Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) PC LANDING CORP. ) ) Application for a license to land and operate in the ) File No. SCL-98-006 United States a private fiber optic submarine cable ) system extending between the United States and Japan ) CABLE LANDING LICENSE Adopted: November 19, 1998 Released: November 23, 1998 By the Chief, Telecommunications Division: I. Introduction 1. In this Order, we grant the application of PC Landing Corp. under the Cable Landing License Act for authority to land and operate a private fiber optic submarine cable system to be called "Pacific Crossing" or "PC-1," extending between the United States and Japan. This system will be operated on a non common carrier basis. We find that PC Landing Corp. has provided sufficient information under our rules to comply with the Cable Landing License Act and therefore grant the cable landing license subject to the conditions listed below. II. Application 2. PC Landing Corp., a Delaware corporation, is a wholly owned subsidiary of Pacific Crossing Ltd., a Bermuda joint venture company which will own and operate PC-1. GCT Pacific Holdings Ltd. (Pacific Holdings), a Bermuda company that is an indirect wholly-owned subsidiary of Global Crossing, holds a 50% ownership in Pacific Crossing Ltd. Marubeni Pacific Cable Limited, a Bermuda company which is a wholly-owned subsidiary of Marubeni Corporation, a Japanese company, owns 35.5% of the venture, and SCS (Bermuda) Ltd. (SCS), a Bermuda company, owns 14.5% of the venture. Overall, Global Crossing, through its Pacific holdings subsidiary, has direct and indirect equity ownership interests of approximately 58% in PC-1. 3. The proposed PC-1 system will connect: (1) Harbour Pointe, Washington and Ajigaura, Japan; (2) Ajigaura, Japan and Shima, Japan; (3) Shima, Japan and Grover Beach, California; and (4) Grover Beach, California and Harbour Pointe, Washington. PC-1 will be a state-of-the-art, optically amplified fiber system, consisting of four optical fiber pairs, two for service and two for protection, employing wavelength division multiplexing. The system will be constructed in a self-healing ring architecture. The wet plant design will initially support 20 gigabits per second (Gbps) of capacity on each fiber pair or 40 Gbps between terminal stations for service. Upon completion of the system's ring configuration, the capacity will be 80 Gbps, upgradeable to a minimum of 160 Gbps using dense wavelength division multiplexing. 4. As shown in Exhibit A of the application that is attached to this order, PC-1 will consist of four segments as follows: (1) Segment N will include the whole of the submarine cable system between and including system interface at the cable station at Harbour Pointe, Washington (a subdivision within the city of Mukilteo) and the system interface at the cable station at Ajigaura, Japan; (2) Segment W will include the whole of the submarine cable system between and including the system interface at the cable station at Ajigaura, Japan and the system interface at the cable station at Shima, Japan; (3) Segment S will include the whole of the submarine cable system between and including the system interface at the cable station at Shima, Japan and the system interface at the cable station at Grover Beach, California; and (4) Segment E will include the whole of the submarine cable system between and including the system interface at the cable station at Grover Beach, California and the system interface at the cable station in Harbour Pointe, Washington. The initial capacity of the two optical fiber pairs used for service is comprised of 512 STM-1 (155 Mbps) Minimum Investment Units (MIUs). Operation of PC-1 is anticipated to begin in March 2000. III. Comments 5. The application was placed on public notice on August 19, 1998. Tyco Submarine Systems Ltd. (Tyco) filed comments in support of the application. The Port of San Luis Commercial Fisherman's Association (Fisherman's Association) filed a letter expressing concerns with the application and requesting that the Commission implement several "mitigation measures" to lessen the impact PC-1 might have on commercial fishing practices in the area of the cable system. PC Landing Corp. responded to the Fisherman's Association letter. Pursuant to Section 1.767(b) of the Commission's rules, the Cable Landing License Act, and Executive Order No. 10530, we informed the Department of State of the application. The Department of State, after coordinating with the National Telecommunications and Information Administration and the Department of Defense, stated that it has no objection to issuance of the cable landing license. IV. Discussion A. Private Submarine Cable Policy 6. PC Landing Corp. proposes to operate PC-1 as a non common carrier system in which capacity will not be offered indifferently to the user public. PC Landing Corp. will offer bulk capacity in the PC-1 system to a specific class of eligible users, including common carriers, on an original ownership, indefeasible right of user basis. PC Landing Corp. requests a license under the Commission's private submarine cable policy, which is intended to promote competition in the provision of international transmission facilities. Pursuant to this policy, the Commission has authorized non common carrier cables where (1) there is no legal compulsion to serve the public indifferently and (2) there are no reasons implicit in the nature of the operations to expect an indifferent holding-out to the eligible user public. 