New FCC Proposed Rules Would Speed Deployment of Small Cell and Distributed Antenna Systems

By Jenny Paul, Marc Martin, and Marty Stern


As part of its efforts to spur the construction of new wireless infrastructure, the FCC recently released proposed rules and requested comment on ways to expedite the environmental review process for small cell, Distributed Antenna System, and other small-scale wireless systems.  Increasingly, such systems are used to increase wireless broadband coverage in areas that have been difficult to reach from traditional deployments.  Comments are due 60 days from date of publication in the Federal Register, which means the due date for comments will likely fall in early December.

 The small-scale wireless technologies targeted by the proposed rulemaking use a large number of smaller antennas placed at lower heights, usually on poles or rooftops, and supported by compact radio equipment.  The FCC rules that currently govern the environmental and historic preservation review of wireless deployments, including a 2004 National Programmatic Agreement on historic preservation review for new antenna structures under Section 106 of the National Historic Preservation Act of 1966, were adopted with an eye toward large-scale deployments on communications towers or other tall structures.  While FCC rules already exempt from most environmental review the collocation of antennas on existing antenna towers and buildings, the proposed rules would expand that exemption to include existing structures such as utility poles, water tanks, light poles, and road signs.

In addition, the NPRM proposes the adoption of a new rule to specifically exempt DAS, small cells, and other small-scale wireless facilities from most environmental review, including Section 106 review under the NPA.  The rule would be broader than the collocation proposal described above, because it would cover the construction of new support structures for these technologies, as well as collocation of the technologies on existing structures.  On this front, the FCC seeks input from commenters on how to define the scope of a blanket exclusion, while ensuring that technologies eligible for the exclusion have no more than de miminis effects on the environment and historic properties.

The NPRM also proposes the creation of a permanent exemption from the pre-construction environmental notification process for select temporary antenna towers.  The permanent exemption would track an interim waiver currently in effect for temporary towers that have certain characteristics — very short duration, height limits, minimal or no excavation, and no lighting — which minimize their potential to cause significant environmental effects.  According to the FCC, the exemption would streamline the offering of broadband and other wireless services during major events and unanticipated periods of localized high demand.

FCC Incentive Auction Band Plan Public Notice Triggers Industry Debate

By Nickolas Milonas, J. Bradford Currier, and Marc Martin

The Federal Communications Commission recently released a Public Notice requesting further comments related to its Broadcast Television Incentive Auction NPRM.  The Public Notice seeks further comment on two variations of the “Down from 51” 600 MHz band plan under consideration in the NPRM, which would potentially (1) reverse uplink/downlink allocations or (2) provide for time division duplexing.  The Public Notice seeks comments on whether these band plan variations may be able to mitigate interference and address market variation where available spectrum may be limited.

In response to the Commission’s request, various industry participants voiced criticism of the FCC offering for comment the two alternative band plans after the submission of comments by broadcasters, wireless carriers and equipment manufacturers in vetting a framework for the 600 MHz band.  The NAB, Verizon Wireless and AT&T quickly published critiques of the Public Notice.  Several other wireless industry stakeholders, however, such as Sprint and Ericsson, previously submitted comments that discuss the advantages of proposed band plan alternatives.

The Public Notice sets a due date of June 14, 2013 for comments and a due date of June 28, 2013 for reply comments on the alternatives.

FCC Finds More Spectrum for Wi-Fi

By Nick Milonas

Yesterday, the Federal Communications Commission adopted a Notice of Proposed Rulemaking to free up spectrum in the 5MHz band for unlicensed Wi-Fi use. With this step, the FCC hopes to accelerate the growth and expansion of new high-speed Wi-Fi services, while reducing Wi-Fi congestion in the home and in public locations.

As part of the Middle Class Tax Relief and Jobs Creation Act of 2012, Congress mandated that the FCC explore options to open the 5MHz band for increased Wi-Fi use. The NRPM seeks to make up to 195 megahertz of additional spectrum (a 35% increase) available in the band for such purposes. The FCC hopes that manufacturers of unlicensed devices will take advantage of wider bandwidth channels to offer faster speeds to consumers and businesses. The NPRM also proposes a more-flexible regulatory environment to streamline existing rules and the device approval process.  

