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. §
601, et seq.
150.
IT IS FURTHER ORDERED that this proceeding, IB Docket No. 11-133, IS HEREBY
TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A

List of Commenters

Comments on the NPRM
AT&T Inc. (AT&T)
Department of Defense (DOD)
Department of Justice and Department of Homeland Security (“DOJ/DHS” or “the Departments”)
European-American Business Council (EABC)
GSM Association (GSMA)
Intelsat License LLC (Intelsat)
Minority Media and Telecommunications Council (MMTC)
Satellite Industry Association (SIA)
T-Mobile USA, Inc. (T-Mobile)
Verizon (Verizon)*
Vodafone Group (Vodafone)
Replies on the NPRM
CTIA-The Wireless Association® (CTIA)
European Telecommunications Network Operators’ Association (ETNO)
Organization for International Investment (OFII)
Sprint Nextel Corporation (Sprint)
United States Telecom Association (USTelecom)
Verizon*
Vodafone
Comments on the Forbearance Public Notice
AT&T
EABC
Verizon*
Vodafone
Replies on the Forbearance Public Notice
Deutsche Telekom AG and T-Mobile USA, Inc. (DT/T-Mobile)
*Verizon states that the Verizon companies participating in its filings (“Verizon”) are the regulated,
wholly owned subsidiaries of Verizon Communications Inc. and Verizon Wireless.
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APPENDIX B

Rules

Parts 1 and 25 of the Commission rules are amended as follows:

PART 1 – PRACTICE AND PROCEDURE

1. The authority citation for part 1 is amended to read as follows:

AUTHORITY: 47 U.S.C. 151, 154(i), 154(j), 155, 157, 225, 227, 303(r), 309 and 310.

2. Section 1.907 of Subpart F is amended to include the following definitions:
Spectrum leasing arrangement. An arrangement between a licensed entity and a third-party entity in
which the licensee leases certain of its spectrum usage rights to a spectrum lessee, as set forth in Subpart
X of this Part (47 C.F.R. §§ 1.9001 et seq.). Spectrum leasing arrangement is defined in § 1.9003.
Spectrum lessee. Any third party entity that leases, pursuant to the spectrum leasing rules set forth in
Subpart X of this Part (47 C.F.R. §§ 1.9001 et seq.), certain spectrum usage rights held by a licensee.
Spectrum lessee is defined in § 1.9003.
3. Subpart F is amended to add sections 1.990-1.994 to read as follows:

FOREIGN OWNERSHIP OF COMMON CARRIER, AERONAUTICAL EN ROUTE, AND AERONAUTICAL
FIXED RADIO STATION LICENSEES

§ 1.990 Citizenship and filing requirements under section 310(b) of the Communications Act of
1934, as amended.

These rules establish the requirements and conditions for obtaining the Commission’s prior approval of
foreign ownership in common carrier, aeronautical en route, and aeronautical fixed radio station licensees
and common carrier spectrum lessees that would exceed the 25 percent benchmark in section 310(b)(4) of
the Act. These rules also establish the requirements and conditions for obtaining the Commission’s prior
approval of foreign ownership in common carrier (but not aeronautical en route or aeronautical fixed)
radio station licensees and spectrum lessees that would exceed the 20 percent limit in section 310(b)(3) of
the Act.
(a)(1) A common carrier, aeronautical en route or aeronautical fixed radio station licensee or common
carrier spectrum lessee shall file a petition for declaratory ruling to obtain Commission approval under
section 310(b)(4) of the Act, and obtain such approval, before the aggregate foreign ownership of any
controlling, U.S.-organized parent company exceeds, directly and/or indirectly, 25 percent of the U.S.
parent’s equity interests and/or 25 percent of its voting interests. An applicant for a common carrier,
aeronautical en route or aeronautical fixed radio station license or common carrier spectrum leasing
arrangement shall file the petition for declaratory ruling required by this paragraph at the same time that it
files its application.
(a)(2) A common carrier radio station licensee or spectrum lessee shall file a petition for declaratory
ruling to obtain approval under the Commission’s section 310(b)(3) forbearance approach, and obtain
such approval, before aggregate foreign ownership, held through one or more intervening U.S.-organized
entities that hold non-controlling equity and/or voting interests in the licensee, along with any foreign
interests held directly in the licensee or spectrum lessee, exceeds 20 percent of its equity interests and/or
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20 percent of its voting interests. An applicant for a common carrier radio station license or spectrum
leasing arrangement shall file the petition for declaratory ruling required by this paragraph at the same
time that it files its application. Foreign interests held directly in a licensee or spectrum lessee, or other
than through U.S.-organized entities that hold non-controlling equity and/or voting interests in the
licensee or spectrum lessee, shall not be permitted to exceed 20 percent.
Note 1 to § 1.990: Paragraph (a)(1) of this section implements the Commission’s foreign ownership
policies under section 310(b)(4) of the Act, 47 U.S.C. § 310(b)(4), for common carrier, aeronautical en
route, and aeronautical fixed radio station licensees and common carrier spectrum lessees. It applies to
foreign equity and/or voting interests that are held, or would be held, directly and/or indirectly in a U.S.-
organized entity that itself directly or indirectly controls a common carrier, aeronautical en route, or
aeronautical fixed radio station licensee or common carrier spectrum lessee. A foreign individual or
entity that seeks to hold a controlling interest in such a licensee or spectrum lessee must hold its
controlling interest indirectly, in a U.S.-organized entity that itself directly or indirectly controls the
licensee or spectrum lessee. Such controlling interests are subject to section 310(b)(4) and the
requirements of paragraph (a)(1) of this section. The Commission assesses foreign ownership interests
subject to section 310(b)(4) separately from foreign ownership interests subject to section 310(b)(3).
Note 2 to § 1.990: Paragraph (a)(2) of this section implements the Commission’s section 310(b)(3)
forbearance approach adopted in the First Report and Order in IB Docket No. 11-133, FCC 12-93
(released August 17, 2012), 77 FR 50628 (Aug. 22, 2012). The section 310(b)(3) forbearance approach
applies only to foreign equity and voting interests that are held, or would be held, in a common carrier
licensee or spectrum lessee through one or more intervening U.S.-organized entities that do not control
the licensee or spectrum lessee. Foreign equity and/or voting interests that are held, or would be held,
directly in a licensee or spectrum lessee, or indirectly other than through an intervening U.S.-organized
entity, are not subject to the Commission’s section 310(b)(3) forbearance approach and shall not be
permitted to exceed the 20 percent limit in section 310(b)(3) of the Act, 47 U.S.C. § 310(b)(3).
Example 1. U.S.-organized Corporation A is preparing an application to acquire a common carrier radio
license by assignment from another licensee. U.S.-organized Corporation A is wholly owned and
controlled by U.S.-organized Corporation B. U.S.-organized Corporation B is 51 percent owned and
controlled by U.S.-organized Corporation C, which is, in turn, wholly owned and controlled by foreign-
organized Corporation D. The remaining non-controlling 49 percent equity and voting interests in U.S.-
organized Corporation B are held by U.S.-organized Corporation X, which is, in turn, wholly owned and
controlled by U.S. citizens. Paragraph (a)(1) of this section requires that U.S.-organized Corporation A
file a petition for declaratory ruling to obtain Commission approval of the 51 percent foreign ownership
of its controlling, U.S.-organized parent, Corporation B, by foreign-organized Corporation D, which
exceeds the 25 percent benchmark in section 310(b)(4) of the Act for both equity interests and voting
interests. Corporation A is also required to identify and request specific approval in its petition for any
foreign individual or entity, or “group,” as defined in paragraph (d) of this section, that holds directly
and/or indirectly more than five percent of Corporation B’s total outstanding capital stock (equity) and/or
voting stock, or a controlling interest in Corporation B, unless the foreign investment is exempt under §
1.991(i)(3).
Example 2. U.S.-organized Corporation A is preparing an application to acquire a common carrier radio
license by assignment from another licensee. U.S.-organized Corporation A is 51 percent owned and
controlled by U.S.-organized Corporation B, which is, in turn, wholly owned and controlled by U.S.
citizens. The remaining non-controlling 49 percent equity and voting interests in U.S.-organized
Corporation A are held by U.S.-organized Corporation X, which is, in turn, wholly owned and controlled
by foreign-organized Corporation Y. Paragraph (a)(2) of this section requires that U.S.-organized
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Corporation A file a petition for declaratory ruling to obtain Commission approval of the non-controlling
49 percent foreign ownership of U.S.-organized Corporation A by foreign-organized Corporation Y
through U.S.-organized Corporation X, which exceeds the 20 percent limit in section 310(b)(3) of the Act
for both equity interests and voting interests. U.S.-organized Corporation A is also required to identify
and request specific approval in its petition for any foreign individual or entity, or “group,” as defined in
paragraph (d) of this section, that holds an equity and/or voting interest in foreign-organized Corporation
Y that, when multiplied by 49 percent, would exceed five percent of U.S.-organized Corporation A’s
equity and/or voting interests, unless the foreign investment is exempt under § 1.991(i)(3).
Example 3. U.S.-organized Corporation A is preparing an application to acquire a common carrier radio
license by assignment from another licensee. U.S.-organized Corporation A is 51 percent owned and
controlled by U.S.-organized Corporation B, which is, in turn, wholly owned and controlled by foreign-
organized Corporation C. The remaining non-controlling 49 percent equity and voting interests in U.S.-
organized Corporation A are held by U.S.-organized Corporation X, which is, in turn, wholly owned and
controlled by foreign-organized Corporation Y. Paragraphs (a)(1) and (a)(2) of this section require that
U.S.-organized Corporation A file a petition for declaratory ruling to obtain Commission approval of
foreign-organized Corporation C’s 100 percent ownership interest in U.S.-organized parent, Corporation
B, and of foreign-organized Corporation Y’s non-controlling, 49 percent foreign ownership interest in
U.S.-organized Corporation A through U.S-organized Corporation X, which exceed the 25 percent
benchmark and 20 percent limit in sections 310(b)(4) and 310(b)(3) of the Act, respectively, for both
equity interests and voting interests. U.S-organized Corporation A’s petition also must identify and
request specific approval for ownership interests held by any foreign individual, entity, or “group,” as
defined in paragraph (d) of this section, to the extent required by § 1.991(i).
(b) The petition for declaratory ruling required by paragraph (a) of this section shall be filed electronically
on the Internet through the International Bureau Filing System (IBFS). For information on filing your
petition through IBFS, see Part 1, Subpart Y and the IBFS homepage at http://www.fcc.gov/ib.
(c)(1) Each applicant, licensee, or spectrum lessee filing a petition for declaratory ruling required by
paragraph (a) of this section shall certify to the information contained in the petition in accordance with
the provisions of § 1.16 and the requirements of this paragraph. The certification shall include a
statement that the applicant, licensee and/or spectrum lessee has calculated the ownership interests
disclosed in its petition based upon its review of the Commission’s rules and that the interests disclosed
satisfy each of the pertinent standards and criteria set forth in the rules.
(c)(2) Multiple applicants and/or licensees shall file jointly the petition for declaratory ruling required by
paragraph (a) of this section where the entities are under common control and contemporaneously hold, or
are contemporaneously filing applications for, common carrier licenses, common carrier spectrum leasing
arrangements, or aeronautical en route or aeronautical fixed radio station licenses. Where joint petitioners
have different responses to the information required by § 1.991, such information should be set out
separately for each joint petitioner, except as otherwise permitted in § 1.991(h)(2).
(c)(2)(i) Each joint petitioner shall certify to the information contained in the petition in accordance with
the provisions of § 1.16 with respect to the information that is pertinent to that petitioner. Alternatively,
the controlling parent of the joint petitioners may certify to the information contained in the petition.
(c)(2)(ii) Where the petition is being filed in connection with an application for consent to transfer control
of licenses or spectrum leasing arrangements, the transferee or its ultimate controlling parent may file the
petition on behalf of the licensees or spectrum lessees that would be acquired as a result of the proposed
transfer of control and certify to the information contained in the petition.
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(c)(3) Multiple applicants and licensees shall not be permitted to file a petition for declaratory ruling
jointly unless they are under common control.
(d) The following definitions shall apply to this section and §§ 1.991-1.994 of this part.
(1) Aeronautical radio licenses refers to aeronautical en route and aeronautical fixed radio station licenses
only. It does not refer to other types of aeronautical radio station licenses.
(2) Affiliate refers to any entity that is under common control with a licensee, defined by reference to the
holder, directly and/or indirectly, of more than 50 percent of total voting power, where no other individual
or entity has de facto control.
(3) Control includes actual working control in whatever manner exercised and is not limited to majority
stock ownership. Control also includes direct or indirect control, such as through intervening
subsidiaries.
(4) Entity includes a partnership, association, estate, trust, corporation, limited liability company,
governmental authority or other organization.
(5) Group refers to two or more individuals or entities that have agreed to act together for the purpose of
acquiring, holding, voting, or disposing of their equity and/or voting interests in the relevant licensee,
controlling U.S. parent, or entity holding a direct and/or indirect equity and/or voting interest in the
licensee or U.S. parent.
(6) Individual refers to a natural person as distinguished from a partnership, association, corporation, or
other organization.
(7) Licensee as used in §§ 1.990-1.994 of this part includes a spectrum lessee as defined in § 1.9003.
(8) Privately held company refers to a U.S.- or foreign-organized company that has not issued a class of
equity securities for which beneficial ownership reporting is required by security holders and other
beneficial owners under sections 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, 15
U.S.C. 78a et seq. (Exchange Act), and corresponding Exchange Act Rule 13d-1, 17 C.F.R. § 240.13d-1,
or a substantially comparable foreign law or regulation.
(9) Public company refers to a U.S.- or foreign-organized company that has issued a class of equity
securities for which beneficial ownership reporting is required by security holders and other beneficial
owners under sections 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. 78a
et seq. (Exchange Act) and corresponding Exchange Act Rule 13d-1, 17 C.F.R. § 240.13d-1, or a
substantially comparable foreign law or regulation.
(10) Subsidiary refers to any entity in which a licensee owns or controls, directly and/or indirectly, more
than 50 percent of the total voting power of the outstanding voting stock of the entity, where no other
individual or entity has de facto control.
(11) Voting stock refers to an entity’s corporate stock, partnership or membership interests, or other
equivalents of corporate stock that, under ordinary circumstances, entitles the holders thereof to elect the
entity’s board of directors, management committee, or other equivalent of a corporate board of directors.
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(12) Would hold as used in §§ 1.990-1.994 includes equity and/or voting interests that an individual or
entity proposes to hold in an applicant, licensee, or spectrum lessee, or their controlling U.S. parent, upon
consummation of any transactions described in the petition for declaratory ruling filed under § 1.990(a)(1)
or § 1.990(a)(2) of this part.
§ 1.991 Contents of petitions for declaratory ruling under section 310(b) of the Communications
Act of 1934, as amended.

