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Re: Review of Commission Consideration of Applications under the Cable Landing License Act (rel. June 8, 2000).

I respectfully dissent from today's item for two reasons. First, in my view, the Commission lacks authority over undersea cable landing licenses. Second, today's order proposes a vast and unnecessary regulatory structure all in the name of "streamlining." Indeed, today's streamlining item looks more like yesterday's command and control regulation than tomorrow's deregulated and dynamically competitive marketplace.

The Commission lacks clear authority to regulate cable landing licenses. I previously detailed my concerns in the FCC's Order(1) finally approving the Japan-U.S. undersea cable.(2) I will not repeat those arguments here. However, it bears emphasizing that the Cable Landing License Act provides that "no person shall land or operate in the United States any submarine cable…unless a written license to land or operate such cable has been issued by the President of the United States."(3) The majority has taken the position that the President may delegate such authority to the FCC. While I believe the President is free to delegate such responsibilities to the Executive Branch, it is not the President's general prerogative to assign duties to an independent agency, such as the FCC.(4) The Commission's independence from the Executive Branch is fundamental to its existence and it is our obligation to prevent any erosion of that core principle. Therefore, I believe the FCC must resolve the threshold legal issue of our jurisdiction before running headlong into a complicated streamlining proceeding. I encourage parties with concerns about the scope of the agency's jurisdiction to file comments addressing this issue.

As I also stated in the Japan-U.S. proceeding, I am deeply troubled by the delays that have been associated with issuance of cable landing licenses. However, even if the FCC had clear authority over these licenses, I would be hard pressed to support much of today's item. While I support streamlining and the goal of lending additional predictability to the FCC's consideration of these license applications, I believe today's item may fall short of these goals.

What gets lost in today's item is that applicants for cable landing licenses are, by definition, expanding overall capacity. Expanded capacity is inherently good news for consumers. Regardless of the circumstances, more capacity expands consumer choice and drives down prices. Also lost in today's item is that the undersea cable market is more competitive than ever and all signs point towards additional dramatic increases in capacity over the next few years.(5) It seems like an odd time for the FCC to first enter this field of regulation and promulgate detailed rules, even in the name of streamlining.

If the Notice applied a simple, straightforward test for streamlined treatment, and offered some hope that even non-streamlined applications would move more quickly, then I would have far fewer concerns. Instead, the Notice proposes three complicated tests to assess eligibility for streamlining.(6) Each of those three tests has numerous definitional elements and subparts. For example, under the third test, competitive safeguards, there are two categories to consider: (1) landing stations and competitive backhaul and (2) capacity upgrades and use of capacity.(7) Under the first category, a license applicant faces two additional subtests to show that the applicant ensures competition.(8) The second of those subtests sets forth further subparts addressing the sufficiency of the space at the cable landing stations for potential competitors, who can use that space, and who can perform backhaul.(9) Then there is the question of the second category, capacity upgrades and use of capacity. Under this second category there are two further subtests involving a voting scheme for upgrading capacity and controls on resale or transfers of capacity.(10) This hardly seems like streamlining. (11)

It is not so much that any of these components are ill conceived. I believe the majority has thought extensively about how submarine cables "should" operate. But therein lies the rub, the majority believes the FCC should consider forcing carriers to "do the right thing" in developing their submarine cable business. I am not at all confident that government can determine what the "right thing" is, and even if it could, I would be reluctant to support the level of detailed business engineering that is apparently required to achieve it. The "right thing" in regulatory engineering may be the wrong thing for consumers who may end up with nothing in expanded capacity or lower rates.

For those who believe the FCC has authority over these licenses, I encourage proposals for a more simple and easy-to-apply streamlining test. In addition, I have recently learned that many of the delays and costs imposed on undersea cable ventures may stem from the actions of other governmental entities. Thus it would be informative for commenting parties to discuss the nature of any governmental barriers to entry and what steps the Commission may take under Section 253 to preempt such barriers.(12)

These are dynamic and competitive times for the undersea cable industry, this streamlining order should focus on what this agency can do to get itself and others out of the way.

1    See AT&T Corp. Et. Al., Joint Application for a License to Land and Operate a Submarine Cable Network Between the United States and Japan, File No. SCL-LIC-19981117-00025, Cable Landing License, 14 FCC Rcd. 13066 (1999) (Japan-U.S. Order).

2     See Public Statement of Commissioner Harold Furchtgott-Roth, Re: Joint Application for a License to Land and Operate a Submarine Cable Network Between the United States and Japan, http://www.fcc.gov/Speeches/Furchtgott_Roth/Statements/sthfr932.html (July 9, 1999).

3    47 U.S.C. § 34.

4     This analysis may be different if there were a specific statutory provision calling for such delegation.

5     See Letter from Paul W. Kenefick, Director, International Regulatory Affairs, Cable & Wireless to Elizabeth Nightingale, International Bureau, FCC (January 13, 2000) (citing 6521% increase in Trans-Atlantic cable capacity and a 3607% increase in Trans-Pacific capacity from 1998 to 2001 corresponding to 96.7% and 90.7% decreases in the per circuit costs on the Trans-Atlantic and Trans-Pacific routes respectively from 1996 to 2001); IP Telephony Workshop, International Telecommunications Union, Geneva, ITU New Initiatives Programme, IPTEL/03, p. 11-12 (May 29, 2000) (showing the recent "massive increase" in undersea cable capacity).

6    See Notice of Proposed Rulemaking, Re: Review of Commission Consideration of Applications under the Cable Landing License Act, at ¶ 20 (rel. June 8, 2000 ) (NPRM)

7     See NPRM, at ¶ 39.

8     See NPRM, at ¶¶ 41-42.

9     See NPRM, at ¶¶ 43-44.

10    See NPRM, at ¶¶ 49-53.

11    There is an additional impediment to the Commission's streamlining efforts, because the license approved by the FCC must then be approved by the Secretary of State. See id. at ¶ 55.

12    See 47 U.S.C. § 253 (d); see also AT & T Communications of the Southwest, Inc. v. City of Austin, Tex., 42 F.Supp.2d 708 (W.D. Tex. 1998) (holding the city ordinance requiring municipal consent before entrant could operate telecommunications services in the city was preempted by 47 U.S.C. § 253 and state law); Silver Star Telephone Company, 13 FCC Rcd. 16356 (1998).