******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) NEXTWAVE PERSONAL ) File Nos. 00341CWL96 et al. COMMUNICATIONS INC. ) ) Request for Temporary Waiver of ) Indirect Alien Ownership Limits ) ORDER Adopted: May 16, 1997 Released: May 16, 1997 By the Acting Chief, Wireless Telecommunications Bureau: I. INTRODUCTION 1. On April 10, 1997, NextWave Personal Communications Inc. (NextWave) filed a "Petition for Temporary Waiver" of the restructuring obligations imposed by the Wireless Telecommunications Bureau as a condition on the grant to NextWave of broadband Personal Communications Services (PCS) C-block licenses. NextWave requests that the restructuring deadline of July 3, 1997, established by the NextWave Licensing Order be tolled until 90 days after the effective date of the Commission's rulemaking proceeding regarding the implementation of the World Trade Organization Basic Telecommunications Agreement (WTO Agreement). In addition, NextWave requests that the Commission refrain from exercising its authority under Section 310(b)(4) of the Communications Act during this period so that NextWave may seek access without limitation to additional foreign capital. In this order, we grant NextWave's request to extend the deadline for compliance with its restructuring obligations under the NextWave Licensing Order. However, in the absence of any specific showing, we deny NextWave's request for blanket approval of additional foreign investment. This order is subject to the outcome of any decision with respect to the application for review of the NextWave Licensing Order now pending before the Commission. II. BACKGROUND 2. NextWave is a wholly-owned subsidiary of NextWave Telecom Inc. (NTI). Both entities were formed to acquire broadband PCS licenses and to operate PCS networks. At the conclusion of the Commission's auction and reauction of C-block licenses, NextWave was the high bidder for 63 licenses. On July 1, 1996, Antigone Communications Limited Partnership (Antigone) and PCS Devco, Inc. (Devco) filed a petition to deny NextWave's long-form applications for the licenses. Among other things, Antigone and Devco alleged that NextWave exceeded the 25 percent foreign ownership benchmark of Section 310(b)(4). 3. Following a review of the record, the Bureau determined that NextWave's level of foreign ownership exceeded the 25 percent statutory benchmark. The Bureau then granted NextWave an opportunity to either file a restructuring plan that would bring it into compliance with the 25 percent benchmark, or make a showing of why the public interest would be served by granting the licenses notwithstanding its level of foreign ownership. In response, NextWave filed a restructuring plan in which it proposed to achieve 25 percent foreign ownership within nine months. On January 3, 1997, after reviewing NextWave's restructuring plan and Antigone and Devco's opposition, the Bureau granted NextWave's applications, conditioned on NextWave restructuring within six months (i.e., by July 3, 1997) in accordance with its restructuring plan. Antigone and Devco have filed an application for review challenging the NextWave Licensing Order, which is currently pending before the Commission. 4. On February 15, 1997, the United States joined 68 other countries in making binding commitments to open telecommunications markets to foreign investment. Under this agreement, reached under the auspices of the WTO, the United States has committed to allow, among other things, 100 percent foreign indirect investment in non-broadcast common carrier Title III licenses. The WTO Agreement, and the U.S. commitments, become effective on January 1, 1998. The Commission will consider whether and how to modify its rules and policies in light of U.S. WTO commitments on or before January 1, 1998. III. PLEADINGS 5. NextWave's Petition. In its Petition, NextWave asks the Commission to extend the restructuring deadline set by the NextWave Licensing Order until 90 days after Commission implementation of the WTO Agreement. In addition, NextWave requests a temporary waiver of Section 310(b)(4) of the Communications Act so that it may have additional access to foreign capital during this time period. NextWave asserts that special circumstances warrant the grant of its requested waivers and that such action would be in the public interest. More specifically, NextWave argues that the WTO Agreement will render NextWave's restructuring obligations and Section 310(b)(4) restrictions unnecessary. In addition, NextWave asserts that grant of the requested waivers would further the public interest by facilitating NextWave's buildout of a nationwide wireless infrastructure. Finally, NextWave argues that grant of the temporary waivers is consistent with Commission precedent. 6. Opposition and Reply. Antigone and Devco jointly oppose NextWave's Petition. First, the joint parties argue that NextWave's petition should be denied on the grounds that it is an untimely request for reconsideration of the conditions imposed by the NextWave Licensing Order. Antigone and Devco argue that NextWave is precluded from challenging these conditions more than 30 days after release of the underlying order. NextWave responds that its request is not for reconsideration of the conditional grant of its licenses but is instead a waiver request governed by the Commission's waiver rules. Because these rules allow for the filing of waiver requests at any time, NextWave argues that its petition was timely filed. 