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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 ) ) GE American Communications, Inc., ) CCC Merger Sub, Inc., and ) Columbia Communications Corp. ) File No. SAT-T/C-20000203-00056 ) Application for Consent to Transfer of ) Space Station Licenses of Columbia ) Communications Corporation ) ) GE American Communications, Inc. ) CCC Merger Sub, Inc., and ) Columbia Communications Corp. ) File No. SES-T/C-20000203-00142 ) Call Sign E980105 Application for Consent to Transfer of ) Earth Station License of Columbia ) Communications Corporation ) ORDER AND AUTHORIZATION Adopted: June 26, 2000 Released: June 27, 2000 By the Chief, International Bureau: I. INTRODUCTION 1. In this Order, we grant Columbia Communications Corp. (Columbia) authority to assign five space station licenses and one earth station license to a wholly owned subsidiary of GE American Communications, Inc. (GE Americom). This grant should allow GE Americom, which serves primarily the domestic telecommunications market, and Columbia, which serves primarily the international communications market, to compete more effectively in the global telecommunications market. The resulting competition will lead to wide service offerings and lower prices for consumers. II. BACKGROUND 2. GE Americom is an indirect wholly-owned subsidiary of General Electric Corporation, a New York corporation. GE Americom is incorporated in Delaware with its principle office in New Jersey. GE Americom currently operates 13 satellites that provide primarily domestic U.S. services in the C- and Ku-bands. GE Americom holds a number of earth station licenses as well. In addition, GE Americom has authority to launch and operate a Ka-band global satellite system, and has an application pending for authority for a global satellite system in the V-band. An affiliate of GE Americom owns a minority interest in Nahuelsat, S.A., an Argentine corporation operating a Ku-band satellite at the 71.8 W.L. orbit location. Another GE Americom affiliate owns half the transponders on the Ku-band Sirius II satellite, a Swedish satellite located at 5 E.L. Further, GE Americom and Lockheed Martin Global Telecommunications (Lockheed Martin) have entered into a joint venture to launch a satellite into the 108.2 E.L. orbit location to provide service to Asia. 3. Columbia currently provides Atlantic Ocean Region (AOR) service over the C-band Columbia 515 satellite, located at 37.7 W.L., and the TDRS-6 satellite, located at 47 W.L. TDRS-6 is owned by the National Aeronautics and Space Administration (NASA), and Columbia has authority to lease C-band capacity on that satellite. Columbia also leases capacity on NASA's TDRS-5 satellite located at 174.3 W.L. to provide Pacific Ocean Region (POR) service. In January 1999, Columbia was authorized to launch and operate a C-band and extended C-band satellite at 47 W.L., and a hybrid C/Ku-band satellite at 172 E.L. In addition, Columbia has a number of space station applications pending before the Commission. Finally, Columbia holds one license for a C-band transmit/receive earth station with a 4.5-meter antenna in Las Cruces, New Mexico. 4. GE Americom created CCC Merger Sub, Inc. (Merger Sub) to facilitate its proposed merger with Columbia. If this transfer is approved, Columbia's licenses would be transferred to Merger Sub, and Columbia would then become a wholly-owned subsidiary of GE Americom. The applicants argue that the combination of their satellite systems would form a global satellite network that could compete more effectively with other global satellite network operators. No comments or oppositions were filed in response to the proposed merger. III. DISCUSSION A. Legal Standard 5. Under Section 310(d) of the Communications Act, we must find that the proposed assignment serves the public interest, convenience, and necessity before we can approve the assignment of authorizations or licenses. To make this finding, we must weigh any potential public interest harms against any potential public interest benefits, considering competitive effects and other public interest factors such as rapid delivery of service to the public. As the Commission explained in the TCI/AT&T Order: [O]ur public interest analysis is not, however, limited by traditional antitrust principles . . . . It also encompasses the broad aims of the Communications Act. . . . To apply our public interest test, then, we must determine whether the merger violates our rules, or would otherwise frustrate our implementation or enforcement of the Communications Act and federal policy. That policy is, of course, shaped by Congress and deeply rooted in a preference for competitive processes and outcomes. 6. Consistent with this precedent, we begin our analysis by identifying the relevant product markets that are affected by the proposed transaction, and then consider the competitive effects of the proposed transaction in these markets. Subsequently, we consider the Applicant's request for a waiver of the Commission's "cut-off" rule. B. Effects on Competition 1. Relevant Product Markets 7. In evaluating the competitive effects of proposed transactions, the Commission considers both the relevant product market and geographic market. For satellite service providers, the Commission has determined that the relevant product markets include domestic and international telecommunications markets. The domestic telecommunications market includes "all interstate, domestic interexchange telecommunications services with no relevant submarkets." The relevant geographic market for satellite services is nationwide. The Commission has divided the international communications market into three submarkets: international message telephone service (IMTS), non-IMTS, and television service. The Commission has also analyzed the international telecommunications market on a country-by-country basis, where each country represents a separate geographic market. 