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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 ) ) fONOROLA FIBER DEVELOPMENT INC. ) ) LEDCOR INDUSTRIES INC. ) ) File No. SCL-98-001 Application for a license to land and operate in the ) United States a private fiber optic submarine cable ) system extending between the United States and ) Canada ) CABLE LANDING LICENSE Adopted: August 19, 1998 Released: August 21, 1998 By the Chief, Telecommunications Division: Introduction 1. In this Order, we grant the application of fONOROLA Fiber Development Inc. (fONOROLA Fiber) and Ledcor Industries Inc. (Ledcor) under the Cable Landing License Act for authority to land and operate a private fiber optic submarine cable system to be called "America-Canada-1" or "AmeriCan-1," extending between the United States and Canada. This system will be operated on a non common carrier basis. We find that fONOROLA Fiber and Ledcor have 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. Application 2. fONOROLA Fiber, a Delaware corporation, is a wholly owned subsidiary of fONOROLA Holdco Inc., a Delaware corporation, which, in turn, is a wholly owned subsidiary of fONOROLA Telecommunications Limited Partnership, which is organized under the laws of Canada. The partnership is wholly owned by fONOROLA Inc. (fONOROLA), a Canadian corporation, which, through its various subsidiaries, provides long-distance services throughout North America. In the United States, a wholly owned Delaware subsidiary, fONOROLA Corporation, provides a variety of telecommunications services, including private lines interconnected with the public switched networks between the United States and Canada. 3. At the time this application was filed, fONOROLA was a publicly traded Canadian corporation, and its only shareholder with a 10 percent or greater interest was a trust company. On May 21, Call-Net Enterprises Inc. (Call-Net) filed an application to transfer control of the Section 214 authorizations and pending application for a cable landing license held indirectly by fONOROLA to Call- Net. On July 3, 1998, we granted Call-Net's application to transfer control of fONOROLA's Section 214 authorizations. We have been informed that Call-Net has completed its acquisition of all of the shares of fONOROLA. 4. Call-Net is a telecommunications holding corporation organized under the laws of Canada. Its wholly owned subsidiary, Sprint Canada Inc., provides long-distance voice, data, Internet access, and network management services to consumers, businesses, and governments across Canada. Sprint Canada has 11 percent of the Canadian long-distance market. Call-Net also certifies that it is affiliated with Sprint U.S. through Sprint Communications Company LP's ownership of an interest in Call-Net. 5. Ledcor, a Washington corporation, is a wholly owned subsidiary of Ledcor Industries (USA) Ltd., a Washington corporation, which, in turn, is a wholly owned subsidiary of Ledcor Industries Limited, a Canadian corporation. Ledcor Industries Limited is wholly owned by Ledcor Inc., a privately held Canadian corporation owned by its shareholder employees. Ledcor Inc. is one of the largest multi- disciplined construction companies in Canada. None of the Ledcor companies provides telecommunications services or holds any FCC licenses. 6. The AmeriCan-1 System will be constructed using state-of-the-art SONET OC-192 optically amplified technology with a system speed per fiber pair of 10 Gbps. The cable will consist of three bundles of 12 fibers each, for a total of 36 fibers. AmeriCan-1's capacity is 129,000 lines (or line equivalents). The cable will be double armored in all areas where water depth is less than 150 feet and single armored in all other areas. The system consists of three segments: Segment A is the cable landing station to be located near Seattle, Washington; Segment B is the cable landing station to be located in Victoria, Canada; and Segment C is the entire submarine cable portion, including the system interfaces at Segments A and B. fONOROLA Fiber will own and control Segment A, the U.S. portion of the system. Segment B, the Canadian portion, will be owned by the Partnership, and fONOROLA Fiber and Ledcor will each own one and one half bundles of Segment C, the submarine cable portion. 7. fONOROLA Fiber and Ledcor propose to operate the AmeriCan-1 System as a non common carrier system in which capacity will not be offered indifferently to the user public. fONOROLA Fiber and Ledcor will offer bulk capacity in the AmeriCan-1 system to a specific class of eligible users, including common carriers, on an original ownership, indefeasible right of user or lease of capacity basis. fONOROLA Fiber and Ledcor request 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. Comments 8. The application was placed on public notice on February 11, 1998. 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 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. Discussion 9. The Commission has previously concluded that private cable systems introduce meaningful competition that benefits consumers. No one has suggested that the public interest requires a cable such as AmeriCan-1 to be offered on a common carrier basis. There are many common carrier cable, terrestrial, and microwave facilities between the United States and Canada. Because of the sufficient availability of common carrier circuits between the United States and Canada, we conclude that there is no public interest reason to require that the applicants' proposed cable facilities be provided on a common carrier basis. 