**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the matter of                 | *  | ISP-PDR-20041115-00013       |
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| Petition of TelCove, Inc. for a  | ** |                              |
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**Order and Declaratory Ruling**

**Adopted: April 14, 2006 Released: April 14, 2006**

By the Chief, International Bureau:

# introduction

1.  We have before us a petition for declaratory ruling ("Petition")
    submitted by TelCove, Inc. ("TelCove" or "Petitioner")[^1]
    requesting that the Commission find permissible the indirect foreign
    ownership of TelCove FWL, Inc. ("TelCove FWL"), an indirect
    wholly-owned subsidiary of TelCove,[^2] in excess of the 25 percent
    benchmark set forth in section 310(b)(4) of the Communications Act
    of 1934, as amended (the "Act").[^3] Subject to the limitations
    contained in this Order and Declaratory Ruling, we find that the
    public interest would not be served by prohibiting the indirect
    foreign ownership of TelCove FWL in excess of the 25 percent
    benchmark.[^4]

# Background

2.  TelCove, a Delaware corporation, is a facilities-based CLEC that
    offers local and long-distance voice, dedicated data, ATM, frame
    relay, and Internet services via fiber optic facilities in
    approximately 50 markets in the eastern part of the United
    States.[^5] Its indirect wholly-owned subsidiary,[^6] TelCove FWL, a
    Delaware corporation, holds FCC licenses for facilities that are
    authorized, but not yet operating, in the Local Multipoint
    Distribution Service and the 39 GHz bands.[^7] These licenses are
    classified as common carrier licenses.[^8]

3.  TelCove filed a Petition seeking approval to exceed the 25 percent
    foreign ownership benchmark for common carrier licenses set forth in
    section 310(b)(4) of the Act.[^9] According to the Petition, TelCove
    and certain of its subsidiaries filed separate petitions for
    protection under Chapter 11 of the Bankruptcy Code in the U.S.
    Bankruptcy Court for the Southern District of New York in March and
    June of 2002. Upon emergence from bankruptcy in 2004, TelCove became
    a privately-held company whose shareholders include former
    bondholders and creditors, as well as their
    successors-in-interest.[^10] Post bankruptcy, five investment
    vehicles controlled by Bay Harbour Management, L.C., a U.S. based
    investment advisory firm, hold an aggregate 47.45 percent equity and
    voting interest in TelCove.[^11] Two of these, Bay Harbour Partners
    Ltd. (20.37%) and Institutional Benchmark Master Fund (1.13%) are
    organized overseas in the Cayman Islands and Bermuda,
    respectively.[^12] According to the Petition, other foreign
    shareholders (including shareholders of unknown nationality) hold an
    additional aggregate 41.74 percent of the equity and voting
    interests in TelCove.[^13] Thus, according to the Petition, the
    total foreign investment in TelCove is 63.24 percent. The Petitioner
    asserts, however, that of the 63.24 percent foreign equity and
    voting interests in TelCove, 54 percent are held by entities from
    WTO Member countries and the remaining 9.24 percent are held by
    shareholders of unknown nationality.[^14] Accordingly, TelCove
    requests a declaratory ruling, *nunc pro tunc,* that the public
    interest would not be served by prohibiting TelCove FWL's 54 percent
    indirect foreign ownership by entities from WTO Member countries and
    9.24 percent indirect ownership by unidentified foreign
    investors.[^15] TelCove also requests that the Commission grant
    authorization for an additional 25 percent foreign ownership as long
    as (1) no more than 25 percent of its total ownership is
    attributable to entities from non-WTO countries and/or (2) no more
    than 25 percent is attributable to a single previously unidentified
    entity from a WTO Member country.[^16]

4.  On January 19, 2005, the Commission released a public notice that
    found the Petition acceptable for filing and requested comment on
    the Petition.[^17] No comments were filed in response to the public
    notice.

5.  On February 16, 2005, the United States Department of Homeland
    Security ("DHS") requested, on behalf of itself, the United States
    Department of Justice ("DOJ"), the Federal Bureau of Investigation
    ("FBI"), and TelCove, that the Commission defer acting on TelCove's
    Petition until the resolution of potential national security, law
    enforcement, and public safety issues.[^18]

6.  On June 15, 2005, TelCove entered into an agreement with DHS and DOJ
    (including FBI) that was intended to ensure that DHS, DOJ and FBI
    and other entities with responsibilities for enforcing the law,
    protecting the national security, and preserving public safety can
    proceed in a legal, secure, and confidential manner to satisfy these
    responsibilities. This agreement was adopted as a condition to the
    Commission's grant of an unrelated application by TelCove and covers
    all domestic communications infrastructure of TelCove, including the
    licenses subject to the Petition.[^19]

7.  On September 15, 2005, the Petitioner submitted a Joint Petition to
    Adopt Conditions to Authorizations and Licenses Executed by DHS,
    DOJ, FBI and TelCove.[^20] The Joint Petition advised that DHS, DOJ,
    and FBI have no objection to the Commission granting TelCove's
    Petition, provided that the Commission conditions its grant on
    TelCove's compliance with the terms of the June 15, 2005 Agreement
    between and among DHS, DOJ, FBI, and TelCove.[^21]

# Discussion

8.  We consider the indirect foreign ownership of TelCove FWL pursuant
    to our public interest analysis under section 310(b)(4) of the Act
    and the Commission's foreign ownership policies adopted in the
    *Foreign Participation Order*.[^22] As part of that analysis, we
    consider any national security, law enforcement, foreign policy, or
    trade policy concerns raised by the indirect foreign
    investment.[^23]

9.  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 radio licensees. This
    section also grants the Commission discretion to allow higher levels
    of foreign ownership if it determines that such ownership is not
    inconsistent with the public interest.[^24]

10. The calculation of foreign ownership interests under section
    310(b)(4) is a two-pronged analysis in which the Commission examines
    separately the equity interests and the voting interests in the
    licensee's parent.[^25] The Commission 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. Similarly, the Commission
    calculates the voting interest of each foreign investor in the
    parent and aggregates these voting interests.[^26] The presence of
    aggregated alien equity or voting interests in a common carrier
    licensee's parent in excess of 25 percent triggers the applicability
    of section 310(b)(4)'s statutory benchmark.[^27] Once the benchmark
    is triggered, section 310(b)(4) directs the Commission to determine
    whether the "public interest will be served by the refusal or
    revocation of such license."[^28] In the *Foreign Participation
    Order*, the Commission concluded that the public interest would be
    served by permitting greater investment by individuals or entities
    from WTO Member countries in U.S. common carrier and aeronautical
    fixed and en route radio licensees.[^29] Therefore, with respect to
    indirect foreign investment from WTO Members, the Commission
    replaced its "effective competitive opportunities," or "ECO," test
    with a rebuttable presumption that such investment generally raises
    no competitive concerns.[^30] In evaluating an applicant's request
    for approval of foreign ownership interests under section 310(b)(4),
    the Commission uses a "principal place of business" test to
    determine the nationality or "home market" of foreign
    investors.[^31]

