**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the matter of Applications of | *  | File No. BALMD-19990930ABA   |
|                                  | *) |                              |
| CENTRAL DAKOTA TV, INC.          | ** | File No. BALMD-19990930AAZ   |
|                                  |    |                              |
| Application for Consent to the   | *  | File No. BALMD-19990930AAY   |
| *Pro Forma* Transfer of Negative | *) |                              |
| Control in Northern Plains       | ** |                              |
|                                  |    |                              |
| Electric Cooperative with        | *  |                              |
| Respect to Multipoint            | *) |                              |
|                                  | ** |                              |
| Distribution Service Stations    |    |                              |
| WNTE464,                         | *  |                              |
|                                  | *) |                              |
| WLW751, WLW752, WNTB718          | ** |                              |
|                                  |    |                              |
| and WNTF478                      | *  |                              |
|                                  | *) |                              |
| Application for Consent to the   | ** |                              |
| *Pro Forma*                      |    |                              |
|                                  | *  |                              |
| Transfer of Negative Control in  | *) |                              |
| Dakota                           | ** |                              |
|                                  |    |                              |
| Central Telecommunications       | *  |                              |
| Cooperative                      | *) |                              |
|                                  | ** |                              |
| with Respect to Multipoint       |    |                              |
| Distribution Service             | *  |                              |
|                                  | *) |                              |
| Stations WNTE464, WLW751,        | ** |                              |
| WLW752,                          |    |                              |
|                                  | *  |                              |
| WNTB718 and WNTF478              | *) |                              |
|                                  | ** |                              |
| Application for Consent to the   |    |                              |
| *Pro Forma*                      | *  |                              |
|                                  | *) |                              |
| Assignment of the Licenses for   | ** |                              |
| Multipoint                       |    |                              |
|                                  | *  |                              |
| Distribution Service Stations    | *) |                              |
| WNTE464,                         | ** |                              |
|                                  |    |                              |
| WLW751, WLW752, WNTB718 and      | *  |                              |
| WNTF478                          | *) |                              |
|                                  | ** |                              |
| to Dakota Central                |    |                              |
| Telecommunications               | *  |                              |
|                                  | *) |                              |
| Cooperative                      | ** |                              |
|                                  |    |                              |
| Application for Request for      | *  |                              |
| Special Temporary                | *) |                              |
|                                  | ** |                              |
| Authority to Continue Operation  |    |                              |
| of Multipoint                    | *  |                              |
|                                  | *) |                              |
| Distribution Service Stations    | ** |                              |
| WNTE464,                         |    |                              |
|                                  | *  |                              |
| WLW751, WLW752, WNTB718 and      | *) |                              |
| WNTF478                          | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
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+----------------------------------+----+------------------------------+

**ORDER ON RECONSIDERATION**

**Adopted: October 25, 2004 Released: October 25, 2004**

By the Deputy Chief, Broadband Division, Wireless Telecommunications
Bureau:

# Introduction

1.  The Broadband Division of the Wireless Telecommunications Bureau
    (Division) has before it a petition for reconsideration filed by the
    Central Dakota TV, Incorporated (CDTV) on January 6, 2003.[^1] CDTV
    seeks reconsideration of an October 1, 2002 action by the Chief,
    Licensing and Technical Analysis Branch (Branch), of the former
    Public Safety and Private Wireless Division, Wireless
    Telecommunications Bureau dismissing the captioned applications as
    defective.[^2] For the reasons set forth below, we grant the
    Petition in part and deny the Petition in part.

# Background

2.  Prior to January 1, 1997, Tri-County Electric Cooperative
    (Tri-County) and Dakota Central Telecommunications Cooperative
    (Dakota Central) each owned fifty percent of Central Dakota
    Television (CDTV), an FCC licensee that operated Multichannel
    Multipoint Distribution Service (MMDS)[^3] stations WNTE464, WLW751,
    WNTB718, and WNTF478 (MMDS stations).[^4] On January 1, 1997,
    Tri-County merged with Baker Electric Cooperative to form Northern
    Plains Electric Cooperative (Northern Plains).[^5] Then, on December
    31, 1997, Dakota Central redeemed Northern Plains' fifty percent
    interest in CDTV, which resulted in CDTV becoming a wholly-owned
    subsidiary of Dakota Central.[^6] Dakota Central is a rural
    telephone cooperative that is principally engaged in the provision
    of local exchange telephone service and is wholly-owned by its
    subscribers.

