FOREIGN OWNERSHIP GUIDELINES

FOR FCC COMMON CARRIER AND AERONAUTICAL RADIO LICENSES

Section 310 of the Communications Act of

1934, as amended

![](media/image1.wmf){width="3.625in" height="3.625in"}

Initial Authorizations and Transfers of Control and Assignments of
Common Carrier and Aeronautical Radio Licenses

International Bureau

November 17, 2004

DA 04-3610

**Table of Contents**

[INTRODUCTION 3](#__RefHeading___Toc88459293)

[SECTION I -- PURPOSE AND OVERVIEW 4](#__RefHeading___Toc88459294)

[A. Purpose 4](#__RefHeading___Toc88459295)

[B. Limitations 4](#__RefHeading___Toc88459296)

[SECTION II: BACKGROUND 5](#__RefHeading___Toc88459297)

[A. Section 310 of the Act 5](#__RefHeading___Toc88459298)

[B. Applicability of Section 310 7](#__RefHeading___Toc88459299)

[C. Section 310 Decision Flowchart 9](#__RefHeading___Toc88459300)

[SECTION III - FOREIGN OWNERSHIP ANALYSIS UNDER SECTION 310(B)(4)
10](#__RefHeading___Toc88459301)

[A. Analytical Framework 10](#__RefHeading___Toc88459302)

[B. Foreign Investments 10](#__RefHeading___Toc88459303)

[1. WTO Member Countries 10](#__RefHeading___Toc88459304)

[2. Non-WTO Member Countries 11](#__RefHeading___Toc88459305)

[C. Home Market Determination 11](#__RefHeading___Toc88459306)

[1. Unidentifiable Foreign Interests 13](#__RefHeading___Toc88459307)

[2. Representations Made by Applicants 13](#__RefHeading___Toc88459308)

[D. Calculating Foreign Ownership Interests
13](#__RefHeading___Toc88459309)

[1. Ownership Interests Up the Vertical Ownership Chain
14](#__RefHeading___Toc88459310)

[2. Calculating Foreign Equity and Voting Interests
14](#__RefHeading___Toc88459311)

[3. Redemption Rights 16](#__RefHeading___Toc88459312)

[E. Use of the Multiplier 16](#__RefHeading___Toc88459313)

[1. Multiplier Used 16](#__RefHeading___Toc88459314)

[2. Multiplier Not Used 17](#__RefHeading___Toc88459315)

[3. Calculating Voting Interests Held Through Intervening Partnerships
17](#__RefHeading___Toc88459316)

[F. Control 20](#__RefHeading___Toc88459317)

[1. *De Jure* Control 20](#__RefHeading___Toc88459318)

[2. *De Facto* Control 21](#__RefHeading___Toc88459319)

[G. Separate Treatment of Section 310(b)(3) and (b)(4)
23](#__RefHeading___Toc88459320)

[H. Foreign Ownership Issues in the Context of Secondary Markets
23](#__RefHeading___Toc88459321)

[1. "Spectrum manager\" Leasing 23](#__RefHeading___Toc88459322)

[2. "*De Facto* transfer" Leasing 25](#__RefHeading___Toc88459323)

[3. *De Facto* Control in the Context of Spectrum Leasing
26](#__RefHeading___Toc88459324)

[I. Declaratory Rulings 26](#__RefHeading___Toc88459325)

[1. *Pro Forma* Assignments or Transfers of Control
27](#__RefHeading___Toc88459326)

[2. Continuing Obligations 28](#__RefHeading___Toc88459327)

[SECTION IV - OTHER COMMISSION PRECEDENT
29](#__RefHeading___Toc88459328)

[A. Corporate Applicants and Shareholder Polling in the Broadcast
Context 29](#__RefHeading___Toc88459329)

[1. Corporations with Few Stockholders 29](#__RefHeading___Toc88459330)

[2. Corporations with Numerous Stockholders
30](#__RefHeading___Toc88459331)

[B. "Control" in the Broadcast Context 30](#__RefHeading___Toc88459332)

[SECTION V - DEFINITIONS 31](#__RefHeading___Toc88459333)

[SECTION VI -- SELECTED CASES 33](#__RefHeading___Toc88459334)

[A. Section 310(a) 33](#__RefHeading___Toc88459335)

[B. Section 310(b)(1) 33](#__RefHeading___Toc88459336)

[C. Section 310(b)(3) 33](#__RefHeading___Toc88459337)

[D. Section 310(b)(4) 33](#__RefHeading___Toc88459338)

[]{#__RefHeading___Toc88459293 .anchor}INTRODUCTION

Under Section 310 of the Communications Act of 1934, as amended (the
"Act"), the Federal Communications Commission ("FCC" or "Commission")
reviews foreign investment in FCC radio licensees. To that end, the
Commission has developed over the years a body of case law that
interprets Section 310 of the Act.

A review of the applications involving foreign ownership interests
received by the Commission suggests that the case law may not provide
sufficiently clear guidance to applicants. For example, applications
received by the Commission often do not contain all the information
required by the Commission for its review. Even sophisticated applicants
have failed to successfully apply the case law and, therefore, have not
always provided the necessary foreign ownership information to the
Commission. Consequently, Commission staff often finds it necessary to
request additional information from applicants. Noncompliance with the
Commission's rules in the first instance not only taxes the Commission's
limited resources but also creates unnecessary administrative delay that
may have an adverse impact on the operations of businesses seeking to
merge their assets, assign or transfer licenses, acquire initial
authorizations, or engage in spectrum leasing.

Accordingly, to assist the public and applicants in understanding and
complying with the Commission's interpretation of Section 310 of the
Act, its rules, and foreign ownership policies as set forth in case law,
the International Bureau ("Bureau") issues these "Foreign Ownership
Guidelines for FCC Common Carrier and Aeronautical Radio Licenses."
These Guidelines interpret existing Commission policy and precedent.
Because foreign ownership issues are often fact-dependent, however,
these Guidelines should not be viewed as exhaustive of all foreign
ownership issues that may arise under Section 310.

[]{#__RefHeading___Toc88459294 .anchor}SECTION I -- PURPOSE AND OVERVIEW

Section I describes the purpose and the limitations of these Guidelines.
Section II provides a brief discussion of Section 310 of the Act.
Sections III and IV present a detailed discussion of the Commission's
foreign ownership analysis under Section 310(b)(4) of the Act and other
relevant Commission precedent. Section V defines certain terms used in
these Guidelines, while Section VI provides a non-exhaustive list of
cases where the Commission or the Bureau, under delegated authority, has
applied the Commission's foreign ownership analysis.

[]{#__RefHeading___Toc88459295 .anchor}A. Purpose

These Guidelines are an interpretation of existing Commission policy and
precedent. The Guidelines are intended to explain how the Commission
analyzes foreign ownership issues related to foreign investment in radio
licensees, applications for initial radio licenses, transfers of control
and assignments of radio licenses, and spectrum leasing in the secondary
market for radio licenses.

The Bureau anticipates that these Guidelines will assist applicants in
submitting applications that contain the information that the Commission
requires and that comply with existing policy and precedent. This, in
turn, will assist Commission staff in analyzing the foreign ownership
issues presented in applications under Section 310 of the Act. Further,
the Bureau expects that these Guidelines will be used by licensees to
ensure their continuing compliance with the foreign ownership
requirements of Section 310 of the Act.

[]{#__RefHeading___Toc88459296 .anchor}B. Limitations

Foreign ownership issues vary from case to case and are often
fact-dependent. Accordingly, no set of guidelines will provide specific
answers to every foreign ownership question.

These Guidelines are advisory in nature and are not binding on the
Commission. They do not modify the Commission's existing foreign
ownership analytical framework, and they may not be cited as precedent.
The Commission will continue to exercise its judgment and discretion in
analyzing foreign ownership issues, evaluating each case on its own
facts, and applying the analytical framework that is generally described
in these Guidelines.

These Guidelines are intended to apply to two categories of radio
licenses: (1) common carrier and (2) aeronautical en route or
aeronautical fixed (hereinafter, "aeronautical") licenses.[^1]

[]{#__RefHeading___Toc88459297 .anchor}SECTION II: BACKGROUND

[]{#__RefHeading___Toc88459298 .anchor}A. Section 310 of the Act

Section 310 of the Act requires the Commission to review foreign
investment in radio station licenses.[^2] This section imposes specific
ownership restrictions on who may hold certain types of radio licenses.

The relevant provisions of Section 310 of the Act are as follows:

[Section 310. Limitation on Holding and Transfer of
Licenses]{.underline}

> \(a\) 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.

**Section 310(a) of the Act** expressly prohibits a foreign government
or representative[^3] from holding ***any*** radio license. This
prohibition is absolute and the Commission has no discretion to waive
it. Section 310(a), however, does not expressly prohibit indirect
foreign government control of licensees. As explained in the
*VoiceStream/Deutsche Telekom Order*, a foreign government or
representative may hold a controlling ownership interest in a U.S.
domestic licensee through a domestically organized holding company under
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.[^4]

**Section 310(b) of the** **Act** contains four subsections that place
specific restrictions on the ownership of broadcast, common carrier, or
aeronautical radio station licensees.

-   **Section 310(b)(1) of the Act** prohibits any alien or
    representative of any alien from holding a broadcast, common
    carrier, or aeronautical radio station license. This prohibition is
    absolute and the Commission has no discretion to waive it. Section
    310(b)(1), however, does not bar indirect foreign control of a U.S.
    domestic licensee that holds licenses.

-   **Section 310(b)(2) of the Act** prohibits a foreign corporation
    from holding a broadcast, common carrier, or aeronautical radio
    station license. This prohibition is absolute and the Commission has
    no discretion to waive it. However, as with Sections 310(a) and
    310(b)(1), Section 310(b)(2) does not expressly prohibit indirect
    foreign control of licensees.

-   **Section 310(b)(3)** **of the Act** prohibits foreign governments,
    individuals, and corporations from owning more than 20 percent of
    the stock of a broadcast, common carrier, or aeronautical radio
    station licensee. The Commission strictly applies the statutory
    restrictions of this section and has no discretion to waive the 20
    percent statutory benchmark.

    -   The prohibition contained in Section 310(b)(3) also applies in
        situations where a foreign government, individual, or
        corporation holds equity or voting interests in a licensee
        through an intervening domestically organized holding company
        that itself holds *non-controlling* interests in the
        licensee.[^5]

-   **Section 310(b)(4) of the Act** establishes a 25 percent benchmark
    for investment by foreign individuals, corporations, and governments
    in entities that control a U.S. broadcast, common carrier, or
    aeronautical radio station licensee. This section also grants the
    Commission discretion to allow higher levels of foreign ownership
    unless it finds that such ownership is inconsistent with the public
    interest.

