Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | SCL-T/C-20000727-00028       |
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| KDD America, Inc.                | ) |                              |
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| Application for Authority to     | * |                              |
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| Landing License to DDI           | * |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted:** November 15, 2000 **Released:** November 16, 2000

By the Associate Chief, Telecommunications Division, International
Bureau:

# Introduction

1.  In this Order, we grant the Application[^1] of KDD America, Inc.
    (KDDA) and DDI Corporation (DDI) (collectively "Applicants") seeking
    authority to transfer control of a cable landing license held by
    KDDA to DDI.

2.  On September 30, 1999, the Commission authorized KDDA and numerous
    other carriers, pursuant to the Cable Landing License Act,[^2] and
    Executive Order No. 10530,[^3] to land and operate a common carrier
    submarine fiber optic cable system, called the TAT-14 Cable Network
    (TAT-14), extending between the United States, Denmark, Germany, the
    Netherlands, France, and the United Kingdom.[^4] KDDA held a 0.23046
    percent ownership interest in TAT-14.[^5]

3.  KDDA is a New York corporation that provides both facilities-based
    and resold international telecommunications services to customers in
    the United States. KDDA is a wholly-owned subsidiary of KDD
    Corporation (KDD), a Japanese corporation. KDD is a provider of
    international telecommunications services in Japan.[^6]

4.  KDD desires to merge with DDI, as part of a three-way merger between
    KDD, DDI, and IDO Corporation (IDO). Upon consummation of the
    proposed merger, DDI will own all of the issued and outstanding
    stock of KDD, which in turn owns all of the issued and outstanding
    stock of KDDA. In addition, DDI will own all of the issued and
    outstanding stock of IDO.[^7] Applicants assert that on April 5,
    2000, KDD, DDI, and IDO executed a Merger Agreement whereby they
    proposed that each share of DDI will be issued to the shareholders
    of KDD in exchange for 92.1 shares of KDD, and each share of DDI
    will be issued to the shareholders of IDO for 2.9 shares of IDO.[^8]

5.  DDI, a publicly held Japanese corporation, provides primarily
    domestic long distance telephone service in Japan, but also provides
    international telephone service, leased circuit service, and data
    services such as Internet access and frame relay. Applicants assert
    that Kyocera Corp. (Kyocera), a Japanese corporation that
    manufactures electronic components, information/telecommunications
    equipment, and semiconductor parts, currently owns 25.16 percent of
    the equity of DDI.[^9] Applicants also assert that following the
    proposed merger, Kyocera will own 15.3 percent of the equity of DDI,
    and Toyota Motor Corp., a Japanese corporation, will own 13.29
    percent of the equity of DDI.[^10]

6.  Through various subsidiaries, DDI offers cellular service and
    personal handyphone service (PHS), a service for telephones that
    function as cordless units at home and mobile units elsewhere.[^11]
    One of DDI's subsidiaries, DDI Communications America Corporation
    (DDICA) holds a Section 214 authorization to provide global
    facilities-based and resale services from the United States.[^12]

7.  IDO, a Japanese corporation, provides cellular service in
    metropolitan and Tokai areas of Japan.[^13]

8.  The Commission, on September 15, 2000, granted Applicants' request
    for approval to transfer control of Section 214 authorizations held
    by KDDA from the shareholders of KDD to DDI, without prejudice to
    Commission action on this Application.[^14] On September 27, 2000,
    the Commission granted KDDA's request for Special Temporary
    Authority commencing October 1, 2000, to permit the transfer of
    control of the TAT-14 cable landing authorization held by KDDA to
    DDI.[^15]

# II. Discussion {#ii.-discussion .unnumbered}

9.  We placed the Application on public notice on August 11, 2000.[^16]
    We received no comments. Pursuant to Section 1.767(b) of the
    Commission's rules,[^17] the Cable Landing License Act, and
    Executive Order No. 10530, we informed the Department of State of
    the request for transfer of control.[^18] 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 approving the Applicant's request to
    transfer control of KDDA's interest in the TAT-14 cable system to
    DDI.[^19]

10. Under Section 1.767(a)(8) of the Commission's rules, Applicants are
    required to disclose their affiliations with foreign carriers.[^20]
    DDI has certified that it is a foreign carrier authorized in Japan
    to provide telecommunications services, and that it is also
    affiliated with various foreign carriers in Japan, Brazil, Paraguay,
    and Australia.[^21] DDI has also certified that, upon acquisition of
    KDD and KDDA, DDI (through KDDA) will provide international
    telecommunications services to Japan, where it is a foreign carrier,
    and that it also will control KDD, another foreign carrier in
    Japan.[^22] Japan, Brazil, Paraguay, and Australia are WTO member
    countries.[^23] None of the landing points for TAT-14 are located in
    any of the countries where DDI has affiliates, and we see no reason
    to deny the Applicants' request to transfer control of KDDA's
    interest in the TAT-14 cable system to DDI on the basis of DDI's
    foreign affiliations.

