Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | SCL-T/C-20000719-00029       |
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| GLOBAL CROSSING LTD.             | ) |                              |
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| IPC COMMUNICATIONS, INC.         | * |                              |
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| Joint Application for Authority  | ) |                              |
| to Transfer Control of           | * |                              |
| International Exchange Networks, | * |                              |
| Ltd., Holder of a Cable Landing  |   |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted:** December 18, 2000 **Released:** December 20, 2000

By the Chief, Telecommunications Division, International Bureau:

# Introduction

1.  In this Order, we grant the Application[^1] of Global Crossing Ltd.
    ("Global Crossing") and IPC Communications, Inc. ("IPC")
    (collectively "Applicants") seeking authority, *nunc pro tunc,* to
    transfer control of International Exchange Networks, Ltd., ("IEXN"),
    a non-dominant common carrier with a Cable Landing License, from IPC
    to Global Crossing in connection with the acquisition of IPC by
    Global Crossing.

2.  On July 9, 1999, the Commission authorized IEXN and numerous other
    carriers, pursuant to the Cable Landing License Act,[^2] and
    Executive Order No. 10530,[^3] to land and operate a non-common
    carrier submarine fiber optic cable system, called the Japan-U.S.
    Cable Network ("Japan-U.S. CN"), extending between three landing
    points in the United States and three landing points in Japan.[^4]

3.  IEXN's original investment share and allocation of network capital
    in the Japan-U.S. CN was 0.22630 percent; its capacity allocation,
    ownership interest in segments, and voting interest were each
    0.18692 percent; and its allocation of network operations and
    maintenance costs was 0.18692 percent.[^5]

4.  Global Crossing, the builder and operator of a global fiber optic
    network, is a Bermuda corporation, and is publicly traded on the
    NASDAQ National Market. Pacific Capital Group, Inc., ("PCG") holds a
    12.98 percent[^6] interest in Global Crossing. Gary Winnick, a U.S.
    citizen, is the sole shareholder, as owner and trustee, of PCG.[^7]
    Global Crossing's worldwide network consists of seven undersea
    systems and terrestrial networks in the United States, Europe,
    Japan, and Hong Kong.

5.  Prior to consummation of the transfer of control, IPC was a publicly
    traded Delaware holding corporation. IPC, through its wholly-owned
    subsidiary IPC Information Systems, Inc. ("IPC Systems"), a Delaware
    corporation, was the parent of IXnet, Inc. ("IXnet"), a Delaware
    holding company, and IEXN, a Delaware corporation. IEXN is the
    wholly-owned operating subsidiary of IXnet.[^8]

6.  Applicants assert that IPC Systems provides integrated
    telecommunications equipment and services that facilitate the
    execution of transactions by the worldwide financial services
    community.[^9] Applicants assert further that IXnet provides,
    through its wholly-owned operating subsidiary IEXN, interexchange
    and international private line and switched telecommunications
    services to the financial community in the United States and
    abroad.[^10]

7.  IEXN is authorized to provide international telecommunications
    service pursuant to several Section 214 authorizations granted by
    the Commission. Applicants assert that although IEXN is not itself
    authorized to provide telecommunications service in any foreign
    country, various subsidiaries of IEXN are authorized to provide
    telecommunications services in foreign countries including Canada,
    Japan, and the United Kingdom.[^11] Applicants further assert that
    all of IEXN's foreign subsidiaries are located in World Trade
    Organization ("WTO") member countries and have substantially less
    than a 50 percent share of the international transport and local
    access markets in their respective countries.[^12] As a result,
    Applicants assert that IEXN is regulated as a non-dominant carrier
    of international services to all of these countries.[^13]

8.  The Commission, on May 25, 2000, granted Applicants' request for
    approval under Section 214 of the Communications Act of 1934, as
    amended, to transfer control of IEXN to Global Crossing.[^14]
    However, Applicants state that, due to an oversight, they did not
    request such approval for the transfer of control of IEXN's
    ownership interest in the Japan-U.S. CN prior to consummation of the
    transfer of control of IEXN to Global Crossing on June 14, 2000.
    Consequently, Applicants request approval of the transfer of
    control, *nunc pro tunc*.