Comments are due 45 days after the NPRM’s publication in the Federal Register, which based on publication trends, may be early May. 

FCC Proposes Licensing New Wireless Spectrum for Flexible Use

By J. Bradford Currier and Marc Martin

The spectrum band used for mobile wireless service would be extended by 10 MHz under a Notice of Proposed Rulemaking recently released by the Federal Communications Commission. Under the proposal, the FCC would license the so-called “H Block” spectrum for flexible use through a system of competitive bidding expected to occur in 2013. The licensing of the H Block was a requirement of the Middle Class Tax Relief and Job Creation Act of 2012, and the proceeds from the H Block auction will be used to support the buildout of a nationwide interoperable public safety network and reduce the national deficit. The FCC stated that its proposal is necessary to meet the growing demand for wireless broadband and follows other recent FCC efforts to make more wireless spectrum available.

Under the proposal, the FCC would license H Block spectrum for use in exclusive geographic areas. H Block licensees would be required to provide signal coverage and offer service to: (1) at least 40% of the population in each licensed area within four years and (2) at least 70% of the population in each licensed area at the end of a 10-year license term. New licensees would be required to reimburse a portion of the costs incurred in prior efforts to clear incumbents from the H Block and may disaggregate, partition, and lease their spectrum, subject to the FCC’s rules. Mobile and low-powered fixed transmissions would be authorized in the lower H Block spectrum, with base and fixed transmissions permitted in the upper H Block spectrum.

The FCC seeks comment on the above proposals as well as the appropriate interference mitigation techniques to ensure that the lower H Block spectrum does not cause interference to existing adjacent wireless operations. The FCC asserted that the power and emission limitations offered in its proposal would be sufficient to ensure that new and existing licensees can operate harmoniously but reserved the right to allocate the lower H Block spectrum to unlicensed use should interference issues become unmanageable. 

Comments on the proposal are due by February 6, 2012, with reply comments due by March 6, 2013.

FCC Proposes New Broadband Spectrum for Small Cell, Shared Use

By J. Bradford Currier, Marc Martin, and Marty Stern

New spectrum may become available for shared, small cell broadband use in a new a “Citizens Broadband Service” under a Notice of Proposed Rulemaking recently released by the Federal Communication Commission. The proposal would reallocate 100 MHz of spectrum in the 3.5 GHz Band for shared use using small cell technologies and implements recommendations made earlier this year by the President’s Council of Advisors on Science and Technology. The FCC stated that increased spectrum sharing is necessary as demand for wireless broadband outpaces the availability of new spectrum. The FCC seeks comment on the structure and implementation of the Citizens Broadband Service and whether adjacent spectrum should be included in the proposal to create a larger contiguous spectrum block.

The proposed rules would authorize small cell broadband systems using low-power wireless base stations that are designed to cover targeted indoor or localized outdoor areas, such as homes, stadiums, shopping malls, and hospitals. The FCC noted that small cell stations can be easily deployed at relatively low cost to greatly increase data capacity and fill in coverage gaps created by buildings and terrain. Building on the TV White Spaces model, incumbent users would be protected through the use of geolocational databases that would allow spectrum sharing in geographic areas where incumbent systems are not operating.

The FCC’s proposal would divide spectrum users into three tiers. First, the Incumbent Access tier would include authorized federal users and incumbent satellite licensees. These incumbents would be afforded protection from all other users in the 3.5 GHz Band. Second, the Protected Access tier would include critical-use facilities, such as hospitals, utilities, government facilities, and public safety entities that would be ensured access to a portion of the spectrum in certain designated locations. Third, the General Authorized Access tier would include all other users, including consumer and business users, wireless ISPs, and licensed commercial wireless providers, all of whom would operate in the 3.5 GHz Band subject to protections for the other tiers. The FCC seeks comment on a number of issues, including whether the General Access Tier should be subject to a light licensing regime similar to a registration requirement, potential interference mitigation techniques, and details on the geolocational database and how it will regulate access to the band.