7. Antigone and Devco next argue that the Commission must deny NextWave's requested relief in order to "protect the integrity of the auction process." By granting NextWave's requested relief, they argue the Commission will "send a loud and clear signal to all future auction bidders that the FCC's rules are made to be broken." NextWave responds that its request does not involve licensing integrity issues. Rather, NextWave contends, those issues are addressed in the pending Application for Review and are not relevant to its waiver requests. 8. Finally, Antigone and Devco urge the Commission to enforce Section 310(b) strictly until the WTO Agreement becomes effective. In particular, they argue that the source of NextWave's current foreign investment should bar the grant of NextWave's request. According to the joint parties, any deviation from enforcing our current rules will be seen as a "sign of weakness" by other countries and will encourage them to delay implementing their WTO commitments. NextWave responds that it has not requested the Commission to consider the scope of the U.S. Government's obligations under the WTO Agreement but has merely asked for a temporary waiver of the conditions of its licenses and Section 310(b)(4). NextWave adds that it does not seek a permanent waiver and acknowledges that whatever relief it is granted would be subject to the Commission's final determinations with respect to WTO implementation. IV. DISCUSSION 9. For the reasons discussed below, we conclude that NextWave's request is not untimely, and that in light of the pendency of the Commission's implementation of the WTO Agreement, extending the restructuring deadline in the NextWave Licensing Order would serve the public interest. We decline, however, to grant NextWave's request for a temporary blanket waiver of our Section 310(b)(4) requirements to obtain unspecified additional foreign investment. 10. As an initial matter, we disagree with Antigone and Devco that NextWave's petition should be considered as an untimely Petition for Reconsideration of the conditional grant of NextWave's licenses. In its Petition, NextWave does not request that the Commission remove its license conditions, but rather seeks a temporary waiver or extension of the condition. The Commission has previously permitted licensees with conditional license grants to seek temporary waivers or extensions to such conditions later than 30 days after the date in which the conditions were imposed. The Commission does not treat such a request as a petition for reconsideration of the conditional license grant, and so the time period governing petitions for reconsideration is not applicable. 11. We next consider whether it is appropriate to grant NextWave a temporary waiver or extension of time to comply with its license conditions. Under the terms of the NextWave Licensing Order, NextWave has two options: 1) restructure within six months to reduce its foreign ownership to the statutory benchmark, or 2) demonstrate that it is in the public interest to allow it to exceed the statutory benchmark. Compliance with either of these options is governed by the Commission's application of Section 310(b)(4). However, our application of the statutory benchmark, and the public interest demonstration that NextWave would have to make to allow it to exceed the benchmark, may change as a result of the Commission's implementation of the WTO agreement on or before January 1, 1998. The U.S. commitment to the WTO calls for a liberalization of our indirect foreign ownership rules applicable to common carrier Title III licenses. The United States made this commitment in exchange for comparable market openings by this nation's major trading partners. The Commission will commence a rulemaking soon to consider whether and how to revise its rules in light of the WTO Agreement and, in particular, whether and how it should amend its rules on foreign investment in wireless telecommunications licenses. It may be that NextWave will have more flexibility with regard to foreign investment once the Commission adopts new rules than it does currently under the terms of its license conditions. 12. In light of the fact that the WTO Agreement may result in the Commission modifying its foreign ownership rules for Title III common carrier licenses, we believe that NextWave should be granted an extension of the deadline on its restructuring obligations. We conclude that such a deferral is in the public interest because it will allow NextWave to build out its infrastructure without having to undertake a costly restructuring that may ultimately prove to be unnecessary. This finding is also consistent with our previous finding that it was in the public interest to allow NextWave six months to restructure in accordance with its restructuring plan. Accordingly, given the possibility that the Commission's foreign ownership rules will change on or prior to January 1, 1998, we find that it serves the public interest to extend NextWave's obligation to restructure until 90 days following the effective date of the Commission rulemaking proceeding regarding implementation of the WTO agreement. 