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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $// Order, Foreign Ownership Waiver Petitions, GN 93-252, DA 95-1303//$ RECORD ONLY Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1303 In the Matter of Implementation of Sections 3(n) and 332 of the Communications Act Regulatory Treatment of Mobile Services -- Foreign Ownership Waiver Petitions ) ) ) GN Docket No. 93-252 ) ) ) ) ORDER Adopted: June 12, 1995 Released: June 12, 1995 By the Chief, Wireless Telecommunications Bureau: I. Introduction 1. This Order resolves thirty-three requests for waiver of the foreign ownership rules filed pursuant to the Omnibus Budget Reconciliation Act of 1993 (Budget Act) and the First Report and Order in this docket (CMRS First Report and Order). As discussed herein, we (1) grant the petitions filed by MAP Mobile Communications, Geotek Corporation, Nextel Corporation, Pittencrieff Communications, RACOM, and Uniden; (2) dismiss the waiver petition filed by Comcast Corporation as moot; and (3) deny the remaining petitions. II. Background 2. Prior to the enactment of the Budget Act, petitioners were regulated as private land mobile radio service providers and therefore were not subject to the foreign ownership restrictions contained in Section 310(b) of the Communications Act (the Act). In the Budget Act, Congress reclassified certain categories of private land mobile radio providers as commercial mobile radio service (CMRS) providers, and provided that they would be treated as common carriers under the Act. As a result of this statutory change, reclassified CMRS providers will become subject to the foreign ownership restrictions applicable to common carriers. 3. To alleviate the potential burden on reclassified licensees of complying with the foreign ownership restrictions, the Budget Act provided for limited grandfathering of existing foreign interests in such licensees. Specifically, Congress provided that any private land mobile service licensee subject to reclassification as a CMRS provider could petition the Commission by February 10, 1994 for waiver of the application of Section 310(b) to any foreign ownership that lawfully existed as of May 24, 1993. The statute further stated that the Commission could grant such waivers to eligible petitioners only upon certain conditions: (a) the extent of foreign ownership interest could not be increased beyond May 24, 1993 levels; and (b) the waiver could not allow any subsequent transfers in violation of Section 310(b). In the CMRS First Report and Order, we indicated that we also would apply the waiver provisions to foreign officers and directors. 4. In the CMRS First Report and Order, the Commission established a petition procedure for affected licensees to request waiver of the foreign ownership restrictions. The Commission acknowledged that because of the February 10, 1994 filing deadline, petitioners might be required to file their waiver requests prior to a final determination of whether they were subject to reclassification. Accordingly, the Commission stated that the filing of a petition would not prejudice a licensee's right at a later date to assert that it should not be reclassified as a CMRS provider. Thirty-three timely-filed requests were received by the February 10 statutory deadline. 5. Following the filing of the petitions, the Commission adopted the Second Report and Order in this docket (CMRS Second Report and Order), which specified those services that would be regulated as CMRS (and thereby subject to the foreign ownership restrictions). In that Order, the Commission defined CMRS as a mobile service that is: (a) provided for profit, i.e., with the intent of receiving compensation or monetary gain; (b) an interconnected service; and (c) available to the public or to such classes of eligible users as to be effectively available to a substantial portion of the public. A mobile service that does not meet that definition is presumed to be PMRS. 6. On May 24, 1994, the Land Mobile and Microwave Division of the Private Radio Bureau asked all petitioners to provide supplemental information regarding their waiver requests. In particular, the Division asked each petitioner to certify whether, in light of the guidelines set forth in the CMRS Second Report and Order, it was subject to reclassification as a CMRS provider and would therefore qualify for statutory relief from the restrictions contained in Section 310(b). III. Discussion A. Waiver Requests of Geotek, MAP Mobile, RACOM, and Uniden 7. In their initial and follow-up filings, petitioners Geotek, MAP Mobile, RACOM and Uniden indicate that they are subject to reclassification as CMRS providers and accordingly request waiver of the foreign ownership restrictions. No opposition to any of these petitions was filed. 