Public Mobile Radio Services, Personal Communications Services, Wireless Communications Services, Private Land Mobile Radio Services, and Fixed Microwave Services

Federal RegisterMar 3, 1998

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR 22, 24, 27, 90, and 101

[FCC 98-18]

Public Mobile Radio Services, Personal Communications Services,

Wireless Communications Services, Private Land Mobile Radio Services,

and Fixed Microwave Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Memorandum Opinion and Order, in response to a

petition for forbearance, the Commission forbears from its existing

procedures for transfers of control and assignment of licenses for non-

substantial or ``pro forma'' transactions for certain wireless

telecommunications licensees and adopts streamlined procedures in order

to reduce such carriers' regulatory burdens.

EFFECTIVE DATE: April 2, 1998.

FOR FURTHER INFORMATION CONTACT: David Furth at (202) 418-0620 or

Rhonda Lien at (202) 418-7240 (Wireless Telecommunications Bureau/

Commercial Wireless Division).

SUPPLEMENTARY INFORMATION: This is a summary of the Memorandum Opinion

and Order, adopted and released February 4, 1998. The complete text of

the Memorandum Opinion and Order is available for inspection and

copying during normal business hours in the FCC Reference Center (Room

239), 1919 M Street, N.W., Washington D.C. and also may be purchased

from the Commission's copy contractor, International Transcription

Services, (202) 857-3800, 1231 20th St. N.W., Washington, D.C. 20037.

Synopsis of the Report and Order

I. Introduction

1. On February 4, 1997, the Wireless Telecommunications Practice

Committee of the Federal Communications Bar Association (FCBA) filed a

Petition for Forbearance from the application of the prior notification

and approval requirements of section 310(d) of the Communications Act

of 1934, as amended (the Act) to telecommunications carriers licensed

by the Wireless Telecommunications Bureau of the Federal Communications

Commission (Commission) for pro forma assignments of licenses and

transfers of control. See 47 U.S.C. 310. On May 22, 1997, the Broadband

Personal Communications Services Alliance of the Personal

Communications Industry Association (PCIA) filed a separate petition

for forbearance, which reiterates FCBA's request for forbearance from

section 310(d) and requests forbearance from other regulations as well.

For the reasons discussed below, the Commission grants the FCBA

Petition and that portion of the PCIA Petition relating to forbearance

from section 310(d), subject to several exceptions noted below. This

Memorandum Opinion and Order (Order) only addresses PCIA's request for

forbearance from enforcement of section 310(d). PCIA's requests for

forbearance of other regulations contained in PCIA's petition will be

addressed in a separate order.

II. Background, Petition, and Comments

2. Section 310(d) of the Act forbids any assignment of a radio

license or transfer of control of a radio licensee corporation without

obtaining prior Commission consent, and states in relevant part: ``No

construction permit or station license * * * shall be transferred,

assigned, or disposed of in any manner, voluntarily or involuntarily,

directly or indirectly, or by transfer of control of any corporation

holding such permit or license, to any person except upon application

to the Commission and upon finding by the Commission that the public

interest, convenience, and necessity will be served thereby.'' 47

U.S.C. 310(d). Currently, transfers or assignments that do not

``involve a substantial change in ownership or control,'' commonly

referred to as pro forma transactions, must receive prior Commission

approval but are exempt from the 30-day public notice requirement that

would otherwise apply. Applicants identify whether their applications

for transfer and assignment are pro forma in nature, and the Wireless

Telecommunications Bureau (Bureau) processes pro forma applications

through an initial determination that the application is in fact pro

forma in nature, and a review of the application for accuracy and

completeness. When these criteria are met, there is no need for

additional public interest review of the application, because the

person or entity retaining ultimate control of the license was subject

to prior public interest review and approval by the Commission when it

was originally awarded the license, whether by initial licensing or by

a previous transfer or assignment. Therefore, where no substantial

change of control will result from the transfer or assignment, grant of

the application is presumptively in the public interest, and the

application is placed on public notice as granted.

[[Page 10339]]

3. In its Petition, FCBA states that forbearance from the section

310(d) requirements of prior Commission application and approval of pro

forma transfers and assignments is warranted under section 10 of the

Act. Section 10 requires the Commission to forbear from applying any

regulation or provision of the Act to a telecommunications carrier if

it determines that: (1) Enforcement is not necessary to ensure that

charges, practices, classifications and services are just and

reasonable, and not unjustly or unreasonably discriminatory; (2)

enforcement is not necessary for the protection of consumers; and (3)

forbearance is consistent with the public interest. See

Telecommunications Act of 1996, Public Law 104-104, 110 Stat. 56,

Section 10, codified at 47 U.S.C. 160(a). In making the determination

that forbearance is consistent with the public interest, the Commission

shall consider whether forbearance from enforcing the provision or

regulation will promote competitive market conditions, including the

extent to which such forbearance will enhance competition among

providers of telecommunications services. 47 U.S.C. 160(b).