The petition for declaratory ruling required by § 1.990(a)(1) and/or § 1.990(a)(2) shall contain the
following information:
(a) With respect to each petitioning applicant or licensee, provide its name; FCC Registration Number
(FRN); mailing address; place of organization; telephone number; facsimile number (if available);
electronic mail address (if available); type of business organization (e.g., corporation, unincorporated
association, trust, general partnership, limited partnership, limited liability company, trust, other (include
description of legal entity)); name and title of officer certifying to the information contained in the
petition.
(b) If the petitioning applicant or licensee is represented by a third party (e.g., legal counsel), specify that
individual’s name, the name of the firm or company, mailing address and telephone number/electronic
mail address.

(c)(1) For each named licensee, list the type(s) of radio service authorized (e.g., cellular radio telephone
service; microwave radio service; mobile satellite service; aeronautical fixed service).
(c)(2) If the petition is filed in connection with an application for a radio station license or a spectrum
leasing arrangement, or an application to acquire a license or spectrum leasing arrangement by
assignment or transfer of control, specify for each named applicant:
(c)(2)(i) the File No(s). of the associated application(s), if available at the time the petition is filed;
otherwise, specify the anticipated filing date for each application; and
(c)(2)(ii) the type(s) of radio services covered by each application (e.g., cellular radio telephone service;
microwave radio service; mobile satellite service; aeronautical fixed service).
(d) With respect to each petitioner, include a statement as to whether the petitioner is requesting a
declaratory ruling under § 1.990(a)(1) and/or § 1.990(a)(2).
(e)(1) Direct U.S or foreign interests of ten percent or more or a controlling interest. With respect to
petitions filed under § 1.990(a)(1), provide the name of any individual or entity that holds, or would hold,
directly 10 percent or more of the equity interests and/or voting interests, or a controlling interest, in the
controlling U.S. parent of the petitioning common carrier or aeronautical radio station applicant(s) or
licensee(s) as specified in paragraphs (e)(1)(i)-(e)(4)(iv) of this section.
(e)(2) Direct U.S or foreign interests of ten percent or more or a controlling interest. With respect to
petitions filed under § 1.990(a)(2), provide the name of any individual or entity that holds, or would hold,
directly 10 percent or more of the equity interests and/or voting interests, or a controlling interest, in each
petitioning common carrier applicant or licensee as specified in paragraphs (e)(1)(i)-(e)(4)(ii) of this
section.
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(e)(3) Where no individual or entity holds, or would hold, directly 10 percent or more of the equity
interests and/or voting interests, or a controlling interest, in the controlling U.S. parent (for petitions filed
under § 1.990(a)(1)) or in the applicant or licensee (for petitions filed under § 1.990(a)(2)), the petition
shall state that no individual or entity holds or would hold directly 10 percent or more of the equity
interests and/or voting interests, or a controlling interest, in the U.S. parent, applicant or licensee.
(e)(4)(i) Where a named U.S. parent, applicant, or licensee is organized as a corporation, provide the
name of any individual or entity that holds, or would hold, 10 percent or more of the outstanding capital
stock and/or voting stock, or a controlling interest.
(e)(4)(ii) Where a named U.S. parent, applicant, or licensee is organized as a general partnership, provide
the names of the partnership’s constituent general partners.