8. We conclude that the petitions filed by Geotek, MAP Mobile, RACOM, and Uniden meet the statutory requirements for grant of the requested waivers. Each of these petitioners has satisfied the informational showings and certifications required by the Budget Act, the CMRS First Report and Order, and our May 24 request for information. Moreover, allowing these petitioners to retain foreign ownership that existed as of May 23, 1993, will help ensure a smooth transition as these entities and/or their subsidiaries become subject to CMRS regulation. 9. We therefore exercise our authority to grandfather all foreign ownership that lawfully existed in each of these petitioners as of May 24, 1993. Consistent with the Budget Act, we also impose the following conditions on each waiver: (a) the extent of foreign ownership interest cannot be increased beyond May 24, 1993 levels; and (b) any subsequent transfers in violation of Section 310(b) are prohibited. Licensees operating in violation of the terms of these waivers will be subject to appropriate enforcement action. 10. We also clarify that, while petitioners may not increase their level of foreign ownership above May 24, 1993 levels, the waivers granted by this Order do apply to additional licenses granted to petitioners in the same service after May 24, 1993 and prior to August 10, 1996, provided the same ownership structure is maintained. We believe that this is consistent with Congressional intent in grandfathering the foreign ownership interests of reclassified licensees. In the CMRS Second Report and Order, we provided that grandfathered licensees who acquired new licenses in the same service during the 3-year statutory transition period could extend grandfathered PMRS status to such new licenses until August 10, 1996. We believe the same flexibility should be extended to petitioners with respect to the waivers granted by this Order. Accordingly, until August 10, 1996, petitioners may acquire additional licenses in the same service using the ownership structure approved by this waiver. The requirements of Section 310(b) will apply, however, to any licenses awarded to petitioners after August 10, 1996. B. Waiver Request of Pittencrieff 11. In its initial petition and May 24 supplemental filing, Pittencrieff stated that as of May 24, 1993, it was 100 percent foreign owned, but that its level of foreign ownership had declined to 54.4 percent as of the date of the petition. Subsequently, in a September 26, 1994 letter, Pittencrieff stated that after the initial petition was filed, it had undergone a corporate reorganization involving the pro forma transfer of its licenses to a newly-created wholly- owned subsidiary. Pittencrieff indicated that while the formal chain of ownership of the licenses had been altered by the transaction, the identity of the foreign interest holders did not change. Pittencrieff also noted that it has further reduced its foreign ownership level to 23.8 percent. 12. The Bureau concludes that Pittencrieff is entitled to a waiver applicable to any foreign individual or entity who held an interest in Pittencrieff's licenses as of May 24, 1993. Pittencrieff's September 26, 1994 letter indicates that as a result of its corporate reorganization, such foreign interest holders now hold their interests through a new entity created since the petition was filed. Nevertheless, we believe that the waiver policy established by Congress extends to such interests, provided that the petitioner certifies that (1) the identity of the foreign interest holders has not changed, and (2) the percentage interest in the licensees held by such interest holders has not increased since May 24, 1993. We therefore grant Pittencrieff's waiver request provided that it certifies to the above conditions within 60 days after publication of this Order in the Federal Register. As discussed in paragraph 10, supra, we also extend this waiver to additional licenses acquired by Pittencrieff through August 10, 1996, in services where it held licenses as of May 24, 1993, so long as its ownership structure remains in place. C. Waiver Request of Nextel 13. Nextel states in its petition and follow-up filings that it is subject to reclassification as a CMRS provider and accordingly requests waiver of the foreign ownership restrictions. Nextel explains that a waiver is needed because Matsushita, a Japanese corporation, acquired a 1.38 percent equity interest in Nextel in 1992 and has the right to designate one member of Nextel's nine person Board of Directors. Nextel also notes that the identity of the board member designated by Matsushita has changed since May 24, 1993. Nextel maintains that in the case of a corporate directorship interest, the Budget Act grandfathers the interest itself, not the individual representing the corporate interest. Therefore, Nextel argues, the Commission should grandfather Matsushita's corporate directorship interest and grant the waiver. 