Wireless broadband providers praised the FCC’s proposal, stating that spectrum sharing will enable increased coverage in rural and underserved areas and provide start-up companies with a testing ground for new technologies. Supporters of unlicensed spectrum use suggest that available interference mitigation techniques will ensure that incumbent users and critical care facilities can be protected, while opening up additional spectrum for commercial and public use. However, in reports earlier this Fall on opening up the 3.5 GHz band to unlicensed use, industry observers noted that spectrum sharing in the 3.5 GHz Band poses a number of technical challenges for commercial wireless providers that may take years to resolve before the spectrum can be deployed as an adjunct to their core wireless services.

Comments on the proposal are due by February 20, 2012, with reply comments due by March 22, 2013.

Revisions to Children's Online Privacy Rules Proposed By FTC

By J. Bradford Currier, Marc Martin, and Lauren Pryor

Websites, social media platforms, software “plug in” developers, and online advertisements aimed at children may face new restrictions under proposed rules recently released by the Federal Trade Commission. The proposed rules would modify key definitions contained in the Children’s Online Privacy Protection Act (“COPPA”), which requires websites or online services directed at children under the age of 13 to seek and obtain parental consent before collecting or using a child’s personal information. With the new definitions, the FTC aims to clarify the responsibilities under COPPA when third parties (such as advertising networks or downloadable “plug-ins”) collect personal information from users on child-directed websites. The proposed rules represent another example of the FTC’s recent efforts to expand its enforcement on a variety of privacy-related issues related to children. Comments on the proposed rules will be accepted until September 10, 2012.

The proposed rules modify the scope of the FTC’s COPPA Notice of Proposed Rulemaking released in September 2011. As we reported previously, the earlier proposals would have expanded the definition of personal information to include so-called “persistent identifiers,” which represent unique user identification information obtained through “cookies” or other methods for purposes other than to support the website/service’s internal operations. The initial proposals would also have extended COPPA protections to photographs, videos, or audio files that include a child’s image or voice. The prior proposals further stated that the FTC would consider a wider range of factors, including whether a website included child celebrities and music content, when determining whether a website or online service was directed to children. Stakeholders submitted hundreds of comments in response to the 2011 proposals, leading the FTC to release this new round of proposed rule changes.

The new proposed rules modify the obligations under COPPA in three key areas:

(1)        Website Operators

Previous FTC guidance suggested that the responsibility for providing notice to parents and obtaining consent for the collection of personal information from children rested with the entity actually collecting the information. As a result, a child-directed website/service operator could permit others to collect personal information from child visitors without taking responsibility for seeking and obtaining parental consent. The proposed rules would now hold responsible both the child-directed website/service operator andany third-parties collecting information on such operator’s behalf for the parental consent requirements. Specifically, the FTC stated that “an operator of a child-directed site or service that chooses to integrate into its site or service other services that collect personal information from its visitors should be considered a covered operator under [COPPA].” The FTC noted that the website/service operator is often in the best position to give notice and obtain consent from parents and can control which third-party plug-ins, software downloads, or advertising networks are integrated into its site.

(2)        Website/Service Directed to Children

The COPPA rules only apply to websites/services “directed to children.” The new rules would clarify that that a third-party plug-in, software download, or advertising network is covered under COPPA when the third-party provider “knows or has reason to know” that it is collecting personal information through a child-directed website or online service. The new rules would not require third-party providers to monitor or investigate whether their services are incorporated into child-directed websites/services, but providers may not ignore information brought to their attention indicating that incorporation has occurred.

The proposed rules also attempt to address the fact that some websites/services that contain child-oriented content may also be of interest to adults. Under current FTC rules, these sites must treat all visitors as under 13 years of age. In response, some commenters suggested that the FTC adopt a system that would permit websites/services directed to a broad audience to implement procedures to differentiate among users and require notice and consent only for users who self-identify as under age 13 years of age. The FTC agreed. The new rules allow general audience websites/services to “age screen” all users (i.e. by supplying a birth date) and provide notice and obtain consent only for users who identify themselves as under 13 years of age. The FTC recognized that child users may lie about their age, but thought the age screening process “strike[s] the correct balance” between privacy and access. However, child-directed websites/services that knowingly target children under 13 as their “primary audience” or whose overall content is likely to attract children under 13 must continue to treat all users as children under COPPA.