    -   By its express language, Section 310(b)(4), rather than Section
        310(b)(3), applies in situations where the foreign entity holds
        equity or voting interests in a domestically organized holding
        company that directly or indirectly *controls* the licensee.[^6]

    -   The majority of the cases where foreign ownership is an issue
        implicate Section 310(b)(4) of the Act.

[]{#__RefHeading___Toc88459299 .anchor}B. Applicability of Section 310

The provisions of Section 310 of the Act apply to applications for
initial radio licenses, applications for assignments and transfers of
control of radio licenses, and spectrum leasing arrangements within the
secondary market. The Commission or the Bureau, under delegated
authority,[^7] must approve the foreign ownership interests presented in
these applications before or at the same time as grant of the licenses
to the foreign owned or controlled entity. In order to apply for a
foreign ownership ruling before the grant of a license or license
transfer or assignment, applicants must file a petition or request for
declaratory ruling.

-   **Initial authorizations.** The Policy Division of the International
    Bureau, in coordination with the licensing divisions of the
    International Bureau and the Wireless Telecommunications Bureau,
    along with the Office of General Counsel, analyzes foreign ownership
    issues presented in applications for initial common carrier and
    aeronautical radio licenses.[^8]

-   **Assignments and Transfers of Control.** The Policy Division of the
    International Bureau, in coordination with the licensing divisions
    of the International Bureau and the Wireless Telecommunications
    Bureau, along with the Office of General Counsel, examines the
    foreign ownership issues presented by assignees and transferees in
    applications for the assignment and transfer of control of common
    carrier and aeronautical radio licenses.

-   **Spectrum Leasing within the Secondary Market**. The Policy
    Division of the International Bureau, in coordination with the
    Wireless Telecommunications Bureau and the Office of General
    Counsel, assesses the foreign ownership issues raised by spectrum
    lessees in spectrum leasing arrangements and will, when necessary,
    issue a declaratory ruling concerning spectrum lessees prior to or
    concurrently with the effective date of the leasing arrangement
    under the secondary market rules.[^9]

[]{#__RefHeading___Toc88459300 .anchor}C. Section 310 Decision Flowchart

The following chart provides a general outline of how the Commission
analyzes foreign ownership under Section 310 of the Act.

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[]{#__RefHeading___Toc88459301 .anchor}SECTION III - FOREIGN OWNERSHIP
ANALYSIS UNDER SECTION 310(B)(4)

[]{#__RefHeading___Toc88459302 .anchor}A. Analytical Framework

Section 310(b)(4) of the Act establishes a 25 percent benchmark for
investment by foreign individuals, corporations, and governments in
entities that control U.S. common carrier and aeronautical radio
licensees.[^10] This section, however, grants the Commission discretion
to allow higher levels of foreign ownership unless it finds that such
ownership is inconsistent with the public interest.[^11] Thus, a foreign
government, individual, or corporation may own, directly or indirectly,
up to 100 percent of the stock of a U.S. holding company that holds a
controlling interest in a common carrier or aeronautical radio licensee
provided the Commission does not find the foreign ownership to be
inconsistent with the public interest.

[]{#__RefHeading___Toc88459303 .anchor}B. Foreign Investments

The Commission treats foreign investments from World Trade Organization
("WTO") Member countries and non-WTO Member countries differently. As
discussed below, the Commission uses a "principal place of business"
test to determine whether the nationality or "home market" of a foreign
investor is a WTO Member country.

[]{#__RefHeading___Toc88459304 .anchor}1. WTO Member Countries

In the *Foreign Participation Order*, the Commission unanimously
concluded that the public interest would be served by permitting greater
investment by individuals and entities from WTO Member countries in U.S.
common carrier and aeronautical radio licensees.[^12] Accordingly, they
are afforded a rebuttable presumption by which the Commission presumes
that foreign investment from WTO Member countries does not pose
competitive concerns in the U.S. market.

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.[^13]

In addition to the presumption regarding competitive concerns noted
above, the Commission considers other public interest concerns related
to national security, law enforcement, foreign policy, and trade
policy.[^14] If the Executive Branch raises national security, law
enforcement, foreign policy, or trade policy concerns, the Commission
accords deference to its expertise on such matters.[^15]

[]{#__RefHeading___Toc88459305 .anchor}2. Non-WTO Member Countries

Applicants with foreign ownership interests from non-WTO Member
countries are not afforded the same rebuttable presumption. These
applicants must satisfy the Commission's effective competitive
opportunities ("ECO") test in order to obtain authorization to exceed
the 25 percent benchmark set forth in Section 310(b)(4) of the Act.

The ECO test was adopted by the Commission in 1995.[^16] Under the ECO
test, common carrier and aeronautical radio applicants and licensees are
required to demonstrate, as a condition of exceeding the 25 percent
benchmark, that no legal or practical restrictions on U.S. investment
exist in the relevant service sector of the home markets of the
applicant's foreign investors. The ECO test was developed to promote
effective competition in the U.S. telecommunications service market, to
prevent anti-competitive conduct in the provision of international
services or facilities, and to encourage foreign governments to open
their telecommunications markets.

[]{#__RefHeading___Toc88459306 .anchor}C. Home Market Determination

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 company of a common carrier or aeronautical radio applicant or
licensee. The Commission generally considers a foreign individual's home
market to be its country of citizenship. The Commission does not
determine a foreign investor's home market based on the investor's
address of record.

An applicant must provide, in support of its request for a foreign
ownership ruling, sufficient information to establish the home market of
any foreign individual or entity that would hold a direct or indirect
equity or voting interests in the applicant's U.S. parent company.[^17]
Where the interest would be held by a foreign individual, the applicant
must disclose the individual's country of citizenship.

Where the interest would be held by a foreign corporation, partnership,
or other business organization, the applicant must establish the
investing entity's principal place of business by specifying the
following information:

-   the country of its incorporation, organization or charter;

-   the nationality of all investment principals,[^18] officers, and
    directors;

-   the country in which its world headquarters is located;

-   the country in which the majority of its tangible property,
    including production, transmission, billing, information, and
    control facilities, is located; and

-   the country from which it derives the greatest sales and revenues
    from its operations.[^19]

If an applicant believes it cannot provide the information required for
each foreign individual or entity that would hold a direct or indirect
equity or voting interest in the applicant's U.S. parent company, it
should contact Commission staff prior to filing its request for a
ruling. The applicant should discuss the basis for its determination
that such information cannot be ascertained or would be unduly
burdensome or costly to ascertain. As discussed in Section III.C.1.
below, if the Commission cannot reasonably determine the citizenship or
principal place of business of a proposed foreign investor based upon
the information provided by the applicant, the Commission will consider
these investments as though they were from non-WTO Member countries.

The following cases illustrate how the Commission determines the home
market of an applicant's foreign investors:

-   *Lockheed Martin Global Telecommunications, Comsat Corporation, and
    Comsat General Corporation, Applications for Assignment of Section
    214 Authorizations, Private Land Mobile Radio Licenses, Experimental
    Licenses, and Earth Station Licenses*, Order and Authorization, 16
    FCC Rcd 22897, 22908-09 ¶¶ 25-27 (2001).

-   *Space Station System Licensee, Inc. (Assignor) and Iridium
    Constellation LLC (Assignee) et al.,* Memorandum Opinion, Order and
    Authorization, 17 FCC Rcd 2271, 2281-82 ¶¶ 19-23 (IB 2002).

-   *Vodafone Americas Asia Inc. (Transferor), Globalstar Corporation
    (Transferee), Consent to Transfer Control of Licenses and Section
    214 Authorizations and Petition for Declaratory Ruling Allowing
    Indirect Foreign Ownership*, Order and Authorization, 17 FCC Rcd
    12849, 12864-65, ¶¶ 46-50 (IB 2002).

[]{#__RefHeading___Toc88459307 .anchor}1. Unidentifiable Foreign
Interests

If the applicant does not provide the information required by the
Commission to conduct its home market determination for entities
investing directly or indirectly in its U.S. parent company, the
Commission will treat the foreign investor's interests as unidentifiable
foreign interests from non-WTO Member countries. This situation arises
where applicants, for various reasons, fail to provide the information
required by the Commission to establish a foreign investor's home
market. Similarly, if the Commission cannot reasonably ascertain the
citizenship of foreign individuals with ownership interests based on
information provided by the applicant, the Commission will consider
these investments as unidentifiable foreign interests from non-WTO
Member countries.

[]{#__RefHeading___Toc88459308 .anchor}2. Representations Made by
Applicants

The Commission will accept applicants' representations as to the
principal places of business of their proposed foreign investors if
Commission staff can independently verify the accuracy of these
representations through publicly available resources. If the Commission
staff cannot independently verify the accuracy of these representations,
then the Commission will not accept the representations made by
applicants as to foreign investors' principal places of business. We
caution applicants, however, that Commission resources are limited.
Accordingly, applicants are strongly encouraged to provide the
Commission with the necessary information to assist the Commission in
conducting its principal place of business analyses.[^20]

[]{#__RefHeading___Toc88459309 .anchor}D. Calculating Foreign Ownership
Interests

Under the Commission's longstanding policies, any ownership or voting
interest held by an individual other than a United States citizen or an
entity organized under the laws of a foreign government is counted in
the application of the statutory benchmarks.[^21] The list of
attributable interests includes nearly all forms of voting and equity
interests held in and through the successive corporate parents of an
applicant or licensee.

In applying Section 310(b), the Commission has interpreted the term
"capital stock" to include not only the individual shareholdings of the
corporate parent, but also the many "alternative means by which equity
or voting interests are held in these \[non-corporate entities\],"[^22]
including partnership interests,[^23] policyholders of mutual insurance
companies,[^24] church members,[^25] union members,[^26] and
beneficiaries of irrevocable trusts.[^27]

[]{#__RefHeading___Toc88459310 .anchor}1. Ownership Interests Up the
Vertical Ownership Chain

The Commission considers all the relevant ownership interests up the
vertical ownership chain including "even small investments in publicly
traded securities."[^28] The Commission has stated that even these small
investments, if aggregated, could nevertheless create a degree of
control or influence over a licensee that would be contrary to U.S.
national security or law enforcement interests.[^29] The Commission,
therefore, requires all applicants under Section 310(b)(4) of the Act to
"indicate how much \[indirect foreign ownership\] is attributable to
each identified shareholder and how much of that amount is an allowance
for fluctuations in publicly traded shares."[^30]

[]{#__RefHeading___Toc88459311 .anchor}2. Calculating Foreign Equity and
Voting Interests

As the Commission has previously held, "\[c\]ompliance with Section
310(b) is a two-pronged analysis, one pertaining to voting interests and
the second to ownership interests."[^31] The Commission, therefore,
evaluates compliance with Section 310(b) in terms of both voting and
equity interests in the Commission licensee, under Section 310(b)(3),
and in a controlling parent company, under Section 310(b)(4).