13. We also agree with NextWave that Commission precedent supports the grant of NextWave's request to extend the period for compliance with its licensing conditions. For example, in Capital Cities/ABC, the Commission had previously conditioned Capital Cities/ABC's acquisition of certain radio stations and television stations on the licensee's compliance with the Commission's "one-to-a-market" rule within 18 months. Capital Cities/ABC requested a deferral of its obligation to comply with this rule (which would have required the divestiture of certain broadcast licenses) on the grounds that the Commission had undertaken a rulemaking proceeding proposing to modify the "one-to-a-market" rule. In light of the pending rulemaking, the Commission found that it was in the public interest to grant a deferral of the divestiture requirement until six months after the effective date of the modified rule. As indicated above, the Commission will commence a rulemaking soon regarding implementation of the WTO, due to the WTO January 1, 1998, effective date. 14. NextWave finds itself in a situation similar to the petitioners in Capital Cities/ABC. That is, under the conditions imposed on its licenses, NextWave is required to restructure its ownership in order to comply with the Commission's current foreign ownership rules. As mentioned above, these rules, and the manner in which the Commission interprets and enforces Section 310(b)(4), may change on or before January 1, 1998. Thus, enforcing NextWave's compliance with the conditions of its license when such conditions may be modified is unduly burdensome and would not be in the public interest. 15. We note that the grant of NextWave's request for additional time to comply with its restructuring obligations is expressly conditioned on the outcome of the Application for Review pending before the Commission. We also emphasize that 90 days after the effective date of the Commission's order regarding implementation of the U.S. government's WTO commitments, NextWave must have fully complied with its license conditions. That is, it must have either restructured in accordance with its restructuring plan, or have filed a petition with the Commission demonstrating that it is in the public interest to allow it to exceed the statutory benchmark set out in Section 310(b)(4) of the Communications Act, pursuant to any new rules. This action does not relieve NextWave of complying with the other conditions listed in the NextWave Licensing Order. NextWave must continue to satisfy its reporting requirements under the NextWave Licensing Order. In addition, NextWave must provide the Wireless Bureau with copies of any correspondence to or from the United States Securities and Exchange Commission in connection with the proposed public offering described in its December 30, 1996 Restructuring Plan. 16. While we extend the deadline for NextWave to meet its licensing conditions, we decline to grant NextWave's request for blanket authority to obtain additional foreign investment. Should NextWave wish to increase the level of its foreign investment above that which existed at the time of the NextWave Licensing Order, or change the composition of its foreign investment, it must first file a proper request with the Commission, identifying the source of the investment and demonstrating why grant of the request would be in the public interest. 17. We disagree with Antigone's and Devco's argument that granting an extension of time to NextWave would undermine the integrity of the Commission's auction processes. As NextWave observes, issues concerning NextWave's compliance with the C-block auction rules remain pending before the Commission based on Antigone and Devco's Application for Review. Our partial grant of NextWave's request does not affect or prejudge the outcome of that ongoing proceeding. 18. We also disagree with Antigone and Devco's contention that NextWave's extension request should be denied because the primary source of NextWave's current foreign investment is South Korea. In this order, we do not address the source of NextWave's current investment, but conclude only that NextWave should have additional time to meet the restructuring obligations set forth in the NextWave Licensing Order. We believe it is appropriate and in the public interest to allow NextWave to maintain the status quo with respect to its ownership structure during the interim period between signing of the WTO Agreement and the effectiveness of any Commission implementing rules. Nevertheless, should NextWave seek to increase its level of foreign ownership during this period, from any source, we emphasize that we will consider the source of its proposed foreign investment under the applicable Commission rules. V. ORDERING CLAUSES 19. Accordingly, IT IS ORDERED that NextWave's "Petition for Temporary Waiver of the Foreign Ownership Limitations" is GRANTED, to the extent set forth here that we allow NextWave an extension of the time period in which to comply with the restructuring obligations set forth in the NextWave Licensing Order. In all other respects, NextWave's Petition is DENIED. 20. This Order is issued under Section 0.331 of the Commission's Rules, 47 C.F.R.  0.331. FEDERAL COMMUNICATIONS COMMISSION Daniel B. Phythyon Acting Chief, Wireless Telecommunications Bureau