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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 ) ) AMERICASKY CORPORATION ) ) Application for Authority for Transfer) File No. 1821-DSE-TC-96(3) of Control ) ) ORDER AND AUTHORIZATION Adopted: December 4, 1996 Released: December 6, 1996 By the Deputy Bureau Chief, International Bureau: I. Introduction 1.In this Order, we permit AmericaSky Corporation ("AmericaSky") to exceed the foreign ownership benchmark contained in Section 310(b)(4) of the Communications Act of 1934, as amended, ("the Act") and grant its application to transfer control of AmericaSky to Entel USA Holdings, Inc. ("Entel USA"). Entel USA is a U.S. corporation indirectly owned and controlled by Empresa Nacional de Telecomunicaciones S.A. ("ENTEL-Chile"), a long distance carrier organized under the laws of, and operating in, Chile. II. Background 2.AmericaSky, a U.S. corporation, maintains and operates three earth station facilities licensed by the Commission for domestic and international fixed satellite service. AmericaSky uses its earth stations to provide satellite earth station capacity for traffic of other Commission-authorized carriers. 3.At present, 20 percent of AmericaSky is owned by ENTEL International B.V.I. Corporation ("ENTEL B.V.I."), a corporation owned and controlled by ENTEL-Chile. ENTEL B.V.I. is incorporated under the laws of the British Virgin Islands. Sixty percent of AmericaSky is owned by Northland Communications, Inc. ("NCI"), a U.S. corporation owned entirely by Patricio and Marco Northland, two individuals who are U.S. citizens. The remaining 20 percent of AmericaSky is equally divided between Patricio and Marco Northland in their individual capacities, thus each owns an additional 10 percent. 4.AmericaSky and ENTEL B.V.I. applied for authority to transfer the 80 percent of AmericaSky owned by NCI and the Northlands to ENTEL B.V.I., in accordance with Section 25.118 of the Commission's Rules. The transfer of control application was subsequently amended to name Entel USA as the transferee. No opposition to the application has been filed. 5.As amended, the application proposes that Entel USA will directly own 80 percent of AmericaSky and ENTEL B.V.I. will continue to own directly the remaining 20 percent. The net effect is that ENTEL B.V.I. will own all of AmericaSky, with some of the ownership indirectly held through its wholly-owned subsidiary, Entel USA. Thus, because ENTEL B.V.I. is itself owned and controlled by ENTEL-Chile, ultimate control of AmericaSky will lie with ENTEL-Chile. 6.Due to a clerical error, the Satellite and Radiocommunication Division ("Satellite Division") erroneously granted this application effective September 27, 1996, and issued a public notice of the grant on October 2, 1996. On November 1, 1996, the Satellite Division sent a letter to counsel for AmericaSky that set aside the grant, in order to consider the public interest aspects of this proposed transfer of control pursuant to Section 310(b)(4) of the Act. III. Discussion 7.Section 310(b)(4) of the Act establishes a 25 percent benchmark applicable to foreign investment in and ownership of the parent company of a U.S. common carrier radio licensee but gives the Commission discretion to allow higher levels of foreign ownership as long as the Commission determines that such ownership would not be inconsistent with the public interest. In the Foreign Carrier Entry Order the Commission explained that an important part of our determination under Section 310(b)(4) is an examination of whether effective competitive opportunities ("ECO") exist in the particular radio-based service in the foreign entity's "home market" that is analogous to the service in which the foreign entity seeks to participate in the U.S. market. 8.The Commission also reaffirmed in the Foreign Carrier Entry Order that, in addition to the ECO analysis, we will consider other public interest factors in determining whether to permit foreign investment subject to Section 310(b)(4). These factors include the general significance of the proposed entry to the promotion of competition in the U.S. communications market, any national security, law enforcement, foreign policy, or trade policy concerns raised by the Executive Branch. 9.This application proposes that AmericaSky, a provider of common carrier services, be ultimately owned by ENTEL-Chile. Thus, AmericaSky's proposed foreign ownership level exceeds the 25 percent threshold in Section 310(b)(4) and the Commission is required to determine whether grant of AmericaSky's application is consistent with the public interest. A. Appropriate National Market 10.First we must determine the appropriate national market for comparison. In determining an alien entity's appropriate national market we need to identify: (1) the country of its incorporation, organization, or charter; (2) the nationality of its investment principals, officers, and directors; (3) the country in which its world headquarters is located; (4) the country in which the majority of its tangible property, including production, transmission, billing information and control facilities, is located; and (5) the country from which it derives the greatest sales and revenues from its operations. If all five factors indicate that the same country should be considered to be the entity's home market it would be presumed to be so, subject only to rebuttal based on clear and convincing evidence. If these five factors yield inconsistent results, however, the Commission stated that these factors, as well as any other information that is particularly relevant to the case should be balanced to determine the appropriate home market under the totality of circumstances. 11.AmericaSky submits the following information to support its position that Chile is the home market for both ENTEL B.V.I. and ENTEL-Chile. Although ENTEL B.V.I. is incorporated in the British Virgin Islands, it is owned and controlled by a Chilean corporation, its principals are Chilean citizens, its world headquarters is in Chile, its tangible property is located in Chile and the United States, and its revenues are derived exclusively from long distance telecommunications between Chile and the United States. ENTEL-Chile is incorporated under Chilean law. In addition, while ENTEL-Chile has thousands of shareholders, all of its 10 percent or greater direct and indirect equity investors are Chilean citizens and nearly all of its officers and directors are Chilean citizens. Also, its world headquarters and most of its tangible property is in Chile, and its sales and revenues are derived almost exclusively from long distance telecommunications within Chile and between Chile and other countries. 