Recognizing that voting interests may differ from equity interests, the
Commission begins its evaluation of the foreign ownership interests
presented in applications and petitions under Section 310(b)(4) by
calculating separately the foreign equity and voting interests in the
licensee's U.S. parent.[^32]

The Commission first calculates the equity interest of each foreign
investor in the parent and then aggregates these interests to determine
whether the sum of the foreign equity interests exceeds the statutory
benchmark. The Commission next calculates the voting interest of each
foreign investor in the parent and aggregates these voting
interests.[^33] The presence of aggregated alien equity or voting
interests in the parent company in excess of 25 percent triggers the
applicability of Section 310(b)(4)'s statutory benchmark.[^34] Once the
benchmark is exceeded, Section 310(b)(4) directs the Commission to
determine whether the "public interest will be served by the refusal or
revocation of such license."[^35] The Commission then determines whether
these foreign interests properly are ascribed to individuals or entities
whose home markets are in WTO Member countries. If the Commission finds
that more than 25 percent of the ownership of an entity that controls a
common carrier radio or aeronautical radio licensee or applicant is
attributable to investors whose home markets are in non-WTO Member
countries, the licensee or applicant must satisfy the Commission's ECO
analysis in order to obtain authorization to exceed the 25 percent
benchmark.[^36]

As previously stated, applicants and licensees that propose foreign
investment from WTO Member countries are given the benefit of a
rebuttable presumption that foreign investment from these countries does
not pose competitive concerns in the U.S. market. If this presumption is
rebutted, however, the Commission may find it necessary in a particular
case to impose specific conditions on a licensee to address a
demonstrated risk to competition from WTO investment; or, where
conditions would not satisfactorily address competitive concerns, the
Commission could deny the application or petition for declaratory
ruling.[^37] In addition, the Commission's public interest analysis
takes into account and affords the appropriate level of deference to
Executive Branch agencies on national security, law enforcement, foreign
policy, and trade policy issues.[^38]

[]{#__RefHeading___Toc88459312 .anchor}3. Redemption Rights

The Bureau reminds applicants that, in calculating foreign ownership
amounts, the Commission does not consider convertible interests such as
options, warrants, and convertible debentures until converted. However,
the Commission will consider convertible interests in calculating
foreign ownership interests if 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 action
under Section 310(b)(4). 

[]{#__RefHeading___Toc88459313 .anchor}E. Use of the Multiplier

As part of the calculation of foreign ownership interests in the U.S.
parent of an applicant or licensee, the Commission uses a "multiplier"
to ascertain ownership interests held by foreign investors through one
or more intervening entities.[^39] As discussed in Section III.D. above,
once the equity and voting interests of each foreign investor are
calculated, these equity and voting interests are then aggregated
separately to determine whether the sum of the equity or voting
interests exceeds the statutory benchmark in Section 310(b)(4). The
guidelines discussed below for calculating foreign equity and voting
interests in the U.S. parent company of an applicant or licensee also
apply for purposes of calculating foreign equity and voting interests in
an applicant or licensee under Section 310(b)(3) of the Act.

[]{#__RefHeading___Toc88459314 .anchor}1. Multiplier Used

**Equity Interests**. The Commission uses a multiplier to calculate the
percentage of each investor's equity interest in the applicant's or
licensee's U.S. parent company 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.

-   For example, if foreign individuals or entities hold a 20 percent
    equity interest in Company A and Company A, in turn, holds a 40
    percent equity interest in Company B, but has *de facto* control of
    Company B, the percentage of Company B's equity capital supplied by
    Company A is 40 percent even though Company A controls Company B. In
    this case, the foreign equity interest attributed to the foreign
    individuals or entities would be 8 percent because "the percentage
    of that 40 percent equity capital reasonably attributable to aliens
    is proportionate to the alien contribution to Company A. The use of
    the multiplier (40% x 20% = 8%) properly discounts the alien
    participation in Company B."[^40]

**Non-controlling Voting Interests.** In calculating foreign voting
interests in the applicant's or licensee's U.S. parent company, the
Commission applies a multiplier to each link in the vertical ownership
chain that does not constitute a controlling interest in the company
positioned in the next lower tier. Thus, a non-controlling stockholder
may use the multiplier to dilute the percentage of its foreign voting
interests that will be attributed to the company positioned in the next
lower tier of the ownership chain.

-   For example, under a Section 310(b)(3) scenario, if foreign
    individuals or entities hold a non-controlling 30 percent voting
    interest in Corporation A which, in turn, holds a non-controlling 40
    percent voting interest in Licensee Corporation B, the foreign
    voting interest in Licensee Corporation B would be calculated by
    multiplying the foreign individuals' or entities' voting interest in
    Corporation A by Corporation A's voting interest in Licensee
    Corporation B. The resulting foreign voting interest (30% x 40% =
    12%) would not exceed the 20 percent statutory benchmark set forth
    in Section 310(b)(3).

> []{#__RefHeading___Toc88459315 .anchor}2. Multiplier Not Used

**Controlling Voting Interests**. In calculating foreign voting
interests in the applicant's or licensee's U.S. parent company, the
Commission does not apply the multiplier to any link in the vertical
ownership chain that constitutes a controlling interest in the company
positioned in the next lower tier. Thus, a controlling stockholder's
foreign voting interests flow entirely to the next tier of the ownership
chain.

-   For example, if foreign individuals or entities hold a
    non-controlling 20 percent voting interest in Company A which, in
    turn, has a *de facto* controlling 40 percent voting interest in
    Company B, the 20 percent foreign voting interest in Company A,
    which has *de facto* control of Company B, would flow entirely to
    the next tier, and be attributed to Company B (20% x 100% = 20%).
    The Commission has explained that counting all of Company A's
    foreign voting interest is appropriate, because "actual control over
    the business . . . is unlikely to be significantly attenuated
    through intervening companies."[^41]

> []{#__RefHeading___Toc88459316 .anchor}3. Calculating Voting Interests
> Held Through Intervening Partnerships

Where foreign voting interests in a parent company are held through one
or more intervening partnerships, a different set of guidelines applies
depending upon whether the foreign individual or entity holds an
insulated limited partnership interest, a general partnership interest,
or an uninsulated limited partnership interest.

**Insulated Limited Partnership Interests.** A common carrier applicant
or licensee can use the multiplier to calculate foreign voting interests
held in a parent company through an intervening limited partnership
where the licensee or applicant can demonstrate that the foreign
investor holds its interest in the partnership as a limited partner that
effectively is insulated from active involvement in partnership affairs.
The Bureau has applied the multiplier in the context of Section
310(b)(4) rulings where the common carrier applicant or licensee has
demonstrated that the foreign limited partners are prohibited by the
relevant partnership agreement from participating in the day-to-day
management of the partnership, and that only the usual and customary
investor protections are contained in the limited partnership
agreement.[^42]

A different standard applies in the context of broadcast licensees and
applicants. The Commission has stated that, while a broadcast licensee
has flexibility in the manner in which it chooses to demonstrate
insulation, a foreign limited partner will be deemed to be effectively
insulated for purposes of calculating the Section 310(b) foreign
ownership benchmarks if the licensee can demonstrate that the foreign
limited partner conforms to the specific insulation criteria for
exemption from attribution under the media ownership rules.[^43]
Specifically, fully insulated interests will not be considered in
calculating a broadcast licensee's foreign *voting* interest.[^44]

For purposes of calculating foreign *equity* ownership, the Commission
includes fully insulated limited partnership interests (along with
uninsulated limited partnership interests and general partnership
interests). A broadcast as well as a common carrier and aeronautical
radio licensee or applicant can use the multiplier in computing foreign
equity interests held through intervening limited or general
partnerships regardless of whether the foreign individual or entity
holds a general partnership interest, an insulated limited partnership
interest, or an uninsulated limited partnership interest.[^45]

The following example illustrates the application of the multiplier to
calculate foreign voting interests held in a common carrier applicant's
or licensee's U.S. parent company through an intervening limited
partnership:

-   U.S. Limited Partnership A proposes to hold a non-controlling 40
    percent equity and voting interest in U.S. Parent Corporation B. The
    aggregate percentage of equity held by foreign limited partners in
    U.S. Limited Partnership A is 25 percent.[^46] Because each of the
    foreign limited partners is effectively insulated from active
    involvement in partnership affairs, the foreign voting interest in
    U.S. Parent Corporation B would be calculated by multiplying the
    aggregate foreign investment interest in U.S. Limited Partnership A
    (25%) by that entity's voting interest in U.S. Parent Corporation B
    (40%). The resulting foreign voting interest in U.S. Parent
    Corporation B would be 10 percent (25% x 40% = 10%). The foreign
    equity interest in U.S. Parent Corporation B also would be 10
    percent because the multiplier always applies to the calculation of
    foreign equity interests.[^47]

**General Partners/Uninsulated Limited Partners.** In calculating
foreign voting interests in a common carrier applicant's or licensee's
U.S. parent company, the applicant or licensee may not use the
multiplier to dilute a general partnership interest or uninsulated
limited partnership interest held by a foreign individual or entity. The
Bureau will consider a general partner to hold the same voting interest
as the partnership holds in the company 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 same voting interest as the partnership holds in the
company in the next lower tier of the vertical ownership chain.[^48]

The following example illustrates the calculation of voting interests
held by a foreign general partner when those interests are held in a
common carrier applicant's or licensee's U.S. parent company through an
intervening limited partnership:

-   U.S. Limited Partnership A proposes to hold a non-controlling 40
    percent equity and voting interest in U.S. Parent Corporation B. The
    percentage of equity held by the foreign general partner of U.S.
    Limited Partnership A is 10 percent. In these circumstances, the
    foreign general partner would be attributed with the 40 percent
    voting interest to be held by the limited partnership in U.S. Parent
    Corporation B. If U.S. Limited Partnership A also had an uninsulated
    foreign limited partner, that foreign limited partner also would be
    considered to hold U.S. Limited Partnership A's 40 percent voting
    interest in U.S. Parent Corporation B.