(e)(4)(iii) Where a named U.S. parent, applicant, or licensee is organized as a limited partnership or
limited liability partnership, provide the name(s) of the general partner(s) (in the case of a limited
partnership), any uninsulated partner(s), and any insulated partner(s) with an equity interest in the
partnership of at least 10 percent (calculated according to the percentage of the partner’s capital
contribution). With respect to each named partner (other than a named general partner), the petitioner
shall state whether the partnership interest is insulated or uninsulated, based on the insulation criteria
specified in § 1.993.
(e)(4)(iv) Where a named U.S. parent, applicant, or licensee is organized as a limited liability company,
provide the name(s) of each uninsulated member, regardless of its equity interest, any insulated member
with an equity interest of at least 10 percent (calculated according to the percentage of its capital
contribution), and any non-equity manager(s). With respect to each named member, the petitioner shall
state whether the interest is insulated or uninsulated, based on the insulation criteria specified in § 1.993,
and whether the member is a manager.
Note to Paragraph (e): The Commission presumes that a general partner of a general partnership or
limited partnership has a controlling interest in the partnership. A general partner shall in all cases be
deemed to hold an uninsulated interest in the partnership.
(f)(1) Indirect U.S or foreign interests of ten percent or more or a controlling interest. With respect to
petitions filed under § 1.990(a)(1), provide the name of any individual or entity that holds, or would hold,
indirectly, through one or more intervening entities, 10 percent or more of the equity interests and/or
voting interests, or a controlling interest, in the controlling U.S. parent of the petitioning common carrier
or aeronautical radio station applicant(s) or licensee(s). Equity interests and voting interests held
indirectly shall be calculated in accordance with the principles set forth in § 1.992.
(f)(2) Indirect U.S or foreign interests of ten percent or more or a controlling interest. With respect to
petitions filed under § 1.990(a)(2), provide the name of any individual or entity that holds, or would hold,
indirectly, through one or more intervening entities, 10 percent or more of the equity interests and/or
voting interests, or a controlling interest, in the petitioning common carrier radio station applicant(s) or
licensee(s). Equity interests and voting interests held indirectly shall be calculated in accordance with the
principles set forth in § 1.992.
(f)(3) Where no individual or entity holds, or would hold, indirectly 10 percent or more of the equity
interests and/or voting interests, or a controlling interest, in the controlling U.S. parent (for petitions filed
under § 1.990(a)(1)) or in the petitioning applicant(s) or licensee(s) (for petitions filed under §
1.990(a)(2)), the petition shall specify that no individual or entity holds indirectly 10 percent or more of
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the equity interests and/or voting interests, or a controlling interest, in the U.S. parent, applicant(s), or
licensee(s).
Note to Paragraph (f): The Commission presumes that a general partner of a general partnership or
limited partnership has a controlling interest in the partnership. A general partner shall in all cases be
deemed to hold an uninsulated interest in the partnership.
(g) For each 10 percent interest holder named in response to paragraphs (e) and (f) of this section, specify
the equity interest held and the voting interest held (each to the nearest one percent); in the case of an
individual, his or her citizenship; and in the case of a business organization, its place of organization, type
of business organization (e.g., corporation, unincorporated association, trust, general partnership, limited
partnership, limited liability company, trust, other (include description of legal entity)), and principal
business(es).
(h)(1) Estimate of aggregate foreign ownership. For petitions filed under § 1.990(a)(1), attach an exhibit
that provides a percentage estimate of the controlling U.S. parent’s aggregate direct and/or indirect
foreign equity interests and its aggregate direct and/or indirect foreign voting interests. For petitions filed
under § 1.990(a)(2), attach an exhibit that provides a percentage estimate of the aggregate foreign equity
interests and aggregate foreign voting interests held directly in the petitioning applicant(s) and/or
licensee(s), if any, and the aggregate foreign equity interests and aggregate foreign voting interests held
indirectly in the petitioning applicant(s) and/or licensee(s). The exhibit required by this paragraph must
also provide a general description of the methods used to determine the percentages; and a statement
addressing the circumstances that prompted the filing of the petition and demonstrating that the public
interest would be served by grant of the petition.
(h)(2) Ownership and control structure. Attach an exhibit that describes the ownership and control
structure of the applicant(s) and/or licensee(s) that are the subject of the petition, including an ownership
diagram and identification of the real party-in-interest disclosed in any companion applications. The
ownership diagram should illustrate the petitioner’s vertical ownership structure, including the controlling
U.S. parent named in the petition (for petitions filed under § 1.990(a)(1)) and the direct and indirect
ownership (equity and voting) interests held by the individual(s) and/or entity(ies) named in response to
paragraphs (e) and (f) of this section. Each such individual or entity shall be depicted in the ownership
diagram and all controlling interests labeled as such. Where the petition includes multiple petitioners, the
ownership of all petitioners may be depicted in a single ownership diagram or in multiple diagrams.
(i) Requests for specific approval. Provide, as required or permitted by this paragraph, the name of each
foreign individual and/or entity for which each petitioner requests specific approval, if any, and the
respective percentages of equity and/or voting interests (to the nearest one percent) that each such foreign
individual or entity holds, or would hold, directly and/or indirectly, in the controlling U.S. parent of the
petitioning common carrier or aeronautical radio station applicant(s) or licensee(s) for petitions filed
under § 1.990(a)(1), and in each petitioning common carrier applicant or licensee for petitions filed under
§ 1.990(a)(2).
(i)(1) Each petitioning common carrier or aeronautical radio station applicant or licensee filing under §
1.990(a)(1) shall identify and request specific approval for any foreign individual, entity, or group of such
individuals or entities that holds, or would hold, directly and/or indirectly, more than 5 percent of the
equity and/or voting interests, or a controlling interest, in the petitioner’s controlling U.S. parent unless
the foreign investment is exempt under paragraph (i)(3) of this section. Equity and voting interests shall
be calculated in accordance with the principles set forth in paragraphs (e) and (f) of this section and in §
1.992.
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(i)(2) Each petitioning common carrier radio station applicant or licensee filing under § 1.990(a)(2) shall
identify and request specific approval for any foreign individual, entity, or group of such individuals or
entities that holds, or would hold, directly, and/or indirectly through one or more intervening U.S.-
organized entities that do not control the applicant or licensee, more than 5 percent of the equity and/or
voting interests in the applicant or licensee unless the foreign investment is exempt under paragraph (i)(3)
of this section. Equity and voting interests shall be calculated in accordance with the principles set forth
in paragraphs (e) and (f) of this section and in § 1.992.
Note to paragraphs (i)(1), (2): Two or more individuals or entities will be treated as a “group” when they
have agreed to act together for the purpose of acquiring, holding, voting, or disposing of their equity
and/or voting interests in the licensee and/or controlling U.S. parent of the licensee or in any intermediate
company(ies) through which any of the individuals or entities holds its interests in the licensee and/or
controlling U.S. parent of the licensee.
(i)(3) A foreign investment is exempt from the specific approval requirements of paragraphs (i)(1) and
(i)(2) of this section where:
(i) The foreign individual or entity holds, or would hold, directly and/or indirectly, no more than 10
percent of the equity and/or voting interests of the U.S. parent (for petitions filed under § 1.990(a)(1)) or
the petitioning applicant or licensee (for petitions filed under § 1.990(a)(2)); and
(ii) The foreign individual or entity does not hold, and would not hold, a controlling interest in the
petitioner or any controlling parent company, does not plan or intend to change or influence control of the
petitioner or any controlling parent company, does not possess or develop any such purpose, and does not
take any action having such purpose or effect. The Commission will presume, in the absence of evidence
to the contrary, that the following interests satisfy this criterion for exemption from the specific approval
requirements in paragraphs (i)(1) and (i)(2) of this section:
(A) Where the relevant licensee, controlling U.S. parent, or entity holding a direct or indirect equity
and/or voting interest in the licensee or U.S. parent is a “public company,” as defined in § 1.990(d)(9),
provided that the foreign holder is an institutional investor that is eligible to report its beneficial
ownership interests in the company’s voting, equity securities in excess of 5 percent (not to exceed 10
percent) pursuant to Exchange Act Rule 13d-1(b), 17 C.F.R. § 240.13d-1(b), or a substantially
