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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) ) TELEBERMUDA ) INTERNATIONAL, L.L.C. ) File No. SCL-95-009 ) Application for a License to Land and) Operate a Private Submarine Fiber Optic) Cable between the United States and ) Bermuda ) CABLE LANDING LICENSE Adopted: December 4, 1996 Released: December 6, 1996 By the Chief, Telecommunications Division: I. Introduction 1.TeleBermuda International, L.L.C. (TBI-US) seeks authorization under the Cable Landing License Act to land and operate a digital private fiber optic submarine cable system, BUS-1, extending between the United States and Bermuda. TBI-US proposes to operate BUS-1 on a non-tariffed, non-common carrier basis. We find that TBI-US has provided sufficient information under our rules to comply with the Cable Landing License Act and grant this application, subject to the conditions listed below. II. Amended Application 2.The applicant, TBI-US, is a Delaware limited liability company in which 80 percent of the ownership shares is owned by Elbac Cable Corporation (ECC) and 20 percent is owned by TeleBermuda International Ltd. (TBI-Bermuda). ECC, a Delaware corporation, is 100 percent owned by the David A. Bayer Trust. David A. Bayer, a U.S. citizen, is the grantor, sole trustee, and during his lifetime the sole beneficiary of the David A. Bayer Trust. TBI-Bermuda, a Bermudian corporation, is 60 percent owned by Bermudian shareholders and 40 percent owned by Canadian shareholders. 3.TBI-US will serve as the licensee for the U.S. landing license and will own all plant and equipment landing in the United States. TBI-Bermuda will hold the cable landing license in Bermuda and will own all plant and equipment landing in Bermuda. The international portion of the cable (BUS-1) will be owned by a separate corporation, BUS-1 Cable, L.L.C., a Delaware corporation owned equally by TBI-US and TBI-Bermuda. 4.BUS-1 will land on the U.S. end at AT&T's existing cable landing station in Tuckerton, New Jersey. From this station, the cable will extend underwater to a branching unit, and from the branching unit to a cable station located at the southern coast of Bermuda. The cable will be used to provide voice, data, and video services with a transmission speed of 2.5 Gbit/s, with the ability to upgrade the transmission speed and capacity for future use. BUS-1 also will be able to provide restoration capabilities for other cables connecting the U.S. mainland and Bermuda. BUS-1 is scheduled to be operational as soon as possible. 5.Capacity in BUS-1 will be sold through ownership, indefeasible right of user, or lease to users on a non-tariffed, non common carrier basis. TBI-US states that it is not required to apply for authority under Title II of the Communications Act of 1934, as amended, (the Act) because the proposed services will not be offered on a common carrier basis. Therefore, the Commission should consider its application pursuant only to the Cable Landing License Act. III. Comments 6.We placed the initial application on public notice. Atlantic Express Communications II, L.L.C. (Atlantic Express) and ComSouth Cable International, Inc. (CSCI) filed petitions to deny. TBI-Bermuda filed a response, to which Atlantic Express replied. TBI-Bermuda and TBI-US subsequently filed an amendment to the original application. We placed the amendment on public notice. Atlantic Express filed a petition to deny and Optel Communications, Inc. (Optel) filed comments. TBI-US filed a reply to Atlantic Express and Optel. 7.In their petitions to deny the original application, Atlantic Express and CSCI generally argued that, because TBI-Bermuda is foreign-owned, the application should be denied until reciprocal opportunities exist for U.S. carriers to land and operate cables in Bermuda. In response, TBI-Bermuda stated that Bermuda has allowed U.S. firms to own and operate capacity in submarine cables that land in Bermuda. TBI-Bermuda also asserted that the Bermudian Government is committed to opening its telecommunications market. 8.TBI-Bermuda's amendment changed the proposed licensee to TBI-US. TBI-US will own 100 percent of the U.S. plant and equipment and 50 percent of BUS-1. TBI- Bermuda will own 100 percent of the Bermudian plant and equipment and 50 percent of BUS-1. In response, Atlantic Express and Optel asserted that TBI-US must file a new application to change the applicant. In addition, Atlantic Express argued that the amendment was not signed by the new applicant, TBI-US, and that TBI-US had not complied with the Commission's rules with regard to the Federal Drug Abuse Act of 1988, 21 U.S.C.  862. 9.