As demonstrated by the example above, when evaluating foreign voting
interests in the U.S. parent company of a common carrier licensee or
applicant, it is possible for the Bureau to treat multiple investors as
holding the same voting interest in the U.S. parent company.[^49] The
Bureau's purpose in identifying the citizenship of the specific
individuals or entities that hold these interests is not to increase the
aggregate level of foreign investment, but rather to determine whether
any particular interest that a foreign investor may acquire raises
potential risks to competition or other public interests concerns, such
as national security or law enforcement concerns.

[]{#__RefHeading___Toc88459317 .anchor}F. Control

The term "control" as used in the Act means "every form of control,
actual or legal, direct or indirect, negative or affirmative."[^50]

Control is relevant to the Commission's foreign ownership analysis
because it determines whether the Commission will analyze a particular
transaction under Section 310(b)(3) or 310(b)(4) of the Act. The
Commission will analyze a particular transaction or application under
Section 310(b)(3) if a foreign investor holds a non-controlling interest
directly in the licensee or in an intervening holding company that, in
turn, holds a non-controlling interest in the licensee. By contrast, the
Commission will analyze a particular transaction under Section 310(b)(4)
if a foreign investor holds interests in a U.S. holding company that, in
turn, holds a controlling interest in the licensee.[^51] Control is also
relevant to the Commission's calculation of foreign voting interests in
an applicant or licensee. As explained in Section III.E.2., when the
Commission calculates the level of foreign voting interests in an
applicant or licensee, it does not apply the "multiplier" to any link in
a vertical ownership chain that constitutes a controlling interest in
the company positioned in the next lower tier.

The Commission examines two types of control: *de jure* (control as a
matter of law) and *de facto* (control as a matter of fact).

[]{#__RefHeading___Toc88459318 .anchor}1. *De Jure* Control

*De jure* control is typically determined by whether a shareholder owns
more than 50 percent of the voting shares of a corporation.[^52] For
purposes of its foreign ownership analysis, the Commission does not
consider future redemption rights relevant to determining *de jure*
control until the future shares are actually redeemed.[^53]

[]{#__RefHeading___Toc88459319 .anchor}2. *De Facto* Control

Determining *de facto* control is more complex: it "transcends formulas,
for it involves an issue of fact which must be resolved by the special
circumstances presented. Case-by-case rulings are therefore required,
and we have considered a variety of factors in making our
determinations."[^54] In the context of common carrier
authorizations,[^55] the Commission considers the following six factors
set forth in *Intermountain Microwave*[^56] and *Ellis Thompson*[^57] to
determine whether an investor has *de facto* control over a company:

-   Does the licensee have unfettered use of all facilities and
    equipment?

-   Who controls the daily operations?

-   Who determines and carries out the policy decisions, including
    preparing and filing applications with the Commission?

-   Who is in charge of employment, supervision, and dismissal of
    personnel?

-   Who is in charge of the payment of financing obligations, including
    expenses arising out of operations?

-   Who receives monies and profits derived from the operation of the
    facilities?

The Commission also considers negative control as part of its control
analysis. Negative control is held by a person or entity that can block
decisions, but cannot compel action without the concurrence of another
party.[^58]

In analyzing the presence of *de facto* control in a particular case,
the Commission will consider the representations of the applicant, its
actual conduct, and relevant corporate governance and contractual
provisions.[^59]

An applicant's or licensee's ownership structure frequently consists of
a complex set of vertical ownership interests in its U.S. parent
company. As discussed in Section III.E. above, a non-controlling
stockholder may use the multiplier to dilute the percentage of its
voting interest in the company positioned in the next tier of the
ownership chain.[^60] A controlling stockholder's interest, however,
flows entirely to the next tier.[^61] Therefore, in order to calculate
foreign voting interests in the U.S. parent, the applicant or licensee
must identify any controlling interests in the vertical ownership chain.
This determination often involves examining control relationships
between and among investors that may be far removed from the actual
operations of the licensee,[^62] where the *Intermountain Microwave*
criteria are not directly applicable.[^63] In these circumstances and
for purposes of determining where *de facto* control is situated,
applicants should consider the totality of the circumstances,[^64]
including who has the power to direct a company's operations or control
its board of directors.[^65] Applicants should also examine minority
investor protections to determine whether these provisions may, either
alone or in conjunction with other corporate governance provisions,
shift *de facto* control to the minority investor.[^66]

For more information on how the Commission conducts its control
analyses, see

-   *Applications of Space Station System Licensee, Inc., Assignor et
    al.*, Memorandum Opinion and Order, 17 FCC Rcd 2271, 2284, ¶ 26
    (IB 2002) (recognizing that in the context of common carrier
    authorizations, the Commission traditionally uses the six factors
    set forth in *Intermountain Microwave* to determine whether *de
    facto* control exists).

-   *Application of Volunteers in Technical Assistance for Authority to
    Construct, Launch and Operate a Non-Voice, Non-Geostationary
    Mobile-Satellite System*, Order, 12 FCC Rcd 3094, ¶ 23 (1997)
    (evaluating agreements under the guidelines established by the
    Commission in *Intermountain Microwave*).

As explained in greater detail below, the Commission, in the *Secondary
Markets Order*, revised its *de facto* control standard for interpreting
Section 310(d) requirements in the context of spectrum leasing,
replacing the *Intermountain Microwave* standard.[^67] The Commission
has not similarly modified its control analysis for purposes of applying
the foreign ownership requirements of Section 310 of the Act.

[]{#__RefHeading___Toc88459320 .anchor}G. Separate Treatment of Section
310(b)(3) and (b)(4)

The Commission treats Section 310(b)(3) and 310(b)(4) restrictions
separately and does not aggregate the foreign interests calculated under
Section 310(b)(3) with foreign interests calculated under 310(b)(4). In
other words, foreign investment in the licensee and foreign investment
in the licensee's U.S. parent are not aggregated for purposes of
calculating foreign ownership.[^68]

[]{#__RefHeading___Toc88459321 .anchor}H. Foreign Ownership Issues in
the Context of Secondary Markets[^69]

The Commission has issued new policies and rules applicable to spectrum
leasing arrangements. Under these policies, licensees in many wireless
services may enter into spectrum leasing arrangements with spectrum
lessees -- involving any amount of the licensed spectrum, in any
geographic area of the license and for any period of time -- provided
certain conditions are met. The Commission permits spectrum leasing
parties to enter into two different kinds of spectrum leasing
arrangements: "spectrum manager" and "de facto transfer" leases. In both
of these types of leasing arrangements, spectrum lessees (and spectrum
sublessees)[^70] are required to satisfy the same requirements related
to foreign ownership as required of licensees.

[]{#__RefHeading___Toc88459322 .anchor}1. "Spectrum manager\" Leasing

Under spectrum manager leases, the Commission permits licensees and
spectrum lessees to enter into spectrum leasing arrangements -- for any
amount of spectrum, in any geographic area, and for any period of time
within the scope and term of the license -- without the need for prior
Commission approval. However, licensees must retain both *de jure* and
*de facto* control (under a revised standard for spectrum leasing, as
discussed below) over the leased spectrum by acting as a "spectrum
manager" with regard to the spectrum rights it chooses to lease.

Under this leasing option, the licensee and spectrum lessee file a
notification with the Commission. In this notification, the spectrum
lessee must certify to foreign ownership criteria analogous to those
applicable to Commission licensees. Accordingly, spectrum lessees are
required to meet applicable foreign ownership eligibility requirements
by certifying that they meet Section 310(a) requirements and, to the
extent that Section 310(b) applies (*e.g.*, to the extent they are
common carriers), that they meet those requirements as well. As part of
the notification process for this type of leasing arrangement, each
spectrum lessee must certify that it is not a foreign government or
representative of a foreign government in the same manner as required of
licensees pursuant to Section 310(a). In addition, if the spectrum
lessee intends to provide a service to which Section 310(b) applies, it
must certify that it is not an alien or representative of an alien; is
not organized under the laws of a foreign government; and that no more
than one-fifth of its capital stock is owned of record or voted by
aliens, their representatives, or by a foreign government or
representative thereof, or by any foreign corporation. The spectrum
lessee must also state whether it is 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 foreign
corporation. If this is the case, the spectrum lessee must be able to
certify and substantiate that it has obtained the necessary declaratory
ruling establishing its eligibility for the lease of spectrum.[^71]

The Commission will hold a spectrum lessee directly and independently
accountable for these certifications.[^72] The Commission retains the
ability to investigate and terminate any spectrum manager leasing
arrangement to the extent the Commission determines, post-notification,
that a spectrum manager lease arrangement raises foreign ownership
concerns. In addition, spectrum lessees that violate Commission rules or
other federal laws potentially will be subject to forfeitures under
Section 503(b) of the Act, other administrative sanctions, and criminal
prosecution.[^73]

[]{#__RefHeading___Toc88459323 .anchor}2. "*De Facto* transfer" Leasing

Under *de facto* transfer leasing arrangements, the Commission permits
licensees and spectrum lessees to enter into spectrum leasing
arrangements -- for any amount of spectrum, in any geographic area, and
for any period of time within the scope and term of the license -- in
which *de facto* control of the leased spectrum is transferred to the
spectrum lessee(s) for the duration of the lease. As with spectrum
manager leasing arrangements, for purposes of the Commission's foreign
ownership analysis, the lessee of a *de facto* transfer leasing
arrangement is required to meet applicable foreign ownership eligibility
requirements.

Under this option, all spectrum lessees are required to file an
application with the Wireless Telecommunications Bureau for approval of
the transfer. A spectrum lessee that seeks to provide common carrier
services must indicate whether it is: (1) a foreign government or
representative of a foreign government; (2) an alien or a representative
of an alien; (3) a corporation organized under the laws of a foreign
government; or (4) a corporation of which more than one-fifth 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 foreign corporation. Any spectrum lessee seeking to provide
common carrier service that answers in the affirmative to any of these
questions will have its application dismissed without further
consideration.

A spectrum lessee that seeks to provide common carrier services must
also indicate whether it is 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 foreign
corporation. If this is the case, the spectrum lessee must attach an
exhibit explaining the nature and extent of these foreign equity and
voting interests, and it must request approval of these foreign
ownership interests pursuant to Section 310(b)(4). The Commission then
applies the foreign ownership analysis presented in these Guidelines.

