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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) ) CABLE & WIRELESS, INC.) ) Application for Authority Pursuant to ) Section 214 of the Communications Act ) File No. ITC-97-335 of 1934, as Amended, to Provide Resold and ) Facilities-Based Switched and Private Line ) Service between the United States and the ) Philippines and to Be Held Non-dominant for ) All Services on This Route. ) ORDER, AUTHORIZATION, AND CERTIFICATE Adopted: January 15, 1998 Released: January 20, 1998 By the Chief, Telecommunications Division: I. Introduction 1. In this Order, we grant Cable & Wireless, Inc. (CWI) authority to provide facilities-based switched and private line international telecommunications services and resold private line service between the United States and the Philippines. We also grant CWI's request that it be regulated as non-dominant on the U.S.-Philippine route. II. Background 2. CWI filed an application requesting authority, pursuant to Section 214 of the Communications Act of 1934, as amended, to operate both as a facilities-based carrier and as a resale carrier for the provision of international telecommunications services between the United States and the Philippines. Services that Cable & Wireless seeks to provide include facilities-based switched and private line service and resold non-interconnected private line service. CWI also requests that it be classified as a non-dominant carrier for the provision of international communications services on the United States-Philippine route. 3. CWI, a Virginia corporation, is a wholly owned subsidiary of Cable & Wireless Holdings, Inc., which is a wholly owned subsidiary of Cable & Wireless plc (CW plc). CW plc is incorporated under the laws of England and Wales. 4. In the Philippines, CWI has two affiliates within the Commission's definition: Eastern Telecommunications Philippines, Inc. (ETPI) and Oceanic Wireless Network Inc. (OWNI). CWI requests that it be regulated as non-dominant for the provision of international communications services to the Philippines because neither of the affiliates has the ability to discriminate against unaffiliated U.S. international carriers through the control of bottleneck services or facilities in the Philippines. First, OWNI is mainly a carrier's carrier, providing long distance services over microwave facilities for other carriers, including the dominant carrier, PLDT. Second, CWI states the Philippine telecommunications market remains predominantly controlled by the Philippine Long Distance Telephone Company (PLDT), which controls 82 percent of the international gateway (IG) market. The remaining IG market is controlled by Philippine Global Communications (10 percent share), and the other seven licensed carriers, including ETPI, split the remaining 8 percent of the market. While competitive IG carriers have been granted licenses to compete with PLDT's local service in several areas of the country, CWI argues it has had little effect on PLDT's dominance as PLDT controls approximately 90 percent of the local exchange network. III. Comments 5. CWI filed its application on June 9, 1997. On June 25, 1997, the Commission placed CWI's application on Public Notice and invited interested parties to file comments. 6. ABS-CBN Telecom, North America, Inc. filed a Petition to Deny on July 23, 1997. The Petition asserts that CWI's application did not clearly state whether CWI would provide switched service over resold International Private Lines (IPL), or International Simple Resale (ISR), between the United States and the Philippines. The Petitioner opposes the grant of the application and argues that an effective competitive opportunities (ECO) determination, or an equivalency determination, is required unless CWI amends its application to clarify that it is not seeking authorization to provide switched services over IPLs. CWI responded, in its Opposition to Petition to Deny, that CWI did not request to provide ISR to and from the Philippines and that the IPL resale authority to the Philippines that CWI is seeking will be used only for private line purposes and not for switched traffic. IV. Discussion A. Section 214 Application 7. The rules and standards adopted in the Foreign Carrier Entry Order apply to this application. In that Order, the Commission determined that an important element of a foreign carrier s entry into the U.S. international services market is whether U.S. carriers have effective opportunities to compete in the destination market that a foreign carrier seeks to serve. The Commission stated that an ECO test would be one part of its overall public interest analysis of international Section 214 applications. The Commission also stated that it would continue to consider other public interest factors that may weigh in favor of, or against, granting an application. These factors include the general significance of the proposed entry to the promotion of competition in the U.S. telecommunications market, any national security, law enforcement, foreign policy, or trade concerns raised by the Executive Branch, and the presence of cost-based accounting rates. 8. In adopting the ECO test, the Commission stated that it would apply this test to applications from foreign carriers that have market power, or are affiliated with such carriers, in the destination markets they seek to serve. The Foreign Carrier Entry Order defines market power as the ability of the carrier to act anticompetitively against unaffiliated U.S. carriers through the control of bottleneck services or facilities on the foreign end. The Commission found that applications from foreign carriers that hold market power raise the greatest potential of anticompetitive conduct, particularly if U.S. carriers are not allowed to compete effectively in those markets. If the affiliation is with a non-dominant foreign carrier, we do not apply an ECO analysis to the application. 