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 this application. On November 19, 1996, the Department of State, after coordinating with the Department of Commerce's National Telecommunications and Information Administration and the Department of Defense, stated that it approves of the granting of the cable license, subject to the Commission imposing certain conditions. These conditions include requiring: (1) any common carrier seeking to acquire or use capacity on BUS-1 to obtain Section 214 authorization from the Commission; and (2) TBI-US to "obtain prior Commission approval for the transfer of the cable landing license, the rights granted therein, or any change in ownership or control of the cable." The Department of State also requested that the Commission notify it of any such applications or other filings by TBI-US and provide an adequate opportunity for the Department of State to review and comment to the Commission. IV. Discussion A. Procedural Issues 10.Atlantic Express and Optel assert that TBI-Bermuda's amendment changed the proposed licensee to TBI-US. Therefore, according to Atlantic Express and Optel, the new applicant, TBI-US, must file a new application. Although the Commission's rules require that a separate application be filed for each individual cable system, no other Commission rules or decisions applicable to cable landing license applications limit the content of amendments to such applications, even as to the ownership and identity of the applicant. We thus find that the proposed amendment to the original application, including the designation of a new applicant, is consistent with our rules. Moreover, we note that parties have had full opportunity to comment on both the original application and the amendment. 11.Atlantic Express also argues that TBI-US did not comply with the Commission's rules because it failed to sign the application amendment and failed to certify that neither TBI-US nor any party to the application is subject to a denial of Federal benefits pursuant to the Federal Drug Abuse Act of 1988. We note that Section 1.744 of the Commission's rules, 47 C.F.R.  1.744, requires an applicant to sign amendments in the same manner as the initial application. Although TBI-US did not sign the original application or the amendment, it subsequently filed a signed certification stating that Thomas R. Rudd, on behalf of TBI-US, had reviewed the amendment and that it is, to the best of his knowledge, true and correct. In addition, pursuant to Section 1.2002 of the Commission's rules, 47 C.F.R.  1.2002, TBI-US certified that neither TBI-US nor any of its principals is subject to a denial of Federal benefits pursuant to the Federal Drug Abuse Act of 1988, 21 U.S.C.  862. We find that TBI-US' certifications are sufficient to comply with our rules. B. Private Submarine Cable Policy 12.TBI-US requests a license under the Commission's private submarine cable policy to promote competition in the provision of international transmission facilities. Pursuant to this policy, the Commission has authorized non common carrier cables where there is no legal compulsion to serve the public indifferently and no reasons implicit in the nature of the operations to expect an indifferent holding-out to the eligible user public. Because of the wide availability of common carrier circuits on existing and future cables and satellite circuits between the United States and Bermuda, there is no public-interest reason to require that TBI-US' proposed cable facilities be provided on a common carrier basis. 13.In addition, because the applicant will individually negotiate with interested users and therefore will make "individualized decisions, whether and on what terms to deal," and will not undertake to "carry for all people indifferently," there is no reason to expect that the proposed cable circuits would be held out to the public indifferently. We thus conclude that TBI-Bermuda will not offer capacity in the proposed cable system to the public on a common carrier basis and accordingly is not subject to regulation under Title II of the Communications Act. C. Analysis Under the Cable Landing License Act 14.While there is no need to require that the proposed BUS-1 cable be operated on a common carrier basis, Atlantic Express and CSCI argue that TBI-US' application fails to satisfy the reciprocity standard of the Cable Landing License Act and thus should be denied. Atlantic Express also submits that it is concerned that the opportunities open to competitors in the U.S. market are not matched by opportunities to compete in foreign markets. Atlantic Express asserts that this concern is the foundation of our Foreign Carrier Entry Order and of the Cable Landing License Act. TBI-US responds that it has met the reciprocity standard of the Cable Landing License Act and furthermore that an effective competitive opportunities (ECO) analysis as set forth in the Foreign Carrier Entry Order should not apply to this application. 15.In the Foreign Carrier Entry Order, the Commission determined that it will examine whether effective competitive opportunities exist for U.S. carriers in the destination markets of foreign carriers with market power seeking to enter the U.S. international services market either directly or through an affiliation under Section 214 of the Act. The Commission similarly would examine whether foreign markets offer effective competitive opportunities to U.S. entities in considering foreign investment in excess of the benchmarks contained in Section 310(b)(4) of the Act. The Commission has not yet specifically applied an effective competitive opportunities analysis to non-common carrier submarine cables under the Cable Landing License Act. Thus, we will examine this application under our existing cable landing license precedent. 