# 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, 2000 Released: February 18, 2000**

By the Chief, Telecommunications Division:

###### 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.

###### Background

2.  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]

3.  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]

###### Discussion

####### Entry standard

4.  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.

5.  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.

6.  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]

####### Bermuda's WTO Status

7.  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

8.  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]

9.  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]

###### Conclusion

10. 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.

11. 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.

###### Ordering Clauses

12. 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.

13. 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).

14. 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.

15. 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
    http://www.fcc.gov/Bureaus/International/Public_Notices/1999/da990809.txt.
    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.

16. IT IS FURTHER ORDERED that this Order is effective upon release.

FEDERAL COMMUNICATIONS COMMISSION

Rebecca Arbogast

Chief

Telecommunications Division

International Bureau

[^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) \<<http://www.wto.org/wto/about/organs6.htm>\> (listing 135
    current Members of the WTO).

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

[^7]: *See* *Non 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]: *See* *Non 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]: *See* *Rules 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]: *See* *Foreign Participation Order*, 12 FCC Rcd at 23906-10, ¶¶
    33-43; *see also id.* at 23913-17, ¶¶ 50-58.

[^12]: *See* *id.* 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)
    \<<http://www.odci.gov/cia/publications/factbook/bd.html>\>; 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 \<<http://www.wto.org/wto/about/organs6.htm>\> (visited
    Jan. 20, 2000) and therefore implicitly treated Bermuda as a non-WTO
    Member. *See* *In 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]: *See* *Foreign 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]: *See* *Foreign Participation Order*, 12 FCC Rcd at 23919-21, ¶¶
    61-66.