4. FCBA asserts that the Commission should forbear from enforcing

its section 310(d) requirements with respect to pro forma transfers and

assignments involving telecommunications carriers licensed by the

Bureau because all three prongs of the section 10 forbearance standard

are met. FCBA's Petition was filed on behalf of and in cooperation with

numerous carriers holding radio licenses and the associations

representing their interests. All of the commenters to the FCBA

Petition support its request for forbearance and no oppositions were

filed. PCIA's Petition was filed by the Broadband Personal

Communications Services Alliance of the PCIA, representing numerous

broadband personal communications services (PCS) licensees. All

commenters to the section 310(d) portion of the PCIA Petition support

forbearance from section 310(d). The Commission adopts streamlined

procedures in response to these petitions only related to non-

substantial transfer and assignments involving telecommunications

carriers licensed by the Bureau. However, the Commission will continue

to apply existing procedures to applications for pro forma transactions

involving telecommunications carriers licensed by the Bureau that are

subject to the Commission's unjust enrichment provisions, and proposed

transactions involving changes to corporate management through the use

of proxy mechanisms.

III. Discussion

A. Scope of Proposed Forbearance--Pro Forma v. Non-Pro Forma

Transactions

5. Background. In its Petition, the FCBA uses the term ``non-

substantial'' or ``pro forma'' to refer to assignments and transfers of

control that do not involve a substantial change in the ultimate de

facto or de jure control of a licensee.

6. Discussion. The streamlined procedures that the Commission

adopts herein apply only to pro forma transfers and assignments, that

is, transfers and assignments that do not cause a ``substantial change

in ownership or control'' of the license as provided in section

309(c)(2)(B) of the Act. 47 U.S.C. 309(c)(2)(B). Where a proposed

transfer or assignment would result in a substantial change of de jure

or de facto control, the transaction is not treated as pro forma and is

outside the scope of the forbearance provided for in this Order. De

jure control is control as a matter of law. It is present where a

shareholder or shareholders voting together own or control fifty

percent or more of the licensee's voting shares. De jure control of a

partnership is similarly based on holding a fifty percent or greater

voting interest. De facto control is defined as actual control of the

licensee, and primarily applies where the party or entity in question

has the power to control or dominate management of the licensee.

Because it inherently involves issues of fact, de facto control is

determined on a case-by-case basis, and may vary with the circumstances

presented by each licensee. While the size of a person's or entity's

ownership interest is relevant, it is not necessarily a determinative

factor in establishing de facto control. Other factors that may be

relevant to a finding of de facto control include: (1) Power to

constitute or appoint more than fifty percent of the board of directors

or partnership management committee; (2) authority to appoint, promote,

demote and fire senior executives that control the day-to-day

activities of the licensee; (3) ability to play an integral role in

major management decisions of the licensee; (4) authority to pay

financial obligations, including expenses arising out of operating; (4)

ability to receive monies and profits from the facility's operations;

and (5) unfettered use of all facilities and equipment. See

Implementation of Section 309(j) of the Communications Act--Competitive

Bidding, Fifth Memorandum Opinion and Order, PP Docket No. 93-253, 59

FR 63210 (December 7, 1994). Under some circumstances, a change in

corporate management resulting from a proxy contest may affect de facto

control.

7. In general, a substantial change in ownership or control occurs

when there is a transfer of fifty percent or more a licensee's stock or

a transfer that results in a stockholder, whose qualifications have not

been passed on by the Commission, acquiring at least a fifty percent

voting interest in a licensee. However, because there are other factors

that also may be found in a particular case to substantially affect de

facto control, there is no express rule or ``bright-line'' test that

distinguishes those transfers and assignments of telecommunications

licenses that involve substantial changes in ownership or control and

those that do not. In the case of common carrier transfers and

assignments, the Commission has applied the same standard that is set

forth in Sec. 73.3540(f) of its broadcast rules, which identifies

common categories of transactions that are considered non-substantial

and therefore are eligible for pro forma treatment: (1) Assignment from

an individual or individuals (including partnerships) to a corporation

owned or controlled by such individuals or partnerships without any

substantial change in their relative interests; (2) assignment from a

corporation to its 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. See 47

CFR 73.3540(f).

