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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 ) ARCOS-1 USA, INC. ) ) Application for a license to land and operate in ) File No. SCL-LIC-19981222-00032 the United States a private fiber optic submarine ) cable system extending between the United States ) mainland, The Bahamas, the Turks and Caicos Island, ) the Dominican Republic, Puerto Rico, Curacao, ) Venezuela, Colombia, Panama, Costa Rica, ) Nicaragua, Honduras, Guatemala, Belize and ) Mexico ) ) CABLE LANDING LICENSE Adopted: July 1, 1999 Released: July 2, 1999 By the Chief, Telecommunications Division: I. Introduction 1. In this Order, we grant the application of ARCOS-1 USA, INC. (ARCOS), under the Cable Landing License Act and Executive Order No. 10530, for authority to land and operate a fiber optic submarine telecommunications cable system to be called the "Americas Region Caribbean Ring System" or "ARCOS-1," extending between the U.S. Mainland, The Bahamas, the Turks and Caicos Island, the Dominican Republic, Puerto Rico, Curacao, Venezuela, Colombia, Panama, Costa Rica, Nicaragua, Honduras, Guatemala, Belize and Mexico. The system will be operated on a non-common carrier basis. We find that ARCOS has provided sufficient information under our rules to comply with the Cable Landing License Act and that it would serve the public interest to grant the cable landing license subject to the conditions listed below. II. Application 2. ARCOS, a Delaware corporation, is a wholly-owned subsidiary of CEN-TA Telecom (CEN-TA), organized under the laws of the Grand Cayman Islands. Fifty-one percent of CEN-TA is owned by Inversiones Jaafe S.A., organized under the laws of Panama, and 49 percent is owned by Sun Financial Corporation, organized under the laws of the Cayman Islands. The majority owner of Inversiones Jaafe S.A. is a citizen of Colombia. Sun Financial Corporation is owned equally by a citizen of Germany and a citizen of Colombia. 3. The proposed ARCOS-1 system, designed as a ring configuration, will connect: (1) Hollywood, Florida; (2) Nassau, The Bahamas; (3) Cockburn Town, The Bahamas; (4) Acklins Island, The Bahamas; (5) Grand Turk, Turks and Caicos Island (U.K.); (6) Nagua, Dominican Republic; (7) El Macao, Dominican Republic; (8) San Juan, Puerto Rico; (9) Willemstad, Curacao; (10) Punto Fijo, Venezuela; (11) El Cabo de la Vela, Colombia; (12) Baranquilla, Colombia; (13) Mulatos, Colombia; (14) ColĒn (Maria Chica), Panama; (15) Puerto LimĒn, Costa Rica; (16) Bluefields, Nicaragua; (17) Puerto Cabezas, Nicaragua; (18) Puerto Lempira, Honduras; (19) Trujillo, Honduras; (20) Puerto Cortez, Honduras; (21) Puerto Barrios, Guatemala; (22) Belize City, Belize; (23) Isla de Cozumel, Mexico; and (24) Cancun, Mexico. According to the application, the 8,400 km ARCOS-1 system, consisting of 74 percent unrepeatered cables and 26 percent repeatered cables, will be a state-of-the-art wavelength division multiplexing (WDM) optically amplified fiber system. The system will initially consist of six STM-16 (2.5 Gbps) optical channels for a combined capacity of 15 Gbps with an equal restoration capacity. The cable segments between Curacao; Venezuela; Colombia; Panama; Costa Rica; Nicaragua; Honduras; Guatemala; Belize; and Mexico as well as the cable segments between Hollywood, Florida; The Bahamas; Turks and Caicos Island; Dominican Republic; and Puerto Rico will consist of 12 fiber pairs that are unrepeatered in a festooned configuration. The cable segment between Cancun, Mexico and Hollywood, Florida and the cable segment between San Juan, Puerto Rico and Willemstad, Curacao will consist of four fiber pairs that are repeatered. The entire wetplant of the system is designed for a maximum available capacity of 640 Gbps and will function with totally duplicated terminal equipment (1 + 1) in a self-healing protective ring via fiber-path/line switching. III. Comments 4. The application was placed on public notice on January 6, 1999 (Report No. TEL- 00051NS). We received no comments. Pursuant to Section 1.767(b) of the Commission's rules, the Cable Landing License Act, and Executive Order No. 10530, we informed the Department of State of the Application. The Department of State, after coordinating with the National Telecommunications and Information Administration and the Department of Defense, stated that it has no objection to the issuance of the cable landing license. IV. Discussion A. Private Submarine Cable Policy 5. ARCOS proposes to operate ARCOS-1 as a non common carrier submarine cable system in which capacity will not be offered indifferently to the public. ARCOS requests a license under the Commission's private submarine cable policy, which is intended to promote competition in the provision of international transmission facilities. Pursuant to this policy, the Commission has authorized non common carrier cables where: (1) there is no legal compulsion to serve the public indifferently; and (2) there are no reasons implicit in the nature of the operations to expect that the applicant would make capacity available to the public indifferently and indiscriminately. 6. In applying the first prong of the test to submarine cable authorizations, the Commission has stated that there will be no legal compulsion to serve the public indifferently where there is no public interest reason to require facilities to be offered on a common carrier basis. This public interest analysis has generally focused on whether an applicant will be able to exercise market power because of the lack of alternative facilities. Where there are sufficient alternatives, the Commission has found that the licensee will lack market power and will not be able to charge monopoly rates for cable capacity. The Commission has found that, in those circumstances, the public interest would be served by allowing a submarine cable to be offered on a non-common carrier basis. 