comparable foreign law or regulation. This presumption shall not apply if the foreign individual, entity or
group holding such interests is obligated to report its holdings in the company pursuant to Exchange Act
Rule 13d-1(a), 17 C.F.R. § 240.13d-1(a), or a substantially comparable foreign law or regulation.
Example. Common carrier applicant (“Applicant”) is preparing a petition for declaratory ruling to request
Commission approval for foreign ownership of its controlling, U.S.-organized parent (“U.S. Parent”) to
exceed the 25 percent benchmark in section 310(b)(4) of the Act. Applicant does not currently hold any
FCC licenses. Shares of U.S. Parent trade publicly on the New York Stock Exchange. Based on a
shareholder survey and a review of its shareholder records, U.S. Parent has determined that its aggregate
foreign ownership on any given day may exceed an aggregate 25 percent, including a six percent common
stock interest held by a foreign-organized mutual fund (“Foreign Fund”). U.S. Parent has confirmed that
Foreign Fund is not currently required to report its interest pursuant to Exchange Act Rule 13d-1(a) and
instead is eligible to report its interest pursuant to Exchange Act Rule 13d-1(b). U.S. Parent also has
confirmed that Foreign Fund does not hold any other interests in U.S. Parent’s equity securities, whether
of a class of voting or non-voting securities. Applicant may, but is not required to, request specific
approval of Foreign Fund’s six percent interest in U.S. Parent.
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Note to paragraph (i)(3)(ii)(A): Where an institutional investor holds voting, equity securities that are
subject to reporting under Exchange Act Rule 13d-1, 17 C.F.R. § 240.13d-1, or a substantially
comparable foreign law or regulation, and equity securities that are not subject to such reporting the
investor’s total capital stock interests may be aggregated and treated as exempt from the 5 percent specific
approval requirement in paragraphs (i)(1) and (2) of this section so long as the aggregate amount of the
institutional investor’s holdings does not exceed ten percent of the company’s total capital stock or voting
rights and the investor is eligible to certify under Exchange Act Rule 13d-1(b), 17 C.F.R. § 240.13d-1(b),
or a substantially comparable foreign law or regulation that it has acquired its capital stock interests in the
ordinary course of business and not with the purpose nor with the effect of changing or influencing the
control of the company. In calculating foreign equity and voting interests, the Commission does not
consider convertible interests such as options, warrants and convertible debentures until converted, unless
specifically requested by the petitioner, i.e., where the petitioner is requesting approval so those rights can
be exercised in a particular case without further Commission approval.
(B) Where the relevant licensee, controlling U.S. parent, or entity holding a direct and/or indirect equity
and/or voting interest in the licensee or U.S. parent is a “privately held” corporation, as defined in §
1.990(d)(8), provided that a shareholders’ agreement, or similar voting agreement, prohibits the foreign
holder from becoming actively involved in the management or operation of the corporation and limits the
foreign holder’s voting and consent rights, if any, to the minority shareholder protections listed in
paragraph (i)(5) of this section.
(C) Where the relevant licensee, controlling U.S. parent, or entity holding a direct and/or indirect equity
and/or voting interest in the licensee or U.S. parent is “privately held,” as defined in § 1.990(d)(8), and is
organized as a limited partnership, limited liability company (“LLC”), or limited liability partnership
(“LLP”), provided that the foreign holder is “insulated” in accordance with the criteria specified in §
1.993.
(i)(4) A petitioner may, but is not required to, request specific approval for any other foreign individual or
entity that holds, or would hold, a direct and/or indirect equity and/or voting interest in the controlling
U.S. parent (for petitions filed under § 1.990(a)(1)) or in the petitioning applicant or licensee (for petitions
filed under § 1.990(a)(2)).
(i)(5) The minority shareholder protections referenced in paragraph (i)(3)(ii)(B) of this section consist of
the following rights:
(i) The power to prevent the sale or pledge of all or substantially all of the assets of the corporation or a
voluntary filing for bankruptcy or liquidation;
(ii) The power to prevent the corporation from entering into contracts with majority shareholders or their
affiliates;
(iii) The power to prevent the corporation from guaranteeing the obligations of majority shareholders or
their affiliates;
(iv) The power to purchase an additional interest in the corporation to prevent the dilution of the
shareholder’s pro rata interest in the event that the corporation issues additional instruments conveying
shares in the company;
(v) The power to prevent the change of existing legal rights or preferences of the shareholders, as
provided in the charter, by-laws or other operative governance documents;
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(vi) The power to prevent the amendment of the charter, by-laws or other operative governance
documents of the company with respect to the matters described in paragraph (i)(5)(i)-(v) of this section.
(i)(6) The Commission reserves the right to consider, on a case-by-case basis, whether voting or consent
rights over matters other than those listed in paragraph (i)(5) of this section shall be considered
permissible minority shareholder protections in a particular case.
(j) For each foreign individual or entity named in response to paragraph (i) of this section, provide the
following information:
(1) In the case of an individual, his or her citizenship and principal business(es);
(2) In the case of a business organization:
(i) Its place of organization, type of business organization (e.g., corporation, unincorporated association,
trust, general partnership, limited partnership, limited liability company, trust, other (include description
of legal entity)), and principal business(es);
(ii) The name of any individual or entity that holds, or would hold, directly and/or indirectly, through one
or more intervening entities, 10 percent or more of the equity interests and/or voting interests, or a
controlling interest, in the foreign entity for which the petitioner requests specific approval. Specify for
each such interest holder, his or her citizenship (for individuals) or place of legal organization (for
entities). Equity interests and voting interests held indirectly shall be calculated in accordance with the
principles set forth in § 1.992.
(iii) Where no individual or entity holds, or would hold, directly and/or indirectly, 10 percent or more of
the equity interests and/or voting interests, or a controlling interest, the petition shall specify that no
individual or entity holds, or would hold, directly and/or indirectly, 10 percent or more of the equity
interests and/or voting interests, or a controlling interest, in the foreign entity for which the petitioner
requests specific approval.
(k) Requests for advance approval. The petitioner may, but is not required to, request advance approval
in its petition for any foreign individual or entity named in response to paragraph (i) of this section to
increase its direct and/or indirect equity and/or voting interests in the controlling U.S. parent of the
common carrier or aeronautical radio station licensee, for petitions filed under § 1.990(a)(1), and/or in the
common carrier licensee, for petitions filed under § 1.990(a)(2), above the percentages specified in
response to paragraph (i) of this section. Requests for advance approval shall be made as follows:
(k)(1) Petitions filed under § 1.990(a)(1). Where a foreign individual or entity named in response to
paragraph (i) of this section holds, or would hold upon consummation of any transactions described in the
petition, a de jure or de facto controlling interest in the controlling U.S. parent, the petitioner may request
advance approval in its petition for the foreign individual or entity to increase its interests, at some future
time, up to any amount, including 100 percent of the direct and/or indirect equity and/or voting interests
in the U.S. parent. The petitioner shall specify for the named controlling foreign individual(s) or
entity(ies) the maximum percentages of equity and/or voting interests for which advance approval is
sought or, in lieu of a specific amount, state that the petitioner requests advance approval for the named
controlling foreign individual or entity to increase its interests up to and including 100 percent of the U.S.
parent’s direct and/or indirect equity and/or voting interests.
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(k)(2) Petitions filed under § 1.990(a)(1) and/or § 1.990(a)(2). Where a foreign individual or entity
named in response to paragraph (i) of this section holds, or would hold upon consummation of any
transactions described in the petition, a non-controlling interest in the controlling U.S. parent of the
licensee, for petitions filed under § 1.990(a)(1), or in the licensee, for petitions filed under § 1.990(a)(2),
the petitioner may request advance approval in its petition for the foreign individual or entity to increase
its interests, at some future time, up to any non-controlling amount not to exceed 49.99 percent. The
petitioner shall specify for the named foreign individual(s) or entity(ies) the maximum percentages of
equity and/or voting interests for which advance approval is sought or, in lieu of a specific amount, shall
state that the petitioner requests advance approval for the named foreign individual(s) or entity(ies) to
increase their interests up to and including a non-controlling 49.99 percent equity and/or voting interest in
the licensee, for petitions filed under § 1.990(a)(2), or in the controlling U.S. parent of the licensee, for
petitions filed under § 1.990(a)(1).
§ 1.992