11. In light of the policies adopted in the *Foreign Participation
    Order*, we begin our evaluation of TelCove FWL's indirect foreign
    ownership under section 310(b)(4) by calculating the foreign equity
    and voting interests in TelCove, the indirect U.S. parent of TelCove
    FWL, the common carrier licensee. We then determine whether these
    foreign interests properly are ascribed to individuals or entities
    that are citizens of, or have their principal places of business in,
    WTO Member countries. The Commission stated, in the *Foreign
    Participation Order*, that it will deny an application if it finds
    that more than 25 percent of the ownership of an entity that
    controls a common carrier radio licensee is attributable to parties
    whose principal place(s) of business are in non-WTO Member countries
    that do not offer effective competitive opportunities to U.S.
    investors in the particular service sector in which the applicant
    seeks to compete in the U.S. market, unless other public interest
    considerations outweigh that finding.[^32]

12. In *Wilner & Scheiner* and its progeny, the Commission has set forth
    a standard for calculating both alien equity and voting interests
    held in a licensee or in the licensees' parents where such interests
    are held through intervening entities.[^33] In calculating
    attributable alien equity interests in a parent company, the
    Commission uses a multiplier to dilute the percentage of each
    investor's equity interest in the 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.[^34] Once
    the *pro rata* equity interests of each alien investor are
    calculated, these interests then are aggregated to determine whether
    the sum of the interests exceeds the statutory benchmark.[^35]

13. By contrast, in calculating alien voting interests in a parent
    company, the multiplier is not applied to any link in the vertical
    ownership chain that constitutes a controlling interest in the
    company positioned in the next lower tier.[^36] In circumstances
    where voting interests in the U.S. parent of a common carrier
    licensee are held through intervening partnerships, the multiplier
    is not applied to dilute a general partnership interest or
    uninsulated limited partnership interest held by a foreign
    individual or entity. A general partner is considered to hold the
    same voting interest as the partnership holds in the company
    situated in the next lower tier of the vertical ownership chain.
    Similarly, in the absence of a specific demonstration that a limited
    partner effectively is insulated from active involvement in
    partnership affairs, a limited partner will be deemed to hold the
    same voting interest as the partnership holds in the company in the
    next lower tier of the vertical ownership chain.[^37] Thus, when
    evaluating foreign voting interests in the U.S. parent company of a
    common carrier licensee, it is possible that multiple investors will
    be treated as holding the same voting interest in a U.S. parent
    company where the investment is held through multiple intervening
    holding companies or partnerships. Our 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 proposes to acquire raises potential risks
    to competition or other public interest concerns, such as national
    security or law enforcement concerns.[^38]

14. For the reasons set forth below, we find that it would not serve the
    public interest to prohibit the indirect foreign ownership of
    TelCove FWL under section 310(b)(4) of the Act, and we grant
    TelCove's Petition.[^39] We find that the majority of the foreign
    equity and voting interests identified in the record that are held
    indirectly in TelCove FWL are properly ascribed to individuals and
    entities from WTO Member countries, including the United States.
    Accordingly, the Petitioner is entitled to a rebuttable presumption
    that the indirect foreign ownership of TelCove FWL would not pose a
    risk to competition in the U.S. market, and there is no evidence to
    rebut this presumption. Further, under the Commission's precedent,
    we accord the appropriate level of deference to the Executive
    Branch's expertise on national security and law enforcement issues,
    and the Joint Petition to Adopt Conditions to Authorizations and
    Licenses is granted. Pursuant to section 310(b)(4) of the Act and
    the Commission's precedent for indirect investment by WTO Members in
    U.S. common carrier radio licensees, we therefore conclude that it
    would not serve the public interest to prohibit the indirect foreign
    ownership of TelCove FWL.

## Attribution of Foreign Ownership Interests

15. The Petitioner sent a detailed, eight-page "home market"
    questionnaire to the parent organizations of each of its
    shareholders that hold more than one percent interest in TelCove.
    The Petitioner obtained detailed home market and underlying investor
    information for institutional investors that are controlled by Bay
    Harbour Management, L.C. ("Bay Harbour"), which in turn controls
    TelCove's board of directors.[^40] TelCove, however, did not obtain
    home market information from certain minority shareholders.[^41] We
    calculate below the foreign equity and voting interests held in
    TelCove, the indirect U.S. parent of TelCove FWL, *by* and *through*
    the various investment vehicles that directly hold shares in TelCove
    based on the information in the record. We first calculate the
    foreign equity and voting interests held *by* and *through* the
    investment vehicles controlled by Bay Harbour. Next, we calculate
    the foreign equity and voting interests held *by* and *through*
    TelCove's minority shareholders. Based on our review of the record,
    we find that the majority of the foreign equity and voting interests
    in TelCove constitute investment from the United States or another
    WTO Member country and that 9.24 percent are unidentified ownership
    interests, which we treat as investments from non-WTO Member
    countries**.**[^42]

16. ***Foreign Equity and Voting Interests Held By and Through
    Investment Vehicles Controlled by Bay Harbour Management, LC.***
    According to the Petitioner, the following five investment vehicles,
    which are managed and controlled by Bay Harbour**,**[^43]
    collectively hold approximately 47 percent equity and voting
    interests in TelCove: (1) Bay Harbour Partners, Ltd. ("BHP")
    (20.37%), (2) Institutional Benchmark Master Fund, Ltd. ("IBMF")
    (1.13%), (3) Bay Harbour 90-1 Ltd. (17.39%) ("BH 90-1"), (4) Trophy
    Hunter Investments Ltd. (6.34%) ("Trophy"), and (5) d Quant Fund,
    LLC (2.22%) ("Quant"). Bay Harbour, in turn, is owned by: (1) John
    Stout, a U.S. citizen (5%),[^44] (2) Tower Investment Group, Inc., a
    U.S. company ("Tower") (85%), and (3) Unity N.V., a Netherlands
    Antilles limited liability company ("Unity") (10%). Tower is owned
    by two U.S. citizens, each of whom holds 50 percent ownership
    interest in Tower.[^45] Unity is wholly-owned by the John Templeton
    Foundation, a Tennessee non-profit foundation.[^46]

