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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Cable & Wireless USA, Inc. ) ) File No. ITC-214-19990709-00412 Application for Authority to Operate as a ) Facilities-based Carrier in Accordance with ) the Provisions of Section 63.18(e)(4) of the ) Rules between the United States and Bermuda ) ) ORDER, AUTHORIZATION AND CERTIFICATE Adopted: February 16, 2000 Released: February 18, 2000 By the Chief, Telecommunications Division: I.Introduction 1. In this Order, we grant Cable & Wireless USA, Inc. ("C&W USA") authority, pursuant to Section 214 of the Communications Act of 1934, as amended, and 47 C.F.R.  63.18(e)(4), to provide switched and non-interconnected international private line service between the United States and Bermuda as a facilities-based carrier. C&W USA will be subject to the Commission's dominant carrier safeguards on that route. II.Background 3. C&W USA is a Delaware corporation and is affiliated, within the meaning of Section 63.09(e) of the Commission's rules, with Cable & Wireless Bermuda ("C&W Bermuda"), a foreign carrier operating in Bermuda. Both C&W USA and C&W Bermuda are wholly owned subsidiaries of Cable & Wireless plc, a holding company incorporated and based in the United Kingdom. C&W Bermuda provides international transport facilities and services in Bermuda. C&W Bermuda has more than 50% market share in the international telecommunications market in Bermuda. 4. On July 8, 1999, C&W USA filed an Application seeking Section 214 authority to provide switched and non-interconnected private line service as a facilities-based carrier between the United States and Bermuda ("Application"). The Application did not request streamlined processing, and we initially deemed it ineligible for streamlined processing because Bermuda does not appear on the list of Members of the World Trade Organization (WTO) published by the WTO. On July 23, 1999, we placed the Application on public notice. We received no comments or petitions to deny. On October 21, 1999, pursuant to Section 63.12 of the Commission's rules, we provided public notice that, because the application raised questions of extraordinary complexity, an additional 90-day period of review was needed. On January 19, 2000, we again extended the review period under Section 63.12 of our rules. V.Discussion A. Entry standard 2. In November 1997, the Commission adopted the Foreign Participation Order, which was designed to increase competition in the U.S. telecommunications market by facilitating entry by foreign service providers and investors. The rules and standards adopted in the Foreign Participation Order govern our decision whether, and on what terms, to authorize C&W USA to provide service on a route where the applicant has an affiliation with a foreign carrier. 3. In the Foreign Participation Order, the Commission adopted an open entry standard for applicants that request authority to serve a WTO Member destination in which the applicant has a foreign carrier affiliate. The open entry standard was adopted in light of the WTO Agreement on Basic Telecommunications Services (WTO Basic Telecom Agreement), the market-opening commitments of other WTO Members, and the Commission's improved competitive safeguards governing U.S. international services. 4. Previously, the Commission applied the "effective competitive opportunities (ECO)" test to applicants that sought to provide certain categories of service on routes where an affiliated foreign carrier possessed market power. In the Foreign Participation Order, the Commission eliminated the ECO test in favor of a rebuttable presumption that applications for international Section 214 authority from applicants affiliated with foreign carriers in WTO Members do not pose concerns that would justify denial of the application on competition grounds. The Commission retained the ECO test for certain applicants that seek to serve non-WTO Member destinations in which the applicant has an affiliation with a foreign carrier possessing market power. E. Bermuda's WTO Status 6. In order to ascertain the correct entry standard to apply to this Application, we must first determine the WTO status of Bermuda. Bermuda is a dependent overseas territory of the United Kingdom. An opinion provided to us by the U.S. Department of State concludes that the 1994 Marrakesh Agreement Establishing the World Trade Organization applies to Bermuda. We note that the United Kingdom maintains a different view, specifically that the territorial application of the WTO Convention does not extend to the UK's overseas territories. We defer to the opinion provided