How to calculate indirect equity and voting interests under section 1.991.

(a) The criteria specified in this section shall be used for purposes of calculating indirect equity and
voting interests under § 1.991.
(b)(1) Equity interests held indirectly in the licensee and/or controlling U.S. parent. Equity interests that
are held by an individual or entity indirectly through one or more intervening entities shall be calculated
by successive multiplication of the equity percentages for each link in the vertical ownership chain,
regardless of whether any particular link in the chain represents a controlling interest in the company
positioned in the next lower tier.
Example under § 1.990(a)(1). Assume that a foreign individual holds a non-controlling 30 percent equity
and voting interest in U.S.-organized Corporation A which, in turn, holds a non-controlling 40 percent
equity and voting interest in U.S.-organized Parent Corporation B. The foreign individual’s equity
interest in U.S.-organized Parent Corporation B would be calculated by multiplying the foreign
individual’s equity interest in U.S.-organized Corporation A by that entity’s equity interest in U.S.-
organized Parent Corporation B. The foreign individual’s equity interest in U.S.-organized Parent
Corporation B would be calculated as 12 percent (30% x 40% = 12%). The result would be the same
even if U.S.-organized Corporation A held a de facto controlling interest in U.S.-organized Parent
Corporation B.
(b)(2) Voting interests held indirectly in the licensee and/or controlling U.S. parent. Voting interests that
are held by any individual or entity indirectly through one or more intervening entities will be determined
depending upon the type of business organization(s) in which the individual or entity holds a voting
interest as follows:
(b)(2)(i) Voting interests that are held through one or more intervening corporations shall be calculated by
successive multiplication of the voting percentages for each link in the vertical ownership chain, except
that wherever the voting interest for any link in the chain is equal to or exceeds 50 percent or represents
actual control, it shall be treated as if it were a 100 percent interest.
Example under § 1.990(a)(1). Assume that a foreign individual holds a non-controlling 30 percent equity
and voting interest in U.S.-organized Corporation A which, in turn, holds a controlling 70 percent equity
and voting interest in U.S.-organized Parent Corporation B. Because U.S.-organized Corporation A’s 70
percent voting interest in U.S.-organized Parent Corporation B constitutes a controlling interest, it is
treated as a 100 percent interest. The foreign individual’s 30 percent voting interest in U.S.-organized
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Corporation A would flow through in its entirety to U.S. Parent Corporation B and thus be calculated as
30 percent (30% x 100% = 30%).
(b)(2)(ii) Voting interests that are held through one or more intervening partnerships shall be calculated
depending upon whether the individual or entity holds a general partnership interest, an uninsulated
partnership interest, or an insulated partnership interest as specified in paragraphs (b)(2)(ii)(A)-(B) of this
section.
Note to Paragraph (b)(2)(ii): The Commission presumes that a general partner of a general partnership or
limited partnership has a controlling interest in the partnership. A general partner shall in all cases be
deemed to hold an uninsulated interest in the partnership.
(b)(2)(ii)(A) General partnership and other uninsulated partnership interests. A general partner and
uninsulated partner shall be deemed to hold the same voting interest as the partnership holds in the
company situated in the next lower tier of the vertical ownership chain. A partner shall be treated as
uninsulated unless the limited partnership agreement, limited liability partnership agreement, or other
operative agreement satisfies the insulation criteria specified in § 1.993.
(b)(2)(ii)(B) Insulated partnership interests. A partner of a limited partnership (other than a general
partner) or partner of a limited liability partnership that satisfies the insulation criteria specified in § 1.993
shall be treated as an insulated partner and shall be deemed to hold a voting interest in the partnership that
is equal to the partner’s equity interest.
(b)(2)(iii) Voting interests that are held through one or more intervening limited liability companies shall
be calculated depending upon whether the individual or entity is a non-member manager, an uninsulated
member or an insulated member as specified in paragraphs (b)(2)(iii)(A)-(B) of this section.
(b)(2)(iii)(A) Non-member managers and uninsulated membership interests. A non-member manager
and an uninsulated member of a limited liability company shall be deemed to hold the same voting
interest as the limited liability company holds in the company situated in the next lower tier of the vertical
ownership chain. A member shall be treated as uninsulated unless the limited liability company
agreement satisfies the insulation criteria specified in § 1.993.
(b)(2)(iii)(B) Insulated membership interests. A member of a limited liability company that satisfies the
insulation criteria specified in § 1.993 shall be treated as an insulated member and shall be deemed to
hold a voting interest in the limited liability company that is equal to the member’s equity interest.
§ 1.993 Insulation criteria for interests in limited partnerships, limited liability partnerships, and
limited liability companies.