10. Regarding the second prong of the test, fONOROLA Fiber and Ledcor state 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, there is no reason to expect that capacity in the proposed cable system would be held out to the public indifferently. 11. Based on the above analysis, we conclude that fONOROLA Fiber and Ledcor will not offer capacity in AmeriCan-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 applicants 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. We therefore conclude that it is appropriate to license the AmeriCan-1 System on a non common carrier basis. 12. fONOROLA Fiber and Ledcor have provided the ownership information required by Section 1.767(a)(6), Section 63.18(e)(6), and Section 63.18(h) of the Commission's rules. fONOROLA Fiber certifies that it is affiliated with a foreign carrier in Canada within the meaning of Section 63.18(h)(1). fONOROLA and several of its subsidiaries provide telecommunications services in Canada. We have previously found that one wholly owned subsidiary, fONOROLA Corporation, is non-dominant in the provision of its authorized switched services through the resale of private line services between the United States and Canada. Call-Net states that its subsidiary, Sprint Canada, has 11 percent of the Canadian long-distance market and that fONOROLA's subsidiaries have a 5 percent share of that same market. Based on the information submitted by the applicants and Call-Net, we conclude that fONOROLA Fiber's affiliates in Canada lack sufficient market power to adversely affect competition in the U.S. market. Furthermore, we observe that Canada is a member of the World Trade Organization, and our open entry policies therefore apply to this application. Ledcor certifies that it is not affiliated with any foreign carrier. 13. The applicants expect that the cable system will land in three U.S. points near Seattle, Washington Point Roberts, Whidbey Island, and Seattle and in Victoria, Canada. We find the applicants' description of the likely landing points to be sufficient to determine that the proposed cable system will 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 an initial application to provide a general description of the landing points. The applicants must file a specific description of the landing points, including a map, no later than 90 days prior to construction. The Commission will give public notice of the filing of the description, and grant of the license will be considered final unless the Commission notifies the applicants to the contrary no later than 60 days after receipt of the specific description of the landing points. 14. Based on the information provided by the applicants 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, fONOROLA Fiber and Ledcor are not required to submit an environmental assessment, and this application is categorically excluded from environmental processing. 15. Accordingly, we conclude that U.S. interests under the Cable Landing License Act will be served by grant of the license to fONOROLA Fiber and Ledcor as conditioned below. Ordering Clauses 16. Consistent with the foregoing and pursuant to the Cable Landing License Act and Executive Order 10530, we hereby GRANT AND ISSUE fONOROLA Fiber Development Inc. and Ledcor Industries Inc. a license to land and operate a non common carrier fiber optic cable system (operating at 10 Gbps per fiber pair on three bundles of 12 fibers each) extending from the United States to Canada. 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 Licensees at their 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 Licensees 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 Licensees or any persons or companies controlling them, controlled by them, or under direct or indirect common control with them 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 Licensees or any persons or companies controlling them, controlled by them, or under direct or indirect common control with them 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 Licensees or any persons controlling them, controlled by them, or under direct or indirect common control with them 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 Licensees to any persons, unless the Federal Communications Commission shall give prior consent in writing; (6) The Licensees shall notify the Commission in writing of the precise locations at which the cable system 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 the landing points; (7) The Commission reserves the right to require the Licensees 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 Licensees shall maintain no less than a 50-percent ownership interest and voting control share in the portion of the cables located in U.S. territorial waters and 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 Licensees 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 direct or indirect ownership in the licensees; (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 Licensees 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 Licensees 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. 17. 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