**DA 02-2102**

**Released: August 28, 2002**

**DOMESTIC SECTION 214 APPLICATION FILED FOR AUTHORIZATION OF NORTH
AMERICAN COMMUNICATIONS CONTROL, INC., TO ACQUIRE ASSETS OF A.R.C.
NETWORKS, INC.**

**STREAMLINED Pleading Cycle Established**

**WC Docket No. 02-267**

On July 3, 2002, A.R.C. Networks, Inc. d/b/a InfoHighway ("A.R.C.") and
North American Communications Control, Inc. ("NACC"), pursuant to
section 214 of the Communications Act of 1934, as amended, 47 U.S.C. §
214 (the "Act"), filed an application for approval to transfer control
of certain assets from NACC to A.R.C.[^1] The assets are NACC's customer
base (and corresponding accounts receivable) in 19 states, including
local exchange customers in New York, and long distance customers in
Arizona, California, Connecticut, Florida, Georgia, Illinois, Maryland,
Massachusetts, Michigan, Minnesota, New Jersey, New York, North
Carolina, Pennsylvania, South Carolina, Texas, Utah, Vermont, and
Virginia.

Applicants assert that this application is subject to streamlined
processing under section 63.03(b)(2)(i) of the Commission's rules
because the proposed transaction would result in the transferee, A.R.C.
(and its affiliates), having a market share in the interstate,
interexchange market of less than 10 percent; the transferee would
provide competitive telephone exchange services or exchange access
services exclusively in geographic areas served by a dominant local
exchange that is not a party to this transaction; and neither of the
applicants is dominant with respect to any service.[^2]

A.R.C. is a wholly-owned subsidiary of ARC Networks, Inc., a Delaware
corporation ("ARC-Parent"). ARC-Parent is a wholly-owned subsidiary of
InfoHighway Communications Corporation ("ICC"), a Delaware corporation.
GTCR Fund VII, L.P., a private equity firm located at 200 W. Madison
Ave., 17^th^ floor, Chicago, IL 60606, holds 71.4 percent of the equity
of ICC.

The applicants have agreed to a multi-step transaction for the purposes
of transferring NACC's customer base and accounts receivable to A.R.C.
subject to receipt of requisite regulatory approvals. This transaction
will not result in a change in control of either party. For the purposes
of effectuating the transfer, the applicants have executed an Asset
Purchase Agreement (the "Agreement"), effective May 31, 2002. Pursuant
to this Agreement, NACC will transfer its customer base to a subsidiary
of A.R.C., NACC Acquisition Management, Inc. ("NACC-AM"), in exchange
for cash and ICC preferred stock. Upon NACC's sale and NACC-AM's
acquisition of the customer base of NACC, ICC, as ultimate parent, will
take the necessary actions to merge NACC-AM into A.R.C. As a result,
A.R.C. will be the entity providing telecommunications services to
current NACC customers.[^3]

Applicants state that the transaction will serve the public interest,
convenience, and necessity because it will promote competition in the
provision of domestic telecommunications services. Applicants state that
acquisition of the customer base of NACC will enable A.R.C. to expand
its customer base, allowing it to increase revenues and thereby to
compete more effectively in local and interexchange telecommunications
markets.

**[GENERAL INFORMATION]{.underline}**

The transfer of control application identified herein has been found,
upon initial review, to be acceptable for filing as a streamlined
application. The Commission reserves the right to return any transfer of
control application if, upon further examination, it is determined to be
defective and not in conformance with the Commission's rules and
policies. Interested parties may file **comments within 14 days** and
**reply comments within 21 days** of this notice.[^4] Unless otherwise
notified by the Commission, an applicant is permitted to transfer
control of the domestic lines or authorization to operate on the 31^st^
day after the date of this notice. Comments may be filed using the
Commission\'s Electronic Comment Filing System (ECFS) or by filing paper
copies. *See Electronic Filing of Documents in Rulemaking Proceedings*,
63 Fed. Reg. 24121 (1998).

Comments filed through the ECFS can be sent as an electronic file via
the Internet to \<http://www.fcc.gov/e-file/ecfs.html\>. Generally, only
one copy of an electronic submission must be filed. If multiple docket
or rulemaking numbers appear in the caption of this proceeding, however,
commenters must transmit one electronic copy of the comments to each
docket or rulemaking number referenced in the caption. In completing the
transmittal screen, commenters should include their full name, U.S.
Postal Service mailing address, and the applicable docket or rulemaking
number. Parties may also submit an electronic comment by Internet
e-mail. To get filing instructions for e-mail comments, commenters
should send an e-mail to ecfs@fcc.gov, and should include the following
words in the body of the message, \"get form \<your e-mail address\>.\"
A sample form and directions will be sent in reply.