3.  On September 30, 1999, almost two years after these transactions
    occurred, and after learning from counsel that prior Commission
    approval was necessary for these transactions with respect to CDTV,
    CDTV filed applications seeking the Commission's consent to the *pro
    forma* transfer of negative control of CDTV from Tri-County to
    Northern Plains,[^7] to the *pro forma* transfer of control of CDTV
    from Northern Plains and Dakota Central to Dakota Central,[^8] and
    to the *pro forma* transfer of the licenses for the MMDS stations
    from CDTV to Dakota Central.[^9] CDTV also requested Special
    Temporary Authority (STA) to permit CDTV to operate the MMDS
    stations pending action on the other applications.[^10]

4.  On October 1, 2002, the Branch dismissed the applications and STA
    Request as defective for failure to specify that each of the
    transactions was substantial in nature, and in the case of the
    Tri-County-Northern Plains application, for failure to obtain the
    signature of the transferor.[^11] On January 6, 2003, CDTV filed the
    instant Petition.

# discussion

5.  CDTV argues that the Branch's decision was in error because the
    applications were *pro forma* and not substantial in nature.[^12]
    With regard to the Tri-County-Northern Plains transfer of control
    application, CDTV argues that Tri-County and Dakota Central were not
    equal partners with regard to CDTV because Dakota Central held both
    negative *de jure* control and affirmative *de facto* control over
    CDTV; thus, Dakota Central could exert affirmative control over CDTV
    on an ongoing basis.[^13] CDTV further argues that, Northern Plains,
    the successor-in-interest to Tri-County, became a fifty percent
    owner of CDTV as a result of the merger between Tri-County and Baker
    Electric.[^14] This change of ownership had little effect on CDTV,
    CDTV argues, because both before and after the Tri-County-Baker
    Electric merger and despite the ability of Tri-County to jointly
    elect officers and directors of CDTV with Dakota Central, day-to-day
    management rested with the officers and directors of CDTV, all of
    whom were employees of Dakota Central.[^15] CDTV concedes, however,
    that the Division may conclude that the Tri-County-Baker Electric
    merger was substantial in nature with respect to CDTV.[^16] In this
    event, CDTV indicates that the Division should place the application
    on public notice for 30 days in accordance with Section 309(d)(1) of
    the Communications Act of 1934,[^17] as amended and otherwise
    process the application to grant rather than dismissing the
    application.[^18] CDTV further maintains that the
    Tri-County-Northern Plains transfer of control application was
    properly executed when it was manually filed with the Commission on
    FCC Form 704.[^19] CDTV explains, however, that the signature of the
    transferor was inadvertently omitted when Division staff entered the
    Tri-County-Northern Plains application into electronic Form 306 on
    the Commission's Broadband Licensing System (BLS) database, thus
    making it appear as if it had not been properly executed.[^20]

6.  With regard to the Northern Plains-Dakota Central application, CDTV
    argues that both before and after Dakota Central redeemed all of
    Northern Plains' stock in CDTV, Dakota Central had maintained actual
    managerial control over CDTV.[^21] CDTV further argues that before
    the redemption, Central Dakota held negative *de jure* control of
    CDTV.[^22] Moreover, all of the officers and directors of CDTV were
    employees of Dakota Central, although they were elected by both
    Dakota Central and Northern Plains.[^23] Thus, CDTV argues that the
    redemption of Northern Plains stock resulted in a *pro forma*
    transfer of control of CDTV from Northern Plains and Dakota Central
    to Dakota Central.[^24]