(3)        Persistent Identifiers and Website/Service Support

The new rules clarify how child-directed websites/services can use persistent identifiers. The FTC first reiterated its 2011 proposal that persistent identifiers should be included in the definition of personal information. The FTC then stated that website/service operators may still use persistent identifiers without obtaining consent for activities such as performing site maintenance and analysis; performing network communications; authenticating users; maintaining user preferences; serving contextual advertisements; and protecting against fraud and theft. The exemption would not apply when the information collected through persistent identifiers is used to contact a user directly, including through the use of behaviorally-targeted advertising, or for any other purpose.

FCC Seeks Comment on Mobile Phone Privacy Protections

By J. Bradford Currier and Marc Martin

The Federal Communications Commission recently released a Public Notice seeking comment on, among other things, how mobile wireless service providers safeguard customer information stored on user devices. The Public Notice was accompanied by an FCC Staff Report, discussing the privacy issues presented by location-based mobile applications, which collect and transmit information about a user’s physical location to the service provider in order to provide real-time services. The Public Notice requests comment on the types of customer information collected by wireless service providers, the steps that should be taken by wireless service providers to secure such data, and the scope of wireless service providers’ obligations relative to the device manufacturer or software developer, as set forth below.

The Public Notice seeks to update the record developed in response to a 2007 Further Notice of Proposed Rulemaking concerning the obligations of wireless service providers under the Communications Act to protect their users’ customer proprietary network information (“CPNI”). The Public Notice invites input on whether current data security practices meet consumer needs and whether developments in the past five years pose new risks to protecting CPNI. The FCC also request comment on the importance of certain factors when assessing a wireless service provider’s compliance with the CPNI rules, including:

  • Whether the device is sold by the service provider;
  • Whether the device only works on a single service provider’s network;
  • The degree of control that the service provider exercises over the design, integration, installation, or use of the software that collects and stores information;
  • The service provider’s role in selecting, integrating, and updating the device’s operating system, preinstalled software, and security capabilities;
  • The manner in which the collected information is used;
  • Whether the information pertains to voice service, data service, or both; and
  • The role of third parties in collecting and storing data.

The Public Notice asks whether the FCC should adopt a declaratory ruling clarifying the application of these factors and the regulatory obligations of wireless service providers that collect sensitive consumer data. Comments will be due 30 days after publication of the Public Notice in the Federal Register, with reply comments due 45 days after Federal Register publication.

FCC Opens Rulemaking Promoting Interoperability in the Lower 700 MHz Band

By J. Bradford Currier

The Federal Communications Commission’s recent Notice of Proposed Rulemaking seeks comment on how to best achieve interoperability in the Lower 700 MHz Band. The NPRM responds to a 2009 petition for rulemaking filed by an alliance of small regional wireless providers operating in the lower A Block of the 700 MHz Band. The petitioners alleged that the mobile devices currently developed for major wireless carriers do not support operations in the lower A Block. The NPRM focuses on four key issues:

(1)        Interoperability Challenges

Supporters of the rulemaking assert that the lack of interoperability in the Lower 700 MHz Band prevents lower A Block licensees from using popular mobile devices and negotiating affordable roaming agreements. Opponents of the rulemaking respond that interoperability requirements would expose licensees in the nearby lower B and C Blocks to harmful interference and delay the deployment of mobile devices. The NPRM asks whether achieving interoperability in the Lower 700 MHz Band would improve lower A Block licensees’ access to new mobile devices and seeks data regarding previous mobile device and roaming agreements between lower A Block licensees and major device manufacturers. 

