******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** DA 97-934 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Direct Net Telecommunications, ) A Limited Liability Company ) ) Application for Authorization Pursuant to ) ITC-97-094 Section 214 of the Communications Act of ) 1934, as Amended, to Provide Facilities-based ) and Resold Switched and Private Line Services ) between the United States and All ) International Points ) ORDER, AUTHORIZATION AND CERTIFICATE Adopted: May 1, 1997 Released: May 6, 1997 By the Chief, Telecommunications Division I. Introduction 1. We grant the application of Direct Net Telecommunications, a Limited Liability Company (Direct Net or the Applicant) for authority pursuant to Section 214 of the Communications Act of 1934, as amended, to provide facilities-based and resold switched and private line services between the United States and all international points. We also find that the Applicant's provision of such services should be subject to non-dominant carrier regulation. II. Background 2. Direct Net is a privately held limited liability company organized under the laws of the State of Nevada. Presently, Direct Net has Section 214 authority to provide facilities- based international switched and private line services and to resell international switched services to certain international points. 3. In its application, Direct Net seeks global authority to provide facilities-based and resold services. Specifically, the Applicant requests authority to acquire and operate U.S. common carrier and non-common carrier facilities previously and subsequently authorized and to resell the international services of authorized U.S. common carriers. The application includes a request for authority to resell private lines interconnected to the public switched network of the United States and any country found by the Commission to offer equivalent resale opportunities. No party opposed the application. 4. Direct Net certifies that it is the sole owner of Direct Net Russian Joint Stock Company (Direct Net RJSC), which holds a license from the Russian Federation to originate and terminate private line traffic on behalf of licensed users. As a result, this application is not subject to streamlined processing because such processing is not available to an applicant seeking authority to provide service to a market in which it is affiliated with a facilities-based foreign carrier and the Commission has not yet made a determination as to whether that foreign carrier possesses market power in that destination market. III. Discussion 5. Direct Net asserts that its proposed expansion of service will "promot[e] increased competition in the international telecommunications marketplace." We find that a grant of this application will serve the public interest under Section 214 of the Act by facilitating the efficient and rapid provision of international services. 6. As noted above, Direct Net certifies that it is affiliated with Direct Net RJSC, a foreign carrier under Section 63.18(h)(1) of the Commission's rules. We must determine, therefore, whether the Applicant should be subject to dominant carrier regulation along the U.S.- Russia route. 7. The Commission regulates U.S. international carriers as dominant on routes where an affiliated foreign carrier has the ability to discriminate in favor of its U.S. affiliate through control of bottleneck services or facilities in the destination market. The Applicant maintains that it should be classified as non-dominant on the U.S.-Russia route despite its affiliation with Direct Net RJSC. The Applicant certifies that neither Direct Net RJSC nor Direct Net has the ability to discriminate against unaffiliated U.S. international carriers. As an initial matter, the Applicant states that Direct Net RJSC "is not interconnected with the PSTN in the Russian Federation." Direct Net RJSC is authorized to operate as an "overlay carrier" in the Russian Federation, offering service to customers via private lines only. Direct Net RJSC leases private lines from the local monopoly service provider to carry traffic between its offices and its customers' premises. The Applicant contends that neither Direct Net nor Direct Net RJSC "own or control any means of providing international telecommunications services," but rely on a subcontractor to provide service between the Russian Federation and international points. As a result, the Applicant asserts that Direct Net RJSC "does not have the ability to discriminate against unaffiliated U.S. international carriers through control of bottleneck services or facilities in the Russian Federation." We find that there is no evidence in the record, nor are we aware of any, in contradiction to the Applicant's assertions. 8. Accordingly, under Section 63.10(a)(3) of the Commission's rules, we find that, because the Applicant's foreign affiliate lacks the ability to discriminate against unaffiliated U.S. carriers, the Applicant is entitled to classification as a non-dominant carrier for the provision of international communications services on all routes, including the U.S.-Russia route. As a non- dominant carrier, the Applicant will be subject to regulation under Title II of the Act. Specifically, Title II requires carriers to offer international services under rates, terms and conditions that are just, reasonable and not unduly discriminatory (Sections 201 and 202), and Title II carriers are subject to the Commission's complaint process (Sections 206-209). Title II carriers also are required to file tariffs pursuant to our streamlined tariffing procedures (Sections 203 and 205). As a non-dominant international carrier, the Applicant will be allowed to file tariffs on no less than one days' notice, without economic or cost support, and the tariffs will be presumed lawful. It also will be subject to the Section 214 requirements of non-dominant U.S. international carriers and the requirements of Sections 43.51, 43.61, 63.14 and 63.19 of the Commission's rules. III. Ordering Clauses 9. Upon consideration of the application and in view of the foregoing, IT IS HEREBY CERTIFIED that the present and future public convenience and necessity require the provision of facilities-based and resold international switched and private line services by Direct Net Telecommunications, a Limited Liability Company (Direct Net). 10. Accordingly, IT IS HEREBY ORDERED that application File No. ITC-97-094 filed by Direct Net IS GRANTED and Direct Net is authorized to provide international communications services pursuant to Sections 63.18(e)(1) and 63.18(e)(2) of the Commission's rules, 47 C.F.R.  63.18(e)(1) & (2). 11. IT IS FURTHER ORDERED that Direct Net shall comply with the requirements specified in Section 63.21 of the Commission's rules, 47 C.F.R.  63.21. 12. 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 the date of the public notice of this order (see Section 1.4(b)(2) of the Commission's rules). FEDERAL COMMUNICATIONS COMMISSION Diane J. Cornell Chief, Telecommunications Division International Bureau