Federal Communications CommissionDA 00-311

Before the

Federal Communications Commission

Washington, D.C. 20554

)

In the Matter of)

)

Cable & Wireless USA, Inc.)

)File No. ITC-214-19990709-00412

Application for Authority to Operate as a )

Facilities-based Carrier in Accordance with )

the Provisions of Section 63.18(e)(4) of the)

Rules between the United States and Bermuda)

)

ORDER, AUTHORIZATION AND CERTIFICATE

Adopted: February 16, 2000Released: February 18, 2000

By the Chief, Telecommunications Division:

I.Introduction
  1. In this Order, we grant Cable & Wireless USA, Inc. (“C&W USA”) authority, pursuant to Section 214 of the Communications Act of 1934, as amended,[1] and 47 C.F.R. § 63.18(e)(4), to provide switched and non-interconnected international private line service between the United States and Bermuda as a facilities-based carrier. C&W USA will be subject to the Commission’s dominant carrier safeguards on that route.
II.Background
  1. C&W USA is a Delaware corporation and is affiliated, within the meaning of Section 63.09(e) of the Commission’s rules,[2] with Cable & Wireless Bermuda (“C&W Bermuda”), a foreign carrier operating in Bermuda. Both C&W USA and C&W Bermuda are wholly owned subsidiaries of Cable & Wireless plc, a holding company incorporated and based in the United Kingdom. C&W Bermuda provides international transport facilities and services in Bermuda. C&W Bermuda has more than 50% market share in the international telecommunications market in Bermuda.[3]
  1. On July 8, 1999, C&W USA filed an Application seeking Section 214 authority to provide switched and non-interconnected private line service as a facilities-based carrier between the United States and Bermuda (“Application”). The Application did not request streamlined processing, and we initially deemed it ineligible for streamlined processing[4] because Bermuda does not appear on the list of Members of the World Trade Organization (WTO) published by the WTO.[5] On July 23, 1999, we placed the Application on public notice.[6] We received no comments or petitions to deny. On October 21, 1999, pursuant to Section 63.12 of the Commission’s rules, we provided public notice that, because the application raised questions of extraordinary complexity, an additional 90-day period of review was needed.[7] On January 19, 2000, we again extended the review period under Section 63.12 of our rules.[8]
III.Discussion
  1. Entry standard
  1. In November 1997, the Commission adopted the Foreign Participation Order,[9] which was designed to increase competition in the U.S. telecommunications market by facilitating entry by foreign service providers and investors. The rules and standards adopted in the Foreign Participation Order govern our decision whether, and on what terms, to authorize C&W USA to provide service on a route where the applicant has an affiliation with a foreign carrier.
  1. In the Foreign Participation Order, the Commission adopted an open entry standard for applicants that request authority to serve a WTO Member destination in which the applicant has a foreign carrier affiliate. The open entry standard was adopted in light of the WTO Agreement on Basic Telecommunications Services (WTO Basic Telecom Agreement), the market-opening commitments of other WTO Members, and the Commission's improved competitive safeguards governing U.S. international services.
  1. Previously, the Commission applied the "effective competitive opportunities (ECO)" test to applicants that sought to provide certain categories of service on routes where an affiliated foreign carrier possessed market power.[10] In the Foreign Participation Order, the Commission eliminated the ECO test in favor of a rebuttable presumption that applications for international Section 214 authority from applicants affiliated with foreign carriers in WTO Members do not pose concerns that would justify denial of the application on competition grounds.[11] The Commission retained the ECO test for certain applicants that seek to serve non-WTO Member destinations in which the applicant has an affiliation with a foreign carrier possessing market power.[12]
  1. Bermuda’s WTO Status
  1. In order to ascertain the correct entry standard to apply to this Application, we must first determine the WTO status of Bermuda. Bermuda is a dependent overseas territory of the United Kingdom.[13] An opinion provided to us by the U.S. Department of State concludes that the 1994 Marrakesh Agreement Establishing the World Trade Organization applies to Bermuda.[14] We note that the United Kingdom maintains a different view, specifically that the territorial application of the WTO Convention does not extend to the UK’s overseas territories.[15] We defer to the opinion provided to us by the U.S. Department of State and therefore treat Bermuda as a WTO Member for the purposes of applying the proper entry standard to this Application.[16] Accordingly, we apply the open entry standard and the rebuttable presumption that the Application does not pose any concern that that would justify denial of the Application on competition grounds.