If the spectrum lessee seeks to rely on an existing declaratory ruling,
the lessee must be able to certify and substantiate that it has obtained
the necessary ruling establishing its eligibility for the lease of
spectrum.[^74] If the lessee has not received the appropriate ruling, it
must attach to its application a date-stamped copy of the request for
declaratory ruling seeking approval of its foreign ownership. The
lessee's application cannot be granted until it receives the declaratory
ruling.

[]{#__RefHeading___Toc88459324 .anchor}3. *De Facto* Control in the
Context of Spectrum Leasing

In the *Secondary Markets Order*, the Commission revised its *de facto*
control standard for interpreting Section 310(d) requirements as applied
in the context of spectrum leasing, replacing the *Intermountain
Microwave* standard.[^75] The revised *de facto* control standard for
spectrum leasing arrangements focuses on whether licensees continue to
exercise effective working control over any spectrum they lease to
others. Under this standard, licensees may lease spectrum usage rights
to spectrum lessees, without the need for prior Commission approval, to
the extent that the licensees (1) maintain an active, ongoing oversight
role to ensure that the lessee complies with all applicable Commission
policies and rules, (2) retain responsibility for all interactions with
the Commission required under the license related to the use of the
leased spectrum (including notification requirements), and (3) remain
primarily and directly accountable to the Commission for any lessee
violation of these policies and rules.[^76]

[]{#__RefHeading___Toc88459325 .anchor}I. Declaratory Rulings

Section 310(b)(4) of the Act requires the Commission to make an
affirmative finding that foreign ownership of an applicant's or
licensee's U.S. parent company in excess of 25 percent is in the public
interest. Applicants and licensees are required to inform the Commission
and obtain prior approval before direct or indirect foreign ownership of
their U.S. parent company exceeds 25 percent.[^77]

The Commission writes its declaratory rulings to allow the foreign
investors named in the petition to hold the ownership amounts -- both
equity and voting -- specified in the petition, provided the petition
contains sufficient information to demonstrate that the foreign
investment is properly ascribed to WTO Member countries. If the petition
is properly supported, and absent countervailing public interest
concerns, the Commission will permit up to and including 100 percent
foreign ownership and control of a U.S. parent company that, in turn,
controls a common carrier or aeronautical radio licensee.

Generally, in addition to approving specific ownership interests to be
held by named foreign investors, the Commission, in its rulings, permits
the petitioner to acquire an additional 25 percent foreign equity and
voting interest, either from investors named in the ruling or from
unnamed investors, without seeking additional Commission approval.[^78]
Thus, the Commission generally grants the petitioner an allowance for an
additional, aggregate 25 percent foreign ownership to account for
fluctuations in ownership, including ownership by investors from non-WTO
Member countries.

The allowance, generally, is subject to two conditions. First, the
petitioner may not use all or part of this allowance to permit any
foreign investor, whether WTO or non-WTO, to acquire a block of equity
and/or voting interests in excess of 25 percent. Any investment by a
foreign individual or entity in excess of 25 percent must receive prior
Commission approval. Second, once the petitioner "uses up" the
allowance, *i.e.*, its U.S. parent company acquires an additional 25
percent direct or indirect foreign ownership from one or more foreign
investors, the petitioner must obtain prior Commission approval before
its parent may accept any additional foreign investment.[^79]

The Commission's foreign ownership rulings do not satisfy the separate
and independent requirement in Section 310(d) of the Act that licensees
obtain Commission approval of an assignment or transfer of control of a
radio license. Thus, for example, if the acquisition of an additional 25
percent foreign ownership in a licensee's U.S. parent company would
result in a transfer of control of the licensee under Section 310(d) of
the Act, the licensee must file an application seeking Commission
approval of the transfer of control.

The Commission also writes its declaratory rulings to allow foreign
ownership of only the applicant or licensee named in the petition.
Entities not named in the petition and in the declaratory ruling issued
by the Commission are not specifically covered by the ruling.
Accordingly, the Commission will require those entities not named in the
ruling, including an affiliate of an entity that has received a ruling,
to submit a petition for declaratory ruling requesting Commission
approval of its indirect foreign ownership pursuant to Section 310(b)(4)
of the Act.

[]{#__RefHeading___Toc88459326 .anchor}1. *Pro Forma* Assignments or
Transfers of Control

The Commission recognizes that it may be unduly burdensome to require
the submission of a petition for declaratory ruling in connection with a
*pro forma* assignment or transfer of control where the licensee and
assignee/transferee are under 100 percent ultimate common ownership and
control by a U.S. parent company whose foreign ownership has been
approved pursuant to Section 310(b)(4) of the Act.

Accordingly, in cases of *pro forma* assignments and transfers of
control, the assignee (in the case of an assignment) and the licensee
(in the case of a transfer of control) do not need to submit a petition
for declaratory ruling *if* they certify and substantiate in their *pro
forma* application that the licensee and assignee/transferee ultimately
are wholly-owned and controlled by the same U.S. parent company and that
the foreign ownership of the U.S. parent company has been approved in a
declaratory ruling issued by the Commission. If the applicant cannot
provide these certifications, the *pro forma* transaction may not be
consummated unless and until the Commission grants the necessary
petition for declaratory ruling.

We caution licensees and their parent companies that, in order for the
assignee or transferee to rely on an existing ruling, any change in
ownership structure that would result from a *pro forma* transaction
must fall within the parameters of the ruling. For example, if as a
result of the *pro forma* transaction a new foreign holding company
would be inserted between the licensee and its ultimate parent, and if
that holding company is a foreign corporation, partnership or limited
liability company for which the licensee has not received specific
approval under Section 310(b)(4), the licensee must request and obtain a
declaratory ruling prior to consummation of the *pro forma* transaction.

[]{#__RefHeading___Toc88459327 .anchor}2. Continuing Obligations

Licensees and lessees have a continuing obligation to remain in
compliance with the foreign ownership provisions of Section 310.[^80]
Thus, a common carrier or aeronautical radio licensee must file a
petition for declaratory ruling to obtain Commission approval pursuant
to Section 310(b)(4) of the Act before the direct or indirect foreign
ownership of its U.S. parent company exceeds the 25 percent benchmark. A
licensee that has already received Commission approval to exceed the 25
percent benchmark up to a certain level of foreign ownership must seek
further Commission approval before it may increase its foreign ownership
above that level.[^81]

The Bureau advises that corporate licensees and their parent companies,
in particular, review Section IV of these Guidelines, which discusses
"Other Commission Precedent." This section focuses on shareholder
polling that traditionally has been used by applicants and licensees in
the broadcast services to ensure that they are in compliance with the
foreign ownership provisions of Section 310. The Bureau recommends that
common carrier licensees and applicants, and their parent companies, use
these same methodologies to ensure compliance with the foreign ownership
provisions of Section 310 and with the particular foreign ownership
rulings issued to them by the Bureau or Commission pursuant to Section
310(b)(4) of the Act.

[]{#__RefHeading___Toc88459328 .anchor}SECTION IV - OTHER COMMISSION
PRECEDENT

The following Commission precedents apply specifically in the broadcast
context.[^82] However, the Commission may apply these precedents, where
applicable, to foreign ownership issues presented in the common carrier
context.

[]{#__RefHeading___Toc88459329 .anchor}A. Corporate Applicants and
Shareholder Polling in the Broadcast Context

In the context of broadcast licenses, the Commission has used
shareholder polling to ascertain whether corporate applicants meet the
citizenship requirements set forth in Section 310 of the Act. The
statute requires that citizens own a specific portion of the total
shares, not that a specific portion of the total shareholders be
citizens. A share is defined as "alien" if the shareholder on the
corporate shareholders list:

-   is an alien person;

-   is a corporation organized under the laws of a foreign country;

-   is a foreign government;

-   represents a share owner who is an alien;

-   represents a share owner that is a corporation organized under the
    laws of a foreign country;

-   represents a share owner that is a foreign government;

-   represents an alien who votes the shares;

-   represents a corporation that votes the shares and is organized
    under the laws of a foreign country; or

-   represents a foreign government that votes the shares.

The status of all other shares is defined as "citizen."

[]{#__RefHeading___Toc88459330 .anchor}1. Corporations with Few
Stockholders

Where the required citizenship percentage cannot be established from
"known" citizen shares, applicants must provide additional information.
For corporations with few shareholders, the Commission recommends that
the corporation conduct a survey of all shareholders whose citizenship
is unknown. If the corporation receives enough "citizen" responses to
demonstrate that the portion of shares held by citizens meets or exceeds
the requirements, then the corporation satisfies the citizenship
conditions of Section 310. The Commission counts shares owned by
non-respondents as "alien" shares. Applicant citizenship status is
determined by adding the citizen shares from "known" shareholders with
those from the survey of general shareholders. If these shares total
either eighty percent or seventy-five percent (for holding
corporations), the citizenship requirements of Section 310 of the Act
have been met.

[]{#__RefHeading___Toc88459331 .anchor}2. Corporations with Numerous
Stockholders

For firms with large numbers of shareholders, the Commission has allowed
corporations to use properly conducted sampling procedures in order to
collect additional citizenship information. These procedures should
provide a conservative estimate of the portion of shares owned by
citizens. Corporations that choose to use a sampling procedure may use
any statistically valid method. The Commission reminds applicants that
shares, not shareholders, should be sampled and that shares of
non-respondents must be counted as owned by aliens.

[]{#__RefHeading___Toc88459332 .anchor}B. "Control" in the Broadcast
Context

The Commission does not apply *Intermountain Microwave* and *Ellis
Thompson* in the context of broadcast services. The determinative
question in the broadcast context is whether the allegedly controlling
party has the power to "dominate management of corporate affairs."[^83]
The Commission has previously determined that a finding that a *de
facto* transfer of control has occurred depends largely upon a review of
the actual operation of the licensed station -- not upon the potential
for some hypothetical exercise of control. In determining whether an
entity exercises such control, the Commission typically focuses on the
ability to control finances, personnel and programming, and the ability
to dominate the company's board of directors.[^84]

[]{#__RefHeading___Toc88459333 .anchor}SECTION V - DEFINITIONS

[Effective competitive opportunities (ECO) test]{.underline} refers to
the test adopted by the Commission in the *Foreign Carrier Entry
Order*.[^85] The ECO test was part of the Commission's overall public
interest analysis for international Section 214 authorizations and
foreign ownership of common carrier radio licensees under Section
310(b)(4) of the Act.[^86] In the 1997 *Foreign Participation Order*,
the Commission concluded that the public interest would be served by
permitting greater investment by entities from World Trade Organization
("WTO") Member countries in U.S. common carrier and aeronautical fixed
and en route radio licensees.[^87] Therefore, with respect to indirect
foreign investment in these radio licensees by entities from WTO Member
countries, the Commission replaced its "effective competitive
opportunities" or "ECO" test with a rebuttable presumption that such
investment generally raises no competitive concerns.[^88] However, the
Commission will apply the ECO test in instances where there are
investments from non-WTO Member countries.