14. In addition, Nextel notes that it has executed an agreement with another Japanese corporation, Nippon Telephone and Telegraph Company (NTT), which will permit NTT to acquire a 0.7 percent interest in Nextel and to be represented by a director on Nextel's Board. Nextel states that in connection with the transaction, it has undertaken a corporate restructuring and has filed applications for the pro forma assignment of all licenses held by Nextel to its wholly-owned subsidiaries. Once these pro forma applications are granted, Nextel states that the Matsushita and NTT interests in Nextel will be within the limitations of Section 310(b)(4) and the waiver requested here no longer will be necessary. 15. Nextel's waiver request is opposed by Kevin Lausman, who filed an Opposition and a number of related documents. In his Opposition, Lausman alleges that Nextel mischaracterized the nature of the Matsushita's interest in Nextel. Specifically, Lausman maintains that Nextel's representation that Matsushita's right to "designate" one member of the board is inconsistent with an SEC filing showing that Matsushita could "nominate" a board member, provided its ownership remained at a certain level. Lausman also alleges that Nextel attempted to mislead the Commission when its petition only identified licenses held by Nextel and not those of its subsidiaries. Moreover, Lausman maintains that Nextel is ineligible for the relief it requests on the grounds that it improperly executed an agreement to increase its level of foreign ownership and permitted Matsushita to change its representative on the Board of Directors. Finally, Lausman argues that granting Nextel's waiver is inconsistent with public policy in view of Japan's unfair trade practices. 16. We are not persuaded by Lausman's arguments. At the outset, we observe that Lausman's opposition was not timely filed and thereby is procedurally defective. Pursuant to Section 1.45(a) of the Commission's Rules, Lausman should have filed his opposition by February 18, 1994, but did not in fact file with the Commission until March 11. Moreover, Lausman did not provide any basis why the Commission should accept its opposition out-of- time. 17. While we have sufficient reason to dismiss Lausman's opposition as untimely on its face, we also find Lausman's substantive allegations to be without merit. We disagree with Lausman's allegation that Nextel misrepresented or failed to disclose information material to our consideration of the waiver requested in Nextel's petition. Nextel's petition and supplemental filings fully comply with the informational requirements set forth in the CMRS First Report and Order. In its petition, Nextel states that Matsushita is a foreign entity that holds an equity interest in Nextel that does not exceed the Section 310(b)(3) benchmark. Nextel also discloses that, based on that interest, Matsushita has the right to designate one member of Nextel's Board of Directors. Nextel also explains that, due to personnel changes in Matsushita, the individual serving as Matsushita's representative on Nextel's Board has changed subsequent to May 24, 1993. Lausman has failed to show how any of these disclosures are incomplete or misleading. The purported discrepancy between Nextel's waiver petition and its SEC filing is a minor difference in terminology that has no substantive significance. 18. In addition, we find that Nextel did not act improperly in identifying only those licenses directly held by Nextel (and not by its subsidiaries) for purposes of its waiver request. Nextel's waiver request is expressly limited to those licenses that it holds directly and which otherwise would be subject to Section 310(b)(3). Nextel was not required to identify its indirect interest in other licenses for which no waiver either was required or sought. 19. Finally, we do not believe the agreement with NTT makes Nextel ineligible for the relief it requested. While Lausman correctly observes that the statute prohibits increases in foreign ownership subsequent to May 24, 1993, we note that Nextel has not requested such relief with respect to NTT's prospective interest. Instead, Nextel properly has taken separate steps to comply with the Section 310(b)(4) foreign ownership restrictions. 20. Accordingly, we grandfather all foreign ownership in Nextel that lawfully existed as of May 24, 1993, subject to the following conditions: (a) the extent of foreign ownership interest cannot be increased beyond May 24, 1993 levels; and (b) any subsequent transfers in violation of Section 310(b) are prohibited. As discussed supra, we construe the statute to extend the waiver to the acquisition of new licenses in services that Nextel provided as of May 24, 1993, so long as the same ownership structure remains in place. 