17. As an initial matter, we find that the principal place of business
    or "home market" of Bay Harbour, BH 90-1, Trophy, Quant, Tower, and
    Unity is the United States. According to the Petition, Bay Harbour,
    BH 90-1, Trophy, Quant, and Tower are legally organized in the
    United States.[^47] Moreover, their investment principals, officers,
    and directors are U.S. citizens, and they have their world
    headquarters and derive the greatest sales and revenues from
    operations in the United States. Additionally, 100 percent of the
    investors in BH 90-1 and Trophy are U.S. citizens or entities, and,
    as noted above, two U.S. citizens own and control Tower. Although
    only 46 percent of Quant is held in the aggregate by U.S. citizens,
    and the remaining 54 percent is held by a single "feeder fund"
    incorporated in the Bahamas, the Petitioner asserts that the feeder
    fund is affiliated with and controlled by the same U.S. individual
    who manages Quant.[^48] As for Unity, although it is organized in
    the Netherlands Antilles, it is wholly-owned by the John Templeton
    Foundation, a Tennessee non-profit foundation, and three of its four
    managing directors are U.S. citizens.[^49] Moreover, the majority of
    Unity's financial holdings, tangible property, sales and revenues
    and Unity's world headquarters are all in the United States.[^50]
    Based on the record, we find that Bay Harbour, BH 90-1, Trophy,
    Quant, Tower, and Unity have their principal places of business in
    the United States. Although we find that Unity has its principal
    place of business in the United States, we count the 10 percent
    interest it holds in TelCove *through* Bay Harbor as part of our
    foreign ownership calculations in paragraph 19. Similarly, we count
    the 54 percent "feeder fund" investment held *through* Quant as part
    of our foreign ownership calculations in paragraph 19.

18. We also find that the United States is the home market of BHP and
    IBMF, which in the aggregate hold 21.5 percent equity and voting
    interests in TelCove.[^51] The Petition contends that, while BHP is
    incorporated in the Cayman Islands, its home market is properly
    ascribed to the United States because its world headquarters and the
    majority of its tangible property is in the United States, it
    derives the greatest amount of its sales revenues from U.S.
    operations, over 90 percent of the fund's investors are U.S.
    entities, and BHP's two directors are citizens of the Netherlands
    and the Bahamas, respectively.[^52] Likewise, the Petition argues
    that, even though the IBMF is incorporated in Bermuda, its home
    market should be ascribed to the United States because that is where
    its world headquarters is located, where the majority of its
    tangible property is found, and where the greatest amount of its
    sales revenues is generated.[^53] In addition, over 80 percent of
    its investors are U.S. corporate or institutional investors, and one
    of the three directors of the fund is a U.S. citizen, while the
    other two are Austrian and British citizens. Notwithstanding the
    presence of foreign directors in BHP and IBMF and their organization
    in the Cayman Islands and Bermuda, respectively, we find on balance
    that the 21.5 percent indirect equity and voting interest held by
    these entities in TelCove FWL is properly treated as investment from
    the United States for purposes of our public interest analysis under
    section 310(b)(4) of the Act and the Commission's foreign ownership
    policies adopted in the *Foreign Participation Order*.

19. We find that the foreign equity and voting interests held indirectly
    in TelCove FWL *through* BHP, IBMF, and Quant are properly ascribed
    to WTO Member countries. As noted above, BHP, IBMF, and Quant
    respectively hold 20.37 percent, 1.13 percent, and 2.22 percent
    equity and voting interests in TelCove. According to the record,
    three institutional investors organized in the Cayman Islands and
    Switzerland hold a nine percent equity and voting interest in
    BHP**,** which itself is a foreign-organized entity. Five
    institutional investors organized in Switzerland, France, and Japan
    hold a 17 percent interest in IBMF, which also is a
    foreign-organized entity. One entity organized in the Bahamas holds
    54 percent interest in Quant, which is a U.S.-organized entity.[^54]
    The remaining equity and voting interest in these three funds, in
    turn, are held by citizens of or entities from the United
    States.[^55] Consistent with our rules and policies, we use the
    multiplier to dilute the percentage of each foreign investor's
    equity and non-controlling voting interest in TelCove when those
    interests are held through intervening companies.[^56] In this case,
    the three foreign investors in BHP and the five foreign investors in
    IBMF collectively hold 2.02 percent indirect interest in TelCove
    through BHP and IBMF. [^57] Based on the representations of TelCove,
    we find that this 2.02 percent indirect foreign equity and voting
    interest in TelCove is properly ascribed to WTO Member countries and
    is counted as part of the 21.5 percent foreign (albeit WTO) equity
    and voting interest calculated for BHP and IBMF in paragraph 18
    above. Although Quant is a U.S.-organized entity that also has its
    principal place of business in the United States, we count as part
    of our foreign ownership calculation a 1.20 percent foreign (albeit
    WTO) equity and voting interest in TelCove as a result of the 54
    percent "feeder fund" investment held *through* Quant.[^58] We also
    include as part of the foreign ownership calculation for TelCove the
    10 percent foreign (albeit WTO) voting interest that Unity holds in
    Bay Harbor. Unity's 10 percent voting interest in Bay Harbor flows
    through in its entirety to TelCove because Bay Harbor controls
    TelCove.[^59]

20. ***Foreign Equity and Voting Interests Held By and Through Other
    Entities Not Controlled by Bay Harbour Management, L.C.*** We next
    calculate the foreign equity and voting interests that will be held
    in TelCove *by* and *through* the following unrelated individuals,
    corporations, and investment institutions: (1) Harvard & Co.
    (1.17%), (2) Credit Suisse First Boston LLC ("CSFB") (10.25%), (3)
    JGD Management Corp. d/b/a York Capital Management ("JGD
    Management") through nine investment vehicles[^60] (7.88%), (4)
    Goldman Sachs (15.59%), (5) Fernwood Associates (1.17%), (6) L C
    Capital Master Fund Ltd. (L C Capital) (4.06%), (7) Fernwood
    Restructuring, Ltd. (2.05)%, (8) RCG Carpathia Master Fund, L.P.
    (0.33%), (9) RCG Carpathia Master Fund, Ltd. (0.16%), (10) Storms &
    Co. (4.68%), (11) Amroc Investments LLC (1.44%), (12) Unidentified
    Miscellaneous Entities (3.11%), and (13) Individual U.S. citizens
    (0.61%). We examine the foreign ownership interests held by and
    through each of these entities below.[^61]

21. Based upon the record, we find that Harvard & Co. (1.17%), CSFB
    (10.25%), JGD Management and its nine investment vehicles (7.88%),
    Goldman Sachs (15.59%), and Fernwood Associates (1.17%) have their
    principal places of business in the United States or another WTO
    Member country. According to the Petition, Harvard & Co. is an arm
    of Harvard University, a U.S. entity.[^62] Moreover, the Petitioner
    states that Harvard & Co.'s country of organization, the nationality
    of its investment principals, officers and directors, its world
    headquarters, the country where the majority of its tangible
    property is located, and the country where it derives its greatest
    sales and revenues is the United States.[^63] We also find that CSFB
    has its principal place of business in Switzerland, a WTO Member
    country.[^64] Although CSFB's country of organization, the
    nationality of its investment principals, officers and directors,
    the country where the majority of its tangible property is located,
    and the country where it derives its greatest sales and revenues is
    the United States, its world headquarters is Switzerland.[^65]
    Moreover, we find that its ultimate corporate parents, Credit Suisse
    Group and Credit Suisse First Boston Suisse Bank both have their
    world headquarters in Switzerland and are 100 percent
    Swiss-owned.[^66] Based upon these representations, we find that
    CSFB's home market is properly ascribed to Switzerland.

