******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) Bell Atlantic Communications, Inc.) FCN-97-011 ) Notification Pursuant to Section 63.11 ) of Foreign Carrier Affiliations ) ORDER Adopted: December 14, 1998 Released: December 17, 1998 By the Chief, Telecommunications Division: I. Introduction 1. In this Order, we reclassify Bell Atlantic Communications, Inc. (BACI) as a dominant carrier on the U.S.-Gibraltar route due to its affiliation with Gibraltar NYNEX Communications Ltd. (GNCL). We find that BACI has not met its burden of demonstrating that it warrants continued regulation as a non-dominant carrier on this route. Accordingly, BACI will be subject to the Commission's dominant carrier regulations for service to Gibraltar, as set forth in Section 63.10 of the Commission's rules. II. Background 2. BACI is a wholly-owned subsidiary of Bell Atlantic Corporation (Bell Atlantic). BACI is authorized to provide, as a non-dominant carrier, resold and facilities-based international telecommunications services originating outside of its in-region states. On September 15, 1997, pursuant to Section 63.11 of the Commission's rules, BACI notified the Commission of its affiliation with a foreign carrier. Specifically, on August 14, 1997, Bell Atlantic consummated its proposed merger with NYNEX. As a result of the merger, Bell Atlantic obtained ownership of NYNEX Network Systems Company, which in turn holds a 50 percent interest in GNCL. On September 25, 1997, the Commission issued a Public Notice requesting interested parties to file comments concerning this affiliation. No comments were filed. III. Discussion 3. BACI requests continued regulation as a non-dominant carrier on the U.S.-Gibraltar route. According to BACI, GNCL owns facilities for the provision of domestic telecommunications services in Gibraltar and for the provision of telecommunications services between Gibraltar and Spain. GNCL is not authorized to provide international public switched voice telecommunications services between Gibraltar and points outside of Gibraltar and Spain. BACI states that GNCL hands off such calls to Gibraltar Telecommunications International Ltd. (Gibraltar Telecom), a joint venture between the Government of Gibraltar and British Telecommunications PLC. Gibraltar Telecom enters into all contractual operating arrangements with other carriers for the transmission of international pubic switched voice traffic between the United States and Gibraltar. For these reasons, BACI requests that it continue to be regulated as a non-dominant carrier. 4. A carrier notifying the Commission of a foreign carrier affiliation may retain its non- dominant status on the affiliated route by providing information to demonstrate that it qualifies for non- dominant classification pursuant to Section 63.10 of the Commission's rules. Under Section 63.10 of the Commission's rules, a carrier with less than 50 percent market share in each of three relevant input markets on the foreign end of a U.S. international route is presumptively classified as non-dominant. In the absence of such a demonstration, however, the affiliate would presumptively be classified as dominant on the affiliated route. The relevant input markets generally include international transport facilities or services, inter-city facilities or services, and local access facilities or services at the foreign end. 5. BACI requests non-dominant treatment on the basis that Gibraltar Telecom, and not GNCL, enters into all contractual operating agreements with other carriers for the transmission of international public switched voice traffic between the United States and Gibraltar. Even if we accept as correct BACI's argument that GNCL cannot discriminate among U.S. carriers in the absence of direct interconnection agreements with them, BACI does not demonstrate that it is prohibited from entering into such agreements. For example, we are concerned that BACI could interconnect its own international whole circuits with its affiliate GNCL, the only carrier authorized to provide domestic wireline telecommunications services in Gibraltar. BACI would then be in a position to receive favorable interconnection arrangements from its affiliate. As the Commission recognized in the Foreign Participation Order, foreign carriers with market power in local exchange and exchange access markets could leverage their market power into the U.S. market to the detriment of competition and consumers. Moreover, BACI does not address the potential for competitive harm in the U.S. private line market, where U.S. consumers may seek to interconnect their customers' private lines to GNCL's local exchange facilities. Accordingly, we find that BACI has not demonstrated that it should continue to be regulated as non- dominant and, therefore, we will regulate BACI as dominant on the U.S.-Gibraltar route. IV. Ordering Clauses 6. Accordingly, IT IS ORDERED that BACI shall be regulated as a dominant carrier on the U.S.-Gibraltar route, pursuant to Section 214 of the Act, 47 U.S.C.  214 and Section 63.10 of the Commission's rules, 47 C.F.R.  63.10 and shall comply with the requirements of paragraph (c) of that section. The quarterly traffic reports filed pursuant to Section 63.10(c) must include the information required by Section 43.61 of the Commission's rules, 47 C.F.R.  43.61, for "resale of international switched services" on the U.S.-Gibraltar route. 9. 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