7. No one has suggested that the public interest requires ARCOS-1 to be operated on a common carrier basis. ARCOS is not affiliated with any foreign carriers on the foreign ends of the cable system and therefore does not control any bottleneck facilities in the markets ARCOS-1 proposes to serve. No commenter has disputed this fact, and we find that, in light of all the circumstances, it would not serve the public interest to impose common carrier regulation on the operations of ARCOS-1 at this time. We note, however, that we retain the authority to impose common carrier or common-carrier-like obligations on the operations of this or any other submarine cable system if the public interest so requires. Furthermore, we have always maintained the authority to classify facilities as common carrier facilities subject to Title II of the Communications Act if the public interest requires that the facilities be offered to the public indifferently. 8. Regarding the second prong of the test, we conclude that there is no reason to expect that capacity in the proposed cable system would be held out to the public indifferently and indiscriminately. ARCOS states that capacity will not be sold indifferently to the user public. ARCOS will make "individualized decisions, in particular cases, [on] whether and on what terms to deal;" it will not hold itself out indifferently to serve the user public. We therefore conclude that ARCOS will operate ARCOS-1 on a non-common carrier basis. 9. We conclude that ARCOS will not offer capacity in ARCOS-1 to the public on a common carrier basis and that the public interest does not require that it does so. Accordingly, we conclude that it is appropriate to license ARCOS-1 on a non-common carrier basis. We also find that the applicant will not provide a telecommunications service for a fee to such class of users as to be "effectively available directly to the public" and thus will not be a "telecommunications carrier" under the Telecommunications Act of 1996. B. Ownership and Landing Points 10. ARCOS has provided the ownership information required by Section 63.18(e)(6), 1.767(a)(6), and Section 63.18(h) of the Commission's rules. ARCOS seeks to own or control ARCOS-1, including the portion of the transmission facilities located in the United States. However, ARCOS states that the cable landing stations in Hollywood, Florida, and San Juan, Puerto Rico, may be owned by ARCOS or by another licensed U.S. carrier, depending upon the availability of such facilities. ARCOS's parent company, CEN-TA, currently maintains a 100 percent voting interest in ARCOS-1. ARCOS anticipates that it will solicit U.S. and foreign carriers, including foreign incumbent carriers, and other investors to obtain ownership interests in ARCOS-1. ARCOS will also offer bulk capacity to a specific class of eligible users, including common carriers, on an original ownership, IRU or lease of capacity basis. ARCOS has stated that it will, through its parent company CEN-TA, continue to maintain at least 51 percent ownership in ARCOS-1, maintaining ultimate de jure and de facto control of ARCOS-1. In the event ARCOS successfully solicits other investors to obtain original ownership in the U.S. segment of ARCOS-1, prior to the consummation of the sale of any original ownership interest in the U.S. segment of the cable system, it must file an amendment to the cable landing license granted by this order to update the ownership and voting interest in the subject license. 11. ARCOS has stated that it will comply with Section 1.767(a)(5) of the Commission's rules by providing specific information on the cable landing locations 90 days prior to commencing construction. We find the applicant's description of the likely landing points to be sufficient to determine that the proposed cable system will comply with the provisions of the Commission rules. Section 1.767(a) of the Commission's rules permits applicants in an initial application to provide a general description of the landing points. The applicant must file a specific description of any landing point, including a map, no later than 90 days prior to construction at that landing point. The Commission will give public notice of the filing of the specific description, and grant of the license will be considered final with respect to that landing point unless the Commission notifies the applicants to the contrary no later than 60 days after receipt of the specific description of the landing point. C. Environmental Impact 12. Based on the information provided by the applicant and pursuant to the Commission's procedures implementing the National Environmental Policy Act of 1969, we find that action on the present application would not significantly affect the environment according to Section 1.1307(a) or (b) of the Commission's rules. Therefore, pursuant to Section 1.1306 of the Commission's rules, we conclude that grant of the requested license would not significantly affect the environment. Consequently, ARCOS is not required to submit an environmental assessment, and this application is categorically excluded from environmental processing. As stated above, however, we condition this license upon final approval of each landing point. If necessary, we will address environmental impacts after the applicant specifically identifies the landing points. V. Conclusion 13. We grant ARCOS's application for authority to land and operate a non-common carrier fiber optic submarine cable extending between the United States mainland, The Bahamas, the Turks and Caicos Island, the Dominican Republic, Puerto Rico, Curacao, Venezuela, Colombia, Panama, Costa Rica, Nicaragua, Honduras, Guatemala, Belize and Mexico, subject to the conditions listed below. VI. Ordering Clauses 14. Consistent with the foregoing and pursuant to the Cable Landing License Act and Executive Order 10530, we hereby GRANT AND ISSUE ARCOS-1 USA, INC. a license to land and operate a non common carrier fiber optic cable system (initially consisting of six STM-16 (2.5 Gbps) optical channels for a combined capacity of 15 Gbps, with