8. For purposes of this Order, the Commission limits its

consideration of forbearance to the above categories of pro forma

transactions only. The Commission is not changing its procedures with

respect to Commission review and approval of non-pro forma

transactions. The Commission also notes that applicants will continue

to be responsible in each instance, as they are currently, for

determining whether a proposed transaction is pro forma or non-pro

forma, and for complying with the relevant rules and procedures that

[[Page 10340]]

govern Commission approval of such transactions. This Order also does

not limit the Commission's authority to determine that a transaction

presented to us as pro forma should in fact be classified as non-pro

forma, or vice versa. The Commission considers telecommunications

carriers licensed by the Bureau and subject to this Order to include

telecommunications carriers licensed under part 21 (domestic public

fixed radio services), part 22 (public mobile radio services), part 24

(personal communications services), part 27 (wireless communications

services), part 90 (private land mobile radio services) and part 101

(common carrier fixed microwave services) of the Commission's rules.

However, licensees governed by these rule parts who do not meet the

definition of ``telecommunications carrier'' (e.g., public safety and

private microwave licensees) are beyond the scope of the Commission's

Sec. 10 forbearance authority, and therefore are not subject to the

revised procedures established by this Order. The Commission also

reiterates that its treatment of pro forma transactions herein does not

apply in other contexts, such as transfers of broadcast permits or

licenses, where different statutory and policy considerations apply.

B. Analysis of Section 10 Forbearance Standard

9. Section 10 provides that the Commission must forbear from

applying any regulation or provision of the Act to a telecommunications

carrier if it determines that:

(1) Enforcement of such regulation or provision is not necessary

to ensure that the charges, practices, classifications, or

regulations by, for, or in connection with that telecommunications

carrier or telecommunications service are just and reasonable and

are not unjustly or unreasonably discriminatory;

(2) Enforcement of such regulation or provision is not necessary

for the protection of consumers; and

(3) Forbearance from applying such provision or regulation is

consistent with the public interest. 47 U.S.C. 160(a).

i. Just and Reasonable Practices

10. Background. The first prong of the section 10 standard for

forbearance is that enforcement of the regulation is not necessary to

ensure that charges, practices, classifications, and services are just

and reasonable, and are not unjustly or unreasonably discriminatory. 47

U.S.C. 160(a)(1). FCBA asserts that applications for pro forma

transfers and assignments do not contain information concerning a

carrier's charges, practices, classifications, or services.

Additionally, FCBA notes that the Commission has expressly declined to

address such issues in connection with its review of major transfers

and assignments, holding that such matters should be addressed

separately.

11. Discussion. The Commission concludes that prior approval of

applications for consent to pro forma transfers and assignments is not

necessary to ensure that licensees' charges, practices,

classifications, and services are just and reasonable, and not unjustly

or unreasonably discriminatory. Because pro forma transactions do not

affect actual control of the licensee, they are unlikely to have any

impact on the licensees' charges, practices, classifications, or

services. Thus, it has not been necessary to consider these issues in

the Commission's review of pro forma transactions, and the Commission

has never done so. Given the existence of other mechanisms to deal with

these issues, and the fact that the Commission has had no need to

consider them in the context of pro forma transactions, it concludes

that the first prong of the forbearance standard is met.

ii. Consumer Protection

12. Background. The second prong of the Sec. 10 forbearance

standard requires that enforcement not be necessary for the protection

of consumers. 47 U.S.C. 160(a)(2). FCBA argues that the vast majority

of pro forma assignments and transfers do not affect consumers, but

merely allow licensees to modify their corporate organization or

ownership structure in a non-substantial way from the structure

previously approved by the Commission. FCBA notes that for substantial

transactions, the Commission often engages in a competitive analysis to

determine the effects of the proposed transaction on consumers and on

competition. FCBA asserts, however, that the Commission does not

conduct such an analysis for pro forma transactions because, by

definition, such transactions cannot significantly change ownership or

control, and thus cannot have a significant impact on consumers.