(2)        Interoperability Implementation            

Before imposing federal interoperability mandates, the NPRM asks whether the Lower 700 MHz Band licensees will be able to develop a voluntary solution in a timely manner. The FCC seeks information relating to existing interoperability agreements between the Lower 700 MHz Band licensees as well as estimates regarding how long it would take an industry-wide accord to develop. Although the FCC would prefer an industry-led solution, it reserved the right to take direct action and require licensees to use mobile devices that can operate across the entire the Lower 700 MHz Band. Under an FCC-led solution, Lower 700 MHz Band licensees would have two years to achieve interoperability. The FCC would also “grandfather” the use of non-interoperable devices produced prior to the implementation of the proposed rules. The NPRM invites commentators to assess the costs and benefits of an industry-led voluntary solution versus top-down FCC regulation. The FCC also asks whether its interoperability inquiry should be expanded to encompass the entire 700 MHz Band.

(3)        Mobile Broadband Deployment

The NPRM suggests that Lower 700 MHz Band interoperability would spur competition in advanced broadband services, especially in rural areas. Opponents of the rulemaking argue that the interoperability requirement would impose unreasonable burdens on current Lower 700 MHz Band build-out plans, degrade mobile device performance, and require significant additional costs. The FCC seeks industry input on the effects of an interoperability requirement on mobile broadband deployment and device performance.

(4)        Legal Authority

The NPRM seeks comment on whether the FCC possesses sufficient regulatory authority to impose an interoperability requirement in the Lower 700 MHz Band. The FCC noted that it may regulate the contractual arrangements of wireless providers in order to prevent unjust and unreasonable discrimination. The FCC also referenced its authority to promote the timely deployment of advanced telecommunications technologies, modify wireless licenses, and manage the use of wireless spectrum.

Once the NPRM is published in the Federal Register, parties will have 60 days to comment. 

FCC Proposes Flexible Use of 2 GHz Band Spectrum

By J. Bradford Currier

Under its recent Notice of Proposed Rulemaking and Notice of Inquiry, the Federal Communications Commission seeks to increase the supply of spectrum for mobile broadband use by permitting flexible use of 40 MHz of spectrum located in the 2 GHz Band currently licensed for Mobile Satellite Service. Specifically, the proposed rules would allow terrestrial mobile broadband service in what the FCC termed the “AWS-4 Spectrum,” located at 2000-2020 MHz and 2180-2200 MHz. The NPRM/NOI covers four key areas:

(1)         AWS-4 Spectrum Band Plan

The FCC would license AWS-4 Spectrum in paired 10 MHz blocks for a 10-year term and would allow a licensee holding two contiguous blocks of AWS-4 Spectrum to combine these authorizations into a single licensed block. The FCC seeks comment on whether the AWS-4 Spectrum band should be shifted up 5 MHz to 2005-2025 MHz or up 10 MHz and compressed to 2010-2025 MHz. Additionally, the NPRM asks for industry input regarding its licensing scheme and whether the FCC should separately license a service area to cover the Gulf of Mexico, which poses special interference challenges. 

In the NOI, the FCC seeks comment on an alternative band plan proposed by NTIA, which would create two new blocks of spectrum: (1) PCS-Extension Block and (2) AWS-Extension Block.  The PCS-Extension Block would cover 35 MHz consisting of existing MSS downlink spectrum located at 2180-2200 MHz and spectrum located at 1695-1710 MHz. The AWS-Extension Block would encompass 30 MHz consisting of existing MSS uplink spectrum located at 2000-2020 MHz, combined with spectrum located at 2020-2025 MHz and 1995-2000 MHz. The alternative band proposal would require the relocation of existing licensees and may require incentive auctions. 

(2)        Licensing Conditions and Obligations

The NPRM imposes no eligibility restrictions on AWS-4 Spectrum licensees. The proposed rules would license the AWS-4 Spectrum under Part 27’s flexible use rules, allowing the licensee to use the spectrum for any terrestrial use permitted by current frequency allocation regulations. Applicants for AWS-4 Spectrum licenses would not be required to choose between providing common carrier and non-common carrier services. Future licensees would be able to lease AWS-4 Spectrum under the secondary market transaction rules first established by the FCC in 2003. The NPRM seeks comment on whether licensees should be permitted to enter into de facto transfer lease arrangements or whether licensees should be limited to spectrum manager lease arrangements. 