to us by the U.S. Department of State and therefore treat Bermuda as a WTO Member for the purposes of applying the proper entry standard to this Application. Accordingly, we apply the open entry standard and the rebuttable presumption that the Application does not pose any concern that that would justify denial of the Application on competition grounds. C. Dominant Carrier Safeguards 7. For each international Section 214 application we must examine whether it is necessary to impose the Commission's international dominant carrier safeguards on an applicant in its provision of service on the route or routes for which the applicant seeks authorization. Under rules adopted in the Foreign Participation Order, the Commission regulates U.S. international carriers as dominant on routes where an affiliated foreign carrier has sufficient market power on the foreign end to affect competition adversely in the U.S. market. A U.S. carrier is presumptively classified as nondominant on an affiliated route if the carrier demonstrates that the foreign affiliate lacks 50 percent market share in the international transport and local access markets on the foreign end of the route. 8. C&W USA states in its Application that its foreign affiliate, C&W Bermuda, has more than 50 percent market share in the international telecommunications market in Bermuda and that accordingly, it accepts dominant carrier classification on this route. IX.Conclusion 10. In light of the above, we find that a grant of C&W USA's application will serve the public interest under Section 214 of the Act, by increasing competition on the U.S.-Bermuda international services route and providing more choices to U.S. consumers. 11. The Commission also considers other public interest factors that may weigh in favor of, or against, granting an international Section 214 application, including national security, law enforcement, foreign policy and trade concerns. The Executive Branch has not raised any such concerns with this application and we know of no other countervailing public interest considerations. XII.Ordering Clauses 13. Accordingly, IT IS HEREBY CERTIFIED that the present and future public convenience and necessity require a grant of the above-captioned application to the extent specified in this Order. Therefore, IT IS ORDERED that Application File No. ITC-214-19990709-00412 is GRANTED, and Cable & Wireless USA, Inc. is authorized pursuant to Section 63.18(e)(4) of the Commission's rules, 47 C.F.R.  63.18(e)(4), to provide facilities-based switched and non- interconnected international private line service between the United States and Bermuda, subject to all current and future Commission regulations, including those specifically listed below. This authorization is limited to private line service between the United States and Bermuda. 14. IT IS FURTHER ORDERED that Cable & Wireless USA, Inc. shall be regulated as a dominant carrier on the U.S.-Bermuda route, and shall comply with the requirements specified in Section 63.10(c)-(d) of the Commission's rules. 47 C.F.R.  63.10(c)-(d). 15. IT IS FURTHER ORDERED that Cable & Wireless USA, Inc. shall comply with the requirements specified in Sections 43.51, 43.61, 63.11, 63.14, 63.17, 63.19, 63.21 and 63.22 of the Commission's rules. 47 C.F.R.  43.51, 43.61, 63.11, 63.14, 63.17, 63.19, 63.21 and 63.22. 16. IT IS FURTHER ORDERED that Cable & Wireless USA, Inc. may not -- and its tariffs must state that its customers may not -- connect its private lines to the public switched network at either the U.S. or Bermuda end, or both, for the provision of international switched basic services unless the Commission has authorized the provision of switched services over private lines to Bermuda or Cable & Wireless USA, Inc. is exchanging switched traffic with a foreign carrier that the Commission has determined lacks market power in the Bermuda. See 47 C.F.R.  63.16, 63.22(e), 63.23(d). A foreign carrier lacks market power for the purposes of this rule if it does not appear on the Commission list of foreign carriers that do not qualify for the presumption that they lack market power in particular foreign points at http://www.fcc.gov/Bureaus/International/Public_Notices/1999/da990809.txt. See generally 1998 Biennial Regulatory Review Reform of the International Settlements Policy and Associated Filing Requirements, IB Docket Nos. 98-148, 95-22, CC Docket No. 90-337 (Phase II), FCC 99- 73 (rel. May 6, 1999), paras. 12-15, 102-109. 17. IT IS FURTHER ORDERED that this Order is effective upon release. FEDERAL COMMUNICATIONS COMMISSION Rebecca Arbogast Chief Telecommunications Division International Bureau