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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-T/C-19990210-00003 ) Application for Consent to Transfer ) of Control of TeleBermuda International, L.L.C. ) to TeleBermuda International Limited ) ) MEMORANDUM OPINION AND ORDER Adopted: October 29, 1999 Released: October 29, 1999 By the Chief, Telecommunications Division I.INTRODUCTION 1. TeleBermuda International, L.L.C. ("TBI LLC") and TeleBermuda International Limited ("TBI Ltd.") filed an application to transfer control of TBI LLC to TBI Ltd. The application was placed on public notice on March 17, 1999, and we received only one comment, which supported grant of the application. For the reasons discussed below, we grant the application. II.BACKGROUND 3. In 1996, the Commission granted TBI LLC authorization to land and operate the BUS-1 Cable between Tuckerton, New Jersey, and Lands End, Bermuda. TBI LLC holds the U.S. landing license and owns all the plant and equipment in the United States. 4. TBI LLC, a Delaware corporation, is 80% owned by Elbac Cable Co. ("ECC") and 20% owned by TBI Ltd. The David A. Bayer Trust ("the Trust") owns 100% of the stock in ECC. TBI Ltd. is a Bermudan corporation. At the time of the filing of the initial application only 23.3% of TBI Ltd.'s stock was held by Bermudan interests. Slightly over 50% of the company was owned, directly or indirectly, by Canadians. U.S. citizens owned, directly or indirectly, 20.3% of the company's stock, and U.S. citizens held one of TBI Ltd.'s six board seats. TBI Ltd. is licensed in Bermuda to provide international telecommunications services between Bermuda and foreign points, but it is not licensed to provide local or domestic service in Bermuda. Although TBI Ltd. is indirectly majority- owned by foreign investors, it is not affiliated with any other foreign carrier. 5. Since filing its initial application in the current proceeding, TBI Ltd. completed an equity financing arrangement that resulted in a number of changes in the ownership structure of the company. GlobeNet Communications Group Limited ("GlobeNet") now has a 100% interest in TBI Ltd. There are three investment companies that hold a 10% or greater share in GlobeNet. 6. TBI LLC requests authority for TBI Ltd. to acquire all of ECC's ownership interests in TBI LLC. As a result, TBI Ltd. will obtain 100% ownership and control of TBI LLC. TBI Ltd. does not anticipate any change in service offerings to the public as it will continue to hold the BUS-1 Cable landing license and will continue the operations of the BUS-1 Cable. Pursuant to Section 1.767(b) of the Commission's rules, the Cable Landing Act, and Executive Order No. 10530, we informed the Department of State of the application and amendment. The Department of State, after coordinating with the National Telecommunications and Information Administration and the Department of Defense, approved the proposed ownership change. VII.DISCUSSION 8. The Applicants state that consummation of the proposed transaction would serve the public interest by streamlining the operation of the BUS-1 Cable system. In addition, the transaction will foster more efficient service offerings. The Applicants also state that granting the request would be consistent with previous Commission decisions of similar cable landing licenses. No party opposed the application, and one party filed in support. Upon review of the application, we find that a grant of this application will serve the public interest and will be consistent with the Cable Landing License Act. 9. In our initial decision granting a cable landing license to TBI LLC, we noted that TBI Ltd.'s 20% ownership of TBI LLC did not implicate the reciprocity provisions of the Cable Landing License Act. We reasoned that TBI Ltd.'s 20% stake in TBI LLC did not exceed the 25% level for classifying a U.S. carrier as an "affiliate" for purposes of applying an Effective Competitive Opportunities (ECO) Accordingly, we found that the interests of the Cable Landing License Act would be served by grant of the cable landing license. 10. Under the proposed transfer of control, TBI Ltd.'s ownership of TBI LLC will increase from 20% to 100%, which would far exceed the 25% ownership threshold for classifying a U.S. carrier as an affiliate of a foreign carrier. In our Foreign Participation Order, we explained that when considering an application to land and operate a submarine cable that will connect to a non-WTO member country, we will consider first whether the applicant is, or is affiliated with, a carrier that has market power in the destination market of the cable. If so, we will then consider whether that destination market offers effective competitive opportunities for U.S. companies to land and operate a submarine cable in that country. 11. Under Section 63.10(a)(3) of our rules, a carrier is presumed to be non- dominant and lack market power on a particular route if the foreign carrier lacks 50% market share in the international transport and the local access markets on the foreign end of the route. The applicants state, unopposed, that TBI Ltd. lacks sufficient market power in Bermuda to affect competition adversely in the U.S. market. Specifically, TBI Ltd. lacks 50 percent market share in the international transport and the local access market in Bermuda. The applicants also point out that while TBI Ltd. is licensed in Bermuda to provide international telecommunications services between Bermuda and foreign points, TBI Ltd. is not licensed to provide local or domestic services in Bermuda. Because TBI Ltd. lacks market power on the destination market of the relevant cable, we need not apply the ECO test. 12. In light of the foregoing, we conclude that grant of the application would be consistent with the Cable Landing License Act. We therefore authorize the transfer of control of TBI LLC to TBI Ltd. We modify the initial authorization to reflect this transfer of control. We do not modify any of the conditions of the authorization. XIII.ORDERLING CLAUSES 14. Accordingly, IT IS ORDERED that the application, File No. SCL-T/C- 19990210-0003, IS GRANTED, and the Applicants are authorized to transfer control of TBI LLC to TBI Ltd. The cable landing license for the BUS-1 Cable, File No. SCL-95- 009, IS MODIFIED to reflect this transfer of control. 15. IT IS FURTHER ORDERED that all the terms and conditions of any Commission decisions granting authority to TBI LLC shall remain in effect. 16. IT IS FURTHER ORDERED that the Applicants shall notify the Commission no later than thirty days after consummation of the transfer of control or in the event a decision is made not to consummate the transfer of control. 17. 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 C.F.R.  1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Rebecca Arbogast Chief, Telecommunications Division International Bureau