AWS-4 Spectrum licensees would be subject to certain performance and construction requirements. First, within three years an AWS-4 licensee must provide signal coverage and offer service to at least 30% of their total AWS-4 population. Second, within seven years the licensee must provide coverage and offer service to at least 70% of the population in each of its license authorization areas. If the licensee fails to meet these obligations, then it may lose its AWS-4 Spectrum licenses. The NPRM seeks comment on these requirements, penalties, and appropriate means for assessing compliance.

(3)        Relocation and Cost Sharing

The NPRM establishes relocation and cost-sharing obligations on AWS-4 Spectrum licensees. New entrants would be allowed to relocate incumbent licensees and recoup a portion of these relocation costs from later entrants. The FCC proposed a sunset date for new entrants’ relocation obligations at 10 years after the issuance of the first AWS-4 Spectrum license. The cost-sharing plan would be administered by a clearinghouse, which would resolve relocation disputes and assess the amount of relocation costs recoverable by a new entrant in the AWS-4 Spectrum. The NPRM seeks comment on whether the AWS-4 Spectrum relocation and cost-sharing rules should differ from previous AWS proceedings and whether the proposed sunset date poses certain risks to entrants or incumbents.

(4)        Interference and Other Technical Issues

The NPRM suggested numerous technical rules designed to prevent interference to other licensees from AWS-4 Spectrum users. The proposed regulations would impose emission limits on AWS-4 Spectrum licensees and require licensees to protect incumbent MSS licensees from harmful interference. The proposed rules would also impose: (1) base station and mobile station power limits; (2) antenna height restrictions; (3) signal strength restrictions; and (4) international coordination requirements on terrestrial operations. The FCC seeks comment on the proposed interference mitigation measures and industry input regarding whether the FCC should impose special interference rules protecting GPS services. 

Once the NPRM/NOI is published in the Federal Register, parties will have 30 days to comment. 

FCC's Comment Deadline Set for Online Video Closed Captioning NPRM

The FCC's Media Bureau announced the following comment deadlines for the FCC’s recently released Notice of Proposed Rulemaking to adopt closed captioning rules for video programming delivered by Internet Protocol: Comments:  October 18, 2011. Reply Comments:  October 28, 2011. As we reported previously, the NPRM proposes closed captioning requirements mandated by the Twenty-First Century Video Communications and Accessibility Act of 2010 (“CVAA”). The new rules would apply to a broader range of devices, including mobile devices, and content providers would be required to meet a strict schedule based upon the type of content captioned.  Notably, under the NPRM, the FCC's closed captioning rules would no longer be restricted to television receivers or to those devices with screens larger than 13 inches, an exception originally established in the Television Decoder Circuitry Act of 1990.  The CVAA requires the FCC adopt these rules by January 12, 2012.

FCC Proposes Closed Captioning Rules for Online Video

By Marc Martin and Marty Stern

Closed captioning of online video for mobile and other devices is a step closer to reality with the FCC's release of a Notice of Proposed Rulemaking in connection with its implementation of the Twenty-First Century Video Communications and Accessibility Act of 2010 (“CVAA”). The CVAA required the FCC to adopt rules providing for the captioning of video programming delivered using Internet Protocol or IP if that programming previously appeared on television with captions. The new captioning regulations would apply to a broad category of IP-enabled devices, such as personal computers, mobile devices, videogame consoles, Blu-Ray players, and television set top boxes. Affected programming distributors will be able to seek hardship waivers from the proposed rules and will not be held responsible for minor compliance failures. Comments will be due within 20 days after publication of the Notice in the Federal Register, with reply comments due a quick 10 days after the deadline for initial comments.