7. In applying the first prong of the test to submarine cable authorizations, the Commission has stated that there will be no legal compulsion to serve the public indifferently where there is no public interest reason to require facilities to be offered on a common carrier basis. This public interest analysis has generally focused on the availability of alternative facilities. Where there are sufficient alternatives, the licensee will lack market power and will not be able to charge monopoly rates for cable capacity. The Commission has found that, in those circumstances, the public interest would be served by allowing a submarine cable to be offered on a non-common carrier basis. 8. No one has suggested that the public interest requires PC-1 to be operated on a common carrier basis. There are many submarine cable and satellite facilities between the United States and Japan. Because of the sufficient availability of common carrier circuits between the United States and Japan, we conclude that it is not necessary to require that PC-1 be operated on a common carrier basis at this time. We note, however, that we always have the ability to impose common carrier or common- carrier-like obligations on the operations of this or any other submarine cable system if the public interest so requires. Furthermore, we have always maintained the authority to classify facilities as common carrier facilities subject to Title II of the Communications Act if the public interest requires that the facilities be offered to the public indifferently. 9. Regarding the second prong of the test, we conclude that there is no reason to expect that capacity in the proposed cable system would be held out to the public indifferently. PC Landing Corp. states that capacity will not be sold indifferently to the user public. Instead, capacity will be assigned pursuant to individualized decisions, and bulk capacity will be offered to a specific class of eligible users. Thus, PC Landing Corp. will operate PC-1 on a non-common carrier basis. 10. Accordingly, we conclude that it is appropriate to license PC-1 on a non-common carrier basis. Based on the above analysis, we conclude that PC Landing Corp. will not offer capacity in PC-1 to the public on a common carrier basis and that the public interest does not require that they do so. Accordingly, we find that the applicant will not provide a telecommunications service for a fee to such class of users as to be "effectively available directly to the public" and thus will not be "telecommunications carriers" under the 1996 Act. B. Ownership and Landing Points 11. PC Landing Corp. has provided the ownership information required by Section 63.18(e)(6), 1.767(a)(6), and Section 63.18(h) of the Commission's rules. PC Landing Corp. is ultimately controlled by Global Crossing. PC Landing Corp. will own the U.S. cable landing stations, including the real property, holdings and terminal equipment, and will own the U.S. territory portions of PC-1 from the landing stations to the points that are one-half mile beyond the U.S. territorial limit. A Japan subsidiary of Pacific Crossing Ltd. will own or lease space in the Japanese landing stations and will own corresponding portions of the system located in Japan. Pacific Crossing Ltd. will own the remaining portions of PC-1. 12. PC Landing Corp. certifies that it is affiliated with foreign carriers in Japan within the meaning of Section 63.18(h)(1). First, PC Landing Corp. is affiliated with Global Access Ltd., a start-up carrier that was recently granted a Japan Type-1 Telecommunications License. Under such a license, a company may apply for permission to land a cable in Japan. PC Landing Corp. is also affiliated with three Japanese cable television carriers which have also been granted Type-1 Telecommunications Licenses. We do not find that any of these affiliations is with a company which controls bottleneck facilities or has the ability to discriminate against U.S. carriers on the U.S.