16.We find that TBI-Bermuda's 20 percent ownership in TBI-US, the proposed licensee, is consistent with our previous decisions. For example, in Optel, the Commission found that the 20 percent ownership interest by Teleglobe, a Canadian carrier, in Optel, the U.S. licensee of CANUS-1, did not represent facilities-based entry into the U.S. market by Teleglobe and thus did not raise the issue of reciprocity under the Cable Landing License Act. The Commission found that Optel is a U.S. corporation operating within the territory of the United States, and that licensing of CANUS-1 to Optel does not itself give rise to the kind of foreign presence that prompted Congress to enact the reciprocity provisions of the Cable Landing License Act. 17.Similarly, we find that TBI-Bermuda's 20 percent ownership interest in TBI- US, as reflected in the amended application, does not implicate the reciprocity provisions of the Cable Landing License Act. As in Optel, TBI-US is a U.S. corporation operating in the territory of the United States and licensing of BUS-1 to TBI-US does not itself give rise to the kind of foreign presence that prompted Congress to enact the reciprocity provisions of the Cable Landing License Act. Thus, we need not apply a reciprocity analysis in this case. 18.We note that this analysis is consistent with our Foreign Carrier Entry Order. The Foreign Carrier Entry Order adopted a level of 25 percent ownership of capital stock, or a controlling interest at any level, for classifying a U.S. carrier as an "affiliate" of a foreign carrier for the purpose of applying the ECO analysis under Section 214 of the Act. Section 310(b)(4) of the Act also establishes a 25 percent benchmark for applying a public interest analysis to certain radio licenses. Under either standard, TBI-Bermuda's 20 percent ownership of TBI-US falls below the established benchmark. D. Landing Points 19.Consistent with prior decisions, we find that TBI-US' description that BUS-1 will land in Tuckerton, New Jersey and on the southern coast of Bermuda to be sufficient to determine whether the proposed cable system would comply with the provisions of the Cable Landing License Act and Commission rules. Pursuant to Section 1.767(a)(5) of the Commission's rules, however, TBI-US must provide a specific description of the landing locations, including a map, no later than ninety days prior to construction. We condition this license upon final approval of the landing points. The Commission will give public notice of this description, and grant of the license will be considered final unless we issue a public notice to the contrary no later than sixty days after receipt of the specific description of the landing point. E. Environmental Impact 20.Based on the information provided by TBI-US and pursuant to the Commission's procedures implementing the National Environmental Policy Act of 1969, we conclude that the grant of the requested authorizations would have no significant effect on the quality of the human environment and is therefore categorically excluded from environmental processing. Consequently, TBI-US is not required to submit an environmental assessment with this application. 21.Accordingly, we conclude that U.S. interests under the Cable Landing License Act will be served by grant of the license to TBI-US, as conditioned below. V. Ordering Clauses 22.Consistent with the foregoing, we hereby GRANT AND ISSUE, under the provisions of the Cable Landing License Act and Executive Order 10530, TeleBermuda International, L.L.C. a license to land and operate a digital non-common carrier fiber optic submarine cable system extending between the United States and Bermuda, with landing points in Tuckerton, New Jersey and the southern coast of Bermuda. The cable will be used to provide voice, data, and video services at a transmission speed of 2.5 Gbit/s, with the ability to upgrade the transmission speed and capacity for future use. 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 does 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 landlines, 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) The Licensee shall notify the Commission in writing of the precise locations at which the cable will land no later than ninety days prior to commencing construction of the cable landing station at those locations. The Commission will give public notice of the filing of these descriptions, and grant of this license will be considered final unless the Commission issues a notice to the contrary no later than sixty days after receipt of the specific description of the landing points; (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 Licensee shall maintain no less than a 50-percent direct or indirect ownership interest and voting control share in the cable, including 100-percent direct ownership in the cable stations in the United States and in the U.S. land portion of the cable from the stations to the U.S. beach joint of the submerged portion of the cable; (9) The Licensee shall, by application, obtain Commission approval prior to the sale or transfer to a foreign entity of five percent or more in the aggregate of U.S.- owned and -controlled stock; (10) 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; (11) 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 (12) 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. 23.This Order is issued under Section 0.261 of the Commission's rules, 47 C.F.R.  0.261, and is effective upon release. 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