13. Discussion. The Commission concludes that requiring prior

review of pro forma transfers and assignments is not necessary for the

protection of consumers. First, as several commenters note, non-

substantial transactions are exempt from the public notice requirement

of section 309(b), indicating that Congress perceived a decreased need

for public scrutiny of such transactions prior to action by the

Commission. The Commission also finds, based on its experience

reviewing pro forma applications, that pro forma transfers and

assignments rarely, if ever, raise consumer issues, because the

ultimate control of the licensee--which has already been subject to

Commission review and approval--does not change as a result of the

transaction. The Commission concludes that forbearance will not deprive

consumers of protection because the Commission will continue to review

any transfer or assignment that would result in a substantial change in

a licensee's ownership or control. Moreover, in the unlikely event that

a pro forma transfer or assignment raises such issues, the streamlined

procedures the Commission adopts herein will provide an opportunity for

Commission reconsideration if necessary.

iii. Public Interest

14. Background. The third prong of the section 10 forbearance

standard requires that forbearance be consistent with the public

interest. FCBA makes four arguments to support its assertion that this

prong is met. First, FCBA asserts that forbearance would promote the

public interest by allowing carriers to make non-substantial changes to

their ownership structure or internal organization without delay to

respond to competition. Second, FCBA argues that advance approval for

pro forma assignments and transfers is not needed to safeguard the

public interest, because no meaningful public interest determination is

made when such applications are reviewed. Third, FCBA argues that

eliminating the application requirements for pro forma transactions

will allow a more efficient use of scarce public and private resources.

Finally, FCBA asserts that forbearance will promote uniformity among

services because different procedures exist for processing pro forma

applications in different wireless services. Commenters uniformly

support FCBA's arguments, and offer numerous examples of the increased

public benefit that would result from forbearance.

15. Discussion. The Commission finds that, provided certain

procedures discussed below are in place, forbearance from section

310(d) requirements for pro forma transactions is consistent with the

public interest. Forbearance will promote competition by allowing

carriers to change their ownership structure or internal organization

without regulatory delay where such delay serves no useful function.

Such efficiency will increase wireless carriers' ability to compete in

today's marketplace, a goal frequently

[[Page 10341]]

advocated by Congress and the Commission.

16. For example, FCBA notes that licenses often must be transferred

or assigned internally as a result of merging local subsidiaries into

new business units, such as regional or national corporations in order

to respond to competitors' business strategies. Alternatively, after

two or more carriers merge during the course of a substantial transfer

or assignment, the merged company may need to reorganize internally and

make non-substantial changes in order to bring different services under

common management. In both of these examples, carriers currently must

file applications for pro forma assignments or transfers well in

advance of the desired transaction and wait for Commission processing

and grant of such applications, despite the fact that the changes would

not result in a substantial change in ownership or control. Such

regulatory delay hampers carriers' ability to respond efficiently to

competitive conditions.

17. The Commission also concludes that advance approval of pro

forma assignments and transfers is not needed because such

transactions, by their nature, do not change the underlying ownership

or control of licensees that the Commission has already reviewed and

approved. As noted above, pro forma transactions are considered

presumptively in the public interest because no substantial change of

control is involved. Therefore, the only purpose of reviewing pro forma

applications in advance is to determine that they are, in fact, pro

forma in nature. While this is a legitimate objective, the Commission

believes the same objective can be accomplished just as effectively and

far more efficiently through a notification procedure. The vast

majority of pro forma applications are for routine transactions where

the pro forma nature of the transaction is self-evident. The Commission

uses the information in these applications merely to update its

ownership and control records, which, as noted below, can be

accomplished just as easily by requiring written proof of a transaction

after it has occurred or by requiring licensees to file updated forms

after the transaction is complete.

18. The Commission further concludes that requiring prior review of

hundreds of routine applications a year is not needed to protect

against the rare instance in which an applicant may file a pro forma

application that should be treated as non-pro forma. Under the

forbearance procedures adopted herein, interested parties will have an

opportunity to challenge and seek reconsideration of any pro forma

transaction granted by notification, and the Commission will retain the

authority to rescind its approval of any purported pro forma

transaction that it determines involves a substantial change of

control. The Commission will also continue to require prior review of

all substantial transfers and assignments and will evaluate the public

interest implications of such proposed transactions as required by the

Act. The Commission believes that elimination of the pre-transaction

application and approval requirement for pro forma transactions will

allow a more efficient use of scarce public and private resources.

Additionally, forbearance will allow Bureau personnel to focus on non-

pro forma applications for transfers and assignments that involve

actual changes of control, as well as the initial review of new

licensees.

19. Forbearance will also eliminate a significant and unnecessary

expenditure of carrier and Commission resources. As FCBA and numerous

commenters note, carriers must devote significant time and resources to

prepare and file pro forma applications, track their status, and ensure

that the transactions are consummated in the time allotted. Forbearance

will free up these resources so that carriers can concentrate on

providing competitive telecommunications services. FCBA also notes that

existing procedures for pro forma transactions are a strain on

Commission resources, because staff must process filing fees, assign

file numbers, review applications for completeness, and prepare public

notices of grants. Forbearance from these activities will allow the

Commission to deploy its resources more efficiently.

