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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* DA 96-956 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Optel Communications, Inc. ) ) Application for a Modification to License ) File No. SCL-92- 004(M) to Land and Operate a Submarine Fiber ) Optic Cable between the United States ) and Canada ) CABLE LANDING LICENSE MODIFICATION Adopted: June 14, 1996 Released: June 14, 1996 By the Chief, Telecommunications Division: INTRODUCTION 1. Optel Communications, Inc. (Optel) requests a modification to its license to land and operate a submarine fiber optic cable between the United States and Canada (CANUS-1). It seeks to add a branch to Bermuda (Bermuda branch) extending from the existing CANUS-1 branching unit in the Atlantic Ocean to a landing point in Bermuda in order to provide services between the United States, Bermuda and Canada. Cable capacity in the CANUS-1 system would continue to be sold or leased on a non-common carrier basis. We find that the proposed modification would promote the public interest by providing additional voice, video and high speed data capacity and reliable, cost- efficient communications between the United States, Bermuda and Canada. We also find that Optel has provided sufficient information to comply with the Cable Landing License Act, and therefore grant the modification to the cable landing license. APPLICATION 2. Optel is a privately-held corporation organized under the laws of the State of Delaware. It is eighty percent owned by United States citizens and twenty percent owned by Teleglobe Canada, Inc. (Teleglobe), the monopoly facilities-based carrier of international traffic originating or terminating in Canada, except for services between Canada and the United States. All of Optel's officers and two-thirds of its directors are United States citizens. The proposed modification seeks to add a Bermuda branch to the CANUS-1 high capacity digital submarine cable system owned jointly by Optel and by Teleglobe. Optel owns 100 percent of the CANUS-1 cable station in the United States and fifty percent of the international portion of the existing CANUS-1 submarine cable. Teleglobe owns 100 percent of the CANUS-1 cable station in Canada and fifty percent of the international portion of the existing CANUS-1 submarine cable. 3. The Bermuda branch will extend from the existing CANUS-1 branching unit, owned fifty percent by Optel and fifty percent by Teleglobe, in the Atlantic Ocean to a landing point in Bermuda and will be used to provide services between the United States, Bermuda and Canada. This revised CANUS-1 configuration will maintain one direct fiber pair, via the branching unit, between the U.S. and Canadian landing points, and produce a direct fiber pair between the United States and Bermuda and a direct fiber pair between Bermuda and Canada. All CANUS-1 fiber pairs will operate at a nominal speed of 2.5 Gigabits per second (Gbps). 4. Cable & Wireless plc (C&W), a publicly-traded U.K. corporation, will own and construct the Bermuda branch. C&W wholly owns C&W Bermuda, the dominant domestic and international facilities and services provider in Bermuda and Cable and Wireless Communications, Inc. (CWI), an authorized U.S. carrier incorporated in the District of Columbia. Optel states that AT&T Submarine Systems, Inc., a U.S. corporation, will supply the submarine cable and repeaters and the terminal equipment at the Bermuda landing point, and that the undersea portion of the Bermuda branch will be maintained via the Atlantic Cable Maintenance Agreement. 5. Optel asserts that the Commission held in its Optel Conditional License decision that there was no public interest reason to require CANUS-1 capacity to be offered on a common carrier basis and there was no reason to expect that CANUS-1 capacity offerings would be made available to serve the public indifferently. Optel submits that the Bermuda branch will not alter the essential character of CANUS-1, nor will it alter Optel's status as a non-common carrier. Optel incorporates by reference all information and representations set forth in its initial cable landing license application. 6. 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 Optel'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 opposition to the grant of the cable landing licenses. COMMENTS 7. We placed Optel's application for modification on public notice on January 23, 1996. In response, TeleBermuda International Ltd. (TBI) filed a motion to accept late filed comments and comments. TBI states that the Bermuda government has selected it to become the second facilities-based international services carrier in Bermuda, to compete with C&W Bermuda, the dominant facilities-based international service provider. TBI has pending before the Commission an application for a cable landing license between Bermuda and the United States. 8. In support of its motion, TBI states it inadvertently missed the deadline for submitting its comments on the modification application. TBI submits that based on its interest in the modification proceeding, the important public interest issues at stake, and the fact that no party will be prejudiced by submission of the late-filed comments, the Commission should grant its motion. In response, Optel notes that TBI's comments were filed late, but does not oppose TBI's motion. DISCUSSION 9. Although TBI's comments are untimely, given that no party will be prejudiced, and to ensure a complete record, we find that the public interest would be served by including TBI's comments in the record as informal comments pursuant to 47 C.F.R. Section 1.41. 10. TBI argues that Optel has provided insufficient information in support of its application. It states that the little information that has been submitted by Optel raises more questions than it answers, particularly with reference to how it might impact the conditions imposed in the Optel Final License decision. 