22. As for JGD Management and the nine investment vehicles that it
    controls but does not own, we find that JGD Management and York
    Global Value Partners, L.P. (0.84 %), York Select, L.P. (1.86%),
    York Capital Management, L.P. (1.66%), and York Credit Opportunities
    Fund, L.P. (0.44%) have their principal places of business in the
    United States.[^67] According to the Petition, JGD Management and
    these investment vehicles are all organized and derive their
    greatest sales and revenues from operations in the United States.
    Additionally, their world headquarters and the majority of their
    tangible property are located in the United States. Moreover, almost
    all of their investment principals, officers and directors are U.S.
    citizens.[^68] Thus, we find that the equity and voting interests
    held *by* and *through* these entities are properly ascribed to the
    United States. We also find that the home markets of the remaining
    York investment vehicles are as follows: (1) Lyxor/York Fund Ltd.
    (0.67%) (Jersey, Channel Islands), (2) HFR Ed Select Fund IV Master
    Fund DTD 7/16/01 (0.10%) (Bermuda), (3) Rossburn International, Inc.
    (0.05%) (Canada), (4) York Select Unit Trust DTD 12/15/00 (1.06%)
    (Cayman Islands), and (5) York Investment Limited (1.19%)
    (Bahamas).[^69] All of these foreign markets are WTO Members.

23. We find that Goldman Sachs's 15.59 percent equity and voting
    interest in TelCove is properly ascribed to the United States or
    another WTO Member country.[^70] According to the Petition, TelCove
    contacted a representative of Goldman's Central Compliance group via
    telephone who orally confirmed that the legal domicile of Goldman
    was the United States and that its world headquarters is in New York
    City. No other additional information was provided because,
    according to the Petition, Goldman does not routinely disclose
    information about its investment vehicles or its investors in cases
    when Goldman does not have a substantial investment in a company.
    TelCove further states that the only information it has been
    provided by its transfer agent is that, of the 15.59 percent of
    TelCove's shares held by Goldman Sachs, 3.03 percent is held by a
    U.S. domiciled investment vehicle and 12.56 percent is held by
    investment vehicles legally domiciled in the British Virgin Islands
    and the Cayman Islands.[^71] Based on the representations of the
    Petitioner, including its statement that Goldman Sachs is
    U.S.-controlled,[^72] we find that 3.03 percent of Goldman Sach's
    shares in TelCove are from the United States and that the remaining
    12.56 percent are from WTO Member investors.

24. We will also treat Fernwood Associates' 1.17 percent equity and
    voting interest in TelCove as investment from the United States. We
    do so because of the small interest that Fernwood Associates holds
    in TelCove as a result of TelCove's Chapter 11 reorganization and in
    view of Fernwood Associates' domicile in the United States. We are
    concerned, however, that Fernwood Associates, and Goldman Sachs, did
    not respond to TelCove's questionnaire. We will therefore treat any
    future investment in TelCove by Fernwood Associates and Goldman
    Sachs, and by any fund in which they hold a controlling interest, as
    unidentified interests, unless and until Goldman Sachs and Fernwood
    Associates demonstrate the equity and voting interests held *by* and
    *through* these entities are properly ascribed to the United States
    or another WTO Member country.

25. We accept TelCove's representations that L C Capital (4.06%) and
    Fernwood Restructuring Ltd. (2.05%) have their home markets,
    respectively, in the Caymans Islands and the British Virgin Islands,
    both of which are WTO Member countries.[^73] We also accept
    Petitioner's representations that RCG Carpathia Master Fund, L.P.
    (0.33%) and RCG Carpathia Master Fund, Ltd. (0.16%), which hold less
    than one percent of TelCove's shares, have their home markets in the
    Cayman Islands, a WTO Member country.

26. We also find that the interests held by and through Storms & Co.
    (4.68%), Amroc Investments, LLC (1.44%), and Numerous Miscellaneous
    Entities (3.11%) constitute unidentified interests because TelCove
    did not provide sufficient home market information for these
    entities.[^74] The total indirect ownership interest held by and
    through these entities is approximately 9.24 percent.[^75]

27. In summary, we find that the majority of foreign equity and voting
    interests identified in the record are held by investors that have
    their principal places of business in the United States or another
    WTO Member country (55.20 percent equity and 65.20 voting
    interests)[^76] for purposes of our public interest analysis under
    section 310(b)(4) of the Act and the Commission's foreign ownership
    policies adopted in the *Foreign Participation Order*.[^77] We also
    find that 9.24 percent of TelCove's investors are unidentified.
    Accordingly, the Commission treats those interests as investments
    from non-WTO Member countries.

## National Security, Law Enforcement, Foreign Policy and Trade Policy Concerns

28. In acting on petitions for declaratory ruling pursuant to section
    310(b)(4), the Commission also considers any national security, law
    enforcement, foreign policy, or trade policy concerns.[^78] We take
    into account the record and afford the appropriate level of
    deference to Executive Branch expertise on national security, law
    enforcement, foreign policy and trade policy issues.[^79] As the
    Commission stated in the *Foreign Participation Order*, foreign
    participation in the U.S. telecommunications market may implicate
    significant national security or law enforcement issues uniquely
    within the expertise of the Executive Branch.[^80] As noted above,
    DHS, DOJ, and FBI advised the Commission in the Joint Petition to
    Adopt Conditions to Authorizations and Licenses[^81] that they have
    no objection to the Commission granting TelCove's Petition, provided
    that the Commission conditions its grant on TelCove's compliance
    with the terms of the June 15, 2005 Agreement between and among DHS,
    DOJ, FBI, and TelCove.[^82] In accordance with this request, we
    grant the Joint Petition to Adopt Conditions to Authorizations and
    Licenses, and we condition our grant of the Petition on compliance
    with the terms and conditions of the June 15, 2005 Agreement between
    and among DHS, DOJ, FBI, and TelCove.