-Japan route. Therefore, we find that PC Landing Corp's foreign affiliations do not raise concerns that persuade us to deny the application under Section 2 of the Cable Landing License Act. 13. PC Landing Corp. has complied with Section 1.767(a)(5) of the Commission's rules by providing specific information on the cable landing locations: Mukilteo (Harbour Pointe Development), Washington connects with Ajigaura, Japan; and Grover Beach, California connects with Shima, Japan. This license is therefore not subject to any further public notice or Commission approval of the cable system's landing points pursuant to the procedure in Section 1.767(a)(5). C. Other Issues 14. In its letter, the Fisherman's Association requests that we implement several "mitigation measures" because of the cable's impact on the area's "historically most productive fishing grounds." Specifically, the Fisherman's Association requests: (1) that we require all cables on the Continental shelf to be buried deep enough not to interfere with traditional fishing methods; (2) absolve fishermen that might accidentally hook the cable of any liability; (3) require cable owners to compensate for any loss of gear and fishing time in a timely manner; (4) require that any unused or abandoned cable be removed from the sea- bed of the Continental shelf within a reasonable period of time; and (5) require a public hearing in the affected area and the local publication of public notices. The Fisherman's Association also notes that they had met with Tyco, the installers of the cable system, to discuss their concerns. They stated that Tyco made verbal assurances but would not provide any written assurances. Tyco also suggested that the Fisherman's Association discuss their concerns with PC Landing Corp., the owners of the cable system. 15. In response, PC Landing Corp. noted the untimely nature of the Fisherman's Association letter and stated that the issues raised in the letter were outside the scope of the Commisssion's authority. PC Landing Corp. also noted that the issues raised by the Fisherman's Association were not unusual in cable landings and are typically dealt with through direct negotiations with the cable supplier (in this case Tyco) and state agencies or the Army Corp of Engineers. PC Landing Corp. also stated that an official of the California Lands Commission had indicated that it would be reviewing the Fisherman's Association's concerns. In addition, PC Landing Corp. stated that through its supplier, Tyco, it is "committed to working with the Fisherman's Association in an effort to resolve their concerns." 16. As an initial matter, we recognize that the Fisherman's Association letter was filed with us on September 17, 1998, one day after the end of the pleading cycle. Nevertheless, we will consider the letter as informal comments. As to the Fisherman's Association's request for specific conditions, we find that these specific conditions which relate to how deep the cable is buried, when a cable should be removed from the sea-bed, and who is liable for either the damaged cable or damaged fishing gear are outside the scope of our consideration of this application under the Cable Landing License Act. We also note that in addition to PC Landing Corp.'s assurance that the California Lands Commission has stated that it will review the Fisherman's Association's concerns, we have also forwarded the Fisherman's Association's letter to the Los Angeles District of the U.S. Army Corp. of Engineers Ventura Regulatory Field Office in California which is also looking into these issues in performing its licensing of the cable system. D. Environmental Impact 17. Based on the information provided by the applicant and pursuant to the Commission's procedures implementing the National Environmental Policy Act of 1969, we conclude that the grant of the requested authorization would not significantly affect the environment. Consequently, PC Landing Corp. is not required to submit an environmental assessment, and this application is categorically excluded from environmental processing. IV. Conclusion 18. We grant PC Landing Corp.'s application for authority to land and operate a non-common carrier fiber optic submarine cable extending between the United States and Japan, subject to the conditions listed below. V. Ordering Clauses 19. Consistent with the foregoing and pursuant to the Cable Landing License Act and Executive Order 10530, we hereby GRANT AND ISSUE PC Landing Corp. a license to land and operate a non common carrier fiber optic cable system (consisting of two operating fiber pairs, with 80 Gbps capacity upon completion, and upgradeable to 160 Gbps) extending from the United States to Japan. This grant is subject to all rules and regulations of the Federal Communications Commission; any treaties or conventions relating to communications to which the United States is or may hereafter become a party; any action by the Commission or the Congress of the United States