12.Given the totality of circumstances, we agree with AmericaSky that the relevant national market for both ENTEL B.V.I. and ENTEL-Chile is Chile. Accordingly, we will apply our public interest analysis to Chile. B. Appropriate Market Segment 13.Second we must determine the appropriate market segment for comparison. Because the sole business of AmericaSky is maintaining and operating three earth stations and using its earth stations to provide earth station capacity for traffic of other authorized carriers, we find that the appropriate market segment is the licensing and operation of earth stations. C. Effective Competitive Opportunities Factors 14.Having identified the appropriate comparable service within the appropriate home market, we can conduct our analysis of ECO available to U.S. companies and investors. If we determine that no de jure restrictions exist and U.S. interests are allowed to hold a controlling interest in a provider of the relevant service in the relevant home market, then the effective competitive opportunities analysis justifies placing no limit on the level of alien ownership in the U.S. service provider, absent significant de facto barriers. 15.We find that Chile has no de jure or de facto restrictions on participation by U.S. entities in the licensing and operation of Chilean earth station facilities. Previously, the Commission found that "there are no relevant legal restrictions on the ability of U.S. and other foreign entities to invest in the Chilean international long distance telecommunications marketplace or to obtain licenses to operate as international facilities- based long distance carriers." The absence of legal restrictions on participation by U.S. entities in Chile's international and domestic long distance markets extends to the licensing and operation of earth station facilities. 16.Chilean law also contains a regulatory framework and specific safeguards against discriminatory treatment by one carrier toward another. These include structural separation of local and long distance companies, the forced divestment of potentially anticompetitive common ownership of Chile's former long distance and local service monopolies, implementation of a multi-carrier dialing system, mandatory sharing of network information among carriers, and express prohibitions on discriminatory interconnection arrangements. We find, however, that Chile's interconnection regime is not relevant to our ECO analysis for this application. 17.Chile's telecommunications regime also includes other provisions to ensure fair and open competition. For example, Chilean law provides for private ownership of telephone companies, no limits on the number of carriers that may provide international or domestic long distance services in Chile, periodic inquiries by Chile's Anti-Monopoly Commission on whether Chile's telecommunications markets are competitive, and no price control except in those sectors of the telecommunications market that are not competitive. Moreover, Chile has an independent regulator, the Subsecretariat of Telecommunications (SUBTEL). 18.Also, U.S. and other non-Chilean entities are in fact participating in the Chilean market. For example, BellSouth/Chile, a wholly-owned subsidiary of BellSouth, is a licensee and operator of international and domestic long distance satellite earth stations in Chile which it uses to provide the same kind of services that AmericaSky provides in the United States. Interests in other Chilean carriers that provide international and domestic long distance service are held by Southwestern Bell (VTR Telecomunicaciones), Bell Atlantic (Iusatel), Telefonica de Espa¤a S.A. (CTC Mundo), and Iusacell (Iusatel). 19.In sum, Chile's laws and regulatory regime permit U.S. entities to be licensees and operators of international and domestic long distance satellite earth stations in Chile and safeguard against anticompetitive conduct, including discrimination against foreign- owned carriers. As a consequence, Chile enjoys one of the most liberalized telecommunications regimes in the world. As the Commission has previously recognized "Chile's liberalized telecommunications regulatory environment...[has] progressed substantially in promoting competition and preventing abuse of market power." Moreover, we have acknowledged "that Chile's new regulatory regime has in fact succeeded in promoting competition and controlling discrimination in the international telephone service market." Thus, we find that our ECO analysis weighs in favor of granting Chilean entities similar access to the U.S. international and domestic markets. D. Additional Public Interest Factors 20.We believe that review of the additional public interest considerations identified in the Foreign Carrier Entry Order supports grant of AmericaSky's application. The Executive Branch has not identified any national security, law enforcement, foreign policy or trade concerns involving AmericaSky's application. Moreover, we find that the contemplated transfer of control of AmericaSky would also serve the public interest in general. Specifically, this transfer of control will facilitate investment of capital into AmericaSky as well as the contribution of the experience and expertise of its ultimate parent, ENTEL-Chile, a seasoned telecommunications provider in Chile. This, in turn, will enhance economic growth in the United States and competition in the U.S. international earth station services market. As previously determined, increased competition "fosters lower prices, innovative services, and increased responsiveness to consumer needs." IV. Conclusion 21.We conclude that grant of AmericaSky's application to transfer control of AmericaSky to ENTEL-Chile is consistent with the public interest. Chile offers effective competitive opportunities for U.S. companies for licensing and operating of satellite earth stations in Chile. V. Ordering Clauses 22.Accordingly, it is ORDERED, pursuant to Section 25.118 of the Commission's Rules, that application File No. 1821-DSE-TC-96 (3) is GRANTED and that Northland Communications, Inc. and Patricio and Marco Northland are authorized to transfer control of AmericaSky Corporation to Entel USA Holdings, Inc. 23.This order is issued under Section 0.261 of the Commission's Rules, 47 C.F.R.  0.261, and is effective upon adoption. Petitions for reconsideration under Section 1.106 of the Commission's Rules, 47 C.F.R.  1.106, may be filed within 30 days of the public notice of this order, as measured in accordance with 47 C.F.R.  1.4. FEDERAL COMMUNICATIONS COMMISSION Roderick K. Porter Deputy Bureau Chief