Petition Seeks to Relieve FCC Licensees, Including Enterprise Users, of Big Headaches from Minor Ownership Changes
Many enterprise users of licensed radio spectrum overlook the requirement to seek prior approval from the Federal Communications Commission (FCC) when they undergo a change in corporate form or ownership structure that causes what is called a “pro forma assignment of license” or “pro forma transfer of control.” A pro forma transaction is one in which the form of ownership changes (e.g., the licensee is converted from being a corporation to a limited liability company) or there is a change in the ownership structure even though ultimate control of the licensee does not change (e.g., an intermediate company is inserted into or removed from the ownership chain between the licensee and the ultimate controlling parent company). The FCC is inviting comment on a petition by CTIA and USTelecom asking the FCC to open a rulemaking proceeding to make it much easier for licensees to implement pro forma ownership changes without requesting prior FCC consent.
The FCC has long taken the position that any change in control of a licensee, even a pro forma transaction, requires prior FCC approval. Many enterprises that hold licenses for private radio systems used to support internal business operations fail to request FCC consent because they do not realize that such a seemingly minor change like this requires FCC consent. It is also confusing to many licensees because the FCC requires very little information about ownership in the initial application for a private radio license, so many licensees do not believe the FCC requires an application to make very minor ownership changes that do not result in a change in the ultimate controlling entity.
CTIA and USTelecom therefore ask the FCC take the following actions:
- Change the rules for all wireless and satellite licensees so that they may simply notify the FCC within 30 days of implementing a pro forma transaction.
- In the alternative, the Universal Licensing System (ULS) should grant pro forma assignment and transfer applications overnight, via the immediate approval procedures.
- Issue a declaratory ruling to limit the types of pro forma transactions that require notification to the FCC.
- Issue a declaratory ruling to clearly explain which types of licenses require prior approval for a pro forma transaction and which types of licenses are subject to only a post-closing notification.
- Update ULS to allow the filing of applications for pro forma transactions involving spectrum leases and special temporary authorizations (STAs).
The petition raises some good points on the benefits to licensees, and especially enterprise users, if the FCC were to streamline the rules and policies regarding pro forma transactions. Moreover, these revisions would eliminate significant confusion among licensees, the possible need for rule waivers, and the potential for enforcement action just because a licensee was not fully aware that it needed FCC authority to implement a simple corporate reorganization.
Comments on the petition will be due July 24, 2020, with Reply Comments due August 10. Please let us know if you have any questions about FCC requirements related to corporate restructurings or if you would like assistance expressing your views to the FCC on this petition for rulemaking.