rescinding, changing, modifying, or amending any rights accruing to any person hereunder; and the following conditions: (1) The location of the cable system within the territorial waters of the United States of America, its territories and possessions, and upon its shore shall be in conformity with plans approved by the Secretary of the Army, and the cable shall be moved or shifted by the Licensee at its expense upon the request of the Secretary of the Army whenever he or she considers such course necessary in the public interest, for reasons of national defense, or for the maintenance or improvement of harbors for navigational purposes; (2) The Licensee shall at all times comply with any requirements of United States government authorities regarding the location and concealment of the cable facilities, buildings, and apparatus for the purpose of protecting and safeguarding the cable from injury or destruction by enemies of the United States of America; (3) The Licensee or any persons or companies controlling it, controlled by it, or under direct or indirect common control with it do not enjoy and shall not acquire any right to handle traffic to or from the United States, its territories, or its possessions unless such service be authorized by the Commission pursuant to Section 214 of the Communications Act, as amended; (4) The Licensee or any persons or companies controlling it, controlled by it, or under direct or indirect common control with it shall not acquire or enjoy any right for the purpose of handling or interchanging traffic to or from the United States, its territories, or its possessions to land, connect, or operate cables or land lines, to construct or operate radio stations, or to interchange traffic, that is denied to any other United States company by reason of any concession, contract, understanding, or working arrangement to which the Licensee or any persons controlling it, controlled by it, or under direct or indirect common control with it are parties; (5) Neither this license nor the rights granted herein shall be transferred, assigned, or in any manner either voluntarily or involuntarily disposed of or disposed of indirectly by transfer of control of the Licensee to any persons, unless the Federal Communications Commission shall give prior consent in writing; (6) Pursuant to Section 2 of the Cable Landing License Act, 47 U.S.C.  35; Executive Order No. 10530, as amended; and Section 214 of the Communications Act of 1934, as amended, 47 U.S.C.  214, the Commission reserves the right to impose additional common carrier or common-carrier- like regulation on the operations of the cable system if it finds that the public interest so requires; (7) The Commission reserves the right to require the Licensee to file an environmental assessment or environmental impact statement should it determine that the landing of the cable at those locations and construction of necessary cable landing stations would significantly affect the environment within the meaning of Section 1.1307 of the Commission's procedures implementing the National Environmental Policy Act of 1969; this license is subject to modification by the Commission upon its review of any environmental assessment or environmental impact statement that it may require pursuant to its rules; (8) The Licensees shall maintain de jure and de facto control of the U.S. portion of the cable system, including the cable landing stations in the United States, sufficient to comply with the requirements of this license; (9) This license is revocable by the Commission after due notice and opportunity for hearing pursuant to section 2 of "An Act Relating to the Landing and Operation of Submarine Cables in the United States," 47 U.S.C.  35, or for failure to comply with the terms of the authorizations; (10) The Licensee shall notify the Commission in writing of the date on which the cable is placed in service, and this license shall expire 25 years from such date, unless renewed or extended upon proper application, and, upon expiration of this license, all rights granted under it shall be terminated; and (11) The terms and conditions upon which this license is given shall be accepted by the Licensee by filing a letter with the Secretary, Federal Communications Commission, Washington, D.C. 20554, within 30 days of the release of the cable landing license. 20. This Order is issued under Section 0.261 of the Commission's rules, 47 C.F.R.  0.261, and is effective upon adoption. Petitions for reconsideration under Section 1.106 or applications for review under Section 1.115 of the Commission's rules, 47 C.F.R.  1.106, 1.115, may be filed within 30 days of the date of public notice of this order (see 47 C.F.R.  1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Diane J. Cornell Chief, Telecommunications Division International Bureau