Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) American Telephone and Telegraph Company) File No. ITC-91-038 ) GTE Hawaiian Telephone Company Incorporated) File No. ITC-91-036 ) MCI International Inc. ) File No. ITC-91-045 ) TRT/FTC Communications Inc. ) File No. ITC-91-051 ) US Sprint Communications Company) File No. ITC-91-026 Limited Partnership ) ) World Communications, Inc. ) File No. ITC-91-007 ) Applications for Authority Pursuant to ) Section 214 of the Communications Act of 1934,) as Amended, to Acquire and Operate Capacity) in the North Pacific Cable System) MEMORANDUM OPINION AND ORDER ON RECONSIDERATION Adopted: June 2, 1999 Released: June 2, 1999 By the Acting Chief, International Bureau: 1. In this order, we reconsider conditions imposed by the Common Carrier Bureau in its 1991 order (DA 91-588) granting six carriers authority, pursuant to Section 214 of the Communications Act of 1934, to acquire and operate capacity in the North Pacific Cable system for the provision of authorized common carrier services between the United States and points in the Pacific Ocean region. We find that the licensee of the cable system is in compliance with its license and that no modification of the license is necessary. We therefore grant the licensee's petition for reconsideration and remove the conditions in question. Introduction 2. The North Pacific Cable system (NPC system) is licensed as a non common carrier cable system. On May 20, 1991, the Common Carrier Bureau granted the six carriers listed in the caption ("the six carriers") authority to acquire and operate circuits in the North Pacific Cable System. The order included authorizations for those carriers to acquire one-half interests in circuits in the U.S. portion of the NPC system "on an ownership basis." Two conditions of that order are at issue here. The first issue concerns the need to add the six carriers to the NPC cable landing license, and the second issue concerns the cable landing licensee's compliance with a condition of its license. 3. The NPC cable landing license, granted in 1989, authorized Pacific Telecom Cable, Inc. (PTC) to construct and operate the NPC system on a non common carrier basis. One issue before us now is whether the six carriers' acquisition of rights, as authorized by the 1991 order, requires amendment of the cable landing license to add the six carriers as licensees. In the 1991 order, the Common Carrier Bureau found that amendment of the license was required. The 1991 order conditioned the authorizations upon the six carriers' filing "appropriate applications seeking modification of the Final License for the NPC system to add themselves as licensees of that cable system." 4. The 1991 order observed that the NPC cable landing license contained a condition requiring PTC to "maintain no less than a 50 percent ownership and voting control share" of the NPC system, including 100 percent ownership in the U.S. cable stations. The second issue before us now is whether this condition is violated by the six carriers' acquisition of rights as authorized by the 1991 order. In 1991, the Common Carrier Bureau stated that "[s]ale of ownership interests in the NPC system raises questions regarding PTC's compliance with this condition." The Bureau therefore requested that PTC either explain how it remained in compliance with that condition or seek such modification as it may deem appropriate. It also conditioned the authorizations granted therein upon the outcome of any future proceedings with PTC regarding the ownership matter. 5. On June 20, 1991, PTC submitted a petition for reconsideration of the Common Carrier Bureau's order. PTC asserts that its sale of capacity in the NPC system to the six carriers "neither converts the ownership in the underlying cable nor results in any non-compliance with the conditions to PTC's Final License regarding ownership or voting control." Therefore, PTC argues, no modification of the NPC cable landing license is necessary, and we should reconsider or clarify the 1991 order to the extent it suggests that PTC is not in compliance with the conditions of the NPC cable landing license. Discussion 6. In its petition, PTC clarifies the nature of the "ownership" interests acquired by the six carriers pursuant to the authorization granted in DA 91-588. The six carriers acquired only an ownership interest in the cable system's capacity, not any "right, title or interest in the underlying cable assets." The NPC Construction and Maintenance Agreement (C&MA), which defines the relationship between PTC and the purchasers of capacity in the cable system, defines ownership in terms of "ownership of a portion of the capacity." PTC maintains ultimate control and ownership over the physical structure, function, and maintenance of the cable facility in the United States. 