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 Federal  Communications  Commission  DA  00-  642 
 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 
 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  SkyOnlines  shareholders,  collectively.  As  discussed  in  paragraph  2,  infra,  SkyOnline 


 currently  holds  an  international  214  authorization.  The  application  to  transfer  control  of  this  authorization  was 
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 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 


 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. 
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 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  entitys  home  market  is  a  member  of  the  WTO,  we  evaluate  whether  the  entitys  principal  place  of  business  is  in  a  WTO 
 member  country.  Here,  balancing  the  five  factors  of  the  Commissions  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:  NITs  officers  and  directors  are  French.  NIT  is  ultimately  controlled  by  two  French 
 individuals,  Roland  de  Kergolay  (de  Kergolay)  and  Thais  dAnnoux  (dAnnoux).  de  Kergolay  and  dAnnoux  control  NIT  through  two 
 Panamanian  corporations,  Gariston  Investments,  Inc.  (Gariston),  and  Melkan  Properties  S.  A  (Melkan).  12 


 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  FBIs  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). 
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 (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:  Telfins  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 


 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  dAnnoux. 
 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. 
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 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  Commissions  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  dAnnoux,  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 


 21  See  n.  12  and  n.  17,  supra. 
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