9. CWI submits that it has two affiliates in the Philippines. Therefore, we must determine whether those affiliations require us to undertake an ECO analysis of the Philippine market. According to CWI, its affiliates do not have the ability to discriminate against unaffiliated U.S. international carriers through control of bottleneck services or facilities in the Philippines because the Philippine telecommunications market remains predominantly controlled by companies that are not affiliated with CWI. We therefore find that CWI, through its affiliates, lacks market power that would require us to undertake an ECO analysis of the Philippine telecommunications market. 10. In response to ABS-CBN Telecom's Petition to Deny, CWI has clarified its application by stating that it is not requesting to provide ISR to and from the Philippines and will not use IPL resale authority for switched traffic. We therefore need not determine whether the Philippine market offers equivalent resale opportunities. ABS-CBN Telecom's Petition is therefore denied. 11. We next examine whether there are any countervailing public interest considerations that would require denial of the CWI application. The Executive Branch has not raised any national security, law enforcement, foreign policy or trade concerns with this application, and we know of no other countervailing public interest considerations. Consequently, we find that the public interest would be served by granting CWI Section 214 authority to provide facilities-based switched and private line service and resold private line service between the United States and the Philippines. 12. Upon consideration of the application, filed pursuant to Section 214 of the Communications Act of 1934, as amended, we believe that CWI s entry will increase competition in the United States and Philippines markets and thus benefit U.S. consumers. Therefore, IT IS HEREBY CERTIFIED that the present and future public convenience and necessity require a grant of the present application. B. Request for Non-dominant Treatment 13. Under the Commission s rules, a U.S. carrier that is affiliated with a foreign carrier that is not a monopoly in a destination country and that seeks to be regulated as non-dominant bears the burden of submitting information sufficient to demonstrate that its foreign affiliate lacks the ability to discriminate against unaffiliated U.S. international carriers through control of bottleneck services or facilities in the destination country. Thus, in determining whether to classify CWI as non-dominant for the U.S.-Philippine route, we examine whether its affiliates, ETPI and OWNI, have the ability to discriminate against unaffiliated U.S. international carriers terminating traffic in the Philippines through the control of bottleneck services or facilities in the Philippines. 14. ETPI has a very small share of the market for international gateway services, and OWNI predominantly provides long distance services over microwave facilities for other carriers, including PLDT. We therefore find that CWI s two Philippine affiliates do not have the ability to discriminate against unaffiliated U.S. international carriers terminating traffic in the Philippines. Consequently, we conclude that CWI should be regulated as a non-dominant carrier for service between the United States and the Philippines. V. Ordering Clauses 15. Upon consideration of the application, IT IS HEREBY CERTIFIED that present and future public convenience and necessity require the provision of international basic switched and private line telecommunications services on both a facilities-based and resale basis and non- interconnected private line service by CWI. 16. Accordingly, IT IS ORDERED that CWI's application, File No. ITC-97-335, IS GRANTED, and CWI is classified as a non-dominant carrier authorized to provide international basic switched and private line telecommunications services on both a facilities-based and resale basis pursuant to the terms and conditions of Section 63.18(e)(1) and (2) of the Commission's rules, 47 C.F.R.  63.18(e)(1), (2). 17. IT IS FURTHER ORDERED that CWI shall comply with the requirements specified in Sections 63.14, 63.15(b), 63.19, and 63.21 of the Commission s Rules, 47 C.F.R.  63.14, 63.15(b), 63.19, 63.21. 18. IT IS FURTHER ORDERED that if CWI intends to provide international callback through the use of uncompleted call signalling, its authorization to resell international switched voice and/or data services to provide these services is expressly subject to the conditions listed in VIA USA Ltd., et al., 9 FCC Rcd 2288 (1994), and in the Order on Reconsideration, 10 FCC Rcd 9540 (1995). 19. IT IS FURTHER ORDERED that CWI's authorization to provide facilities-based service to the Philippines is subject to the conditions specified in the matter of International Settlement Rates, IB Docket No. 96-261, Report and Order, FCC 97-280 (rel. Aug. 18, 1997), that is, this authorization is conditioned on CWI's Philippine affiliates offering U.S. international carriers a settlement rate at or below the Commission's relevant benchmark. See id.  231. 20. 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 public notice of this Order (see Section 1.4(b)(2) of the Commission's rules, 47 C.F.R.  1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Diane J. Cornell Chief, Telecommunications Division International Bureau