# Declaratory Ruling

29. This Declaratory Ruling permits TelCove FWL to be owned indirectly
    by: (1) the named foreign investors identified in the record (up to
    and including 55.20 percent equity and 65.20 voting interests)
    and (2) the unidentified foreign investors (up to and including 9.24
    percent equity and voting interests). TelCove FWL may accept up to
    and including an additional 25 percent indirect equity and voting
    interest from the foreign investors of TelCove named in the Petition
    and from other foreign investors without seeking prior Commission
    approval under section 310(b)(4) of the Act, subject to the
    following conditions. First, TelCove shall obtain prior approval
    before any foreign individual or entity acquires individually a
    greater-than-25-percent indirect equity or voting interest in
    TelCove FWL. Second, TelCove shall obtain prior approval before its
    total indirect foreign equity or voting interests from non-WTO
    investors, including TelCove's unidentified foreign investors,
    exceeds 25 percent. For purposes of calculating the additional,
    aggregate 25 percent amount, TelCove shall include any additional
    equity or voting interests acquired by its current foreign investors
    as well as by any new foreign investors. TelCove shall also treat as
    unidentified foreign investment any future investment by Goldman
    Sachs and Fernwood Associates and by any fund in which they hold a
    controlling interest, unless and until Goldman Sachs and Fernwood
    Associates demonstrate the equity and voting interests held *by* and
    *through* these entities are properly ascribed to the United States
    or another WTO Member country. Finally, as a Commission licensee,
    TelCove FWL has an affirmative duty to continue to monitor its
    foreign equity and voting interests and to calculate these interests
    consistent with the attribution principles enunciated by the
    Commission.

30. We deny TelCove's request for *nunc pro tunc* grant of its petition
    for declaratory ruling. The Commission has granted applications and
    other requests for Commission action on a *nunc pro tunc* basis only
    under limited circumstances: 1) when an application has been
    dismissed in error, so as to enable the applicant to retain its
    comparative rights in a mutually exclusive situation, or 2) when
    exceptional public interest considerations justify the relief
    requested or when substantial equities favor the applicant.[^83] We
    recognize that TelCove's foreign investors acquired their shares as
    a result of TelCove's reorganization and emergence from bankruptcy.
    Licensees have a continuing obligation, however, to remain in
    compliance with the foreign ownership provisions of section 310 of
    the Act. The statute provides no exception to this requirement.[^84]
    Notwithstanding TelCove's apparent violation of the statute, TelCove
    has acted diligently to obtain from its new shareholders the
    information required for the Commission to determine whether the
    public interest would be served by revoking TelCove FWL's LMDS and
    39 GHz common carrier licenses due to its indirect foreign ownership
    in excess of the 25 percent benchmark set forth in section 310(b)(4)
    of the Act.[^85] Based on the information provided by TelCove, we
    conclude that it would not serve the public interest to revoke
    TelCove FWL's common carrier licenses. We take this opportunity to
    caution all common carrier licensees, however, that bankruptcy does
    not excuse them from complying with the foreign ownership
    requirements of the Act. Licensees filing for bankruptcy protection
    must obtain prior Commission approval before consummating a plan of
    reorganization that would otherwise result in a violation of section
    310 of the Act.

# Conclusion

31. Based on the foregoing findings and pursuant to section 310(b)(4) of
    the Act and the Commission's precedent for indirect investment by
    WTO Members in U.S. common carrier licensees, we conclude that it
    would not serve the public interest to prohibit the indirect foreign
    ownership of TelCove FWL, subject to the limitations specified in
    paragraphs 29-30.

# ordering clauses

32. Accordingly, IT IS ORDERED that, pursuant to section 310(b)(4) of
    the Communications Act of 1934, as amended, 47 U.S.C. § 310(b)(4),
    the petition for declaratory ruling IS GRANTED to the extent
    specified in this Order and Declaratory Ruling. Failure to comply
    with all relevant Commission rules, policy, or the specific
    conditions of the grant of the Petition for Declaratory Ruling could
    subject the Petitioner to enforcement action, including but not
    limited to the imposition of forfeitures.

33. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), 309,
    and 310(b) and (d) of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 154(i), 154(j), 309, 310(b), 310(d), the Joint Petition to
    Adopt Conditions to Authorizations and Licenses filed by the U.S.
    Department of Homeland Security, U.S. Department of Justice, Federal
    Bureau of Investigation, and TelCove on September 15, 2005 IS
    GRANTED. Grant of TelCove's Petition is conditioned upon compliance
    with the terms of the June 15, 2005 Agreement between and among DHS,
    DOJ, FBI, and TelCove, which is attached to this Order and
    Declaratory Ruling as Appendix C.[^86]

34. IT IS FURTHER ORDERED that, pursuant to section 1.65 of the
    Commission's rules, 47 C.F.R. § 1.65, the Petitioner is afforded 30
    days from the date of release of this Order and Declaratory Ruling
    to amend any pending applications in connection with the instant
    Petition to reflect the approval in this Order and Declaratory
    Ruling.

35. This Order and Declaratory Ruling is issued pursuant to authority
    delegated by section 0.261 of the Commission's rules, 47 C.F.R. §
    0.261 and is effective upon release. Petitions for reconsideration
    under section 1.106 or applications for review under section 1.115
    of the Commission's rules, 47 C.F.R. §§ 1.106, 1.115, may be filed
    within 30 days of the date of the release of this Order and
    Declaratory Ruling. *See* 47 C.F.R. § 1.4(b)(2).

> FEDERAL COMMUNICATIONS COMMISSION

Donald Abelson, Chief

> International Bureau

**Appendix A**

![](media/image1.jpeg){width="6.495138888888889in"
height="8.425694444444444in"}

**Appendix B**

![](media/image2.jpeg){width="6.495138888888889in"
height="8.425694444444444in"}

**Appendix C**

**Agreement Between DHS, DOJ, FBI, and TelCove (June 15, 2005)**

[^1]: Petition of TelCove, Inc. for a Declaratory Ruling Pursuant to
    section 310(b)(4) of the Communications Act of 1934, as amended,
    File No. ISP-PDR-20041115-00013 (filed Nov. 15, 2004) ("Petition").
    TelCove subsequently filed letters on March 4, 2005, September 2,
    2005, and December 20, 2005 supplementing its Petition. Letter from
    William J. Sill and Timothy J. Cooney, Wilkinson Barker Knauer, LLP
    to Marlene Dortch, Secretary, Federal Communications Commission
    (Mar. 4, 2005) ("March 4 Letter"). Letter from William J. Sill and
    Timothy J. Cooney, Wilkinson Barker Knauer, LLP to Marlene Dortch,
    Secretary, Federal Communications Commission (Sept. 2, 2005)
    ("September 2 Letter"). Letter from William J. Sill and Timothy J.
    Cooney, Wilkinson Barker Knauer, LLP to Marlene Dortch, Secretary,
    Federal Communications Commission (Dec. 20, 2005) ("December 20
    Letter") (revising text from the September 2 Letter). TelCove was
    formerly known as Adelphia Business Solutions, Inc. Petition at 2.