(a) A limited partner of a limited partnership and a partner of a limited liability partnership shall be
treated as uninsulated within the meaning of § 1.992(b)(2)(ii)(A) unless the partner is prohibited by the
limited partnership agreement, limited liability partnership agreement, or other operative agreement from,
and in fact is not engaged in, active involvement in the management or operation of the partnership and
only the usual and customary investor protections are contained in the partnership agreement or other
operative agreement. These criteria apply to any relevant limited partnership or limited liability
partnership, whether it is the licensee, a controlling U.S.-organized parent, or any partnership situated
above them in the vertical chain of ownership.
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(b) A member of a limited liability company shall be treated as uninsulated for purposes of §
1.992(b)(2)(iii)(A) unless the member is prohibited by the limited liability company agreement from, and
in fact is not engaged in, active involvement in the management or operation of the company and only the
usual and customary investor protections are contained in the agreement. These criteria apply to any
relevant limited liability company, whether it is the licensee, a controlling U.S.-organized parent, or any
limited liability company situated above them in the vertical chain of ownership.
(c) The usual and customary investor protections referred to in paragraphs (a)-(b) of this section shall
consist of:
(c)(1) The power to prevent the sale or pledge of all or substantially all of the assets of the limited
partnership, limited liability partnership, or limited liability company or a voluntary filing for bankruptcy
or liquidation;
(c)(2) The power to prevent the limited partnership, limited liability partnership, or limited liability
company from entering into contracts with majority investors or their affiliates;
(c)(3) The power to prevent the limited partnership, limited liability partnership, or limited liability
company from guaranteeing the obligations of majority investors or their affiliates;
(c)(4) The power to purchase an additional interest in the limited partnership, limited liability partnership,
or limited liability company to prevent the dilution of the partner’s or member’s pro rata interest in the
event that the limited partnership, limited liability partnership, or limited liability company issues
additional instruments conveying interests in the partnership or company;
(c)(5) The power to prevent the change of existing legal rights or preferences of the partners, members, or
managers as provided in the limited partnership agreement, limited liability partnership agreement, or
limited liability company agreement, or other operative agreement;
(c)(6) The power to vote on the removal of a general partner, managing partner, managing member, or
other manager in situations where such individual or entity is subject to bankruptcy, insolvency,
reorganization, or other proceedings relating to the relief of debtors; adjudicated insane or incompetent by
a court of competent jurisdiction (in the case of a natural person); convicted of a felony; or otherwise
removed for cause, as determined by an independent party;
(c)(7) The power to prevent the amendment of the limited partnership agreement, limited liability
partnership agreement, or limited liability company agreement, or other organizational documents of the
partnership or limited liability company with respect to the matters described in paragraph (c)(1)-(6) of
this section.
(d) The Commission reserves the right to consider, on a case-by-case basis, whether voting or consent
rights over matters other than those listed in paragraph (c) of this section shall be considered usual and
customary investor protections in a particular case.
§ 1.994 Routine terms and conditions.
Foreign ownership rulings issued pursuant to §§ 1.990 et seq. shall be subject to the following terms and
conditions, except as otherwise specified in a particular ruling:
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(a)(1) Aggregate allowance for rulings issued under § 1.990(a)(1). In addition to the foreign ownership
interests approved specifically in a licensee’s declaratory ruling issued pursuant to § 1.990(a)(1), the
controlling U.S.-organized parent named in the ruling (or a U.S.-organized successor-in-interest formed
as part of a pro forma reorganization) may be 100 percent owned, directly and/or indirectly through one
or more U.S- or foreign-organized entities, on a going-forward basis (i.e., after issuance of the ruling) by
other foreign investors without prior Commission approval. This “100 percent aggregate allowance” is
subject to the requirement that the licensee seek and obtain Commission approval before any foreign
individual, entity, or “group” not previously approved acquires, directly and/or indirectly, more than five
percent of the U.S. parent’s outstanding capital stock (equity) and/or voting stock, or a controlling
interest, with the exception of any foreign individual, entity, or “group” that acquires an equity and/or
voting interest of ten percent or less, provided that the interest is exempt under § 1.991(i)(3).
(a)(2) Aggregate allowance for rulings issued under § 1.990(a)(2). In addition to the foreign ownership
interests approved specifically in a licensee’s declaratory ruling issued pursuant to § 1.990(a)(2), the
licensee(s) named in the ruling (or a U.S.-organized successor-in-interest formed as part of a pro forma
reorganization) may be 100 percent owned on a going forward basis (i.e., after issuance of the ruling) by
other foreign investors holding interests in the licensee indirectly through U.S.-organized entities that do
not control the licensee, without prior Commission approval. This “100 percent aggregate allowance” is
subject to the requirement that the licensee seek and obtain Commission approval before any foreign
individual, entity, or “group” not previously approved acquires directly and/or indirectly, through one or
more U.S.-organized entities that do not control the licensee, more than five percent of the licensee’s
outstanding capital stock (equity) and/or voting stock, with the exception of any foreign individual, entity,
or “group” that acquires an equity and/or voting interest of ten percent or less, provided that the interest is
exempt under § 1.991(i)(3). Foreign ownership interests held directly in a licensee shall not be permitted
to exceed an aggregate 20 percent of the licensee’s equity and/or voting interests.
Note to Paragraph (a): Licensees have an obligation to monitor and stay ahead of changes in foreign
ownership of their controlling U.S.-organized parent companies (for rulings issued pursuant to §
1.990(a)(1)) and/or in the licensee itself (for rulings issued pursuant to § 1.990(a)(2)), to ensure that the
licensee obtains Commission approval before a change in foreign ownership renders the licensee out of
compliance with the terms and conditions of its declaratory ruling(s) or the Commission’s rules.
Licensees, their controlling parent companies, and other entities in the licensee’s vertical ownership chain
may need to place restrictions in their bylaws or other organizational documents to enable the licensee to
ensure compliance with the terms and conditions of its declaratory ruling(s) and the Commission’s rules.
Example 1 (for rulings issued under § 1.990(a)(1)). U.S. Corp. files an application for a common carrier
license. U.S. Corp. is wholly owned and controlled by U.S. Parent, which is a newly formed, privately
held Delaware corporation in which no single shareholder has de jure or de facto control. A shareholders’
agreement provides that a five-member board of directors shall govern the affairs of the company; five
named shareholders shall be entitled to one seat and one vote on the board; and all decisions of the board
shall be determined by majority vote. The five named shareholders and their respective equity interests
are as follows: Foreign Entity A, which is wholly owned and controlled by a foreign citizen (5 percent);
Foreign Entity B, which is wholly owned and controlled by a foreign citizen (10 percent); Foreign Entity
C, a foreign public company with no controlling shareholder (20 percent); Foreign Entity D, a foreign
pension fund that is controlled by a foreign citizen and in which no individual or entity has a pecuniary
interest exceeding one percent (21 percent); and U.S. Entity E, a U.S. public company with no controlling
shareholder (25 percent). The remaining 19 percent of U.S. Parent’s shares are held by three foreign-
organized entities as follows: F (4 percent), G (6 percent), and H (9 percent). Under the shareholders’
agreement, voting rights of F, G, and H are limited to the minority shareholder protections listed in
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§1.991(i)(5). Further, the agreement expressly prohibits G and H from becoming actively involved in the
management or operation of U.S. Parent and U.S. Corp.
As required by the rules, U.S. Corp. files a section 310(b)(4) petition concurrently with its application.
The petition identifies and requests specific approval for the ownership interests held in U.S. Parent by
Foreign Entity A and its sole shareholder (5 percent equity and 20 percent voting interest); Foreign Entity
B and its sole shareholder (10 percent equity and 20 percent voting interest), Foreign Entity C (20 percent
equity and 20 percent voting interest), and Foreign Entity D (21 percent equity and 20 percent voting
interest) and its fund manager (20 percent voting interest). The Commission’s ruling specifically
approves these foreign interests. The ruling also provides that, on a going-forward basis, U.S. Parent may
be 100 percent owned in the aggregate, directly and/or indirectly, by other foreign investors, subject to the
requirement that U.S. Corp. seek and obtain Commission approval before any previously unapproved
foreign investor acquires more than five percent of U.S. Parent’s equity and/or voting interests, or a
controlling interest, with the exception of any foreign investor that acquires an equity and/or voting
interest of ten percent or less, provided that the interest is exempt under § 1.991(i)(3).
In this case, foreign entities F, G, and H would each be considered a previously unapproved foreign
investor (along with any new foreign investors). However, prior approval for F, G and H would only
apply to an increase of F’s interest above five percent (because the ten percent exemption under §
1.991(i)(3) does not apply to F) or to an increase of G’s or H’s interest above ten percent (because G and
H do qualify for this exemption). U.S. Corp. would also need Commission approval before Foreign
Entity D appoints a new fund manager that is a non-U.S. citizen and before Foreign Entities A, B, C, or D
increase their respective equity and/or voting interests in U.S. Parent, unless the petition previously
sought and obtained Commission approval for such increases (up to non-controlling 49.99 percent
interests). (See § 1.991(k)(2).) Foreign shareholders of Foreign Entity C and U.S. Entity E would also be
considered previously unapproved foreign investors. Thus, Commission approval would be required
before any foreign shareholder of Foreign Entity C or U.S. Entity E acquires (1) a controlling interest in
either company; or (2) a non-controlling equity and/or voting interest in either company that, when
multiplied by the company’s equity and/or voting interests in U.S. Parent, would exceed 5 percent of U.S.
Parent’s equity and/or voting interests, unless the interest is exempt under § 1.991(i)(3).
Example 2 (for rulings issued under § 1.990(a)(2)). Assume that the following three U.S.-organized
entities hold non-controlling equity and voting interests in common carrier Licensee, which is a privately
held corporation organized in Delaware: U.S. corporation A (30 percent); U.S. corporation B (30
percent); and U.S. corporation C (40 percent). Licensee’s shareholders are wholly owned by foreign
individuals X, Y, and Z, respectively. Licensee has received a declaratory ruling under § 1.990(a)(2)
specifically approving the 30 percent foreign ownership interests held in Licensee by each of X and Y
(through U.S. corporation A and U.S. corporation B, respectively) and the 40 percent foreign ownership
interest held in Licensee by Z (through U.S. corporation C). On a going-forward basis, Licensee may be
100 percent owned in the aggregate by X, Y, Z, and other foreign investors holding interests in Licensee
indirectly, through U.S.-organized entities that do not control Licensee, subject to the requirement that
Licensee obtain Commission approval before any previously unapproved foreign investor acquires more
than five percent of Licensee’s equity and/or voting interests, with the exception of any foreign investor
that acquires an equity and/or voting interest of ten percent or less, provided that the interest is exempt
under § 1.991(i)(3). In this case, any foreign investor other than X, Y, and Z would be considered a
previously unapproved foreign investor. Licensee would also need Commission approval before X, Y, or
Z increases its equity and/or voting interests in Licensee unless the petition previously sought and
