**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

> )

STM Wireless, Inc., Pequot Capital )

Management Inc., SkyOnline, Inc., ) File No. ISP-PDR-1999-1223-00014

And SkyOnline Communications, Inc. )

> )

Application Pursuant to Sections 214 and )

310(b)(4) of the Communications Act, as )

Amended, to Transfer Control of SkyOnline, )

Inc, and to Exceed the Indirect Foreign )

Ownership Benchmark in SkyOnline )

Communications, Inc. )

**MEMORANDUM OPINION AND ORDER**

**Adopted: March 21, 2000 Released: March 22, 2000**

By the Chief, Telecommunications Division:

**I. INTRODUCTION**

1\. In this Order, we grant STM Wireless, Inc. (STM), Pequot Capital
Management, Inc. (Pequot), SkyOnline, Inc. (SkyOnline) and SkyOnline
Communications, Inc. (SkyOnline Communications) (collectively,
Applicants) approval, pursuant to Section 310(b)(4) of the
Communications Act (the Act), for Telfin S.A. (Telfin) and Nouvel
Investissement en Technologie S.A. (NIT) to exceed the indirect foreign
ownership benchmark in the specific amounts proposed in SkyOnline
Communications, the wholly owned subsidiary of SkyOnline. The
Applicants' request for a waiver of 310(b)(4) was filed in the context
of an application filed by SkyOnline requesting approval on a *pro
forma* basis for SkyOnline to assign its earth station authorization to
SkyOnline Communications.[^1] The application also requested authority
to then transfer control of SkyOnline Communications and SkyOnline from
STM and Pequot to SkyOnline itself.[^2]

**II. BACKGROUND**

2\. SkyOnline is a Delaware corporation that holds an earth station
authorization under Title III of the Act to provide services via
Intelsat and Solidaridad, the Mexican satellite system. SkyOnline also
holds an international Section 214 authorization to provide global
facilities-based and resale services.

3\. Under the proposed transaction, two foreign entities, NIT
(Luxembourg) and Telfin (Belgium), propose to invest in SkyOnline in an
amount that, with respect to SkyOnline Communications (to which, as
noted, SkyOnline will assign its earth station authorization), will
exceed the 25 percent indirect foreign ownership benchmark contained in
section 310(b)(4).[^3] Upon Commission approval of the transaction,
SkyOnline will be owned and controlled by several unrelated entities as
follows: NIT and Telfin will each have a 28.31 percent interest; STM, a
California corporation, which currently owns 45 percent of SkyOnline,
will retain a 16.57 percent interest; Pequot, a Delaware corporation,
which currently owns 35 percent will retain a 16.08 percent interest;
and Remec Inc., a California corporation, which currently owns 20
percent, will have a 10.73 percent interest. As a result, according to
the Applicants, SkyOnline will not be owned or controlled by any one
corporation or alliance of corporations.

**III. DISCUSSION**

4\. Section 310(b)(4) of the Act requires the Commission to deny or
revoke a common carrier radio license if: (1) more than 25 percent of
any entity that controls the applicant or licensee is owned of record or
voted by aliens, foreign governments or their representatives, or
foreign corporations, and (2) the Commission finds that denial or
revocation would serve the public interest.[^4] The Commission most
recently refined this public interest inquiry in its *Foreign
Participation Order.* As a result of the transaction, NIT, a Luxembourg
corporation, and Telfin, a Belgian corporation, will each hold a 28.31
percent interest in SkyOnline.[^5] Therefore, a public interest analysis
under Section 310(b)(4) is required.[^6]

5\. In the *Foreign Participation Order*, the Commission stated that,
because additional foreign investment can promote competition in the
U.S. market, the public interest would be served by permitting more open
investment by foreign entities whose home market is a member of the
World Trade Organization ("WTO").[^7] In such a case, there is a strong
presumption that no competitive concerns are raised by the indirect
foreign investment.[^8] The Commission also stated in the *Foreign
Participation Order* that parties who have already received approval to
exceed the 25 percent benchmark up to a certain level of indirect
foreign ownership must continue to seek further Commission approval in
order to increase that level of ownership. [^9]

6\. As part of our analysis in determining whether a foreign entity's
home market is a member of the WTO, we evaluate whether the entity's
"principal place of business" is in a WTO member country. Here,
balancing the five factors of the Commission's "principal place of
business" test,[^10] we find that NIT principally conducts its business
in Luxembourg and Telfin principally conducts its business in Belgium:

A. NIT

(1) *Place of incorporation:* Luxembourg[^11]

(2) *Nationality of investment principals, officers, and directors:*
    NIT's officers and directors are French. NIT is ultimately
    controlled by two French individuals, Roland de Kergolay (de
    Kergolay) and Thais d'Annoux (d'Annoux). de Kergolay and d'Annoux
    control NIT through two Panamanian corporations, Gariston
    Investments, Inc. (Gariston), and Melkan Properties S.A
    (Melkan).[^12]

(3) *Country in which its world headquarters is located:*
    Luxembourg[^13]

(4) *Country in which the majority of its tangible property is located:*
    Luxembourg[^14]

(5) *Country from which it derives the greatest sales and revenues from
    its operations:* The Applicants assert that NIT is a new company
    that was formed for the purpose of investing in SkyOnline and has no
    preexisting sales or revenues.[^15]

> B. Telfin
>
> \(1\) *Place of incorporation:* Belgium[^16]
>
> \(2\) *Nationality of investment principals, officers, and directors:*
> Telfin's officers and directors are Belgian. Telfin is directly and
> indirectly owned by several Belgian entities and is ultimately owned
> by Suez Lyonnaise des Eaux, a French corporation.[^17]
>
> \(3\) *Country in which its world headquarters is located:*
> Belgium.[^18]
>
> \(4\) *Country in which the majority of its tangible property is
> located:* Belgium[^19]
>
> \(5\) *Country from which it derives the greatest sales and revenues
> from its operations:* Belgium[^20]