7.  With regard to the Dakota Central-CDTV application, CDTV argues that
    as a result of the transactions detailed above, CDTV became
    wholly-owned subsidiary of Dakota Central.[^25] CDTV argues that
    because CDTV was proposing to assign its licenses for the MMDS
    stations to its parent company, there was no change in beneficial
    ownership.[^26] Thus, CDTV argues that the transfer of the licenses
    for the MMDS stations from CDTV to Dakota Central is *pro forma* in
    nature.[^27]

8.  As a preliminary matter, after reviewing the Tri-County-Northern
    Plains application submitted on FCC Form 704, we find that it was
    properly executed by Mr. Robert Spencer, General Manager/Chief
    Executive Officer of Tri-County, the transferor. We therefore
    conclude that the Tri-County-Northern Plains application should not
    have been dismissed on that basis.

9.  We now turn to the question of whether the three applications filed
    by CDTV were *pro forma* or substantial in nature*.* Under Section
    310(d) of the Communications Act of 1934, as amended (Act), the
    Commission must give its prior consent before any license or
    construction permit or any rights thereunder can be transferred,
    assigned, or disposed of. [^28] Under Section 309(c)(2)(B) of the
    Act, an assignment or transfer "which does not involve a substantial
    change in ownership or control" is specifically exempted from the
    thirty-day waiting period provided for in Section 309(b) and the
    provisions of Section 309(d)(1) regarding petitions to deny.[^29]
    Section 73.3540(f)[^30] of the Commission's Rules implements the
    provisions of Section 309(c)(2)(B) of the Act by providing for a
    "short-form" application for changes in control of a licensee or its
    controlling company which are not deemed to result in a substantial
    change in its ownership or control.[^31] Thus, in keeping with the
    express legislative intent of Section 309, the Commission has not
    restricted the application of Section 73.3540 of its Rules to
    "corporate reorganizations" in the strict legal sense as defined in
    Black's Law Dictionary, but rather has applied the section to any
    stock realignments or transactions which result in a change or
    relinquishment of control which is not "substantial." Moreover, the
    Commission has held that the list enumerated in Section 73.3540 is
    not exhaustive.[^32] Through long administrative interpretation, the
    test for substantiality" has generally been (a) whether 50 percent
    or more of the stock is being transferred and (b) whether as a
    result of the transaction 50 percent or more of the outstanding
    stock will be held by a person or persons whose qualifications have
    not been approved of or "passed upon" in a "long form"
    application.[^33]

10. With respect assignments and the transfer of control involving
    cooperatives such as the transfer of negative control of CDTV from
    Tri-County to Northern Plains, however, the Commission has not
    developed a legal framework to assess when such a transfer
    constitutes a substantial change in ownership or control.[^34] The
    Commission suggests that such a determination may depend, at least
    in part, on the number of subscribers, voting mechanisms, and the
    degree of power held by members.[^35] The Tri-County-Northern Plains
    transfer of control application, however, does not contain
    sufficient information regarding these factors or other similar
    information to enable us to assess whether the merger between
    Tri-County and Baker Electric and subsequent transfer of control
    from Tri-County to Northern Plains constituted a substantial
    transfer of negative control of CDTV. In light of the ambiguity
    concerning the standards for transfers of control involving
    cooperatives, we will reinstate the Tri-County Northern Plains
    Application. Because of the lack of evidence in the record, however,
    prudence dictates that we find that the transfer of negative control
    from Tri-County to Northern Plains was substantial in nature. In
    this connection, in processing the application, the licensing staff
    of the Broadband Division shall place the Tri-County-Northern Plains
    application on public notice for thirty days as required by Section
    309(b) of the Act.