21. We also grandfather Matsushita's designee on the Nextel Board of Directors, regardless of the fact that the identity of the individual serving as Matsushita's representative changed after May 24, 1993. While the statute prohibits changes in the identity of foreign owners of grandfathered licensees, it does not expressly address the issue of directors. We further note that individual or corporate shareholders commonly seek to protect their investment by obtaining the right to nominate representatives to the board of directors. We conclude that in allowing foreign entities who held ownership interests in reclassified licensees prior to May 24, 1993 to retain those interests, Congress did not intend to deprive such entities of pre-existing rights to nominate members of the board of directors based on such ownership. So long as the entity controlling the directorship remains unchanged, we believe a change in the identity of the individual director is permissible. Accordingly, we conclude that Matsushita's corporate directorship interest should be grandfathered along with its ownership interest, and that the change in the identity of the individual serving as Matsushita's representative does not vitiate the waiver. D. Waiver Request of Comcast 22. Comcast notes that the Commission previously has granted it a waiver of the foreign ownership restrictions to permit an Australian citizen to serve as an officer of the corporation. Nevertheless, Comcast requests a waiver to the extent necessary to allow this officer to remain once certain of its private land mobile subsidiaries are reclassified as CMRS providers. 23. The Bureau agrees with Comcast that the Commission's prior order allowing Comcast to have a foreign corporate officer under Section 310(b)(4) of the Act obviates the need for a separate, statutory waiver. In that Order, the Commission determined that the appointment of John Alchin, an Australian citizen, to the corporate office of senior Vice President and Treasurer of Comcast would not adversely affect the public interest. The Commission subsequently has extended the scope of this waiver to permit Alchin to serve as an officer of any subsidiary of Comcast that directly or indirectly controls common carrier licensees but is not itself a common carrier licensee. Because the Commission has determined that Alchin's service as a corporate officer is in the public interest, and thereby has granted Comcast a waiver pursuant to Section 310(b)(4), the Bureau concludes that the additional waiver relief requested is unnecessary. Accordingly, Comcast's petition is dismissed as moot. E. Other Waiver Requests 24. In responses to the Land Mobile and Microwave Division's May 24 supplemental information request, the remaining petitioners stated that, based on the Commission's rules, they would not be reclassified and thereby declined to certify that they would become CMRS licensees. Noting that the Commission has stated that "the filing of a [Section 310(b)] petition would not prejudice a licensee's future arguments as to whether it should be reclassified," these petitioners stated that, based on their current understanding of the Commission's rules, their radio operations are private. The petitioners nevertheless requested waiver of the foreign ownership restriction in the event that future Commission interpretations suggested they would be reclassified as CMRS providers. The petitioners otherwise failed to provide the information requested in the May 24 letters. 25. The Bureau declines to grant waivers to petitioners who have stated they will remain private mobile radio service providers. Under the Budget Act, waiver of the foreign ownership restrictions is only available to licensees that will be reclassified as CMRS. Because petitioners maintain that their radio operations remain private under the criteria set forth in the CMRS Second Report and Order, the relief requested neither is available nor required. Petitioners' argument that the CMRS First Report and Order affords the flexibility to obtain waiver relief in the future should the Commission clarify its CMRS definition is erroneous. Rather, the language cited by petitioners was intended to protect licensees that could not determine whether they would be reclassified until the CMRS Second Report and Order was released. Based on the standards set forth in the CMRS Second Report and Order, petitioners had sufficient information to determine whether they would be reclassified. IV. Ordering Clauses 26. Pursuant to our authority under 47 U.S.C.  155(c)(1) and 332(c)(6), IT IS ORDERED that the requests for waiver filed by MAP Mobile, Nextel, RACOM, and Uniden ARE HEREBY GRANTED subject to the conditions described above. 27. IT IS FURTHER ORDERED that the waiver request filed by Pittencrieff IS GRANTED, provided that Pittencrieff certifies within 60 days after this Order is published in the Federal Register that (1) the identity of the foreign interest holders has not changed, and (2) the percentage interest in the licenses held by such interest holders has not increased since May 24, 1993. 