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 Federal  Communications  Commission  DA  06-  860 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  matter  of 
 Petition  of  TelCove,  Inc.  for  a  Declaratory  Ruling  Pursuant  to  section  310(  b)(  4)  of  the 
 Communications  Act  of  1934,  as  amended 

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 ISP-  PDR-  20041115-  00013 

 Order  and  Declaratory  Ruling 
 Adopted:  April  14,  2006  Released:  April  14,  2006 
 By  the  Chief,  International  Bureau: 
 I.  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 

 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. 
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 II.  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  FWLs  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 

 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.  TelCoves  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  TelCoves  request  for  nunc  pro  tunc  treatment  in  paragraph  30  of  this  order. 
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 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  TelCoves  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  Commissions  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  TelCoves  Petition,  provided  that  the  Commission  conditions  its  grant  on  TelCoves  compliance  with  the  terms  of  the  June  15,  2005 
 Agreement  between  and  among  DHS,  DOJ,  FBI,  and  TelCove.  21 
 III.  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  Commissions  foreign  ownership  policies 

 adopted  in  the  Foreign  Participation  Order.  22  As  part  of  that  analysis,  we  consider  any  national  security, 

 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). 
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 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 
 licensees  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  licensees  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  applicants  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 

 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  licensees  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  entitys  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  entitys  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  (continued....) 
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 11.  In  light  of  the  policies  adopted  in  the  Foreign  Participation  Order,  we  begin  our  evaluation  of  TelCove  FWLs  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  investors  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 

 (...  continued  from  previous  page)  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  (Intl  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  (Intl  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. 
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 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 
 TelCoves  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  Commissions  precedent,  we  accord  the  appropriate  level  of  deference  to  the  Executive  Branchs 
 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  Commissions 
 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. 
 A.  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  TelCoves 
 board  of  directors.  40  TelCove,  however,  did  not  obtain  home  market  information  from  certain  minority 

 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  (Intl  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  FWLs  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. 
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 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  TelCoves  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  Unitys  financial  holdings, 

 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  TelCoves  board  of  directors.  September  2  Letter  at  2;  December  20  Letter  at  Revised  Appendix  A. 

 45  Each  of  Towers  50%  shareholders  is  a  member  of  TelCoves  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. 
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 tangible  property,  sales  and  revenues  and  Unitys  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  funds  investors  are  U.  S.  entities,  and  BHPs  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  Commissions  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 
 investors  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 
 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%). 
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 (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.  Unitys  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  CSFBs  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 

 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  TelCoves  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. 
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 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  CSFBs  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  Sachss  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  Goldmans  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  TelCoves  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.  - 
 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. 
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 controlled,  72  we  find  that  3.03  percent  of  Goldman  Sachs  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  TelCoves  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  TelCoves  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  TelCoves  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  Petitioners  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  TelCoves  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  Commissions  foreign  ownership  policies 
 adopted  in  the  Foreign  Participation  Order.  77  We  also  find  that  9.24  percent  of  TelCoves  investors  are  unidentified.  Accordingly,  the  Commission  treats  those  interests  as  investments  from  non-  WTO  Member 
 countries. 

 72  Petition  at  4,  n.  7. 
 73  LC  Capital  did  not  respond  to  TelCoves  questionnaire.  LC  Capitals  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  TelCoves  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  Associates  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. 
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 B.  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  TelCoves  Petition,  provided  that  the  Commission  conditions  its  grant  on  TelCoves  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. 

 IV.  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  TelCoves  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  TelCoves  request  for  nunc  pro  tunc  grant  of  its  petition  for  declaratory  ruling. 
 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). 
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 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  TelCoves  foreign  investors  acquired  their  shares  as  a  result  of  TelCoves  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  TelCoves  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  FWLs 
 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  FWLs  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. 
 V.  CONCLUSION 
 31.  Based  on  the  foregoing  findings  and  pursuant  to  section  310(  b)(  4)  of  the  Act  and  the  Commissions  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. 

 VI.  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  TelCoves  Petition  is  conditioned  upon  compliance  with  the  terms  of  the  June  15,  2005  Agreement  between  and  among  DHS,  DOJ,  FBI,  and  TelCove,  which  is 

 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). 
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 attached  to  this  Order  and  Declaratory  Ruling  as  Appendix  C.  86 
 34.  IT  IS  FURTHER  ORDERED  that,  pursuant  to  section  1.65  of  the  Commissions  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  Commissions  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  Commissions  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 

 86  September  15  Letter  at  Attachment  A  (Joint  Petition  to  Adopt  Conditions  to  Authorizations  and  Licenses 
 Executed  by  DHS,  DOJ,  FBI  and  TelCove). 
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 Appendix  A 
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 Appendix  B 
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 Appendix  C 
 Agreement  Between  DHS,  DOJ,  FBI,  and  TelCove  (June  15,  2005) 
17