# II. Comments {#ii.-comments .unnumbered}

9.  We placed the Application on public notice on August 11, 2000.[^15]
    We received no comments. Pursuant to Section 1.767(b) of the
    Commission's rules,[^16] the Cable Landing License Act, and
    Executive Order No. 10530, we informed the Department of State of
    the transfer of control request.[^17] 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 IEXN's interest in the Japan-U.S. CN from IPC to Global
    Crossing.[^18]

# III. Discussion {#iii.-discussion .unnumbered}

10. Under the terms of the transfer of control, Global Crossing and IPC
    entered into a series of transactions whereby Global Crossing
    acquired IPC and its intermediate subsidiaries, IPC Systems and
    IXnet, through an exchange of their respective stocks. Specifically,
    on June 14, 2000, Global Crossing acquired both IXnet and its parent
    company, IPC Systems, through a series of transactions
    including: (a) the merger of IPC and IPC Systems; (b) the merger of
    IPC Systems and Georgia Merger Sub Corporation, a wholly-owned
    subsidiary of Global Crossing formed specifically for the purposes
    of effectuating the transfer of control, whereby Global Crossing
    acquired IPC Systems in exchange for shares of Global Crossing;
    and (c) the merger of IXnet and Idaho Merger Sub Corporation, a
    wholly-owned subsidiary of IPC Systems formed specifically for the
    purposes of effectuating the transfer of control, whereby Global
    Crossing acquired IXnet, also in exchange for shares of Global
    Crossing.[^19] As a result of the transactions, IEXN is an indirect
    subsidiary of Global Crossing.[^20]

11. Under Section 1.767(a)(8) of the Commission's rules, applicants are
    required to disclose their affiliations with foreign carriers.[^21]
    Global Crossing has certified that it is not a foreign carrier
    within the meaning of Section 63.09(d) of the Commission's Rules,
    [^22] but that it is affiliated with foreign carriers in the
    following countries: Argentina, Belgium, Brazil, Canada, Chile,
    Denmark, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico,
    the Netherlands, Norway, Singapore, Spain, Sweden, Switzerland, and
    the United Kingdom.[^23] According to the Application, Global
    Crossing is affiliated with the following foreign carriers in Japan:
    Asia Global Crossing Japan Corporation, Global Crossing Japan K.K.,
    Global Access Ltd., IXnet (Japan) K.K., and IXnet
    Telecommunications.[^24] Japan is a WTO member country, and Global
    Crossing has asserted that the market share in the international
    transport and local access markets of each of its affiliated foreign
    carriers in Japan is significantly less than 50 percent.[^25] We
    conclude, therefore, that Global Crossing's affiliated foreign
    carriers do not possess market power that would allow them to
    discriminate against unaffiliated U.S. carriers through control of
    bottleneck facilities in Japan, and we see no reason to deny the
    Applicants' request to transfer control of IEXN's interest in the
    Japan-U.S. CN to Global Crossing on the basis of Global Crossing's
    foreign affiliations.

12. Although the Japan-U.S. CN competes with Global Crossing's cable
    between the United States and Japan, Applicants assert that Global
    Crossing's aggregate indirect share in the Japan-U.S. CN, through
    IEXN and Frontier Communications Services, Inc. ("Frontier") is only
    0.45260 percent.[^26] Applicants further assert that, given that 30
    other carriers have a share of the ownership of the Global Crossing
    cable, there will be virtually no diminution of competition as a
    result of the indirect transfer of control of IEXN to Global
    Crossing. [^27]

13. Applicants assert that the approval of the transfer of control will
    serve the public interest because the acquisition of IEXN, IXnet,
    and IPC Systems enhances Global Crossing's ability to compete in the
    international services market.[^28] Specifically, Applicants state
    that the acquisition of IXnet will enable Global Crossing to move
    from solely providing building-to-building connectivity in major
    cities to providing desktop-to-desktop connectivity to multinational
    corporations worldwide.[^29] According to Applicants, IEXN and IXnet
    will be able to eliminate network costs by moving their services off
    leased lines onto the Global Crossing network, and IXnet will be
    able to take advantage of Global Crossing's advanced broadband
    network to provide enhanced and expanded service offerings to
    financial institutions.[^30]

14. We conclude that the transfer of control of IEXN's interest to
    Global Crossing raises no competitive concerns, and does not provide
    a basis for altering the non-common carrier status of the cable.
    Specifically, we conclude that Global Crossing's ownership of a
    0.45260 percent interest in the Japan-U.S. CN will not cause
    competitive concerns. A large number of cables have served the
    U.S.-Japan route for some time, and more are coming on line.[^31]
    Moreover, the amount of Global Crossing's ownership interest in
    Japan-U.S. CN is insubstantial. Accordingly, we find that grant of
    the Application is in the public interest.