C.Dominant Carrier Safeguards

  1. For each international Section 214 application we must examine whether it is necessary to impose the Commission's international dominant carrier safeguards on an applicant in its provision of service on the route or routes for which the applicant seeks authorization.[17] Under rules adopted in the Foreign Participation Order, the Commission regulates U.S. international carriers as dominant on routes where an affiliated foreign carrier has sufficient market power on the foreign end to affect competition adversely in the U.S. market.[18] A U.S. carrier is presumptively classified as nondominant on an affiliated route if the carrier demonstrates that the foreign affiliate lacks 50 percent market share in the international transport and local access markets on the foreign end of the route.[19]
  1. C&W USA states in its Application that its foreign affiliate, C&W Bermuda, has more than 50 percent market share in the international telecommunications market in Bermuda and that accordingly, it accepts dominant carrier classification on this route.[20]
IV.Conclusion
  1. In light of the above, we find that a grant of C&W USA’s application will serve the public interest under Section 214 of the Act, by increasing competition on the U.S.-Bermuda international services route and providing more choices to U.S. consumers.
  1. The Commission also considers other public interest factors that may weigh in favor of, or against, granting an international Section 214 application, including national security, law enforcement, foreign policy and trade concerns.[21] The Executive Branch has not raised any such concerns with this application and we know of no other countervailing public interest considerations.
V.Ordering Clauses
  1. Accordingly, IT IS HEREBY CERTIFIED that the present and future public convenience and necessity require a grant of the above-captioned application to the extent specified in this Order. Therefore, IT IS ORDERED that Application File No. ITC-214-19990709-00412 is GRANTED, and Cable & Wireless USA, Inc. is authorized pursuant to Section 63.18(e)(4) of the Commission’s rules, 47 C.F.R. § 63.18(e)(4), to provide facilities-based switched and non-interconnected international private line service between the United States and Bermuda, subject to all current and future Commission regulations, including those specifically listed below. This authorization is limited to private line service between the United States and Bermuda.
  1. IT IS FURTHER ORDERED that Cable & Wireless USA, Inc. shall be regulated as a dominant carrier on the U.S.-Bermuda route, and shall comply with the requirements specified in Section 63.10(c)-(d) of the Commission’s rules. 47 C.F.R. § 63.10(c)-(d).
  1. IT IS FURTHER ORDERED that Cable & Wireless USA, Inc. shall comply with the requirements specified in Sections 43.51, 43.61, 63.11, 63.14, 63.17, 63.19, 63.21 and 63.22 of the Commission’s rules. 47 C.F.R. §§ 43.51, 43.61, 63.11, 63.14, 63.17, 63.19, 63.21 and 63.22.
  1. IT IS FURTHER ORDERED that Cable & Wireless USA, Inc. may not -- and its tariffs must state that its customers may not -- connect its private lines to the public switched network at either the U.S. or Bermuda end, or both, for the provision of international switched basic services unless the Commission has authorized the provision of switched services over private lines to Bermuda or Cable & Wireless USA, Inc. is exchanging switched traffic with a foreign carrier that the Commission has determined lacks market power in the Bermuda. See 47 C.F.R. § 63.16, 63.22(e), 63.23(d). A foreign carrier lacks market power for the purposes of this rule if it does not appear on the Commission list of foreign carriers that do not qualify for the presumption that they lack market power in particular foreign points at See generally 1998 Biennial Regulatory Review – Reform of the International Settlements Policy and Associated Filing Requirements, IB Docket Nos. 98-148, 95-22, CC Docket No. 90-337 (Phase II), FCC 99-73 (rel. May 6, 1999), paras. 12-15, 102-109.
  1. IT IS FURTHER ORDERED that this Order is effective upon release.