11. TBI asserts that the modification may involve the sale of an ownership interest in the CANUS-1 undersea branching unit, thereby altering ownership percentages in CANUS-1 and violating conditions in the Optel Final License decision. It further states that the undersea branching unit could be used to divert one half of the total CANUS-1 system capacity through Bermuda on a spur to be entirely owned by C&W. TBI notes that Condition (7) of the Optel Final License decision requires Optel to file a copy of any contract, understanding or agreement, or summary containing the essential terms, conditions and rates, entered into with Teleglobe, its affiliates, or any partnerships or joint ventures in which Teleglobe is a participant for the sale or lease of any capacity on CANUS-1. It states that the Commission should satisfy itself that all relevant information has been filed to ensure a complete public record. 12. In its reply comments, Optel asserts that TBI's comments are without merit. It states that the addition of the Bermuda branch to CANUS-1 will not violate the conditions in the Optel Final License decision because it will not alter the CANUS-1 ownership percentages of either Optel or Teleglobe. Optel states that no ownership interest in the CANUS-1 undersea branching unit is being sold. It submits that while Optel and Teleglobe each own fifty percent of the international portion of the existing CANUS-1 submarine cable, as well as the branching unit that will serve as a junction point, C&W will construct and own the Bermuda branch. Optel states that no ownership in the undersea branching unit is being sold. Optel asserts that the because the existing ownership interests of the branching unit will remain unchanged, the modification will not violate Condition (7) of the Optel's final license. Finally, Optel states that Teleglobe's ownership in CANUS-1 will not change upon grant of Optel's modification application. 13. We find that Optel has provided sufficient information about the ownership of the CANUS-1 branching unit and the Bermuda branch. The record indicates that the proposed modification does not change the ownership percentages of the CANUS-1 system or the Bermuda branching unit. Optel owns fifty percent (100 percent of the U.S. end) and Teleglobe owns the other fifty percent (100 percent of the Canadian end). We find that no ownership interest will be sold and thus these percentages will not change. Finally, we find that the addition of the Bermuda branch does not change Teleglobe's ownership interest in CANUS-1. 14. TBI also asserts that Optel has failed to provide information regarding the proposed ready for service date for the Bermuda branch and the cost for the extension. TBI states that this information is relevant to the ultimate ownership percentages and assessment of likely utilization of the system by U.S. entities such as C&W North America. Such entities, TBI states, could seek to obtain capacity with C&W Bermuda to provide services in a manner which might violate Condition (3) of the Optel Final License decision, which prohibits the use of facilities in a discriminatory manner. TBI requests that the Commission impose appropriate protections to protect against such potential abuse. 15. TBI notes that C&W Bermuda, in conjunction with C&W plc, currently maintains a bottleneck control over all submarine cable facilities landing in Bermuda, including PTAT and CARAC. It alleges that the proposed modification configuration may allow carriers the potential to direct U.S. traffic to and from Bermuda via Canada, to the detriment of U.S. carriers that are not allowed to compete with Teleglobe in the Canadian international market. TBI submits that protections should be placed on any CANUS-1 modification to guard against potential abuse by Optel, Teleglobe or C&W. It requests that the Commission seek more information from Optel and impose appropriate conditions to protect against potential abuses of, and to ensure compliance with, the conditions previously imposed in the Optel Final License. 16. Optel responds that the Commission has previously addressed and resolved concerns that certain carriers will gain the potential to direct U.S.-originating or -terminating traffic to and from Bermuda through Canada to the detriment of U.S. carriers. It asserts that when the Commission granted Optel its conditional license, the Commission found that U.S. carriers should be protected against discriminatory practices. It states that the Commission held that any concerns as to the routing restrictions or other practices which may discriminate against U.S. carriers would be more appropriately addressed in the context of individual carriers' Section 214 applications. 17. In response to TBI's concerns about traffic diversion, Optel states that in the Optel Order on Reconsideration, the Commission addressed a similar routing concern raised by AT&T that CANUS-1 will be used to divert U.S.-European traffic through Canada. Optel asserts that the Commission concluded that it does not necessarily view such routing as harmful and that CANUS-1 should enhance U.S. international facilities competition. It also notes that the Commission stated that in the event that traffic diversion resulted in harm to U.S. carriers or ratepayers, it would revisit the issue and take corrective measures through the Section 214 process. 18. We decline to require Optel to provide information in its application about the ready for service date and cost of the modification. Our rules do not require such information to be filed with the Commission. We note, however, that the Commission's Section 214 Streamlining Order, which will take effect in the near future, amends Section 1.767 of the Commission's rules to require applicants to promptly disclose to any interested party, upon written request, accurate information concerning the location and timing for the construction of the cable facility. 