FOR IMMEDIATE RELEASE:        News Media Contact:
  July 9, 1999                       Rosemary Kimball at (202) 418-0500
  
  
   COMMISSION GRANTS LICENSE FOR JAPAN-US UNDERSEA CABLE
                          NETWORK
                                        
       The Commission has granted the application of the Japan-US Cable Network
  (JUS) to land and operate a non-common carrier submarine fiber optic cable between
  the United States and Japan.  The Commission granted the license under the Cable
  Landing License Act following the submission by JUS of amendments to its joint
  venture agreement, the Construction and Maintenance Agreement (C&MA).  
  
       The Commission found that these amendments, as well as recent pro-
  competitive commitments by the government of Japan and the Commission's own
  regulatory safeguards, reduced the ability of JUS to facilitate the exercise of market
  power by some or all of its owners.  In view of the need for increased capacity on the
  transpacific route, it concluded that granting the JUS license would, on balance, serve
  the public interest.  However, the Commission did not dismiss claims made by Global
  Crossing Ltd. that consortium cable systems may impede competition in this market,
  and indicated that it would commence a proceeding to examine how its submarine cable
  policies might best promote competition.
  
       The members of JUS are a consortium of large and small U.S.- and Japanese-
  licensed telecommunications carriers that jointly fund the construction and operation of
  the cable system and are allocated portions of its capacity according to the terms of the
  C&MA.  Global Crossing challenged the application, alleging that its consortium
  structure facilitates the exercise of market power by its members and slows the growth
  of competition in international telecommunications. 
  
       In response to the Commission's examination of issues raised by Global
  Crossing, the applicants amended their C&MA to provide for a more pro-competitive
  balance among the parties to that agreement.  One amendment will help ensure that the
  market for backhaul services (transit between cable landing stations and the public
  network) is competitive by granting every member of the consortium the right to
  collocate equipment on either end of the cable and provide backhaul services.  The
  second amendment provides that a simple majority, rather than a super-majority, can
  decide to increase capacity on the cable.  These two amendments address the major
  carriers' ability to earn supracompetitive profits, which ultimately would result in
  higher prices for consumers, by controlling backhaul and the timing of the final
  capacity upgrade of the cable system.
  
       The Commission found that those amendments, together with recent pro-
  competitive commitments by the government of Japan and the Commission's "no
  special concessions" rule, lessened the potential competitive harms of the consortium
  structure.  The Commission therefore found that, given those amendments and
  safeguards, and given the need for more capacity on the transpacific route, the benefits
  of licensing this cable system would outweigh the risk that doing so would have
  anticompetitive effects.  The Commission intends to commence a broader proceeding in
  the near future to examine how its policies regarding submarine cable systems might
  best promote competition and benefit consumers.
  
       Action by the Commission July 8, 1999, by Cable Landing License (FCC 99-
  167).   Chairman Kennard, Commissioners Ness, Powell, and Tristani with 
  Commissioner Furchtgott-Roth not participating.
  
                                                          - FCC -
  
       International Bureau contacts: Doug Klein at (202) 418-0424; Adam Krinsky at
  (202) 418-1099.
  
  Report No. IN 99-26