[^2]: At the time the Petition was filed, TelCove Long Haul, L.P., an
    indirect wholly-owned subsidiary of TelCove, held common carrier
    licenses. On December 7, 2005, TelCove Long Haul, L.P. assigned all
    of its common carrier licenses to its wholly-owned subsidiary,
    TelCove FWL, Inc, a Delaware corporation. File No. 0002406597. *See*
    December 20 Letter at 1-2.

[^3]: 47 U.S.C. § 310(b)(4) ("No broadcast or common carrier or
    aeronautical en route or aeronautical fixed radio station license
    shall be granted to or held by ... 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 would be served by the refusal or revocation of such
    license.").

[^4]: *See infra* ¶ 29.

[^5]: Petition at 2.

[^6]: TelCove FWL is 100% owned by TelCove Long Haul, L.P., a U.S.
    limited partnership. TelCove Long Haul, L.P. is held as follows: (1)
    TelCove Operations Inc., a Delaware corporation (1% general
    partnership interest) and (2) TelCove, LLC, a Delaware limited
    liability company that is a wholly-owned subsidiary of TelCove
    Operations Inc., (99% limited partnership interest). TelCove
    Operations Inc., in turn, is wholly owned by TelCove. December 20
    Letter 1-2; *see* Petition at 2-3.

[^7]: December 20 Letter at 2; *see* File No. 0002406597.

[^8]: Petition at 5 (noting that TelCove holds 193 LMDS and 177 39 GHz
    licenses).

[^9]: On March 4, 2005, September 2, 2005, and December 20, 2005,
    TelCove submitted letters supplementing information previously
    provided on November 15, 2004. *See* March 4 Letter; September 2
    Letter; December 20 Letter.

[^10]: Petition at 3.

[^11]: September 2 Letter at Attachments A & H. TelCove is controlled by
    its seven-member board of directors, four members of whom are owners
    of, or are employed by, Bay Harbour Management, L.C. TelCove's
    directors are all U.S. citizens. September 2 Letter at 2 & Appendix
    A (Diagram of Ownership and Control of TelCove, Inc.); December 20
    Letter.

[^12]: September 2 Letter at Attachments A & H; December 20 Letter at
    Revised Attachments A & H.

[^13]: *Id*.

[^14]: *Id.*

[^15]: September 2 Letter at 6; December 20 Letter at 7. We address the
    merits of TelCove's request for *nunc pro tunc* treatment in
    paragraph 30 of this order*.*

[^16]: September 2 Letter at 7; December 20 Letter at 7.

[^17]: *Non Streamlined International Applications Accepted for Filing,*
    Public Notice, Rep. No. TEL-00872NS (rel. Jan. 19, 2005).

[^18]: Department of Homeland Security, Department of Justice and the
    Federal Bureau of Investigation, and TelCove, Inc., Joint Petition
    to Defer, File No. ISP-PDR-20041115-00013 (filed Feb. 16, 2005).

[^19]: *Authorizations Granted Applications Filed for Acquisition of
    Assets of KMC Operating Companies by TelCove, Inc.*, Public Notice,
    WC Docket No. 05-90, 20 FCC Rcd 11125 (2005).

[^20]: Department of Homeland Security, Department of Justice and the
    Federal Bureau of Investigation, and TelCove, Inc., Joint Petition
    to Adopt Conditions to Authorizations and Licenses, File No.
    ISP-PDR-20041115-00013 (filed Sept. 15, 2005) & Agreement.

[^21]: *Id*.; *see also* September 15 Letter at Attachment A (Joint
    Petition to Adopt Conditions to Authorizations and Licenses Executed
    by DHS, DOJ, FBI and TelCove).

[^22]: 47 U.S.C. § 310(b)(4); *see Rules and Policies on Foreign
    Participation in the U.S. Telecommunications Market*, Report and
    Order and Order on Reconsideration, FCC 97-398, 12 FCC Rcd 23891
    (1997) ("*Foreign Participation Order*"), Order on Reconsideration,
    FCC 00-339, 15 FCC Rcd 18158 (2000).

[^23]: The Commission considers national security, law enforcement,
    foreign policy, and trade policy concerns when analyzing a petition
    for declaratory ruling pursuant to section 310(b)(4). *Foreign
    Participation Order*, 12 FCC Rcd at 23918-21, ¶¶ 59-66.

[^24]: 47 U.S.C. § 310(b)(4).

[^25]: *See BBC License Subsidiary L.P.*, Memorandum Opinion and Order,
    DA 95-364, 10 FCC Rcd 10968, 10973, ¶ 22 (1995) ("*BBC License
    Subsidiary*").

[^26]: *See id.* at 10972, ¶ 20, & 10973-74, ¶¶ 22-25.

[^27]: *See id.* at 10973-74, ¶ 25.

[^28]: *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, FCC 95-498, 11 FCC Rcd 1850, 1857-58, ¶ 47 (quoting section
    310(b)(4)). It is the licensee's obligation to inform the Commission
    before its indirect foreign ownership exceeds the 25% benchmark set
    forth in section 310(b)(4). *See Application of Fox Television
    Stations, Inc. for Renewal of License of Station WNYW-TV, New York,
    New York*, Memorandum Opinion and Order, FCC 95-188, 10 FCC Rcd
    8452, 8474-75, ¶ 52 (1995) ("*Fox Television Stations, Inc.*").

[^29]: *Foreign Participation Order*, 12 FCC Rcd at 23896, ¶ 9, 23913, ¶
    50, & 23940, ¶¶ 111-12.