20. Finally, forbearance will promote uniformity among services, as

all wireless telecommunications carriers will be subject to the

forbearance adopted in this Order. Licensees that hold authorizations

in different wireless telecommunications services, such as PCS, paging,

and cellular, will be able to make pro forma changes efficiently

without filing multiple applications for each license and service.

Thus, forbearance will facilitate pro forma transactions that include

multiple services or licenses, such as an internal reorganization of a

company that holds numerous licenses.

iv. Licensees Affected

21. Background. FCBA requests that the Commission adopt forbearance

of section 310(d) requirements for all non-substantial transactions

involving telecommunications carriers licensed by the Bureau. A

telecommunications carrier, as defined by the Act, is ``any provider of

telecommunications services,'' and ``telecommunications service'' is in

turn defined as the offering of telecommunications for a fee directly

to the public, or to such classes of users as to be effectively

available to the public. See 47 U.S.C. 153(44), (46). In its petition,

PCIA initially proposed that forbearance be applied only to broadband

PCS carriers, but in its reply comments, PCIA agrees with commenters

who contend that forbearance should be applied equally to all

commercial mobile radio services (CMRS) licensees. Commenters who

address this issue generally urge the Commission to apply forbearance

broadly, either to all CMRS licensees or to all wireless

telecommunications carriers licensed by the Bureau.

22. Discussion. The Commission concludes that the record

establishes sufficient justification to forbear from enforcing section

310(d) requirements as they apply to all wireless telecommunications

carriers. The Commission finds, based on the record, that forbearance

will enhance competition among telecommunications carriers and serve

the public interest. As noted above, many commenters support broad

forbearance for CMRS providers, based on Congress' mandate when it

enacted the 1993 Omnibus Reconciliation Act that similar mobile

services receive similar regulatory treatment. The Commission also

believes that the same forbearance should be extended to wireless

telecommunications carriers who are not CMRS providers, e.g., common

carrier microwave licensees. While fewer commenters expressly addressed

this issue, the Commission notes that no commenter expressly opposed

FCBA's proposal to extend forbearance to all wireless

telecommunications carriers, and the Commission sees no reason to

distinguish among different categories of telecommunications carriers

in this regard. Therefore, subject to the exceptions discussed below,

the Commission will apply forbearance from section 310(d) requirements

for pro forma applications uniformly to telecommunications carriers

licensed under part 21 (domestic public fixed radio services), part 22

(public mobile radio services), part 24 (personal communications

services), part 27 (wireless communications services), part 90 (private

land mobile radio services), and part 101 (fixed microwave services) of

the Commission's rules. However, as discussed above, the forbearance

provisions of this Order do

[[Page 10342]]

not apply to licensees governed by these rule parts who do not meet the

statutory definition of ``telecommunications carrier.'' Under section

10, the Commission's forbearance authority only extends to

telecommunications carriers and telecommunications services. It does

not apply to services such as public safety and private point-to-point

microwave, which do not involve the provision of ``telecommunications

service,'' i.e., the offering of telecommunications for a fee to the

public, or to such classes of users as to be effectively available to

the public. 47 U.S.C. 153(44), (46). Thus, licensees in these non-

telecommunications services will continue to be subject to existing

procedures with respect to pro forma applications for assignment and

transfer. The Commission recognizes that in some instances, this may

cause inconvenience to licensees who hold both telecommunications and

non-telecommunications licenses, because they will be unable to use the

streamlined notification procedures adopted in this Order with respect

to their non-telecommunications licenses. However, because section 10

does not extend forbearance to non-telecommunications services, the

Commission is constrained from applying these procedures more broadly.

Nevertheless, in order to minimize any disparity in the Commission's

treatment of non-telecommunications as compared to telecommunications

licenses, the Commission intends to consider adoption of expedited

procedures for pro forma transfers and assignments of non-

telecommunications licenses in an upcoming rulemaking implementing the

Universal Licensing System for wireless services. The Commission is

developing the Universal Licensing System to integrate its licensing

databases and provide for electronic filing of wireless applications,

including transfer and assignment requests.