[*De facto* control]{.underline} refers to actual control, and is
determined on a case-by-case basis. In the context of common carrier
authorizations, the Commission considers, among other things, the
totality of the circumstances and the following six factors set forth in
*Intermountain Microwave* and *Ellis Thompson* to determine whether an
investor has *de facto* control over a company: (1) Does the licensee
have unfettered use of all facilities and equipment? (2) Who controls
the daily operations? (3) Who determines and carries out the policy
decisions, including preparing and filing applications with the
Commission? (4) Who is in charge of employment, supervision, and
dismissal of personnel? (5) Who is in charge of the payment of financing
obligations, including expenses arising out of operations? (6) Who
receives monies and profits derived from the operation of the
facilities?

[*De jure* control]{.underline} refers to legal control, and is
typically determined by whether a shareholder owns more than 50 percent
of the voting shares of a corporation.

[Foreign ownership benchmarks]{.underline} refer to the permissible
level of foreign ownership interests by foreign individuals,
corporations, and governments in certain radio licensees as set forth in
Section 310(a) and (b) of the Communications Act, as amended.[^89]

[Home market]{.underline} refers to the nationality of the foreign
investors.

[Principal place of business test]{.underline} refers to the test the
Commission uses to determine a foreign investor's home market. For
purposes of determining a foreign entity's home market under Section
310(b)(4), the Commission balances the following factors: (1) the
country of its incorporation, organization or charter; (2) the
nationality of all 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.[^90]

[Station license]{.underline} is defined as "that instrument of
authorization required by this Act or the rules and regulations of the
Commission made pursuant to this 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."[^91]

[]{#__RefHeading___Toc88459334 .anchor}SECTION VI -- SELECTED CASES

[]{#__RefHeading___Toc88459335 .anchor}A. Section 310(a)

-   *Application of VoiceStream Wireless Corporation, Powertel, Inc.,
    Transferors, and Deutsche Telekom AG, Transferee*, Memorandum
    Opinion and Order, 16 FCC Rcd 9779 (2001).

[]{#__RefHeading___Toc88459336 .anchor}B. Section 310(b)(1)

-   *Application of Nevada Broadcasting Group, Las Vegas, Nevada, for
    Construction Permit for New Television Station*, Memorandum Opinion
    and Order, 1985 W.L. 291868 (MMB 1986).

-   *KOZN-FM* *Stereo* 99*, Ltd.*, *Licensee of Radio Station KOZN-FM,
    Imperial, CA, Order to Show Cause Why the License of KOZN-FM,
    Imperial CA Should not be Revoked,* Order to Show Cause, 59 Rad.
    Reg. 2d 628 (1986).

[]{#__RefHeading___Toc88459337 .anchor}C. Section 310(b)(3)

-   *Request for Declaratory Ruling Concerning the Citizenship
    Requirements of Section 310(b)(3) and (4) of the Communications Act
    of 1934, as amended*, Declaratory Ruling, 103 F.C.C. 2d 511 (1985),
    *reconsidered in part*, 1 FCC Rcd 12 (1986).

-   *Catherine L. Waddill,* Memorandum Opinion and Order and Notice of
    Apparent Liability for Forfeiture, 8 FCC Rcd 2169 (1993).

-   *Applications of BBC License Subsidiary L.P., et al.*, Memorandum
    Opinion and Order, 10 FCC Rcd 10968 (1995).

-   *Glentel Corp.*, Memorandum Opinion and Order, 17 FCC Rcd 12008
    (Satellite Division/IB 2002).

[]{#__RefHeading___Toc88459338 .anchor}D. Section 310(b)(4)

-   *Request for Declaratory Ruling Concerning the Citizenship
    Requirements of Section 310(b)(3) and (4) of the Communications Act
    of 1934, as amended*, Declaratory Ruling, 103 F.C.C. 2d 511 (1985),
    *reconsidered in part*, 1 FCC Rcd 12 (1986).

-   *Applications of BBC License Subsidiary L.P., et al.*, Memorandum
    Opinion and Order, 10 FCC Rcd 10968 (1995).

-   *Applications of AirTouch Communications, Inc., Transferor, and
    Vodafone Group, Plc., Transferee, for Consent to Transfer of Control
    of Licenses and Authorizations,* Memorandum Opinion and Order, 14
    FCC Rcd 9430 (WTB 1999).

-   *Applications of SATCOM Systems, Inc., TMI Communications and
    Company, LP, et al.*, Order and Authorization, 14 FCC Rcd 20798
    (1999).

-   *Applications of VoiceStream Wireless Corporation or Omnipoint
    Corporation, et al.*, Memorandum Opinion and Order, 15 FCC Rcd 3341
    (2000).

-   *Applications of Vodafone AirTouch, plc., and Bell Atlantic
    Corporation, For Consent to Transfer of Control or Assignment of
    Licenses and Authorizations*, Memorandum Opinion and Order, 15 FCC
    Rcd 16507 (IB/WTB 2000).

-   *Applications of Aerial Communications, Inc., Transferor, and
    VoiceStream Wireless Holding Corporation, Transferee, et al.*,
    Memorandum Opinion and Order, 15 FCC Rcd 10089 (IB/WTB 2000).

-   *Application of VoiceStream Wireless Corporation, Powertel, Inc.,
    Transferors, and Deutsche Telekom AG, Transferee,* Memorandum
    Opinion and Order, 16 FCC Rcd 9779 (2001).

-   *Motient Services, Inc., and TMI Communications and Company, LP,
    Assignors, and Mobile Satellite Ventures Subsidiary LLC, Assignee*,
    Order and Authorization, 16 FCC Rcd 20469 (IB 2001).

-   *Application of General Electric Corporation, Transferors, and SES
    Global, S.A., Transferees*, Order and Authorization, 16 FCC Rcd
    17575 (IB/WTB 2001), *Supplemental Order*, 16 FCC Rcd 18878 (IB/WTB
    2001).

-   *Lockheed Martin Global Telecommunications, Comsat Corporation, and
    Comsat General Corporation, Assignor, and Telenor Satellite Mobile
    Services, Inc., and Telenor Satellite, Inc., Assignee*, Order and
    Authorization, 16 FCC Rcd 22897 (2001), *modified by* *Errata*, 17
    FCC Rcd 2147.

-   *Space Station System Licensee, Inc. (Assignor) and Iridium
    Constellation LLC (Assignee) et al.,* Memorandum Opinion, Order and
    Authorization, 17 FCC Rcd 2271 (IB 2002).

-   *Applications of XO Communications, Inc.,* Memorandum Opinion, Order
    and Authorization, 17 FCC Rcd 19212 (IB/WCB/WTB 2002).

-   *Vodafone Americas Asia Inc. (Transferor), Globalstar Corporation
    (Transferee)*, Order and Authorization, 17 FCC Rcd 12849 (IB 2002).

-   *Global Crossing, Ltd. (Debtor-in-Possession), Transferor, and GC
    Acquisition Limited, Transferee*, Order and Authorization, 18 FCC
    Rcd 20301 (IB/WCB/WTB 2003) (recon. pending).

-   *Bell Atlantic New Zealand Holdings, Inc., Transferor and Pacific
    Telecom Inc., Transferee*, Order and Authorization, 18 FCC Rcd 23140
    (IB/WCB/WTB 2003).

-   *Loral Satellite, Inc. (Debtor-in-Possession) and Loral SpaceCom
    Corporation (Debtor-in Possession), Assignors and Intelsat North
    America, LLC, Assignee,* Order and Authorization, 19 FCC Rcd 2404
    (IB 2004).

[^1]: These Guidelines also discuss existing broadcast radio license
    precedent. We note that the Commission may, where applicable, apply
    such broadcast precedent to foreign ownership issues presented in
    the common carrier context.

[^2]: A "station license" is defined under 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." The Communications
    Act of 1934, as amended § 3(42), 47 U.S.C. § 153(42). For example,
    radio station licenses include broadcast, wireless personal
    communications services ("PCS"), cellular, microwave, fixed
    wireless, aeronautical en route, and mobile satellite services.

[^3]: For purposes of Section 310(a), a "representative" is an entity
    who 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) (citing *Letter from the
    Commission to Russell G. Simpson, Esq.*, 2 F.C.C. 2d 640 (1966)).

[^4]: *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*, Memorandum Opinion and Order, 16 FCC Rcd 9779, 9805-9806, ¶¶
    41- 42 (2001) ("*VoiceStream/Deutsche Telekom Order*").

[^5]: *See Request for Declaratory Ruling Concerning the Citizenship
    Requirements of Sections 310(b)(3) and (4) of the Communications Act
    of 1934, as amended,* Declaratory Ruling, 103 F.C.C. 2d 511,
    520-522, ¶¶ 16-20, n.45 (1985) ("*Wilner & Scheiner I*"),
    *reconsidered in part*, 1 FCC Rcd 12 (1986) ("*Wilner & Scheiner
    II*").

[^6]: *Compare* 47 U.S.C. § 310(b)(3) with § 310(b)(4).

[^7]: *See* 47 C.F.R. § 0.261 (2003).

[^8]: Applicants for licenses subject to competitive bidding must
    certify in their short-form applications that they are in compliance
    with the foreign ownership provisions of Section 310 of the Act. Any
    auction applicant that is controlled by a corporation with more than
    25 percent foreign ownership, or which seeks to exceed the amount of
    foreign ownership approved in a prior ruling, must file a petition
    for declaratory ruling with the International Bureau and reference
    its pending petition in its short form application. The
    International Bureau will accept these petitions, but will not
    necessarily rule on them prior to the auction start date. The
    International Bureau will act on petitions before or at the same
    time as the grant of the underlying licenses. *See Wireless
    Telecommunications Bureau Responds to Questions about the Local
    Multipoint Distribution Service Auction*, Public Notice, 13 FCC Rcd
    13017 (1998).