FEDERAL COMMUNICATIONS COMMISSION

Rebecca Arbogast

Chief

Telecommunications Division

International Bureau

1

[1] 47 U.S.C. § 214.

[2] 47 C.F.R. § 63.18(i).

[3] See Cable & Wireless USA, Inc., Application for Authority to Operate as a Facilities-based Carrier in Accordance with the Provisions of Section 63.18(e)(4) of the Rules between the United States and Bermuda, File No. ITC-214-19990709-00412 (filed July 8, 1999) at 2.

[4] See 47 C.F.R. § 63.12(d).

[5] See World Trade Organization, “About the WTO” (visited Jan. 20, 2000) < (listing 135 current Members of the WTO).

[6] SeeNon Streamlined International Applications Accepted for Filing, Report No. TEL-00117NS (rel. July 23, 1999) (Public Notice accepting the application for filing).

[7] SeeNon Streamlined International Applications Accepted for Filing, Report No. TEL-00148NS (rel. Oct. 21, 1999) (Public Notice extending the time for review an additional 90 days).

[8] SeeNon Streamlined International Applications Accepted for Filing, Report No. TEL-00181NS (rel. Jan. 19, 2000) (Public Notice extending the time for review an additional 90 days).

[9] SeeRules and Policies on Foreign Participation in the U.S. Telecommunications Market, IB Docket No. 97-142, Report and Order, 12 FCC Rcd 23891 (1997) (Foreign Participation Order), recon. pending.

[10] The ECO analysis was developed and discussed in Market Entry and Regulation of Foreign Affiliated Entities, IB Docket No. 95-22, Report and Order, 11 FCC Rcd 3873 (1995).

[11] SeeForeign Participation Order, 12 FCC Rcd at 23906-10, ¶¶ 33-43; see also id. at 23913-17, ¶¶ 50-58.

[12] Seeid. at 23944-46, ¶¶ 124-129; see also id. at 23949-50, ¶¶ 139-142. Section 63.18(j)-(k) of the Commission’s rules applies the ECO test in situations in which an applicant is a foreign carrier in a non-WTO country; or controls a foreign carrier in that country; or where any entity that owns more than 25 percent of the applicant, or controls the applicant, controls a foreign carrier in that country; or, in specified circumstances, where two or more foreign carriers own, in the aggregate, more than 25 percent of the applicant. See 47 C.F.R. § 63.18(j)-(k).

[13] See Central Intelligence Agency, The World Factbook 1999 (visited Jan. 20, 2000) < Letter from Simon Towler, First Secretary (Trade Policy), British Embassy, Washington, to Rebecca Arbogast, Chief, Telecommunications Division, International Bureau, Federal Communications Commission (January 20, 2000) (“Towler letter”) at 1.

[14] See Letter from Robert E. Dalton, Assistant Legal Adviser for Treaty Affairs, United States Department of State, to Rebecca Arbogast, Chief, Telecommunications Division, International Bureau, Federal Communications Commission (Feb. 16, 2000) at 1.

[15]See Towler Letter at 1.

[16] We note that in prior orders we relied exclusively on the list of Members provided by the World Trade Organization on its World Wide Web site at < (visited Jan. 20, 2000) and therefore implicitly treated Bermuda as a non-WTO Member. SeeIn the Matter of TeleBermuda International, L.L.C., 1999 WL 983811 ¶ 7 (rel. Oct. 29, 1999).

[17] The Commission’s international dominant carrier safeguards are set forth in Section 63.10(c)-(d) of the Commission’s rules (as amended in International Settlement Rates, IB Docket No. 96-261, Report and Order on Reconsideration and Order Lifting Stay, FCC 99-124 (rel. June 11, 1999)).

[18] SeeForeign Participation Order, 12 FCC Rcd at 23951-52, ¶ 144; 47 C.F.R. § 63.10(a)(3).

[19] See 47 C.F.R. § 63.10(a)(3); see also 47 C.F.R. § 63.18.

[20] See Application at 2.

[21] SeeForeign Participation Order, 12 FCC Rcd at 23919-21, ¶¶ 61-66.