Tech companies have already submitted numerous comments to the FCC in connection with CVAA proceedings, cautioning the Commission against adopting burdensome compliance obligations which could hamper innovation. The NPRM proposed a deadline schedule for the captioning of content, with pre-recorded programming unedited for Internet distribution meeting the captioning requirement within 6 months of the publication of the final rules in the Federal Register, live or near-live programming compliant within 12 months, and pre-recorded programming edited for Internet distribution adequately captioned within 18 months. The FCC chose not to adopt a controlling technical standard for the delivery of IP-enabled closed captioning.

The FCC also proposes in the NPRM to:

  • Require video programming owners to send captioned files for IP-delivered video programming to video programming distributors and video programming providers along with program files;
  • Obligate video programming distributors and video programming providers to “enable the rendering or pass through of all required captions to the end user”;
  • Mandate that the quality of all required captioning of IP-delivered video programming to be of “at least the same quality” as the captioning of the same programming when shown on television;
  • Adopt methods for handling complaints alleging a violation of the new requirements; and
  • Seek industry input regarding when an “apparatus” will fall under the obligations of the CVAA and when it is “technically feasible” for an apparatus to comply with the proposed rules.

The NPRM follows in the wake of the FCC’s August order reinstating video transcription requirements for the “big four” television networks, large cable systems, and direct broadcast satellite services. 

FCC Proposes Streamlined Foreign Ownership Reviews for Wireless Mobile Companies

By Marc Martin and Marty Stern

The FCC launched a review of its foreign ownership rules for common carrier radio licensees, such as wireless carriers, as well as certain aeronautical radio licensees and spectrum lessees in a Notice of Proposed Rulemaking adopted earlier this month. The NPRM aims to reduce the regulatory hurdles on companies petitioning the FCC to exceed the agency’s 25% foreign ownership benchmark, adopted under Section 310(b) of the Communications Act, which in general requires an FCC public interest finding for 25% indirect foreign ownership of common carrier, aeronautical, and broadcast licensees. According to the Commission, the streamlined procedures would reduce the number of required filings by more than 70%. The NPRM does not affect radio or television broadcast licensees.

The Commission noted the continued difficulties companies encounter under the agency’s foreign ownership rules which were last significantly revised in 1998. Specifically, companies must currently compile detailed records concerning the citizenship and principal places of business of their investors, including entities which hold only de minimus interests through intervening investments and holding companies. The NPRM also recognized that under the current rules, companies must repeatedly submit foreign ownership updates to the FCC. To reduce these burdens, the NPRM offered a number of suggestions for comment, including:

  • Eliminating the requirement that companies obtain specific approval for named foreign investors, unless the foreign investor seeks to acquire an interest in the parent company that exceeds 25 percent or represents a controlling interest at any level
  • Allowing parent companies to request specific approval for foreign investors named in their initial petitions to increase their interests in the parent at any time after issuance of the initial ruling up to and including a non-controlling 49.99 percent equity and/or voting interest
  • Issuing foreign ownership rulings in the name of the parent company of the licensee, allowing for automatic extension of the parent’s ruling to cover any of its subsidiaries or affiliates, provided that the parent company remains in compliance with the terms of its ruling
  • Authorizing parent companies with a foreign ownership ruling to have up to and including 100 percent aggregate foreign ownership by investors that are not named in its initial foreign ownership petition, provided that that no single foreign investor or “group” of foreign investors acquires an interest in the parent that exceeds 25 percent, or a controlling interest at any level, without prior FCC approval
  • Permitting internal reorganizations of a parent company in certain circumstances where a new, foreign-organized controlling parent is inserted into the vertical ownership chain above the U.S. company
  • Amending the FCC’s practice of issuing foreign ownership rulings on a service-specific basis and on a geographic-specific basis

In a statement accompanying the NPRM, FCC Chairman Genachowski predicted the proposed paperwork reductions would save companies both time and money while increasing transparency and predictability for foreign investors. Commissioner Clyburn similarly highlighted the importance foreign investment plays in encouraging broadband deployment and economic growth. By contrast, Commissioner Copps questioned whether the current review process actually discouraged foreign investment and warned that the elimination of some foreign ownership rules carries potential risks.

Comments on the NPRM will be due 45 days after its publication in the Federal Register, which is pending, and reply comments will be due 30 days later.