v. Exceptions to Forbearance

23. While the Commission will generally apply forbearance to pro

forma transactions involving telecommunications carriers, it concludes

that existing procedures should continue to apply to applications for

pro forma transactions involving licensees subject to the Commission's

unjust enrichment provisions, i.e., licensees that hold licenses on

spectrum blocks restricted to designated entities, or licensees that

utilize installment financing or have received bidding credits during

the competitive bidding process. See 47 CFR 1.2111. Because pro forma

transactions involving these licenses may affect financial obligations

to the Commission, transfer and assignment applications by these

licensees are processed differently than other pro forma applications,

and require additional review, paperwork, and coordination, as well as

additional processing time. Each transaction involving a license

subject to unjust enrichment provisions must be carefully scrutinized

to ensure that the proposed transaction, even if pro forma in nature,

would not violate any of the Commission's unjust enrichment rules. The

Commission must also process additional paperwork related to any

installment financing or bidding credits, and coordinate the approval

of financial documentation with the applicant and the U.S. Department

of Treasury.

24. The Commission does not find that licensees subject to its

unjust enrichment provisions meet the section 10 forbearance standard.

Because these licensees have received financial benefits and have

continuing financial obligations to the Commission and, in turn, to the

public, even a pro forma transfer from one affiliated entity to another

may have implications with respect to the transferee's eligibility for

the same financial benefits, the ability of the transferee to meet its

financial obligations, and the ability of the Commission to take

recourse in the event of default or unjust enrichment. The Commission

believes that continued application of its section 310(d) procedures in

such circumstances is in the public interest, because it enables the

Commission to review the financial implications of the transfer before

approving it. Therefore, the Commission will continue to enforce its

section 310(d) prior notice and approval requirements as applied to

those licenses subject to its unjust enrichment provisions.

25. The Commission also concludes that existing pro forma

application procedures should be retained in connection with transfers

arising out of shareholder proxy contests. The Commission has stated

that changes in the composition of a licensee's board of directors

resulting from a proxy contest must be carefully analyzed in terms of

potential outcome in order to determine the appropriate transfer

procedures. Although the Commission recognized that in many instances,

such changes do not constitute a transfer of control that would require

prior Commission approval, it concluded that under limited

circumstances, a change in corporate management arising from a proxy

contest could result in a substantial transfer of control to persons or

persons or entities who had not been subject to prior Commission

review. Id. Therefore, the Commission concluded that transfer

applications arising out of proxy contests could be filed under

existing pro forma transfer and assignment procedures, but that

applicants would also be required to supplement their applications with

information on citizenship, other attributable interests, and other

relevant information. Id.

26. Because each transaction involving a proxy mechanism requires

careful analysis of the potential outcome to ensure that there is no

substantial transfer of control, the Commission does not believe that

forbearance from its prior notification and application procedures in

this context meets the public interest prong of the section 10

forbearance standard. The Commission notes that neither FCBA nor any of

the commenters have specifically addressed whether forbearance should

be extended to proxy-related transfers. To ensure that a proxy contest

does not result in control passing to persons or persons or entities

who have not been subject to prior Commission review, the Commission

continues to believe that it should review such potential changes in

corporate management prospectively under existing pro forma procedures.

Therefore, the Commission declines to extend forbearance to pro forma

transactions involving use of proxy mechanisms at this time.

C. Procedures Adopted for Pro Forma Transfers and Assignments

27. Background. Under the Commission's current rules, when a

telecommunications carrier files an application for consent to transfer

control of its license or assign its license, it must file either an

FCC Form 490, ``Application for Assignment of Authorization or Consent

to Transfer of Control of Licensee,'' or, if it is a common carrier

microwave licensee, a Form 702, ``Application for Consent to Assignment

of Radio Station Construction Authorization or License for Stations in

Services Other than Broadcast,'' or Form 704, ``Application for Consent

to Transfer of Control.'' These forms contain information on the

assignee or transferee, new licensee information, basic licensee

qualifications, and certifications by the assignor/assignee or

transferor/transferee. The forms must be accompanied by a description

of the transaction and a public interest showing. Additionally, if not

a common carrier microwave licensee, the assignee or transferee must

file a report qualifying it as a common carrier radio

[[Page 10343]]

licensee by filing an FCC Form 430 unless a current report is already

on file with the Commission. See 47 CFR 22.137(a), 24.839(b)(3),

27.324, 90.153(a).