obtained Commission approval for such increases (up to non-controlling 49.99 percent interests). (See §
1.991(k)(2).)
(b) Subsidiaries and affiliates. A foreign ownership ruling issued to a licensee shall cover it and any
U.S.-organized subsidiary or affiliate, as defined in § 1.990(d), whether the subsidiary or affiliate existed
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at the time the ruling was issued or was formed or acquired subsequently, provided that the foreign
ownership of the licensee named in the ruling, and of the subsidiary and/or affiliate, remains in
compliance with the terms and conditions of the licensee’s ruling and the Commission’s rules.
(b)(1) The subsidiary or affiliate of a licensee named in a foreign ownership ruling issued under §
1.990(a)(1) may rely on that ruling for purposes of filing its own application for an initial common carrier
or aeronautical license or spectrum leasing arrangement, or an application to acquire such license or
spectrum leasing arrangement by assignment or transfer of control provided that the subsidiary or
affiliate, and the licensee named in the ruling, each certifies in the application that its foreign ownership is
in compliance with the terms and conditions of the foreign ownership ruling and the Commission’s rules.
(b)(2) The subsidiary or affiliate of a licensee named in a foreign ownership ruling issued under §
1.990(a)(2) may rely on that ruling for purposes of filing its own application for an initial common carrier
radio station license or spectrum leasing arrangement, or an application to acquire such license or
spectrum leasing arrangement by assignment or transfer of control provided that the subsidiary or
affiliate, and the licensee named in the ruling, each certifies in the application that its foreign ownership is
in compliance with the terms and conditions of the foreign ownership ruling and the Commission’s rules.
(b)(3) The certifications required by paragraphs (b)(1) and (b)(2) of this section shall also include the
citation(s) of the relevant ruling(s) (i.e., the DA or FCC Number, FCC Record citation when available,
and release date).
(c) Insertion of new controlling foreign-organized companies – (1) Where a licensee’s foreign ownership
ruling specifically authorizes a named, foreign investor to hold a controlling interest in the licensee’s
controlling U.S.-organized parent, for rulings issued under § 1.990(a)(1), or in an intervening U.S.-
organized entity that does not control the licensee, for rulings issued under § 1.990(a)(2), the ruling shall
permit the insertion of new, controlling foreign-organized companies in the vertical ownership chain
above the controlling U.S. parent, for rulings issued under § 1.990(a)(1), or above an intervening U.S.-
organized entity that does not control the licensee, for rulings issued under § 1.990(a)(2), without prior
Commission approval provided that any new foreign-organized company(ies) are under 100 percent
common ownership and control with the foreign investor approved in the ruling.
(c)(2) Where a previously unapproved foreign-organized entity is inserted into the vertical ownership
chain of a licensee, or its controlling U.S.-organized parent, without prior Commission approval pursuant
to paragraph (c)(1) of this section, the licensee shall file a letter to the attention of the Chief, International
Bureau, within 30 days after the insertion of the new, foreign-organized entity. The letter must include
the name of the new, foreign-organized entity and a certification by the licensee that the entity complies
with the 100 percent common ownership and control requirement in paragraph (c)(1) of this section. The
letter must also reference the licensee’s foreign ownership ruling(s) by IBFS File No. and FCC Record
citation, if available. This letter notification need not be filed if the ownership change is instead the
subject of a pro forma application or pro forma notification already filed with the Commission pursuant
to the relevant wireless radio service rules or satellite radio service rules applicable to the licensee.
(c)(3) Nothing in this section is intended to affect any requirements for prior approval under 47 U.S.C. §
310(d) or conditions for forbearance from the requirements of 47 U.S.C. § 310(d) pursuant to 47 U.S.C. §
160.
Example (for rulings issued under § 1.990(a)(1)). Licensee receives a foreign ownership ruling under §
1.990(a)(1) that authorizes its controlling, U.S.-organized parent (“U.S. Parent A”) to be wholly owned
and controlled by a foreign-organized company (“Foreign Company”). Foreign Company is minority
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owned (20 percent) by U.S.-organized Corporation B, with the remaining 80 percent controlling interest
held by Foreign Citizen C. After issuance of the ruling, Foreign Company forms a wholly-owned,
foreign-organized subsidiary (“Foreign Subsidiary”) to hold all of Foreign Company’s shares in U.S.
Parent A. There are no other changes in the direct or indirect foreign ownership of U.S. Parent A. The
insertion of Foreign Subsidiary into the vertical ownership chain between Foreign Company and U.S.
Parent A would not require prior Commission approval, except for any approval otherwise required
pursuant to section 310(d) of the Communications Act and not exempt therefrom as a pro forma transfer
of control under § 1.948(c)(1).
Example (for rulings issued under § 1.990(a)(2)). An applicant for a common carrier license receives a
foreign ownership ruling under § 1.990(a)(2) that authorizes a foreign-organized company (“Foreign
Company”) to hold a non-controlling 44 percent equity and voting interest in the applicant through
Foreign Company’s wholly-owned, U.S.-organized subsidiary, U.S. Corporation A, which holds the non-
controlling 44 percent interest directly in the applicant. The remaining 56 percent of the applicant’s
equity and voting interests are held by its controlling U.S.-organized parent, which has no foreign
ownership. After issuance of the ruling, Foreign Company forms a wholly-owned, foreign-organized
subsidiary to hold all of Foreign Company’s shares in U.S. Corporation A. There are no other changes in
the direct or indirect foreign ownership of U.S. Corporation A. The insertion of the foreign-organized
subsidiary into the vertical ownership chain between Foreign Company and U.S. Corporation A would
not require prior Commission approval.
(d) Insertion of new non-controlling foreign-organized companies – (1) Where a licensee’s foreign
ownership ruling specifically authorizes a named, foreign investor to hold a non-controlling interest in the
licensee’s controlling U.S.-organized parent, for rulings issued under § 1.990(a)(1), or in an intervening
U.S.-organized entity that does not control the licensee, for rulings issued under § 1.990(a)(2), the ruling
shall permit the insertion of new, foreign-organized companies in the vertical ownership chain above the
controlling U.S. parent, for rulings issued under § 1.990(a)(1), or above an intervening U.S.-organized
entity that does not control the licensee, for rulings issued under § 1.990(a)(2), without prior Commission
approval provided that any new foreign-organized company(ies) are under 100 percent common
ownership and control with the foreign investor approved in the ruling.
Note to Paragraph (d)(1): Where a licensee has received a foreign ownership ruling under § 1.990(a)(2)
and the ruling specifically authorizes a named, foreign investor to hold a non-controlling interest directly
in the licensee (subject to the 20 percent aggregate limit on direct foreign investment), the ruling shall
permit the insertion of new, foreign-organized companies in the vertical ownership chain of the approved
foreign investor without prior Commission approval provided that any new foreign-organized companies
are under 100 percent common ownership and control with the approved foreign investor.
Example (for rulings issued under § 1.990(a)(1)). Licensee receives a foreign ownership ruling under §
1.990(a)(1) that authorizes a foreign-organized company (“Foreign Company”) to hold a non-controlling
30 percent equity and voting interest in Licensee’s controlling, U.S.-organized parent (“U.S. Parent A”).
The remaining 70 percent equity and voting interests in U.S. Parent A are held by U.S.-organized entities
which have no foreign ownership. After issuance of the ruling, Foreign Company forms a wholly-owned,
foreign-organized subsidiary (“Foreign Subsidiary”) to hold all of Foreign Company’s shares in U.S.
Parent A. There are no other changes in the direct or indirect foreign ownership of U.S. Parent A. The
insertion of Foreign Subsidiary into the vertical ownership chain between Foreign Company and U.S.
Parent A would not require prior Commission approval.
Example (for rulings issued under §1.990(a)(2)). Licensee receives a foreign ownership ruling under §
1.990(a)(2) that authorizes a foreign-organized entity (“Foreign Company”) to hold approximately 24
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percent of Licensee’s equity and voting interests, through Foreign Company’s non-controlling 48 percent
equity and voting interest in a U.S.-organized entity, U.S. Corporation A, which holds a non-controlling
49 percent equity and voting interest directly in Licensee. (A U.S. citizen holds the remaining 52 percent
equity and voting interests in U.S. Corporation A, and the remaining 51 percent equity and voting
interests in Licensee are held by its U.S.-organized parent, which has no foreign ownership. After
issuance of the ruling, Foreign Company forms a wholly-owned, foreign-organized subsidiary (“Foreign
Subsidiary”) to hold all of Foreign Company’s shares in U.S. Corporation A. There are no other changes
in the direct or indirect foreign ownership of U.S. Corporation A. The insertion of Foreign Subsidiary
into the vertical ownership chain between Foreign Company and U.S. Corporation A would not require
prior Commission approval.
(d)(2) Where a previously unapproved foreign-organized entity is inserted into the vertical ownership
chain of a licensee, or its controlling U.S.-organized parent, without prior Commission approval pursuant
to paragraph (d)(1) of this section, the licensee shall file a letter to the attention of the Chief, International
Bureau, within 30 days after the insertion of the new, foreign-organized entity. The letter must include
the name of the new, foreign-organized entity and a certification by the licensee that the entity complies
with the 100 percent common ownership and control requirement in paragraph (d)(1) of this section. The
letter must also reference the licensee’s foreign ownership ruling(s) by IBFS File No. and FCC Record
citation, if available. This letter notification need not be filed if the ownership change is instead the
subject of a pro forma application or pro forma notification already filed with the Commission pursuant
to the relevant wireless radio service rules or satellite radio service rules applicable to the licensee.
(e) New petition for declaratory ruling required. A licensee that has received a foreign ownership ruling,
including a U.S.-organized successor-in-interest to such licensee formed as part of a pro forma
reorganization, or any subsidiary or affiliate relying on such licensee’s ruling pursuant to paragraph (b) of
this section, shall file a new petition for declaratory ruling under § 1.990 to obtain Commission approval
before its foreign ownership exceeds the routine terms and conditions of this section, and/or any specific
terms or conditions of its ruling.
(f)(1) Continuing compliance. If at any time the licensee, including any successor-in-interest and any
subsidiary or affiliate as described in paragraph (b) of this section, knows, or has reason to know, that it is
no longer in compliance with its foreign ownership ruling or the Commission’s rules relating to foreign
ownership, it shall file a statement with the Commission explaining the circumstances within 30 days of
the date it knew, or had reason to know, that it was no longer in compliance therewith. Subsequent
actions taken by or on behalf of the licensee to remedy its non-compliance shall not relieve it of the
obligation to notify the Commission of the circumstances (including duration) of non-compliance. Such
licensee and any controlling companies, whether U.S.- or foreign–organized, shall be subject to
enforcement action by the Commission for such non-compliance, including an order requiring divestiture
of the investor’s direct and/or indirect interests in such entities.
(f)(2) Any individual or entity that, directly or indirectly, creates or uses a trust, proxy, power of attorney,
or any other contract, arrangement, or device with the purpose or effect of divesting itself, or preventing
the vesting, of an equity interest or voting interest in the licensee, or in a controlling U.S. parent company,
as part of a plan or scheme to evade the application of the Commission’s rules or policies under section
310(b) shall be subject to enforcement action by the Commission, including an order requiring divestiture
of the investor’s direct and/or indirect interests in such entities.
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PART 25 – SATELLITE COMMUNICATIONS

