FOR IMMEDIATE RELEASE: News Media Contact:

July 9, 1999 Rosemary Kimball at (202) 418-0500

COMMISSION GRANTS LICENSE FOR JAPAN-US UNDERSEA CABLE NETWORK

The Commission has granted the application of the Japan-US Cable Network
(JUS) to land and operate a non-common carrier submarine fiber optic
cable between the United States and Japan. The Commission granted the
license under the Cable Landing License Act following the submission by
JUS of amendments to its joint venture agreement, the Construction and
Maintenance Agreement (C&MA).

The Commission found that these amendments, as well as recent
pro-competitive commitments by the government of Japan and the
Commission's own regulatory safeguards, reduced the ability of JUS to
facilitate the exercise of market power by some or all of its owners. In
view of the need for increased capacity on the transpacific route, it
concluded that granting the JUS license would, on balance, serve the
public interest. However, the Commission did not dismiss claims made by
Global Crossing Ltd. that consortium cable systems may impede
competition in this market, and indicated that it would commence a
proceeding to examine how its submarine cable policies might best
promote competition.

The members of JUS are a consortium of large and small U.S.- and
Japanese-licensed telecommunications carriers that jointly fund the
construction and operation of the cable system and are allocated
portions of its capacity according to the terms of the C&MA. Global
Crossing challenged the application, alleging that its consortium
structure facilitates the exercise of market power by its members and
slows the growth of competition in international telecommunications.

In response to the Commission's examination of issues raised by Global
Crossing, the applicants amended their C&MA to provide for a more
pro-competitive balance among the parties to that agreement. One
amendment will help ensure that the market for backhaul services
(transit between cable landing stations and the public network) is
competitive by granting every member of the consortium the right to
collocate equipment on either end of the cable and provide backhaul
services. The second amendment provides that a simple majority, rather
than a super-majority, can decide to increase capacity on the cable.
These two amendments address the major carriers' ability to earn
supracompetitive profits, which ultimately would result in higher prices
for consumers, by controlling backhaul and the timing of the final
capacity upgrade of the cable system.

The Commission found that those amendments, together with recent
pro-competitive commitments by the government of Japan and the
Commission's "no special concessions" rule, lessened the potential
competitive harms of the consortium structure. The Commission therefore
found that, given those amendments and safeguards, and given the need
for more capacity on the transpacific route, the benefits of licensing
this cable system would outweigh the risk that doing so would have
anticompetitive effects. The Commission intends to commence a broader
proceeding in the near future to examine how its policies regarding
submarine cable systems might best promote competition and benefit
consumers.

Action by the Commission July 8, 1999, by Cable Landing License (FCC
99-167). Chairman Kennard, Commissioners Ness, Powell, and Tristani with
Commissioner Furchtgott-Roth not participating.

\- FCC -

International Bureau contacts: Doug Klein at (202) 418-0424; Adam
Krinsky at (202) 418-1099.

Report No. IN 99-26