28. The Bureau makes every attempt to process pro forma

transactions within 30 days, but cannot guarantee grant by date

certain, especially at the end of the calendar year. Additionally,

those non-substantial transactions subject to the Commission's unjust

enrichment provisions, 47 CFR 1.2111, are processed no earlier than

ninety days from the filing date of the application, as they involve

additional paperwork and review and the coordination of the loan

documentation with the applicant and the United States Department of

Treasury. Once the transfer or assignment has been approved, the

Commission places the grant of the pro forma transaction on public

notice as approved, and sends the applicant a consent authorization,

FCC Form 726-C for CMRS licensees or FCC Form 732-C for common carrier

microwave licensees. Applicants other than common carrier microwave

applicants must respond in writing within sixty days of the Form 726-C

and certify that the approved transaction has been consummated. See 47

CFR 22.137(b), 27.324, 90.153(b). As a result of the Commission's

recent part 101 proceeding, which consolidated its point-to-point

microwave rules, common carrier microwave licensees are subject to

streamlined procedures for transfers and assignments, which vary

slightly from the procedures used by other telecommunications carriers.

While they must file an application prior to a proposed transfer or

assignment transaction, they do not need to file a post-consummation

letter or an FCC Form 430.

29. Discussion. The Commission agrees with commenters that its

recordkeeping needs would be best addressed by requiring written

notification of a pro forma transaction within a certain time period

after the transaction is completed. Such procedures will ensure that

the Commission's records are current, and a clear public record exists

of the changes that resulted from any pro forma transaction. Also, the

procedures adopted are slight modifications of existing rules which

should be familiar to every telecommunications carrier. The Commission

disagrees with those commenters who suggest that no written

notification of a pro forma transaction should be required, or that

such proof should only be required in annual filings. Such procedures

would allow more time to elapse after consummation than is currently

permitted, and would also allow the Commission's public records to

quickly become outdated.

30. The Commission therefore adopts several of the proposals

suggested by commenters as a condition of the adopted forbearance and

amends the transfer and assignment sections of its rules in parts 22,

24, 27, 90, and 101. Within 30 days after consummation of a pro forma

transaction, the licensee must submit written proof of such transaction

either in letter form or by filing the appropriate transfer or

assignment form currently in use, i.e., Form 490, 702, or 704, so that

the Commission can place its application on public notice as granted.

In order to obtain streamlined processing under these procedures,

licensees who use Form 490, 702, or 704, rather than a letter, to

notify us of the transaction should indicate on the form, as they

currently do, that the transaction is pro forma. This 30-day

notification requirement is a slight modification of the Commission's

current requirement that licensees notify it within 60 days of

consummation, and of the Commission's streamlined procedures for common

carrier microwave licensees. However, the Commission believes that,

despite this shortened notification period, licensees will benefit from

its streamlined procedures, as they will no longer have to seek pre-

transaction approval by the Commission prior to consummating a pro

forma transaction. Common carrier microwave licensees will no longer

have to seek pre-transaction approval, but will only have to provide

post-consummation information. This modification treats all

telecommunications carriers alike and allows them to take advantage of

the Commission's streamlined procedures. In addition, these

requirements could be subject to further modification as a result of

the Commission's upcoming development of the Universal Licensing System

(ULS), which will provide for electronic filing of wireless

telecommunications applications, including transfer and assignment

requests. The Commission also anticipates proposing certain rule

changes to implement ULS in an upcoming rulemaking. If adopted, these

proposals may slightly modify the procedures the Commission adopts in

this Order by requiring the use of a new post-consummation form for

electronic filing, and the Commission will take appropriate action upon

the final determination of these proposals.

31. Additionally, if a licensee chooses to notify the Commission of

a pro forma transaction in a letter form, the post-transaction

notification letter must contain the licensee's certification that the

subject transfer or assignment is non-substantial and that, together

with all previous non-substantial transactions, it does not involve a

change in the ultimate de facto or de jure control of the licensee. If

the transfer or assignment of more than one license is involved, a

single letter may be filed, so long as all licenses affected by the

transfer are identified by call sign in the letter.

32. In addition to requiring post-consummation notification, the

Commission concludes that licensees must concurrently provide updated

ownership information in order to ensure that the public has a record

of any changes that have occurred to their ownership structure.

Therefore, the Commission continues to require each assignee or

transferee to file an updated ownership report on FCC Form 430 when it

notifies the Commission of the consummated transaction, unless an

updated report is already on file with the Commission. See 47 CFR

22.137(a), 24.839(b)(3), 90.153(a). If such a report is on file, the

assignee or transferee must update this report to reflect any changes.

If the licensee's name has changed as a result of the transaction, it

must request reissuance of the license in the new name, as is currently

required. Additionally, a licensee that transfers or assigns its

license within three years of receiving the license through competitive

bidding remains subject to the reporting requirements of Sec. 1.2111(a)

of its rules. See 47 CFR 1.2111(a). Such licensee must file the

documentation required by this rule when it files its post-consummation

notification.