4. The authority citation for part 25 is amended to read as follows:

AUTHORITY: 47 U.S.C. 701–744. Interprets or applies Sections 4, 301, 302, 303, 307, 309, 310 and
332 of the Communications Act, as amended, 47 U.S.C. Sections 154, 301, 302, 303, 307, 309, 310
and 332, unless otherwise noted.

5. Section 25.105 of Subpart A is added to read as follows:
§ 25.105 Citizenship.
The rules that establish the requirements and conditions for obtaining the Commission’s prior approval of
foreign ownership in common carrier licensees that would exceed the 20 percent limit in section
310(b)(3) and/or the 25 percent benchmark in section 310(b)(4) are set forth in §§ 1.990-1.994 of this
chapter.
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STATEMENT OF

CHAIRMAN JULIUS GENACHOWSKI

Re:
Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees
under Section 310(b)(4) of the Communications Act of 1934, as Amended
, IB Docket No. 11-133.
With this item to streamline and modernize our policies for reviewing foreign ownership, we take
another action in our agency-wide efforts to eliminate unnecessary regulations and improve the
transparency and predictability of the Commission’s work.
Ultimately, this action will unleash more foreign investment, an important source of financing for
U.S. telecommunications companies, fostering technical innovation, economic growth, and job creation.
In the first days of my chairmanship, I launched an agency-wide review of rules and regulations,
appointing a Special Counsel for FCC Reform, and asking all of the Bureaus to incorporate such review
into their daily work.
Agency-wide, we’ve made significant progress. We’ve eliminated over 300 regulations since
January 2011. And we continue to review data collections, reduce backlogs, and improve processes.
The International Bureau has been a leader in this effort. Among many actions, they’ve
streamlined the international reporting requirements in Part 43 of our rules, removing five unnecessary
data collections, as well as eliminating reporting requirements for over 1000 small carriers – leading to an
overall estimated 30% reduction in industry burden.
They’ve removed the International Settlements Policy (ISP) from the Commission’s rules –
allowing U.S. carriers more flexibility to negotiate commercial agreements for international telephone
rates.
And they are in the middle of a proceeding to streamline and modernize the Commission’s rules
related to satellite licensing.
The Foreign Ownership Second Report and Order is yet another step in the reform of our rules.
This Order is the result of a review of our policies and procedures for foreign ownership review
under sections 310(b) of the Communications Act as they apply to common carrier wireless and certain
aeronautical radio station licensees. It will:
(1) reduce the regulatory costs and burdens imposed on wireless common carrier and aeronautical
applicants, licensees, and spectrum lessees by reducing the number of petitions by 40 to 70
percent, as well as the number of burden hours;
(2) provide greater transparency and more predictability with respect to the Commission’s foreign
ownership filing requirements and review process; and
(3) facilitate investment from new sources of capital, while continuing to protect important
interests related to national security, law enforcement, foreign policy, and trade policy.
I thank the staff for all their hard work on this and on the many reforms they’ve made over the
last few years.
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STATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re:
Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees
under Section 310(b)(4) of the Communications Act of 1934, as Amended
, IB Docket No. 11-133.
Facilitating tower construction, providing more options for backhaul services, enabling greater
use of unlicensed spectrum, promoting data roaming agreements, and repurposing spectrum for
commercial broadband use -- all of these objectives and subsequent proceedings under Chairman
Genachowski’s leadership, are key to the realization of higher quality data services and more competitive
mobile service options for consumers. But in order to take advantage of these worthwhile policies, and
fuel other actions to improve their networks, providers need substantial amounts of capital investment.
Investment in wireless networks not only improves broadband capacity, and other mobile services
for consumers, it fosters economic growth and job creation. A 2012 Report by the White House’s
Council of Economic Advisors makes clear, that investment in wireless broadband networks substantially
increases out domestic economic growth. One study, cited by that Report, estimates that, from 2003 to
2009, entities invested $11.6 billion in wireless and satellite technologies, and that infusion created over
168,000 new jobs, during that timeframe. So why should that excite us? Investment in advanced wireless
networks can collectively reduce our deficit, improve public safety, and bolster our Nation's economy.
That is why President Obama, in 2011, set a goal of providing 4G services to at least 98 percent of
Americans by 2016 and that is why we will should and will continue to do all we can, to encourage more
domestic and foreign investment in wireless networks.
As this Order explains, the process for reviewing increases of foreign interests in licensees, under
Section 310(b)(4) of the Communications Act, is an area where the Commission can facilitate greater
investment in mobile networks. That statute and our case precedent, requires us to ensure that certain
increases in foreign investment do not adversely impact important interests such as national security, law
enforcement, and public safety. But, we can substantially reduce the number of petitions and other
administrative hurdles that parties incur when trying to show that increases in foreign ownership of U.S.
licensees would serve the public interest.
Through the capable leadership of Mindel De La Torre, Susan O’Connell, Kate Collins, and other
staff members with decades of experience in these proceedings, we have found several creative ways to
exercise the discretion Congress gave us, while substantially facilitating more foreign investment in more
streamlined manner. By codifying our foreign ownership policies and procedures, we are encouraging
more foreign investment by providing more regulatory predictability and guidance about the information
we need to review and approve these applications. We have substantially reduced the number of non-
controlling foreign interests that must be reported, and removed unnecessary burdens in the filing
investment applications. We have reduced the number of petitions that must be filed by eliminating the
need for U.S. parent companies to return to the Commission every time an already approved foreign
investor seeks to increase its interest on an incremental basis. The staff also took a prudent course, by
coordinating this Order with the United States Trade Representative, Department of Homeland Security,
Department of Justice, and NTIA, to ensure these rule changes would not impede those agencies from
properly assessing our national interests.
Facilitating investment in our wireless licensees is a critical part of a national strategy to advance
our wireless services industry and improve economic growth. These changes go a long way toward
realizing this key objective and that is why, I am pleased to support this order.
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STATEMENT OF

COMMISSIONER JESSICA ROSENWORCEL

Re:
Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees
under Section 310(b)(4) of the Communications Act of 1934, as Amended
, IB Docket No. 11-133.
For American telecommunications companies to maintain their leadership in a global market,
they need investment on a global scale. More funding means more digital age infrastructure and more
innovative services. It means more economic growth. It means more jobs.
So for the Commission, the equation going forward is deceptively simple: our communications
networks need an unprecedented level of investment, and investment requires clarity and predictability.
In short, the Commission should strive to provide confidence for investment.
Establishing clear-cut, understandable rules is one way to instill this confidence. That is what we
do here—and that is why I support today’s decision. We provide clear direction to licensees, making it
easier to invest in our networks and access capital from around the globe. We remove unnecessary filing
requirements, and as a result more resources can be devoted to improving networks rather than pushing
paper. At the same time, our approach is entirely consistent with national security objectives. We keep
intact review of matters of essential national interest and maintain our authority to condition or disallow
foreign investment that threatens those interests.
Finally, transparency, efficiency, and confidence in investment should not be limited to
telecommunications networks. Broadcasters also are facing an increasingly complex, multi-platform
future. That is why I am pleased that the Media Bureau sought comment on a letter from the Coalition for
Broadcast Investment seeking additional clarification of the Commission’s foreign ownership policies.
We should quickly review the record and take action accordingly.
Thank you to the International Bureau for the experience and knowledge you bring to these issues
and this proceeding.
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STATEMENT OF

COMMISSIONER AJIT PAI

Re:
Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees
under Section 310(b)(4) of the Communications Act of 1934, as Amended
, IB Docket No. 11-133.
As today’s item observes, “foreign investment has been . . . an important source of financing for
U.S. telecommunications companies, fostering technical innovation, economic growth and job
creation.”1 We are lucky to have this inflow of capital, for it is a truth universally acknowledged that
constructing next-generation networks requires possession of a good fortune.2 In 2011, for example,
wireless companies poured over $25 billion into building and upgrading their networks.3
This makes it critical that the United States remain the most attractive place in the world for
investment in the communications industry. By reducing regulatory costs and burdens for common
carrier radio station licensees, the measures contained in this Second Report and Order will help us
achieve that goal, and I am therefore pleased to support it.
But today’s effort cannot be a coda. When it comes to foreign investment, one aspect of the
Commission’s policies still demands reexamination and revision. Currently, we have a de facto ban on
any foreign investment in a U.S. broadcast holding company that exceeds a 25 percent benchmark. Under
our rules, then, a foreign company can indirectly hold more than a quarter share in our nation’s largest
cable operators, cable programmers, wireline carriers, wireless carriers, Internet backbone providers, and
satellite video providers. Yet that company cannot own a similar interest in a single AM radio station in a
small, rural town. As I have pointed out before, this makes no sense.4 It is long past time for us to level
the regulatory playing field.
Foreign investment can pave the way for growth and innovation in broadcasting, just as it has
done for other segments of the communications industry. That’s why the Coalition for Broadcast
Investment asked the Commission last year to modernize our current policy and evaluate foreign
investment on a case-by-case basis. In February, the Media Bureau put the Coalition’s proposal out for
comment. We received the first round of feedback on Monday. Even at this early stage, the support for
permitting additional foreign investment is overwhelming.
It might not be a surprise that industry groups, such as the National Association of Broadcasters,
support these investments. But it is notable that at least thirty-one national minority and civil rights
organizations do too, including the League of United Latin American Citizens, the Rainbow PUSH
Coalition, the National Black Caucus of State Legislators, the Asian American Chamber of Commerce,

1 Second Report and Order, ¶ 3.
2 Cf. Jane Austen, Pride and Prejudice 1 (1813).
3 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis
of Competitive Market Conditions With Respect to Mobile Wireless, including Commercial Mobile Services
, WT
Docket No. 11-186, Sixteenth Report, FCC 13-34, at Table 33 (rel. Mar. 19, 2013).
4 See, e.g., Remarks of Commissioner Ajit Pai before the NAB Radio Show at 5–6 (Sept. 19, 2012), available at
http://go.usa.gov/Tj2G; Statement of Commissioner Ajit Pai on Modernizing Approach to Foreign Investment in
Broadcast Stations (Feb. 26, 2013), available at http://go.usa.gov/TjTC; Statement of Commissioner Ajit Pai,
Hearing Before the United States Senate Committee on Commerce, Science, and Transportation, “Oversight of the
Federal Communications Commission” at 9 (Mar. 12, 2013), available at http://go.usa.gov/TjTW.
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and the Minority Media and Telecommunications Council. As these groups put it, “To reverse the decline
in minority broadcast ownership, one of the most significant steps the Commission could take is to relax
its strict application of Section 310(b)(4) of the Communications Act . . . . By relaxing its restrictions on
foreign investment in broadcasting, the Commission would greatly assist minority broadcasters whose
survival depends on their ability to grow domestically and internationally.”
The comment cycle on the Coalition’s proposal will end on April 30, and I hope that the
Commission will take action soon thereafter. By ending our anachronistic approach to foreign
investment, we can bring new vitality to the broadcasting industry. We can increase access to capital.
And we can help boost minority ownership.
In closing, I would like to thank the staff of the International Bureau for their work on today’s
item and for their ongoing efforts to review foreign ownership applications. In particular, the
Commission’s long-time foreign ownership expert, Susan O’Connell, merits special recognition. Much
of today’s item reflects the knowledge and wisdom that Susan has developed through her years of
experience with these issues.
2

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