28. IT IS FURTHER ORDERED that the waiver request filed by Comcast IS DISMISSED as moot. 29. IT IS FURTHER ORDERED that the waiver requests filed by ADT, ADT Mid- South, ADT Mountain West, ADT Northeast, ADT Southwest, ADT West, Amerchol, Big Sky, BP Chemicals, Eastern Associated, Hanson, North Antelope, NuEast, Peabody, Praxair, Rhone-Poulenc, Rochelle, Seadrift, Timken, UCAR, UCAR Carbon, UCAR Resinas, UCC&P, UMETCO, Union Carbide, and Union Carbide Caribe ARE DENIED. 30. IT IS FURTHER ORDERED that the Opposition, Petition for an Order to Cease and Desist, Motion for Summary Judgment, Petition for an Order to Show Cause Why All Radio Station Licenses Held or Controlled by Nextel Communications, Inc. Should Not Be Revoked, Supplement to Opposition, Motion for Deferral of Action, and Motion to Accept Unauthorized Pleading filed by Kevin Lausman ARE DISMISSED. FEDERAL COMMUNICATIONS COMMISSION Regina M. Keeney Chief, Wireless Telecommunications Bureau Appendix A ADT Security Systems, Inc. (ADT) ADT Security Systems, Mid-South, Inc. (ADT Mid-South) ADT Security Systems, Mountain West, Inc. (ADT Mountain West) ADT Security Systems, Northeast, Inc. (ADT Northeast) ADT Security Systems, Southwest, Inc. (ADT Southwest) ADT Security Systems, West, Inc. (ADT West) Amerchol Corporation (Amerchol) Big Sky Coal Company (Big Sky) BP Chemicals Comcast Corporation (Comcast) Eastern Associated Coal Company (Eastern Associated) Geotek Industries, Inc. (Geotek) Hanson Natural Resources Company (Hanson) MAP Mobile Communications, Inc. (MAP Mobile) Nextel Communications, Inc. (Nextel) North Antelope Coal Company (North Antelope) Nu East Mining Corporation (Nu East) Peabody Coal Company (Peabody) Pittencrieff Communications, Inc. (Pittencrieff) Praxair, Inc. (Praxair) RACOM Rhone-Poulenc, Inc. (Rhone-Poulenc) Rochelle Coal Company (Rochelle) Seadrift Pipeline Corporation (Seadrift) Timken Communications Company (Timken) UCAR Carbon Company, Inc. (UCAR Carbon) UCAR Pipeline, Inc. (UCAR) UCAR Resinas Caribe, Inc. (UCAR Resinas) UMETCO Minerals Corporation (UMETCO) Uniden Union Carbide Caribe, Inc. (Union Carbide Caribe) Union Carbide Chemicals and Plastics, Inc. (UCC&P) Union Carbide Corporation (Union Carbide) Appendix B Geotek: Geotek, through its subsidiaries and affiliates, is a Specialized Mobile Radio (SMR) licensee. Yaron Eitan, Yoram Bibring, Joram Rosenfeld, Jacob Burak, Haim Rosen, Eyal Kaplan, Oliver Hilsenrath, and Tamir Friedrich, Israeli citizens, serve as officers and/or directors of Geotek and its wholly owned subsidiaries. Geotek certified that its foreign ownership does not exceed the 20 percent benchmark set forth in Section 310(b)(3). MAP Mobile: MAP Mobile is a private carrier paging licensee wholly owned by Australian and New Zealand citizens and entities. Garry Morrison, Ene Deen, Peter Beresford, Bill Ward, Ed Fragar, and Graham Davies, Australian citizens, are officers of MAP Mobile. They all are legal residents of the United States. Nextel: Nextel is a SMR licensee. One of Nextel's board members is designated by Matsushita, a Japanese corporation. Matsushita holds a 1.38 percent equity interest in Nextel. Nextel also indicated that it has executed an agreement with Nippon Telephone and Telegraph Company (NTT) to sell .7 percent of Nextel stock to NTT. NTT will also be authorized to designated a director to serve on Nextel's board. As indicated in the Order, the waiver does not extend to NTT's foreign ownership interest. Nextel stated that it will take all steps necessary to comply with Section 310(b)(4) foreign ownership restrictions before consummating the agreement. Pittencrieff: Commsco Limited (Commsco), a corporation registered in England and Wales, owns 23.8 percent of Pittencrieff, an SMR licensee. Terence A. Heneaghan, a Scottish citizen serves as Pittencrieff's Managing Director. RACOM: Ericsson General Electric Holdings, Ltd (EGE), a U.S. corporation, holds 33 1/3 percent of RACOM. EGE, in turn, is owned by L.M. Ericsson, a Swedish citizen (80 percent) and General Electric Company (20 percent). Approximately 26.66 percent of RACOM is thereby held by foreign interests. RACOM does not have any foreign officers or directors. Uniden: Uniden, an SMR licensee, is owned by two Japanese corporations, Uniden Corporation (51 percent) and Uniden 21 Corporation (49 percent). Uniden Corporation is a publicly owned company and its stock is traded on the Tokyo stock exchange. Uniden 21 Corporation also is publicly traded, but a controlling amount of stock is owned by Uniden Corporation. Thus, Uniden Corporation ultimately is the parent company of Uniden. S. Ohashi, H. Kanakubo and K. Ikeda, Japanese citizens, serve as both officers and directors of Uniden.