33. Upon receipt of the Form 490, 702, or 704 or letter

notification from the parties, the Commission will place the

transaction on public notice as granted. This will provide an

opportunity for public scrutiny of the transaction. Moreover, any

interested party who objects to the transaction may, within 30 days

from the date upon which public notice is given, file a petition

requesting reconsideration. See 47 U.S.C. 405; see also 47 CFR

1.106(b). The Commission believes this procedure will protect the

public interest by deterring any attempt to misuse its processes and by

providing the public with accurate information regarding Commission

licensees.

IV. Procedural Matters

34. Paperwork Reduction Act Analysis. This Memorandum Opinion and

Order contains an information collection that was submitted to the

Office of Management and Budget

[[Page 10344]]

(OMB) for emergency approval under the Paperwork Reduction Act.

V. Ordering Clauses

35. Accordingly, it is Ordered That Parts 22, 24, 90, and 101 of

the Commission's Rules are amended, effective April 2, 1998.

36. Additionally, it is Ordered That, pursuant to sections 4(i) and

10 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and

160, the Petition for Forbearance filed by the Federal Communications

Bar Association Wireless Telecommunications Practice Committee on

February 4, 1997 is Granted in Part and Denied in Part to the extent

discussed above.

37. Additionally, it is Ordered That, pursuant to sections 4(i) and

10 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and

160, the Petition for Forbearance filed by the Broadband Personal

Communications Services Alliance of the Personal Communications

Industry Association on May 22, 1997 is Granted in Part and Denied in

Part to the extent discussed above.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Parts 22, 24, 27, 90, and 101 of Title 47 of the Code of Federal

Regulations are amended to read as follows:

PART 22--PUBLIC MOBILE SERVICES

1. The authority citation for part 22 continues to read as follows:

Authority: 47 U.S.C. 154, 303, unless otherwise noted.

2. Section 22.137 is amended by adding paragraphs (a)(1) and (a)(2)

and revising the first sentence in paragraph (b) to read as follows:

Sec. 22.137 Assignment of authorization; transfer of control.

* * * * *

(a) * * *

(1) Forbearance from pro forma assignments and transfers of

control. Licensees that are telecommunications carriers as defined in

47 U.S.C. 153 are subject to streamlined procedures for pro forma,

i.e., non-substantial, transfers and assignments.

(2) A pro forma assignee or transferee is not required to seek

prior FCC approval for the transaction, but must notify the FCC no

later than 30 days after the event causing the assignment or transfer,

either by filing an FCC Form 490 or in letter form. If a letter is

submitted, it must contain a certification that the transfer or

assignment is non-substantial and, together with all previous non-

substantial transactions, does not involve a change in the licensee's

ultimate control. A single letter may be filed for a transfer or

assignment of control of more than one authorization if each

authorization affected is identified by call sign. Licensees must

concurrently update ownership information on their FCC Form 430, if

necessary.

(b) Notification of completion. Assignments and transfers of

control must be completed within 60 days of FCC approval, except those

licensees subject to the streamlined procedures of paragraph (a)(1). *

* *

* * * * *

PART 24--PERSONAL COMMUNICATIONS SERVICES

3. The authority citation for part 24 continues to read as follows:

Authority: 47 U.S.C. 154, 301, 302, 303, 309 and 332.

4. Section 24.439 is amended by adding paragraph (a)(3) to read as

follows:

Sec. 24.439 Transfer of control or assignment of station

authorization.

(a) * * *

(3) Forbearance from pro forma assignments and transfers of

control. PCS licensees that are telecommunications carriers as defined

in 47 U.S.C. 153 are subject to streamlined procedures for pro forma,

i.e., non-substantial, transfers and assignments. A pro forma assignee

or transferee is not required to seek prior FCC approval for the

transaction, but must notify the FCC no later than 30 days after the

event causing the assignment or transfer, either by filing an FCC Form

490 or in letter form. If a letter is submitted, it must contain a

certification that the transfer or assignment is non-substantial and,

together with all previous non-substantial transactions, does not

involve a change in the licensee's ultimate control. A single letter

may be filed for a transfer or assignment of control of more than one

authorization if each authorization affected is identified by call sign

in the letter. Licensees must concurrently update ownership information

on their FCC Form 430, if necessary.

* * * * *

5. Section 24.839 is amended by adding paragraphs (a)(1) and (a)(2)

to read as follows:

Sec. 24.839 Transfer of control or assignment of license.