Industry Asks FCC to Reform Foreign Ownership Rules

The FCC should move quickly to streamline foreign ownership rules, said industry reply comments to an August rulemaking notice seeking feedback on the agency’s foreign ownership practices for common carrier and aeronautical radio licensees (CD Aug 10 p11). In the initial comment round, the Satellite Industry Association asked for changes, while the Justice and Homeland Security departments jointly expressed concerns (CD Dec 6 p14).

"The current foreign ownership rules prohibit economically efficient transactions, do not provide adequate transparency and predictability with respect to the Commission’s filing requirements and review process, and are unnecessarily costly and cumbersome for carriers to administer,” USTelecom said (http://xrl.us/bmnx2f). It said the FCC’s “complex rules necessitate redundant and voluminous filings that must contain information that is often difficult to obtain and of little demonstrated value.”

USTelecom also called for a simplification of the rules for demonstrating ownership during the foreign ownership approval process. “Rather than maintaining the torturous process of identifying each ultimate shareholder, the Commission should simplify its process by, for example, permitting the identification of investing mutual funds, or the place of business of a general partner.” The agency should also drop a requirement for a new regulatory ruling each time a company seeks a license for a different service that wasn’t previously authorized, the group said. “Retaining service specific rulings will invalidate efficiencies the Commission seeks to attain through its Foreign Ownership NPRM."

Reform efforts “are consistent with the United States’ longstanding adherence to open investment principles, existing U.S. trade and investment obligations, and ongoing efforts by the Obama Administration to reverse the declining U.S. share of global crossborder investment stock,” said the Organization for International Investment (OFII). Billions of dollars are at stake, the group said (http://xrl.us/bmnx86). “Companies looking to expand abroad, no matter where they are domiciled, have an unparalleled variety of potential investment destinations from which to choose,” OFII said. “While other nations have responded to this shifting economic landscape with aggressive trade and investment initiatives, the United States has lost ground in the global race for cross-border investment."

"The vast majority of commenters agree that the current review and declaratory judgment process is unduly burdensome for applicants and in need of major streamlining and reform,” Verizon said (http://xrl.us/bmnx7x). “Most commenters wholly support the Commission’s proposal to issue Section 310(b)(4) rulings to a licensee’s parent company, and several agree that the ruling should be issued to the highest-tiered, controlling U.S. parent. There is also broad support for the proposals to permit the insertion of new, foreign entities into a licensee’s vertical ownership chain without prior approval where ultimate ownership is unchanged and to eliminate geographic-specific and service-specific Section 310(b)(4) rulings."

"The initial comments in this proceeding reflect near-universal agreement that the Commission should substantially reform its current foreign ownership review process, which almost all parties find unnecessarily complex, costly, unpredictable, and time-consuming,” said Vodafone (http://xrl.us/bmnx8m). The U.K.-based company owns a minority stake in Verizon Wireless.