19. We find that TBI's concerns as to possible routing restrictions or other practices which may discriminate against U.S. carriers would be more appropriately presented and addressed in the context of individual carriers' Section 214 applications than in a cable landing license proceeding. We see no reason to depart from the approach taken in our Optel Conditional License decision, in which we agreed with concerns regarding potential international routing restrictions, but decided that such constraints should be addressed in the context of individual carriers' Section 214 applications. In this case, the ability of carriers to market and provide service directly to U.S. customers in the United States via CANUS-1 -- whether provided on a common carrier or non-common carrier basis -- is subject to prior Commission approval under Section 214. Moreover, as the Commission found in the Optel Conditional License decision, in the event that traffic diversion results in harm to U.S. carriers or ratepayers, the Commission can revisit the issue and take corrective measures through the Section 214 process. We thus conclude that no further conditions are necessary. 20. Since existing cable stations will be used for landing this system, the application does not propose a major action within the meaning of Section 1.305 of the Commission's Rules and Regulations implementing the National Environmental Policy Act of 1969, 42 U.S.C. Sections 4321-4347. Consequently, no environmental information is required as part of the application. ORDERING CLAUSES 21. Consistent with the foregoing, we HEREBY GRANT AND ISSUE, under the Cable Landing License Act and Executive Order No. 10530, Optel Communications, Inc. a modification to its license to land and operate a high-capacity fiber optic submarine cable to add a branch to Bermuda (2 fiber pairs operating at a nominal speed of 2.5 Gbps) extending from the existing CANUS-1 branching unit in the Atlantic Ocean to a landing point in Bermuda. This license is subject to: (1) the Submarine Cable Landing Act, 47 U.S.C.  34-39; (2) the Communications Act of 1934, as amended, 47 U.S.C.  151-609; (3) subsequent applicable acts; (4) all relevant rules and regulations of the Federal Communications Commission; (5) any treaties or conventions to which the United States of America is or may hereafter become a party; (6) any actions by the Commission or the Congress of the United States of America rescinding, changing, modifying, or amending any rights accruing to any person; and (7) the following conditions: (1) The location of the cable within the territorial waters of the United States of America, its territories and possessions, and upon the foreshore thereof, shall be in conformity with plans approved by the Secretary of the Army, and the cable 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 with a view to protecting and safeguarding the cable from injury or destruction by enemies of the United States of America; (3) The Licensee or any persons or companies directly or indirectly controlling it or 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 possessions, to land, connect or operate cables or landlines, to construct or operate radio stations, or to interchange traffic, which 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 or companies controlling it or controlled by it are parties; (4) 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; (5) The Licensee shall maintain no less than a 50 percent ownership interest and voting control share in the proposed cable, including 100 percent ownership in the cable station at Manasquan, New Jersey and in the U.S. land portion of the cable from the station to the U.S. beach joint of the submersible portion of the proposed cable; (6) The Licensee shall not sell or lease any capacity on CANUS-1 to Teleglobe, its affiliates or any partnerships or joint ventures in which Teleglobe is a participant, unless and until Teleglobe, its affiliates, or partnerships in which Teleglobe is a participant has requested and received prior Commission approval for the sale and lease of any such capacity; (7) The Licensee shall file a copy of any contract, understanding or agreement, or a summary containing the essential terms, conditions and rates, entered into with Teleglobe, its affiliates, or any partnerships or joint ventures in which Teleglobe is a participant for the sale or lease of any capacity on CANUS-1; (8) The Licensee shall obtain prior Commission approval for any proposed increase in Teleglobe's level of ownership or participation in the Licensee; (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 Optel stock; (10) This license is subject to future modification which may be determined necessary by the Secretary of State to protect U.S. interests as a result of: (a) the sale or lease of capacity to particular foreign or domestic entities; or (b) contracts awarded to particular foreign or domestic entities for the design, construction, installation, operation, or maintenance of the proposed cable; (11) This license is revocable after due notice and opportunity for hearing by the Federal Communications Commission in the event of breach or nonfulfillment of any requirement specified in Section 2 of the Submarine Cable Landing Act, 47 U.S.C.  34-39, or for failure to comply with the terms of this authorization; (12) 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 that date, unless renewed or extended upon proper applications duly filed no less than six months prior to the expiration date; and, upon expiration of the license, all rights granted under it shall be terminated; and (13) 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 this order. 22. This order is issued under Section 0.261 of the Commission's Rules 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 may be filed within 30 days of public notice of this order (see Section 1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Diane J. Cornell Telecommunications Division International Bureau