Parties who choose to file by paper must file an original and four
copies of each filing. If more than one docket or rulemaking number
appear in the caption of this proceeding, commenters must submit two
additional copies for each additional docket or rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail (although we continue to experience delays in receiving U.S. Postal
Service mail). The Commission\'s contractor, Vistronix, Inc., will
receive hand-delivered or messenger-delivered paper filings for the
Commission\'s Secretary at 236 Massachusetts Avenue, N.E., Suite 110,
Washington, D.C. 20002. The filing hours at this location are 8:00 a.m.
to 7:00 p.m. All hand deliveries must be held together with rubber bands
or fasteners. Any envelopes must be disposed of before entering the
building. Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
Capitol Heights, MD 20743. U.S. Postal Service first-class mail, Express
Mail, and Priority Mail should be addressed to 445 12th Street, SW,
Washington, D.C. 20554. All filings must be addressed to the
Commission\'s Secretary, Office of the Secretary, Federal Communications
Commission.

**In addition, one copy of each pleading must be sent to each of the
following:**

(1) the Commission's duplicating contractor, Qualex International, 445
    12^th^ Street, S.W., Room CY-B402, Washington, D.C. 20554; e-mail:
    <qualexint@aol.com;> facsimile: (202) 863-2898; phone: (202)
    863-2893.

(2) Tracey Wilson, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 5-C437, Washington, D.C.
    20554; e-mail: [twilson@fcc.gov](mailto:jmyles@fcc.gov), and

(3) Bill Dever, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 5-C266, Washington, D.C.
    20554; e-mail: <wdever@fcc.gov>; and

(4) Nandan Joshi, Office of General Counsel, 445 12^th^ Street, S.W.,
    Room 8-A820, Washington, D.C. 20554; e-mail: <njoshi@fcc.gov>.

Filings and comments are also available for public inspection and
copying during regular business hours at the FCC Reference Information
Center, Portals II, 445 12th Street, SW, Room CY-A257, Washington, DC,
20554. They may also be purchased from the Commission\'s duplicating
contractor, Qualex International, Portals II, 445 12th Street, SW, Room
CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile
202-863-2898, or via e-mail <qualexint@aol.com>.

For further information, please contact Tracey Wilson, at (202) 418-1394
or Bill Dever, Competition Policy, Wireline Competition Bureau at (202)
418-1578.

\- **FCC** -

[^1]: This application was resubmitted to the Wireline Competition
    Bureau on August 26, 2002. *See* Letter from Susan M. Hafeli, Shaw
    Pittman LLP to William Dever, Assistant Chief, Competition Policy
    Division (filed Aug. 26, 2002).

[^2]: 47 C.F.R. § 63.03(b)(2)(i).

[^3]: A.R.C. is a non-dominant carrier that provides telecommunications
    services to small- and-medium-sized business, residential customers,
    and government entities in over 20 states. A.R.C. is currently
    certified to provide facilities-based and/or resold local exchange
    service in Arizona (interim authority), California, Connecticut,
    Delaware (conditional), the District of Columbia, Florida, Maine,
    Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New
    York, Ohio, Pennsylvania, Rhode Island, Texas, and Vermont. Its
    affiliate, InfoHighway of Virginia, Inc., is authorized to provide
    facilities-based and resold local services in Virginia. A.R.C. is
    also authorized, pursuant to certification, registration, or
    deregulation, to provide intrastate interexchange services in
    Arkansas, California, Connecticut, Delaware (conditional), Florida,
    Illionois, Indiana, Kansas, Maine, Maryland, Massachusetts,
    Michigan, Missouri, Nevada, New Hampshire, New Jersey, New York,
    North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, Texas,
    Utah, Vermont, and Virginia. A.R.C. has filed applications
    requesting authority to provide interexchange services in the states
    of Georgia, Minnesota and South Carolina. A.R.C. also provides
    international telecommunications services as a non-dominant carrier.
    *See* File No. ITC-96-032 (March 14, 1996).

[^4]: *See* 47 C.F.R. section 63.03(a).