11. We conclude that the Northern-Plains-Dakota Central application was
    *pro forma*. In this regard we note, as mentioned above, that Dakota
    Central owned fifty percent of CDTV before Dakota Central redeemed
    Northern Plains' fifty percent interest in CDTV. Moreover, the
    managers and directors of CDTV, although jointly elected by Dakota
    Central and Northern Plains, were all employees of Dakota Central;
    thus Dakota Central maintained managerial over CDTV both before and
    after Dakota Central redeemed Northern Plains' stock. Most
    importantly, however, Dakota Central as a fifty percent owner in
    CDTV was approved by the Commission in a long-form application and a
    review of Dakota Central's qualifications in this transaction is
    unnecessary.[^36] Since we find that the Northern-Plains--Dakota
    Central application is *pro forma*, we reinstate it to pending
    status. The Commission cannot act on the Northern Plains-Dakota
    Central application before it acts on the Tri-County-Northern Plains
    application. Thus, this application will be granted only after the
    Tri-County Northern Plains application has been placed on public
    notice for thirty days and the Division has acted on any petitions
    to deny.

12. We conclude that the Dakota Central-CDTV application is a pro forma
    transfer of control as it falls within Section 73.3540(f)(5) of the
    Commission's Rules.[^37] Consequently, we will reinstate this
    application to pending status. As described above, these three
    applications concern interrelated transactions. Thus, the Commission
    cannot act on the Dakota Central-CDTV application before it acts on
    the Tri-County-Northern Plains application and the Northern
    Plains-Dakota Central applications.

13. We affirm the dismissal of CDTV's request for Special Temporary
    Authority (STA) because the STA request was applied for in the wrong
    name. Because the transactions in question were transfers of
    control, the STA should have been applied for in the name of Dakota
    Central, the transferee, not CDTV. Dakota Central may reapply for an
    STA if it wishes to do so.

# ordering clauses

14. Accordingly, IT IS ORDERED pursuant to Sections 4(i) and 405 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 405,
    and Section 1.106 of the Commission\'s Rules, 47 C.F.R. § 1.106,
    that the petition for reconsideration submitted by the Central
    Dakota TV, Incorporated on January 6, 2003 IS GRANTED IN PART and
    DENIED IN PART.

15. IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 309 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 309,
    and Section 1.106 of the Commission's rules, 47 C.F.R. § 1.106, that
    the application File Nos. BALMD-19990930ABA, BALMD-19990930AAZ, and
    BALMD-19990930AAY ARE REINSTATED.

16. IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 309 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 309 and
    Section 21.38 of the Commission's Rules, 47 C.F.R. § 21.38, that the
    licensing staff of the Broadband Division SHALL PROCESS File Nos.
    BALMD-19990930ABA, BALMD-19990930AAZ, and BALMD-19990930AAY in
    accordance with this *Order on Reconsideration* and the Commission's
    Rules.

17. This action is taken under delegated authority pursuant to Sections
    0.131 and 0.331 of the Commission\'s Rules, 47 C.F.R. §§ 0.131,
    0.331.

FEDERAL COMMUNICATIONS COMMISSION

John J. Schauble

Deputy Chief, Broadband Division

Wireless Telecommunications Bureau

[^1]: *See* Petition for Reconsideration (filed Jan. 6, 2003)
    (Petition).

[^2]: Letter from Mary M. Shultz, Chief, Licensing and Technical
    Analysis Branch, Public Safety and Private Wireless Division,
    Federal Communications Commission to Central Dakota TV, Inc. (dated
    Oct. 1, 2002) (Branch Letter)

[^3]: On July 29, 2004, the Commission released a *Report and Order and
    Further Notice of Proposed Rulemaking *that transforms the rules
    governing MDS and the Instructional Television Fixed Service (ITFS)
    in order to encourage the deployment of broadband services by
    commercial and educational entities.  Amendment of Parts 1, 21, 73,
    74 and 101 of the Commission's Rules to Facilitate the Provision of
    Fixed and Mobile Broadband Access, Educational and Other Advanced
    Services in the 2150-2162 and 2500-2690 MHz Bands, *et al.*; WT
    Docket Nos. 03-66, *et al.*, *Report and Order and Further Notice of
    Proposed Rulemaking*, 19 FCC Rcd 14165 (2004). To better reflect the
    forward-looking vision for these services, the Commission renamed
    MDS the Broadband Radio Service and ITFS the Educational Broadband
    Service.  Once the new rules become effective, we will no longer
    refer to these services as MDS and ITFS.