2. Competition in the Affected Product Markets a. Domestic Telecommunications Market 8. Neither GE Americom nor Columbia has a dominant position in the domestic telecommunications market. In evaluating previous transfers of control, the Commission has found that a market share of one percent in the domestic telecommunications market would not raise competitive concerns. The Applicants state that 1998 total domestic interexchange revenues were $272 billion, and that their combined revenues constitute less than one percent of that amount. Thus, based on the uncontradicted statements of the Applicants, we conclude that, because Columbia/GE Americom's share of the domestic telecommunications market is less than one percent, it does not raise competitive concerns. b. International Telecommunications Markets 9. The Applicants state that they do not compete with each other in the IMTS market, and that neither holds a dominant position in any international telecommunications market. The Applicants also assert that neither GE Americom nor Columbia is dominant in any international telecommunications market, and that Columbia's market share in the IMTS market is de minimis. In addition, they note that the international telecommunications market is composed of large, well- established systems such as INTELSAT, New Skies, Hughes/PanAmSat, and Loral/Orion. 10. Columbia and GE Americom serve substantially different and distinct markets. Although neither party is precluded from entering the other's market, GE Americom has remained primarily a domestic service provider, while Columbia principally serves the international telecommunications marketplace. Under these circumstances, we find that the merger raises no concerns about substantial harm to competition in any international telecommunications market. 11. In addition, based on the uncontradicted statements of the Applicants, the combined GE Americom/Columbia will be able to offer a wider range of services with greater efficiency. GE Americom's experience and financial assets will make Columbia a stronger competitor internationally, and the addition of Columbia's AOR and POR facilities will enhance GE Americom's ability to provide its customers with a full array of service options. Further, the new entity should be better poised to compete in the global satellite services market. Given that there are no substantial concerns regarding harm to competition resulting from this transaction, these stated benefits are sufficient to establish that authorization of this transaction will serve the public interest. C. Waiver of Cut-off Rules 12. Columbia does not have any applications pending in any processing round. Nevertheless, the Applicants seek waiver of the "cut-off" rules in Section 25.116. Section 25.116(b)(3) of the Commission's rules states that an amendment specifying a substantial change in beneficial ownership of an applicant that requires an application under Section 301(d) of the Act is a major amendment. Section 25.116(c)(2) states that the Commission will consider an application newly filed if it is amended by major amendment filed after the "cut-off" date applicable to the application, unless the major amendment reflects a change in ownership and a request for exemption from the "cut-off" date is granted. Inasmuch as Columbia does not have any applications pending in processing rounds, the cut-off rules do not apply and the request for waiver is unnecessary. Accordingly, we dismiss this request as moot. IV. CONCLUSION 13. In view of the forgoing, we find that granting the applications will serve the public interest, convenience, and necessity by increasing competition in the satellite services market to the benefit of U.S. consumers. For this reason and the reasons described in this Order and Authorization, we grant the application of GE Americom and Columbia for consent to the transfer from Columbia to Merger Sub of Columbia's authorization to launch and operate several satellites in the AOR and POR. We also grant the related application of GE Americom and Columbia for consent to the transfer from Columbia to Merger Sub of Columbia's authorizations associated with earth station facilities in Las Cruces, New Mexico. Finally, we dismiss the Applicants' request for waiver of Section 25.116(c)(2) of the Commission's rules as moot. V. ORDERING CLAUSES 14. Accordingly, IT IS ORDERED that File No. SAT-T/C-20000203-00056, Application for Consent to Transfer of Space Station Licenses of Columbia Communications Corporation, and File No. SES-T/C-20000203-00142, Application for Consent to Transfer of Earth Station License of Columbia Communications Corporation, ARE DISMISSED AS MOOT, to the extent that they seek waiver of Section 25.116(c)(2) of the Commission's rules, 47 C.F.R.  25.116(c)(2), and otherwise ARE GRANTED. 15. IT IS FURTHER ORDERED that pursuant to Section 1.65 of the Commission's rules, 47 C.F.R.  1.65, GE American Communications, Inc. and Columbia Communications Corp. are afforded 30 days from the date of the release of this Order to amend all applications to reflect the new ownership structure approved in this Order. 16. This Order is issued pursuant to Section 0.261 of the Commission's rules on delegated authority, 47 C.F.R.  0.261, and is effective upon release. FEDERAL COMMUNICATIONS COMMISSION Donald Abelson Chief, International Bureau APPENDIX A Thirteen GE Americom Satellites That Provide Primarily Domestic Service (1) C5 at 139 W.L.; C-band (2) GE-8 at 139 W.L.; C-band (3) C1 at 137 W.L.; C-band (4) GE-7 at 137 W.L.; C-band (5) C4 at 135 W.L.; C-band (6) C3 at 131 W.L.; C-band (7) GS4 at 105 W.L.; Ku-band (8) GE-1 at 103 W.L.; Hybrid C/Ku-band (9) GE-4 at 101 W.L.; Hybrid C/Ku-band (10) GE-3 at 87 W.L.; Hybrid C/Ku-band (11) GE-2 at 85 W.L.; Hybrid C/Ku-band (12) K2 at 81 W.L.; Ku-band (13) GE-5 at 79 W.L.; Ku-band Source: GE Americom's website at <>.