7\. Under the *Foreign Participation Order*, NIT and Telfin are entitled
to a strong presumption that no competitive concerns are raised by their
respective investments of 28.31 percent in SkyOnline. We see no reason
to rebut that presumption. Accordingly, we conclude, pursuant to section
310(b)(4) and the Commission's *Foreign Participation Order*, that the
public interest would be served by allowing the proposed direct foreign
ownership of SkyOnline (and the resulting indirect ownership of
SkyOnline Communications) by Telfin and NIT. We also approve the direct
foreign ownership of SkyOnline by Melkan and Gariston, the two
Panamanian entities that jointly own NIT, and by de Kergolay and
d'Annoux, the French owners of NIT. In addition, we approve the indirect
foreign ownership of Telfin by its direct and indirect owners from
France and Belgium. We approve all direct and indirect foreign ownership
at their current levels.[^21] We note that SkyOnline would need
additional Commission authority under section 310(b)(4) to increase its
current foreign investment above the levels authorized here. SkyOnline
would also need additional authority before any other foreign entity or
entities acquire, in the aggregate, a greater-than-25 percent indirect
interest in its licensee subsidiary.

# IV. CONCLUSION

8\. Based upon our review under section 310(b)(4) of the Act, we
conclude that the public interest would be served by allowing the
proposed indirect foreign ownership by NIT and Telfin in SkyOnline
Communications. Accordingly, we grant Applicants' request for waiver of
the 25 percent benchmark contained in section 310(b)(4).

**V. ORDERING CLAUSE**

9\. IT IS ORDERED, pursuant to sections 4(i) and (j), and 310(b) of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), and
310(b), that the application requesting waiver of section 310(b)(4)
filed by STM Wireless, Inc., Pequot Capital Management, Inc., SkyOnline,
Inc., and SkyOnline Communications, Inc. in the above-captioned
proceeding IS GRANTED.

FEDERAL COMMUNICATIONS COMMISSION

Rebecca Arbogast

Chief, Telecommunications Division

International Bureau

[^1]: *See* Application at p. 2.

[^2]: *See* Application at p. 2. We note that, as a result of changes in
    the ownership structure of SkyOnline, STM and Pequot will relinquish
    negative control of SkyOnline. Consequently, control of SkyOnline
    Communications and SkyOnline will be held by SkyOnline's
    shareholders, collectively. As discussed in paragraph 2, *infra*,
    SkyOnline currently holds an international 214 authorization. The
    application to transfer control of this authorization was granted by
    Public Notice on March 16, 2000. The International Bureau will take
    action on the related application to assign and transfer control of
    the earth station authorization by separate Public Notice.

[^3]: ^?^ 47 U.S.C. §310 (b)(4).

[^4]: ^?^ 47 U.S.C. §310 (b)(4); *see also* *Rules and Policies on
    Foreign Participation in the U.S. Telecommunications Market*, Report
    and Order, 12 FCC Rcd 23,890, 23,935 ¶ 97 (1997), *recon. pending*
    ("*Foreign Participation Order*").

[^5]: ^?^ *See* Application at p. 2.

[^6]: ^?^ *Foreign Participation Order*, 12 FCC Rcd at 23,935 ¶ 97.

[^7]: ^?^ *See Foreign Participation Order*, 12 FCC Rcd at 23940 ¶ 111.

[^8]: ^?^ *Id.* at 23,913, 23,941-42 ¶¶ 50, 113, 116.

[^9]: ^?^ *See Foreign Participation Order*, 12 FCC Rcd at 23,941 ¶ 114
    (accepting the FBI's assertion that increases in foreign ownership
    or influence may present concerns that Executive Branch agencies may
    need an opportunity to evaluate before the Commission allows an
    increased level of foreign ownership).

[^10]: ^?^ *See Market Entry and Regulation of Foreign-Affiliated
    Entities*, Report and Order, 11 FCC Rcd 3873, 3951 ¶ 207 (listing
    five factors) (1995) ("*Foreign Carrier Entry Order*"). *See also,
    e.g., AT&T Corp. and Loral Spacecom Corporation*, Order and
    Authorization, 12 FCC Rcd 925 (1997) (applying the principal place
    of business test); *Melbourne International Communications Ltd.*, 12
    FCC Rcd 898 (1997); *Global Crossing Ltd. and Frontier Corporation*,
    Memorandum Opinion and Order, DA 99-1930 ¶¶ 16-17 (rel. Sept. 21,
    1999).

[^11]: ^?^ *See* Letter from Alfred M. Mamlet, Counsel for Applicants,
    to Magalie Roman Salas, Secretary, Federal Communications
    Commission, filed Mar. 7, 2000 ("*SkyOnline March 7 Ex Parte
    Letter"*)*.*

[^12]: ^?^ *Id.* at Attachment B. NIT is held 49.5 percent each by
    Melkan and Gariston. Melkan is owned 99 percent by de Kergolay and
    Gariston is owned 99 percent by d'Annoux.

[^13]: *Id.*

[^14]: ^?^ *Id.*

[^15]: ^?^ *Id.*

[^16]: ^?^ *Id.* at Attachment A.

[^17]: ^?^ *Id.* Suez Lyonaisse des Eaux (France) owns 99.4 percent of
    Societe Generale de Belgique (Belgium), which owns 98.18 percent of
    Tractabel (Belgium), which owns 99.9 percent of Telfin.

[^18]: ^?^ *Id.*

[^19]: ^?^ *Id.*

[^20]: ^?^ *Id.*

[^21]: ^?^ *See* n. 12 and n. 17, *supra.*