[^30]: *Id*

[^31]: To determine a foreign entity's home market for purposes of the
    public interest determination under section 310(b)(4), the
    Commission will identify and balance the following factors: (1) the
    country of a foreign entity's incorporation, organization or
    charter, (2) the nationality of all investment principals, officers,
    and directors, (3) the country in which the world headquarters is
    located, (4) the country in which the majority of the tangible
    property, including production, transmission, billing, information,
    and control facilities, is located, and (5) the country from which
    the foreign entity derives the greatest sales and revenues from its
    operations. *Foreign Participation Order*, 12 FCC Rcd at 23941, ¶
    116 (citing *Market Entry and Regulation of Foreign-Affiliated
    Entities,* Report and Order, FCC 95-475, 11 FCC Rcd 3873, 3951, ¶
    207 (1995)). For examples of cases applying the five-factor
    "principal place of business" test, *see Lockheed Martin Global
    Telecommunications, Comsat Corporation, and Comsat General
    Corporation, Assignor, and Telenor Satellite Mobile Services, Inc.,
    and Telenor Satellite, Inc., Assignee, Applications for Assignment
    of Section 214 Authorizations, Private Land Mobile Radio Licenses,
    Experimental Licenses, and Earth Station Licenses and Petition for
    Declaratory Ruling Pursuant to Section 310(b)(4) of the
    Communications Act*, Order and Authorization, FCC 01-369, 16 FCC Rcd
    22897 (2001), *erratum,* DA 02-266, 17 FCC Rcd 2147 (Int'l Bur.
    2002), *recon. denied,* FCC 02-207, 17 FCC Rcd 14030 (2002); *Space
    Station System Licensee, Inc., Assignor, and Iridium Constellation
    LLC, Assignee, et al.,* Memorandum Opinion, Order and Authorization,
    DA 02-307, 17 FCC Rcd 2271 (Int'l Bur. 2002).

[^32]: *See Foreign Participation Order*, 12 FCC Rcd at 23946, ¶ 131.

[^33]: *See generally 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, FCC
    85-295, 103 F.C.C. 2d 511 (1985) ("*Wilner & Scheiner I*"), *recon.
    in part,* FCC 86-406, 1 FCC Rcd 12 (1986); *BBC License Subsidiary*,
    10 FCC Rcd at 10973-74, ¶¶ 22-25.

[^34]: *See BBC License Subsidiary,* 10 FCC Rcd at 10973-74, ¶¶ 24-25.

[^35]: *See id.* at 10973-74, ¶ 25.

[^36]: *See id.* at 10973, ¶ 23; *see also Wilner & Scheiner I*, 103
    F.C.C. 2d at 522, ¶ 19.

[^37]: *See, e.g., XO Communications, Inc., Applications for Consent to
    Transfer Control of Licenses and Authorizations Pursuant to Sections
    214 and 310(d) and Petition for Declaratory Ruling Pursuant to
    Section 310(b)(4) of the Communications Act*, IB Docket No. 02-50,
    Memorandum Opinion, Order and Authorization, DA 02-2512, 17 FCC Rcd
    19212, 19222, ¶ 24 (Int'l Bur., Wireless Tel. Bur. & Wireline Comp.
    Bur. 2002) ("*XO Communications*").

[^38]: *See Foreign Participation Order*, 12 FCC Rcd at 23940-41, ¶¶
    111-15.

[^39]: The indirect foreign ownership of TelCove FWL does not raise any
    issues under section 310(a) and 310(b)(1)-(b)(3) of the Act. Section
    310(a) of the Act prohibits any radio license from being "granted to
    or held by" a foreign government or its representative. 47 U.S.C. §
    310(a). In this case, no foreign government or its representative
    holds any of the radio licenses. Section 310(b)(1)-(2) of the Act
    prohibits common carrier, broadcast and aeronautical fixed or *en
    route* radio licenses from being "granted to or held by" aliens, or
    their representatives, or foreign corporations. 47 U.S.C. §
    310(b)(1), (b)(2). According to the Petition, no alien,
    representative, or foreign corporation holds any of the common
    carrier licenses. Accordingly, TelCove FWL's indirect foreign
    ownership is not inconsistent with the foreign ownership provisions
    of section 310(a) or 310(b)(1)-(b)(2) of the Act. *See
    VoiceStream/Deutsche Telekom Order*, 16 FCC Rcd at 9804-9809, ¶¶
    38-48. Additionally, because the foreign investment in TelCove FWL
    is held through TelCove Long Haul, L.P., TelCove Operations, Inc.,
    and TelCove, the direct and indirect U.S.-organized parent companies
    that control TelCove FWL, it does not trigger section 310(b)(3) of
    the Act, which places a 20% limit on alien, foreign corporate or
    foreign government ownership of entities that themselves hold common
    carrier, broadcast and aeronautical fixed or *en route* Title III
    licenses. *Compare* 47 U.S.C. § 310(b)(3) with § 310(b)(4). *See
    Wilner & Scheiner I*, 103 F.C.C. 2d 511.

[^40]: December 20 Letter at 4-7.

[^41]: September 2 Letter at 1.

[^42]: We recommend the use of the ownership chart in Appendix A to this
    order, and the list of TelCove shareholders referenced in the
    ownership chart, which is included as Appendix B to this order, as a
    roadmap for the calculations and analyses of the foreign ownership
    interests held in TelCove by and through its shareholders.

[^43]: Petition at 3. According to the Petition, Bay Harbour itself does
    not own any equity interest in TelCove directly or indirectly.
    September 2 Letter at 2.

[^44]: Mr. Stout is also a member of TelCove's board of directors.
    September 2 Letter at 2; December 20 Letter at Revised Appendix A.

[^45]: Each of Tower's 50% shareholders is a member of TelCove's board
    of directors. September 2 Letter at 2; December 20 Letter at Revised
    Appendix A.

[^46]: Unity has acknowledged that it exercises "no control" over Bay
    Harbour. September 2 Letter at 2.

[^47]: Petition at 11.

[^48]: The citizenship of the ultimate investors in the feeder fund is
    unknown. September 2 Letter at 3; December 20 Letter at 4.

[^49]: The remaining managing director is a Netherlands Antilles Trust,
    ING Trust (Antilles) N.V. September 2 Letter at 2.

[^50]: September 2 Letter at 2

[^51]: September 2 Letter at 2-4.

[^52]: *Id*.

[^53]: September 2 Letter at 3-4; December 20 at 5.

[^54]: September 2 Letter at Appendix C (Characteristics of Investors in
    Bay Harbour Investment Vehicles).

[^55]: *Id*.

[^56]: *See BBC License Subsidiary,* 10 FCC Rcd at 10973-74, ¶¶ 24-25.

[^57]: The 3 foreign investors in BHP hold 1.83% (20.37% x 9%), and the
    5 foreign investors in IBMF hold indirectly a 0.19% equity and
    voting interest in TelCove (1.13% x 17%).

[^58]: The Quant foreign feeder fund holds indirectly 1.20% equity and
    voting interest in TelCove (2.22% x 54%).

[^59]: *See supra* paragraph 13 and note 36 (in calculating alien voting
    interests in a parent company, the multiplier is not applied to any
    link in the vertical ownership chain that constitutes a controlling
    interest in the company positioned in the next lower tier). We do
    not calculate a foreign equity interest in TelCove *through* Unity
    because Bay Harbor does not itself hold any equity interest in
    TelCove. *See supra* paragraph 16, note 43.