[^9]: *Promoting Efficient Use of Spectrum Through Elimination of
    Barriers to the Development of Secondary Markets*, Report and Order
    and Further Notice of Proposed Rulemaking, 18 FCC Rcd 20604 (2003)
    *modified by 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,
    19 FCC Rcd 17503 (2004) ("*Secondary Markets Second Report and
    Order*"); *see* 47 C.F.R. §§ 1.913, 1.948, 1.2002, 1.2003, 1.8002,
    1.9001, 1.9003, 1.9005, 1.9010, 1.9020, 1.9030, 1.9035, 1.9040,
    1.9045, 1.9048, 1.9050, 1.9055, 1.9060, 1.9080, 24.239, 27.4, 27.10,
    27.12, 90.20 (2004).

[^10]: 47 U.S.C. § 310(b)(4).

[^11]: *Id.*

[^12]: *Rules and Policies on Foreign Participation in the U.S.
    Telecommunications Market; Market Entry and Regulation of
    Foreign-Affiliated Entities*, Report and Order and Order on
    Reconsideration, 12 FCC Rcd 23891, 23896, ¶ 9, 23913, ¶ 50, and
    23940, ¶¶ 111-12 (1997) ("*Foreign Participation Order*"), *modified
    by Order on Reconsideration*, 15 FCC Rcd 18158 (2000).

[^13]: *Foreign Participation Order*, 12 FCC Rcd at 23913-15**,** ¶¶
    51-54.

[^14]: *Id*., at 23919-21, ¶¶ 61-66.

[^15]: *See Bell Atlantic New Zealand Holdings, Inc., Transferor and
    Pacific Telecom Inc., Transferee*, Order and Authorization, 18 FCC
    Rcd 23140, 23158, ¶ 38 (2003).

[^16]: *See Market Entry and Regulation of Foreign-Affiliated Entities,*
    Report and Order, 11 FCC Rcd 3873 (1995) ("*Foreign Carrier Entry
    Order*").

[^17]: The calculation of foreign equity and voting interests is
    explained in Section III.D., *infra*.

[^18]: The term "investment principal" means any individual or entity
    holding a ten percent or greater equity or voting interest, or a
    controlling interest, whether direct or indirect, in a foreign
    entity.

[^19]: *See Foreign Participation Order*, 12 FCC Rcd at 23941-42, ¶ 116
    (citing *Foreign Carrier Entry Order*, 11 FCC Rcd at 3951, ¶ 207).

[^20]: In the past, the Commission in some cases has accepted
    representations made by applicants as to the principal places of
    business of their proposed foreign investors. For example, in the
    *Vodafone/Globalstar Order*, the Commission accepted the applicants'
    representations that the foreign investors named in the applications
    had their principal places of business in WTO Member countries. *See
    Vodafone Americas Asia Inc. (Transferor), Globalstar Corporation
    (Transferee), Consent to Transfer Control of Licenses and Section
    214 Authorizations and Petition for Declaratory Ruling Allowing
    Indirect Foreign Ownership*, Order and Authorization, 17 FCC Rcd
    12849 (IB 2002) ("*Vodafone/Globalstar Order*").

[^21]: *See Wilner & Scheiner I,* 103 F.C.C. 2d at 514-15.

[^22]: *Applications of PrimeMedia, et al.*, Memorandum Opinion and
    Order, 3 FCC Rcd 4293, 4295 (1988) (emphasis omitted)
    ("*PrimeMedia*") (citing *Wilner & Scheiner I*, 103 F.C.C. 2d at
    516).

[^23]: *Wilner & Scheiner I*, 103 F.C.C. 2d at 519; *Application of
    Continental Cellular for Authority to Construct and Operate a
    Domestic Cellular Radio Telecommunications System on Frequency Block
    A*, 5 FCC Rcd 691 (1990).

[^24]: *Farragut Television Corp.*, 4 Rad. Reg. 2d (P&F) 350 (1965).

[^25]: *Kansas City Broadcasting Co.*, 5 Rad. Reg. (P&F) at 1094.

[^26]: *Chicagoland TV Co.*, 4 Rad. Reg. 2d (P&F) 747, 752 (1965).

[^27]: *See, e.g., PrimeMedia*, 3 FCC Rcd at 4295.

[^28]: *Foreign Participation Order*, 12 FCC Rcd at 23941, ¶ 115.

[^29]: *Id. See also Wilner & Scheiner II*, 1 FCC Rcd at 13, ¶ 7 ("The
    adoption of the equity benchmarks in Section 310(b) reflects
    congressional concern over substantial alien ownership of Commission
    licensees and persons or companies controlling these licensees even
    where the alien's ownership interest is noninfluential in nature.").

[^30]: *Foreign Participation Order*, 12 FCC Rcd at 23941, ¶ 115.

[^31]: *BBC License Subsidiary L.P.*, Memorandum Opinion and Order, 10
    FCC Rcd 10968, 10973-74, ¶¶ 22, 25 (1995) ("*BBC License
    Subsidiary*") (citing Section 310(b)(4) and *Wilner & Scheiner I*,
    103 FCC 2d 511, 519 n.37 (1985) and noting that the plain language
    of Section 310(b) "limits the amount of capital stock which can be
    'owned ... *or* voted' by aliens. 47 U.S.C. § 310(b)(3), (4)
    (Emphasis added.).").

[^32]: *Id.*

[^33]: *See id.* at 10972-73 ¶ 20, 10973-74, ¶¶ 23-27.

[^34]: *See, e.g., Sprint Corporation Petition for Declaratory Ruling
    Concerning Section 310(b)(4) and (d) and the Public Interest
    Requirements of the Communications Act of 1934, as amended*,
    Declaratory Ruling and Order, 11 FCC Rcd 1850, 1857-58, ¶ 47 (1995)
    ("*Sprint*"). *See also BBC License Subsidiary*, 10 FCC Rcd at
    10973-74, ¶¶ 23-27.

[^35]: *See Sprint*, 11 FCC Rcd at 1857-58, ¶ 47. *See also*
    *Application of Fox Television Stations, Inc. for Renewal of License
    Station WNYW-TV, New York, New York,* Memorandum Opinion and Order,
    10 FCC Rcd 8452, 8474-75, ¶ 52 (1995) ("*Fox Television*").

[^36]: *See Foreign Participation Order*, 12 FCC Rcd at 23946, ¶ 131.
    *See also* Section III.B.2, *supra*.

[^37]: *See* Section III.B.1, *supra.*

[^38]: *Id*.

[^39]: *See BBC License Subsidiary*, 10 FCC Rcd at 10973-74, ¶¶ 23-27
    (citing *Wilner & Scheiner I*, 103 F.C.C. 2d at 521-24 and *Wilner &
    Scheiner II*, 1 FCC Rcd at 13, and overruling *Wilner & Scheiner II*
    insofar as it established a method of calculating foreign equity
    ownership or contributed capital interests which directly tracked
    that used to determine foreign voting interests). *See also News
    International, PLC,* 97 F.C.C. 2d 349, 366 (1984); *Corporate
    Ownership Reporting and Disclosure by Broadcast Licensees*, 97
    F.C.C. 2d 997, 1018 (1984).

[^40]: *BBC License Subsidiary,* 10 FCC Rcd at 10973-74, ¶ 25*.*

[^41]: *Id.*, at 10973, ¶ 23. *See also Wilner & Scheiner I*, 103 F.C.C.
    2d at 521-22, ¶ 19.

[^42]: *Applications of XO Communications, Inc.,* Memorandum Opinion and
    Order, 17 FCC Rcd 19212, 19222-23, ¶ 25 (2002) ("*XO
    Communications*").

[^43]: *See Wilner & Scheiner I*, 103 F.C.C. 2d at 521-22, ¶¶ 20-21. The
    Commission's insulation criteria for purposes of attributing
    ownership and other interests in broadcast licensees are codified in
    Note 2(f) to Section 73.3555 of the rules, 47 C.F.R. § 73.3555, Note
    2(f).

[^44]: *Id*. A broadcast licensee or applicant must always include
    uninsulated limited partnership interests and general partnership
    interests in its calculation of foreign voting interests.

[^45]: *See also Amendment of Parts 20, 21, 22, 24, 26, 80, 87, 90, 100,
    and 101 of the Commission's Rules to Implement Section 403(k) of the
    Telecommunications Act of 1996 (Citizenship Requirements)*, Order,
    11 FCC Rcd 13072 (1996); *Fox Television*, 10 FCC Rcd 8452.

[^46]: The relevant measure of equity interests in partnerships is the
    percentage of the partner's capital contribution. *See* *XO
    Communications*, 17 FCC Rcd at 19221-22, ¶ 23, n.68 (citing *Wilner*
    *& Scheiner I*, at 522, ¶ 20 n.50).

[^47]: *See* Section E.1., *supra*.

[^48]: *See, e.g.,* *XO Communications*, 17 FCC Rcd at 19222, ¶ 24.

[^49]: This situation may occur when many small investors hold their
    interests in the licensee's parent company through an intervening
    general partnership and/or an uninsulated limited partnership. As
    explained above, these small ownership interests would "flow
    through" a general partnership or uninsulated limited partnership
    (*i.e.*, they would not be diluted by the percentage of ownership
    held by the partnership in the U.S. parent company). These small
    ownership interests would be fully attributed to the licensee's
    parent company. Thus, is possible that these interests, if
    aggregated, would exceed 100 percent. *See, e.g.,
    Vodafone/Globalstar Order*, 17 FCC Rcd 12849.

[^50]: *WWIZ, Inc.,* 36 FCC 561, 579 (1964), *aff'd sub. nom.,* *Lorain
    Journal Co. v. FCC*, 351 F.2d 824 (D.C. Cir. 1965), *cert. denied*,
    383 U.S. 967 (1966).

[^51]: *See* Section II.C, *supra*.

[^52]: *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) ("*Metromedia*").

[^53]: *WWOR-TV, Inc*., 6 FCC Rcd 6569, 6571-72, n.13 (1991), *appeal
    dismissed as moot sub. nom. Garden State Broadcasting v. FCC*, 996
    F.2d 386 (D.C. Cir. 1993). *But see* 47 C.F.R. § 1.2110(c)(ii)(2)(A)
    (for purposes of the Commission's designated entity rules, ownership
    interests, generally, shall be calculated on a fully diluted basis;
    all agreements such as warrants, stock options and convertible
    debentures will generally be treated as if the rights thereunder
    already have been fully exercised). Additionally, the Commission has
    previously held that restrictions on redemption or conversion can,
    in some instances, effectively assure compliance with Section 310(b)
    of the Communications Act. *Fox Television*, 10 FCC Rcd at 8513, at
    ¶ 152 (citing *Data Transmission Co.*, 44 F.C.C. 2d 935, 935 (1974);
    *Data Transmission Co.*, 52 F.C.C. 2d 439, 439-40 (1975)). *See also
    supra* Section III.D.3.