[^4]: Petition at ii and 7.

[^5]: File No. BALMD-19990930ABA (Tri-County-Northern Plains
    application) at Exhibit 2 (filed Sep. 30, 1999).

[^6]: File No. BALMD-19990930AAZ (Northern Plains-Dakota Central
    application) at Exhibit 2 (filed Sep. 30, 1999).

[^7]: Tri-County-Northern Plains application.

[^8]: Northern Plains-Dakota Central application.

[^9]: File No. BALMD-19990930AAY (filed Sep. 30, 1999) (Dakota
    Central-CDTV application).

[^10]: Request for Special temporary Authority (filed Sep. 30, 1999)
    (STA Request).

[^11]: Branch Letter.

[^12]: Petition at 2.

[^13]: *Id*. at 8.

[^14]: *Id.* at 7.

[^15]: *Id.*

[^16]: *Id.* at 8.

[^17]: 47 U.S.C. § 309(d)(1).

[^18]: Petition at 8.*.*

[^19]: *Id.* at 9.

[^20]: *Id.*

[^21]: *Id*. at 11.

[^22]: *Id.*

[^23]: *Id.*

[^24]: *Id.*

[^25]: *Id.* at 12.

[^26]: *Id.*

[^27]: *Id.*

[^28]: 47 U.S.C. § 310(d).

[^29]: 47 U.S.C. § 309(c)(2)(B).

[^30]: 47 C.F.R. § 73.3540(f). Although Section 73.3540(f) of the
    Commission's Rules only strictly applies to broadcast services, the
    Commission has used the standards contained in that rule to
    determine with respect to other services whether a transfer of
    control is *pro forma* or substantial. *See* Federal Communications
    Bar Association's Petition for Forbearance from Section 310(d) of
    the Communications Act Regarding Non-Substantial Assignments of
    Wireless Licenses and Transfers of Control Involving
    Telecommunications Carriers, *Memorandum Opinion and Order*, 13 FCC
    Rcd 6293, 6298-99 ¶ 8 (1998).

[^31]: Section 73.3540(f) permits licensees to file a short-form
    application in the following situations:

    > \(1\) Assignment from an individual or individuals (including
    > partnerships) to a corporation owned and controlled by such
    > individuals or partnerships without any substantial change in
    > their relative interests;
    >
    > \(2\) Assignment from a corporation to its individual stockholders
    > without effecting any substantial change in the disposition of
    > their interests;
    >
    > \(3\) Assignment or transfer by which certain stockholders retire
    > and the interest transferred is not a controlling one;
    >
    > \(4\) Corporate reorganization which involves no substantial
    > change in the beneficial ownership of the corporation;
    >
    > \(5\) Assignment or transfer from a corporation to a wholly owned
    > subsidiary thereof or vice versa, or where there is an assignment
    > from a corporation to a corporation owned or controlled by the
    > assignor stockholders without substantial change in their
    > interests; or
    >
    > \(6\) Assignment of less than a controlling interest in a
    > partnership.

[^32]: The Committee for Full Value of Storer Communications, Inc. for
    Consent to Transfer Control, *Memorandum Opinion and Order*, 101 FCC
    2d 434 at ¶ 31 (1985).

[^33]: Barnes Enterprises, Inc. *Memorandum Opinion and Order*, 55 FCC
    2d 721, 725 n.4 (1975) (transfer of control from one fifty percent
    stockholder to another fifty percent stockholder is *pro forma*).

[^34]: Transfers of Control of Certain Licensed Non-Stock Entities, MM
    Docket No. 89-77, *Notice of Inquiry*, 4 FCC Rcd 3403 at ¶ 17
    (1989).

[^35]: *Id.* at ¶ ¶ 17-18.

[^36]: *See* Barnes Enterprises, Inc., *supra*.

[^37]: *See* 47 C.F.R. § 73.3540(f)(5).