[^60]: These 9 investment vehicles are: (1) Lyxor York Fund Ltd.
    (0.67%), (2) York Global Value Partners, L.P. (0.84%), (3) HFR Ed
    Select Fund IV Master Fund DTD 7/16/01 (0.10%), (4) York Select,
    L.P. (1.86%), (5) Rossburn International, Inc. (0.05%), (6) York
    Select Unit Trust DTD 12/15/00 (1.06%), (7) York Capital Management,
    L.P. (1.66%), (8) York Credit Opportunities Fund, L.P. (0.44%), and
    (9) York Investment Limited (1.18%). September 2 Letter at 5 &
    Appendix F (Home Market Analysis of TelCove Shareholder York Funds).

[^61]: September 2 Letter at 4, n.5 & Appendix H (Summary of TelCove
    Shares Treated as Foreign Prior to Home Market Analysis); December
    20 Letter at Revised Appendix H. RBC Dain holds 0.04% of TelCove's
    shares, which we treat as 0.00%. December 20 Letter.

[^62]: *See* September 2 Letter at 5.

[^63]: *Id*. at Appendix G (Home Market Analysis of TelCove Shareholder
    Harvard & Co.); December 20 Letter at Revised Appendix G.

[^64]: September 2 Letter at 5 & Appendix D (Corporate Diagram of
    TelCove Shareholder Credit Suisse First Boston, LLC); December 20
    Letter at Revised Appendix D; December 20 Letter at Revised Appendix
    E.

[^65]: September 2 Letter at Appendix E (Home Market Analysis of TelCove
    Shareholder Credit Suisse First Boston, LLC); December 20 Letter at
    Revised Appendix E.

[^66]: September 2 Letter at 5 & Appendix D (Corporate Diagram of
    TelCove Shareholder Credit Suisse First Boston, LLC); December 20
    Letter at Revised Appendix D.

[^67]: September 2 Letter at Appendix F (Home Market Analysis of TelCove
    Shareholder York Funds); December 20 Letter at Revised Appendix F.
    We note, however, that the Petition did not identify the number of
    foreign investors in the York Funds.

[^68]: The sole non-U.S. citizen is an investment principal, officer, or
    director of JGD Management who is a Canadian citizen but holds a
    U.S. green card. September 2 Letter at Appendix F (Home Market
    Analysis of TelCove Shareholder York Funds).

[^69]: With regard to these entities, the Petition states that their
    respective investment principals, officers, and directors are U.S.
    citizens and that their world headquarters is in the United States,
    the majority of their tangible properly is in the United States, and
    they derive their greatest sales and revenues from the United
    States. September 2 Letter at Appendix F; December 20 Letter at
    Revised Appendix F. Nonetheless, as noted above, these entities are
    organized overseas. In the absence of additional information with
    regard to the number of foreign investors in these funds, we
    consider these funds to be foreign entities, albeit from WTO Member
    countries.

[^70]: September 2 Letter at 5-6.

[^71]: *Id*.

[^72]: Petition at 4, n.7.

[^73]: LC Capital did not respond to TelCove's questionnaire. LC
    Capital's website indicates it is a Cayman Island fund controlled by
    French entities. September 2 Letter at Appendix H (Summary of
    TelCove Shares Treated as Foreign Prior to Home Market Analysis). As
    noted *supra* in paragraph 24, Fernwood Associates also did not
    respond to the TelCove questionnaire. It had previously informed
    TelCove, however, that 2% of TelCove's shares are held in Fernwood
    Restructuring Ltd., a British Virgin Island investment vehicle, and
    1.2% of TelCove shares are held by Fernwood Associates, with both
    interests held for Fernwood Associate's own account. September 2
    Letter at 5 & Appendix H, n.4 (Citizenship of TelCove Shareholders
    Prior to Home Market Analysis); December 20 Letter at Revised
    Appendix H.

[^74]: September 2 Letter at 5-6 & Appendix H (Citizenship of TelCove
    Shareholders Prior to Home Market Analysis).

[^75]: *See* September 2 Letter at Appendix H (Citizenship of TelCove
    Shareholders Prior to Home Market Analysis).

[^76]: The 55.20% foreign equity calculation represents the sum of the
    equity interests held in TelCove *by* the "Foreign-Domiciled Holders
    or Parent" entities identified in Appendix B to this order (54%) and
    the equity interest held in TelCove *through* Quant (1.20%). *See
    supra* ¶¶ 17-19, 21-23 and 25. The 65.20% foreign voting calculation
    represents the sum of the voting interests held in TelCove *by* the
    "Foreign-Domiciled Holders or Parent" entities identified in
    Appendix B to this order (54%), the voting interest held in TelCove
    *through* Quant (1.20%), and the voting interest held in TelCove
    *through* Bay Harbor (10%). *See* *supra* ¶¶ 17-19, 21-23, and 25.

[^77]: *See supra* n.21.

[^78]: *Foreign Participation Order,* 12 FCC Rcd at 23918, ¶ 59. The
    Commission stated that foreign participation in the U.S.
    telecommunications market may implicate significant national
    security or law enforcement issues uniquely within the expertise of
    the Executive Branch. *Id*. at 23919, ¶ 62.

[^79]: *Id*. at 23919-21, ¶¶ 61-66.

[^80]: *Id.* at 23919, ¶ 62.

[^81]: Department of Homeland Security, Department of Justice and the
    Federal Bureau of Investigation, and TelCove, Inc., Joint Petition
    to Adopt Conditions to Authorizations and Licenses, File No.
    ISP-PDR-20041115-00013 (filed Sept. 15, 2005) & Agreement.

[^82]: *Id*.; *see* September 15 Letter at Attachment A (Joint Petition
    to Adopt Conditions to Authorizations and Licenses Executed by DHS,
    DOJ, FBI and TelCove).

[^83]: *See, e.g.*, *Aeronautical Radio*, 4 FCC Rcd 6067 ¶15; *Mobile
    Telecommunications Corp*., 49 Rad. Reg.2d 1506 (1981); *see
    generally Jackson Signal Co*., 74 FCC 2d 514 (1979).

[^84]: 47 U.S.C. § 310(a)-(b); *see Fox Television Stations, Inc.*, 10
    FCC Rcd at 8474-75, ¶ 52 (1995).

[^85]: 47 U.S.C. § 310(b)(4) ("No . . . common carrier . . . license
    shall be granted to or held by ... 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 would be served by the refusal or revocation of such
    license*.") (emphasis added).

[^86]: September 15 Letter at Attachment A (Joint Petition to Adopt
    Conditions to Authorizations and Licenses Executed by DHS, DOJ, FBI
    and TelCove).