15. 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. We grant the *nunc
    pro tunc* request made in the Application. However, we caution
    Applicants that the Commission's rules require prior approval of
    such transfers of control and urge Applicants to plan accordingly in
    the future.

16. We hereby 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}

17. 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-20000719-00029, IS GRANTED, the
    transactions listed herein are authorized, and the Japan-U.S. Cable
    Landing License (File No. SCL-LIC-19981117-00025) IS HEREBY MODIFIED
    to reflect those transactions.

18. 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.[^32]

FEDERAL COMMUNICATIONS COMMISSION

Rebecca Arbogast

Chief, Telecommunications Division

International Bureau

[^1]: *See* Application of Global Crossing Ltd. and IPC Communications,
    Inc., Joint Application for Authority to Transfer Control of
    International Exchange Networks, Ltd., Holder of a Cable Landing
    License, File No. SCL-T/C-20000719-00029, filed July 19, 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 and
    Japan*, File No. SCL-LIC-19981117-00025, Cable Landing License, 14
    FCC Rcd 13066 (1999).

[^5]: *Id. See also* Application at 1-2.

[^6]: The 12.98 percent of PCG's holdings in Global Crossing includes
    the holdings of GKW Unified Holdings, LLC, a company formed for the
    benefit of Gary Winnick and members of his family, which is managed
    by PCG. PCG's percentage held also includes its interest in common
    stock issuable upon the exercise of certain warrants. *See*
    Application at 10, n.9.

[^7]: *Id.*

[^8]: *See id.* at 4. *See also* letter from Troy F. Tanner, Counsel for
    Global Crossing Ltd., to Donna Christianson, Federal Communications
    Commission (Oct. 12, 2000) (Amendment Letter).

[^9]: *See* Application*.* at 4.

[^10]: *Id.*

[^11]: *See id.* at 4-5.

[^12]: *See id.* at 5.

[^13]: *Id.*

[^14]: The transfer of control was granted by Public Notice. *See
    International Authorizations Granted,* Report No. TEL-00236, DA
    00-1163, Public Notice, File No. ITC-T/C-20000411-00251 (rel. May
    25, 2000). *See also* the Amendment Letter.

[^15]: *See Non Streamlined International Applications Accepted for
    Filing*, Report No. TEL-00273NS, Public Notice, (rel. Aug. 11,
    2000).

[^16]: 47 C.F.R. § 1.767(b).

[^17]: 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).

[^18]: Letter from Richard C. Beaird, Deputy United States Coordinator,
    International Communications and Information Policy, U.S. Department
    of State, to Donald Abelson, Chief, International Bureau, Federal
    Communications Commission (Dec. 6, 2000).

[^19]: *See* Application at 5.

[^20]: *See* *id.* at 2, 5.

[^21]: *See* 47 C.F.R. § 1.767(a)(8).

[^22]: 47 C.F.R. § 63.09(d).

[^23]: Letter from Helen E. Disenhaus and Troy F. Tanner to Magalie
    Roman Salas, Secretary, Federal Communications Commission, outlining
    Global Crossing's foreign affiliations (Nov. 22, 2000) (Affiliations
    Letter).

[^24]: *Id.* at 2.

[^25]: *Id.*

[^26]: Global Crossing previously acquired an interest in the Japan-US
    CN when it acquired Frontier. *See Frontier Communications Services,
    Inc., Application for Transfer of Control of a Cable Landing License
    from Frontier Corporation to Global Crossing Ltd.,* Order and
    Authorization, 15 FCC Rcd 5043 (IB/TD 2000). Global Crossing's
    interest is calculated by adding the interest of IEXN to the
    interest of Global Crossing's subsidiary, Frontier. *See*
    Application at 3, n.5.

[^27]: *See* Application*.* at 6, n.7.

[^28]: *See id.* at 7.

[^29]: *Id.*

[^30]: *Id.*

[^31]: The following cables currently serve the route: HAW-4/TPC-3, NPC,
    TPC-4, TPC-5, PC-1**,** and China-US. The following cables, in
    addition to the Japan-U.S. CN, plan to serve the route: 360pacific
    and FLAG Pacific-1.

[^32]: *See* 47 C.F.R. § 1.4(b)(2).