a maximum availability of 640 Gbps) extending between the United States mainland, The Bahamas, the Turks and Caicos Island, the Dominican Republic, Puerto Rico, Curacao, Venezuela, Colombia, Panama, Costa Rica, Nicaragua, Honduras, Guatemala, Belize and Mexico. This grant is subject to all rules and regulations of the Commission; any treaties or conventions relating to communications to which the United States is or may hereafter become a party; any action by the Commission or the Congress of the United States rescinding, changing, modifying, or amending any rights accruing to any person hereunder; and the following conditions: (1) The location of the cable system within the territorial waters of the United States, its territories and possessions, and upon its shore shall be in conformity with plans approved by the Secretary of the Army, and the cable shall be moved or shifted by the Licensee at its expense upon the request of the Secretary of the Army whenever he or she considers such course necessary in the public interest, for reasons of national defense, or for the maintenance or improvement of harbors for navigational purposes; (2) The Licensee shall at all times comply with any requirements of U.S. government authorities regarding the location and concealment of the cable facilities, buildings, and apparatus for the purpose of protecting and safeguarding the cable from injury or destruction by enemies of the United States; (3) The Licensee or any persons or companies controlling it, controlled by it, or under direct or indirect common control with it do not enjoy and shall not acquire any right to handle traffic on a common carrier basis to or from the United States, its territories, or its possessions unless such service be authorized by the Commission pursuant to Section 214 of the Communications Act, as amended; (4) The Licensee or any persons or companies controlling it, controlled by it, or under direct or indirect common control with it shall not acquire or enjoy any right for the purpose of handling or interchanging traffic to or from the United States, its territories, or its possessions to land, connect, or operate cables or land lines, to construct or operate radio stations, or to interchange traffic, that is denied to any other United States company by reason of any concession, contract, understanding, or working arrangement to which the Licensee or any persons controlling it, controlled by it, or under direct or indirect common control with it are parties; (5) Neither this license nor the rights granted herein shall be transferred, assigned, or in any manner either voluntarily or involuntarily disposed of or disposed of indirectly by transfer of control of the Licensee to any persons, unless the Commission shall give prior consent in writing; (6) The Licensee shall notify the Commission in writing of the precise locations at which the cable will land in the United States and in foreign countries. Such notification with respect to any given landing location shall occur no later than 90 days prior to commencing construction at that landing location. The Commission will give public notice of the filing of each description, and grant of this license will be considered final with respect to that landing point unless the Commission issues a notice to the contrary no later than 60 days after receipt of the specific description; (7) Pursuant to Section 2 of the Cable Landing License Act, 47 U.S.C.  35; Executive Order No. 10530, as amended; and Section 214 of the Communications Act of 1934, as amended, 47 U.S.C.  214, the Commission reserves the right to impose additional common carrier or common-carrier- like regulation on the operations of the cable system if it finds that the public interest so requires; (8) The Commission reserves the right to require the Licensee to file an environmental assessment or environmental impact statement should it determine that the landing of the cable at those locations and construction of necessary cable landing stations would significantly affect the environment within the meaning of Section 1.1307 of the Commission's procedures implementing the National Environmental Policy Act of 1969; this license is subject to modification by the Commission upon its review of any environmental assessment or environmental impact statement that it may require pursuant to its rules; (9) The Licensee shall maintain de jure and de facto control of the U.S. segment of the cable system, including the cable landing stations in the United States, sufficient to comply with the requirements of this license; (10) In the event the Licensee successfully solicits other investors to obtain original ownership interests in the U.S. segment of the cable system, it shall file, prior to the consummation of the sale of any original ownership interest in the U.S. segment of the cable system, an amendment to the cable landing license granted by this order to update the ownership and voting interests in the subject license; (11) This license is revocable by the Commission after due notice and opportunity for hearing pursuant to Section 2 of the Cable Landing License Act, 47 U.S.C.  35, or for failure to comply with the terms of the authorizations; (12) The Licensee shall notify the Commission in writing of the date on which the cable is placed in service, and this license shall expire 25 years from such date, unless renewed or extended upon proper application, and, upon expiration of this license, all rights granted under it shall be terminated; and (13) The terms and conditions upon which this license is given shall be accepted by the Licensee by filing a letter with the Secretary, Federal Communications Commission, Washington, D.C. 20554, within 30 days of the release of the cable landing license. 15. This Order is issued under Section 0.261 of the Commission's rules, 47 C.F.R.  0.261, 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 Rebecca Arbogast Chief, Telecommunications Division International Bureau