11. Applicants assert that the approval of the transfer of control will
    serve the public interest in promoting competition in the United
    States by permitting KDDA and DDI to compete more effectively
    through combining their financial resources and complementary
    services, facilities, and expertise. Applicants further assert that
    the proposed merger will permit them to realize significant
    economic, marketing, and technical service efficiencies that will
    enhance KDDA's ability to provide high-quality, low-cost competitive
    telecommunications services.[^24]

12. Upon consideration of the record in this proceeding, and in view of
    the foregoing, we conclude that grant of the transfer of control
    sought in the Application will serve the public interest and is
    consistent with the Cable Landing License Act.

13. We modify the initial authorization to reflect these transactions.
    We do not modify the initial authorization in any other respect.

# III. Ordering Clauses {#iii.-ordering-clauses .unnumbered}

14. Consistent with the foregoing and pursuant to the Cable Landing
    License Act and Executive Order 10530, IT IS ORDERED that the
    Application, File No. SCL-T/C-20000727-00028, IS GRANTED, the
    transactions listed herein are authorized, and the TAT-14 Cable
    Landing License (File No. SCL-LIC-19990303-00004) IS HEREBY MODIFIED
    to reflect those transactions.

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.[^25]

FEDERAL COMMUNICATIONS COMMISSION

Jacquelynn Ruff

Associate Chief, Telecommunications Division

International Bureau

[^1]: *See* KDD America, Inc., Application for Authority to Transfer
    Control of Cable Landing License, File No. SCL-T/C-20000727-00028,
    filed July 27, 2000 (Application).

[^2]: An Act Relating to the Landing and Operation of Submarine Cables
    in the United States, 47 U.S.C. §§ 34-39 (Cable Landing License
    Act).

[^3]: Exec. Ord. No. 10530 *reprinted as amended in* 3 U.S.C. § 301.

[^4]: *See AT&T Corp., et al., Joint Application for a License to Land
    and Operate a Submarine Cable Network Between the United States,
    Denmark, Germany, the Netherlands, France and the United Kingdom*,
    File No. SCL-LIC-19990303-00004, Cable Landing License, DA 99-2042,
    (IB/TD, rel. Oct. 1, 1999).

[^5]: *See id.* at Schedule B.

[^6]: *See* Application at 1.

[^7]: *See* *id.* at 2*.*

[^8]: *Id.*

[^9]: *See id.* at 2, 6.

[^10]: *See id.* at 6.

[^11]: *See id.* at 2.

[^12]: *See id*. at 2, n.3.

[^13]: *See id.* at 2.

[^14]: The transfer of control was granted on a streamlined basis by
    Public Notice. *See International Authorizations Granted,* Report
    No. TEL-00289, DA 00-2150, Public Notice, File No.
    ITC-T/C-20000727-00498 (rel. Sept. 21, 2000).

[^15]: *See* Request for Special Temporary Authority Expedited
    Consideration Requested, File No. SCL-STA-20000919-00031 (granted
    Sept. 27, 2000).

[^16]: *See KDD America, Inc. and DDI Corporation Seek FCC Consent to
    Transfer Control of International § 214 Authorizations and Cable
    Landing License; Foreign Carrier Notification Filed*, DA 00-1834,
    Public Notice, (IB/TD rel. Aug. 11, 2000).

[^17]: 47 C.F.R. § 1.767(b).

[^18]: Letter from George S. Li, Deputy Chief, Telecommunications
    Division, International Bureau, Federal Communications Commission,
    to Steven Lett, Deputy U.S. Coordinator, Office of International
    Communications and Information Policy, U.S. Department of State
    (Aug. 11, 2000).

[^19]: Letter from Geoffrey W. Chapman, Acting United States
    Coordinator, International Communications and Information Policy,
    U.S. Department of State, to Donald Abelson, Chief, International
    Bureau, Federal Communications Commission (Nov. 6, 2000).

[^20]: *See* 47 C.F.R. § 1.767(a)(8).

[^21]: *See id.* at 7.

[^22]: *Id.*

[^23]: *Id.*

[^24]: *See id.* at 3.

[^25]: *See* 47 C.F.R. § 1.4(b)(2).