[^54]: *Applications of Univision Holdings, Inc. (Transferor) and
    Perenchio Television, Inc. (Transferee) et al.*, Memorandum Opinion
    and Order, 7 FCC Rcd 6672, 6675 (1992) ("*Univision*") (quoting
    *Stereo Broadcasters, Inc.,* 55 F.C.C. 2d 819, 821 (1975)). *See
    also Storer Communications, Inc.,* 101 F.C.C. 2d 434, 441 (1985)
    ("corporate control varies from case to case and cannot be properly
    defined").

[^55]: A discussion of *de facto* control in the broadcast context can
    be found in Section IV of these Guidelines.

[^56]: *Applications of Intermountain Microwave*, Public Notice, 12
    F.C.C. 2d 559 (1963).

[^57]: *Application of Ellis Thompson Corp.*, 10 FCC Rcd 12554,
    12555-56, ¶ 9 (ALJ 1995).

[^58]: *See e.g., Applications of Space Station System Licensee, Inc.,
    Assignor et al.*, Memorandum Opinion and Order, 17 FCC Rcd 2271,
    2282-85, ¶¶ 24-28 (IB 2002) ("*Space Station Order*");
    *VoiceStream/Deutsche Telekom Order*, 16 FCC Rcd at 9814, n.168; FCC
    Form 323, Instruction 4(a) (Sept. 2000) (negative control consists
    of control of exactly 50 percent of voting stock).

[^59]: *See, e.g*., *News International PLC*, Memorandum Opinion and
    Order, 97 F.C.C. 2d 349, 356, ¶ 17 (1984); *Baker Creek
    Communications, L.P.*, Memorandum Opinion and Order, 13 FCC Rcd
    18709, 18713-714, ¶ 7 (PSPWD/WTB 1998).

[^60]: For example, if a foreign individual or entity holds a
    non-controlling 45 percent voting interest in Company A, which, in
    turn, holds a non-controlling 30 percent voting interest in Parent
    Company B, the foreign investor's attributable voting interest in
    Parent Company B would be diluted by multiplying the investor's
    non-controlling 45 percent voting interest in Company A by Company
    A's non-controlling 30 percent voting interest in Company B,
    totaling 13.5 percent (45% x 30%).

[^61]: If the ownership percentage of any link in the vertical ownership
    chain exceeds 50 percent or represents actual control, it will be
    treated as if it were 100 percent. For example, if a foreign
    individual or entity holds a *de facto* controlling 45 percent
    voting interest in Company A which, in turn, holds a non-controlling
    30 percent voting interest in Parent Company B, the multiplier would
    not be used to dilute the foreign investor's attributable voting
    interest in Parent Company B because the foreign investor's 45
    percent voting interest in Company A is a *de facto* controlling
    interest. The foreign voting interest attributed to Parent Company B
    in this case is 30 percent because the foreign investor's 45 percent
    interest in Company A is treated as if it were 100 percent. The
    foreign investor would be deemed to control Company A and all that
    Company A controls (100% x 30%).

[^62]: Thus, in the preceding example, let us assume that Company A is a
    U.S. investment fund that is controlled by a foreign citizen.
    Although the investment fund (and, in turn, its controlling
    shareholder) do not have a controlling interest in Parent Company B,
    the fact that the fund itself is controlled by a foreign citizen is
    relevant to determining whether, and to what extent, foreign voting
    interests in the parent company exceed the 25 percent benchmark in
    Section 310(b)(4) of the Act.

[^63]: *VoiceStream/Deutsche Telekom Order*, 16 FCC Rcd at 9814, ¶ 58
    n.171 (noting that the *Intermountain Microwave* factors focus on
    matters directly affecting control of the licensee).

[^64]: *Id*. (stating that, where the issue was whether the German
    government had *de facto* control of the licensee's ultimate holding
    company, Deutsche Telekom, a totality of the circumstances test was
    the appropriate standard, rather than the standard applied in
    *Intermountain Microwave*).

[^65]: *See, e.g*., *Metromedia*, 98 F.C.C. 2d at 306.

[^66]: *See, e.g.*, *Space Station Order*, 17 FCC Rcd at 2282-85, ¶¶
    24-28.

[^67]: 47 U.S.C. § 310(d); *Secondary Markets Report and Order,* 18 FCC
    Rcd 20604.

[^68]: *See* *Data Transmission Co.,* 59 F.C.C. 2d 439 (1975).

[^69]: *See Secondary Markets Report and Order*, 18 FCC Rcd 20604;
    *Secondary Markets Second Report and Order*, 19 FCC Rcd 17503.

[^70]: The requirements applicable to spectrum lessees also apply to
    spectrum sublessees. Whenever we reference spectrum lessees, we also
    are including spectrum sublessees. We note that broadcast licensees
    cannot enter into spectrum leasing agreements.

[^71]: The Commission stated in the *Secondary Markets Report and Order*
    that, if the U.S. parent of a spectrum lessee has more than
    one-quarter indirect foreign ownership and "the lessee has not yet
    received a declaratory ruling establishing its eligibility regarding
    the lease of spectrum in the particular service at issue, consistent
    with the Commission's foreign ownership policies, then it may not
    enter into \[a spectrum manager\] leasing arrangement." *Id*., 18
    FCC Rcd at 20653, ¶ 110 n.240. Further, under procedures adopted in
    the *Secondary Markets Second Report and Order*, a potential
    spectrum lessee that seeks "immediate processing" of a spectrum
    manager lease notification must be able to certify in its
    notification that it has previously obtained a declaratory ruling
    that establishes that the spectrum lease falls within the scope of
    the ruling (including the type of service and geographic coverage
    area) and that there has been no change in foreign ownership in the
    meantime. *Secondary Markets Second Report and Order*, 19 FCC Rcd at
    17514-16, ¶¶ 19-23. *See also infra* n.Error: Reference source not
    found.

[^72]: *Secondary Markets Report and Order*, 18 FCC Rcd at 20652, ¶¶
    103-104.

[^73]: *Id*. at 20652, ¶ 104.

[^74]: In the *Secondary Markets Second Report and Order*, the
    Commission adopted "immediate approval" procedures for certain
    Wireless Radio Service applications that do not potentially raise
    specified public interest concerns. Under the new immediate approval
    procedures, a spectrum lessee whose U.S. parent has foreign
    ownership in excess of 25 percent must be able to certify in its
    application that it has previously obtained a declaratory ruling
    that establishes that the spectrum lease falls within the scope of
    the ruling (including the type of service and geographic coverage
    area) and that there has been no change in foreign ownership in the
    meantime. If a prior ruling does not cover the proposed lease
    transaction, the spectrum lessee must obtain a supplemental ruling
    that would apply to the particular transaction, and must do so
    *prior* to filing an application under the new immediate approval
    procedures. In order to minimize the need for multiple Section
    310(b)(4) rulings, the Commission stated that it would entertain
    petitions for Section 310(b)(4) rulings that seek to cover future
    spectrum leasing arrangements involving spectrum for services and
    geographic coverage areas specified in the petitions. The Commission
    stated that it would entertain petitions that seek to cover such
    spectrum leases entered into by the petitioning carrier, as well as
    by wholly-owned subsidiaries of that carrier. However, in order to
    discourage the filing of speculative petitions, the Commission
    cautioned that it would consider petitions for such "blanket"
    rulings only in conjunction with a spectrum lease application that
    would be covered by the requested ruling. *Secondary Markets Second
    Report and Order*, 19 FCC Rcd at 17514-16, ¶¶ 19-23.

[^75]: *Secondary Markets Report and Order,* 18 FCC Rcd 20604.

[^76]: For more information on the revised *de facto* control standard
    as it applies to spectrum leasing, *see generally, Secondary Markets
    Report and Order,*18 FCC Rcd 20604.

[^77]: *See Fox Television*, 10 FCC Rcd at 8474, ¶ 52.

[^78]: *See Vodafone/Globalstar Order*, 17 FCC Rcd at 12866, ¶ 52. As a
    general rule, however, this allowance may not be used to increase
    the holdings of any named foreign investor for which the
    Commission's ruling specifically approves an equity and/or voting
    interest that exceeds 25 percent. Any ownership increases by such a
    foreign investor would require prior Commission approval. *See,
    e.g.*, *Application of General Electric Corporation, Transferors,
    and SES Global, S.A., Transferees*, Order and Authorization, 16 FCC
    Rcd 17575, 17593, ¶ 42 (IB/WTB 2001), *Supplemental Order*, 16 FCC
    Rcd 18878, 18884-885, ¶ 11 (IB/WTB 2001).

[^79]: *Global Crossing, Ltd. (Debtor-in-Possession), Transferor, and GC
    Acquisition Limited, Transferee,* Order and Authorization, 18 FCC
    Rcd 20301, 20329, ¶ 35 (IB/WCB/WTB 2003) (recon. pending).

[^80]: *See Fox Television*, 10 FCC Rcd at 8474, ¶ 52.

[^81]: *Foreign Participation Order,* 12 FCC Rcd at 23941, ¶ 114.

[^82]: The information provided in this section is taken from a document
    entitled "Suggestion for Meeting Citizenship Requirements of
    Corporate Applicants." This document is provided to potential
    broadcast licensees to assist them in complying with the
    requirements of Section 310 of the Act.

[^83]: *Univision*, 7 FCC Rcd at 6675 (quoting *Benjamin L. Dubb*, 16
    FCC 274, 289 (1951)); *UTV of San Francisco, Inc. (Assignors) and
    Fox Television Stations, Inc. (Assignee)*, 16 FCC Rcd 14975 (2001).

[^84]: *Letter to Mr. William S. Paley*, 1 FCC Rcd 1025, 1026 (1986).

[^85]: *Foreign Carrier Entry Order*, 11 FCC Rcd 3873 (1995).

[^86]: 47 U.S.C. § 310(b)(4).

[^87]: *Foreign Participation Order*, 12 FCC Rcd at 23896, ¶ 9, 23913, ¶
    50, and 23940, ¶¶ 111-12.

[^88]: *Id.* at 23896, ¶ 9, 23913, ¶ 50, 23940, ¶¶ 111-12.

[^89]: 47 U.S.C. § 310(a), (b).

[^90]: *See Foreign Participation Order*, 12 FCC Rcd at 23941-42, ¶ 116.

[^91]: 47 U.S.C. § 153(42).