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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 ) ) GST INTERNATIONAL, INC. ) ) File No. SCL-96-006 Application for a license to land and operate ) a submarine fiber optic cable extending ) between the United States and Mexico, ) Guatemala, Costa Rica, and Panama. ) CABLE LANDING LICENSE Adopted: April 28, 1997 Released: April 30, 1997 By the Chief, Telecommunications Division: I. Introduction 1. In this Order, we grant the application of GST International, Inc., (GST) under the Cable Landing License Act for authority to land and operate a digital fiber optic submarine cable to be called the "Hawaii-Americas-1 System" extending between the United States and Mexico, Guatemala, Costa Rica, and Panama. The cable will be operated on a non-common carrier basis. We find that GST 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. Amended Application 2. GST, a corporation organized under the laws of Delaware, is a wholly owned subsidiary of GST USA, Inc., itself a Delaware corporation and the wholly owned subsidiary of GST Telecommunications, Inc. (GSTTI). GSTTI, a corporation organized under the laws of Canada, is a publicly held non-carrier holding company. U.S. citizens or U.S. companies own a majority (approximately 69.04%) of GSTTI's stock, which is traded over both the American (AMEX) and Vancouver stock exchanges. Aside from John Warta, a U.S. citizen who owns 10.5% of GSTTI's stock, no person or entity owns 10% or more of GSTTI. 3. The applicant proposes to land and operate the Hawaii-Americas-1 (HIAM-1) System as a non-common carrier system in which capacity would be sold or leased to users on a non- tariffed, non-common carrier basis. The cable system would be owned by the applicant and by entities authorized to land and operate an international submarine fiber optic cable system in Mexico, Guatemala, Costa Rica, and Panama. All of the proposed cable system's plant and equipment located in the United States would be owned by GST. All plant and equipment located in Mexico, Guatemala, Costa Rica, and Panama would be owned by entities authorized to land and operate an international submarine fiber optic cable system in those jurisdictions. GST initially plans to offer direct service between landing points at San Luis Obispo, California; Oahu, Hawaii; Acapulco, Mexico; and Balboa, Panama. GST considers Guatemala and Costa Rica to be potential destinations for future extensions of the cable system. GST states that U.S. landing points will provide efficient and economical access to other international cables landing nearby or in collocated facilities. GST does not specify the expected date by which the proposed cable system would be operational but commits to providing a specific description of the landing sites no later than ninety days prior to construction. 4. GST's HIAM-1 System will employ SONET/SDH optically amplified fiber optic cable and will consist of 8 fibers. Terminal equipment and underwater repeaters with wavelength division multiplexing (WDM) capability will enable the system capacity to grow with demand. The cable system will be designed to operate at 2.5 Gbps and to support the industry standard capacity increments of E1 to DS3. 5. GST will offer bulk capacity in the HIAM-1 System to a specific class of eligible users, including common carriers, on an original ownership, IRU, or lease of capacity basis. GST does not seek Title II authority since it will not offer services as a common carrier. Specifically, GST expects to make "individualized decisions, in particular cases, [on] whether and on what terms to deal" and will not "hold itself out indifferently to serve the user public." GST states that since its proposed system would not constitute a bottleneck facility, no public interest reason exists to require imposing common carrier obligations on the operation of GST's proposed cable facilities. Thus, GST states that only the Cable Landing License Act requirements are relevant to this application. III. Comments 6. The GST application was placed on public notice on December 4, 1996. No comments were received. 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 GST's 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 7. GST 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 where there are no reasons implicit in the nature of the operations to expect an indifferent holding-out to the eligible user public. 8. Because of the wide availability of common carrier circuits on existing and future cables and satellite circuits between the U.S. west coast and Hawaii, Mexico, and Panama, no public interest reason exists that requires imposing common carrier obligations on the operation of GST's proposed cable facilities. Specifically, we agree with GST that the existence of several competing options prevents GST's proposed system from constituting a bottleneck. GST states that its proposed submarine cable system will route traffic between Asia, Australia and the United States; between Asia, Australia and South America; and between the United States and Central and South America. Competitive alternatives to the proposed HIAM-1 System include, among others, Pacific submarine cable facilities connecting the U.S. west coast with Hawaii and the TPC, HAW, and PacRim systems; terrestrial facilities connecting the United States and Mexico; satellite and terrestrial facilities connecting the United States and Panama; and Caribbean submarine cable facilities. 9. GST states both its intention to compete with such services and its inability to restrict output or raise prices without losing customers to such services. GST will make "individualized decisions, [on] whether and on what terms to deal" and will not "hold itself out indifferently to serve the user public." We conclude that GST will not in fact act as a common carrier in operating the HIAM-1 System and thus is not subject to regulation under Title II of the Communications Act. 10. GSTTI owns a minority interest of approximately 28.7 percent of GST Global, which wholly owns GST Mextel, Inc. GST Mextel, Inc., currently owns 25 percent of Bestel, S.A. de C.V. (Bestel), and has the right to acquire up to 49 percent of Bestel. Although it is authorized to construct and operate telecommunications facilities in Mexico, Bestel (a company organized under the laws of Mexico) does not yet provide service. Pursuant to Section 63.18(h) of our rules, even if GST Mextel, Inc., exercises its right to acquire 49 percent of Bestel, only a 14.06 percent interest in Bestel would be attributed to GSTTI. Therefore, GST is not affiliated with Bestel within our rules. Under these circumstances, GST's relationship with Bestel does not raise concerns that could persuade us to deny the application under Section 2 of the Cable Landing License Act. 11. Consistent with prior decisions, we find GST's statement that the HIAM-1 System will land in California, Hawaii, Mexico, and Panama sufficient to determine whether the proposed cable would comply with the provisions of the Cable Landing License Act and Commission rules. Section 1.767(a) of the Commission's rules permits applicants in their initial applications to provide a general geographic description of the landing points. It requires that grant of cable landing license applications be conditioned on final approval of a specific description of landing points no later than ninety days prior to construction. 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 points. 12. Based on the information provided by GST 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, GST is not required to submit an environmental assessment, and this application is categorically excluded from environmental processing. 13. Accordingly, we conclude that U.S. interests under the Cable Landing License Act will be served by grant of the license to GST, as conditioned below. V. Ordering Clauses 14. Consistent with the foregoing, we hereby GRANT AND ISSUE, under the provisions of the Cable Landing License Act and Executive Order 10530, GST International, Inc., a license to land and operate a digital non-common carrier fiber optic submarine cable system (designed to operate at 2.5 Gbps) extending from the United States to Mexico, Guatemala, Costa Rica, and Panama and including landing points in San Louis Obispo, California; Oahu, Hawaii; Acapulco, Mexico; and Balboa, Panama. 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 cables 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 cables 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 cables will land no later than ninety days prior to commencing construction of cable landing stations 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 descriptions of 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 cables 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 ownership interest and voting control share in the cables, including 100-percent ownership in the cable stations in the United States and in the U.S. land portion of the cables from the stations to the U.S. beach joint of the submerged portion of the cables; (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. 15. 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