7. The six carriers authorized in DA 91-588, and others that may have acquired capacity on similar terms, became "Signatories" to the C&MA. Signatories participate in the Management Committee of NPC, which makes certain decisions with regard to operation of NPC, but other decisions are reserved for the "Founding Signatories," which make up the "Maintenance Authority." Only the original parties to the C&MA are Founding Signatories. Non-founding Signatories become owners of the portions of NPC that carry traffic, but only PTC has ownership interests in the U.S. landing stations. The Founding Signatories remain solely responsible for the operation and maintenance of NPC, and PTC remains solely responsible for operating the U.S. end in accordance with U.S. law. In the event of a dissolution, the assets of NPC would be disposed of and any proceeds or costs divided among the Signatories; thus, the Signatories would not acquire any of the underlying assets. In consideration of the foregoing, we find that the interests acquired by non-founding Signatories, including the six carriers at issue here, do not represent the sort of ownership of NPC that requires those parties to become licensees of the cable system. Therefore, on reconsideration of DA 91-588, we will eliminate the condition that the six carriers authorized therein seek modification of the cable landing license. We will dismiss any requests filed pursuant to that condition as moot. 8. With regard to the condition that PTC "maintain no less than a 50 percent ownership and voting control share," we first conclude, for the same reasons, that PTC has maintained "no less than a 50 percent ownership ... share" of the NPC system. The rights acquired by the six carriers do not represent the sort of original ownership in the cable system that would reduce PTC's ownership below 50 percent. 9. We now turn to whether PTC has maintained a "50 percent ... voting control share" of the NPC system. The C&MA shows that PTC is solely responsible for the "operation and maintenance" of the U.S. portions of the cable system and, together with the other Founding Signatories, is jointly responsible for the operation and maintenance of the international portions. PTC is also solely responsible for "obtaining and maintaining, for the duration of this Agreement, all governmental approvals, consents, authorizations, licenses and permits and other authorizations to enable NPC to be landed, installed, operated and maintained in the U.S. in accordance with U.S. law." It is also responsible for "connecting NPC to national telecommunications networks when and where required in the U.S. and to international facilities in the U.S." Thus, PTC has retained all the authority necessary to comply with the terms of the NPC cable landing license. 10. Furthermore, in its petition, PTC clarifies the rights that the six carriers acquired as owners of capacity in NPC. According to the C&MA, those carriers acquire voting interests on the Management Committee, but decisions that cannot be made by consensus must be made on the basis of at least three Signatories representing at least two-thirds of the total voting interest and must include IDC and PTC. Thus, PTC's assent is necessary for all decisions of the Management Committee. Furthermore, only the Founding Signatories make up the Maintenance Authority, which has responsibility for operation and maintenance of NPC. 11. Thus, the interests acquired by the six carriers did not strip from PTC the sole responsibility, and all of the power under the C&MA that is necessary, to comply with U.S. law and the terms of the license. Those powers were not diluted by adding the six carriers to the Management Committee. In addition, PTC retains very significant power over the decisions of the Management Committee. In consideration of these very specific facts, we find that the rights that PTC has retained are the equivalent of 50 percent voting control of the NPC system and that it therefore is not in violation of that provision of the cable landing license. 12. In conclusion, on the basis of the representations made by PTC, we find that the licensee is in full compliance with the ownership and voting conditions of the NPC cable landing license. Therefore, on reconsideration of DA 91-588, we eliminate the condition stated in paragraph 23, which provided that the authorizations granted therein were subject to the results of any further proceedings regarding PTC's compliance with the conditions of the NPC cable landing license. The license is therefore no longer burdened by DA 91-588 or anything filed in response thereto. Ordering Clause 13. Accordingly, IT IS ORDERED that PTC's Petition for Reconsideration and Clarification of DA 91-588 is GRANTED. It is FURTHER ORDERED that any pending applications to modify the NPC cable landing license, SCL-86-002, to add a party as a licensee, filed in response to DA 91-588, are DISMISSED. 14. This Order is issued under Sections 0.261 and 1.106 of the Commission's rules, 47 C.F.R.  0.261, 1.106, 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 Roderick Kelvin Porter Acting Chief, International Bureau