**DA 04-2148**

**Released: July 15, 2004**

**DOMESTIC SECTION 214 APPLICATION FILED FOR TRANSFER OF CONTROL OF
VERIZON HAWAII INC. TO THE CARLYLE GROUP**

**STREAMLINED Pleading Cycle Established**

**WC Docket No. 04-234**

**Comments Due: July 29, 2004**

**Reply Comments Due: August 5, 2004**

On June 21, 2004, Verizon Hawaii Inc. ("Verizon Hawaii"), Bell Atlantic
Communications, Inc. (d/b/a Verizon Long Distance) ("Verizon Long
Distance") and Verizon Select Services Inc. ("VSSI") (collectively,
"Verizon" or "Transferors") filed an application, pursuant to sections
63.03 and 63.04 of the Commission's rules,[^1] requesting approval to
transfer control of (1) Verizon Hawaii; and (2) the assets related to
interstate interexchange telecommunications service and the interstate
long distance customer relationships of Verizon Long Distance and VSSI
in the State of Hawaii.[^2] The proposed transferee is Paradise
MergerSub, Inc. ("Paradise MergerSub" or "Transferee"), a holding
company wholly owned by investment funds associated with The Carlyle
Group.[^3]

Applicants assert that this transaction is entitled to presumptive
streamlined treatment pursuant to section 63.03(b)(1)(ii) of the
Commission's rules because the transferee is not a telecommunications
provider. The applicants state that the transferee is a private equity
firm with limited interests in the telecommunications industry, none of
which provides domestic common carrier services. Notwithstanding the
fact that the transferee is not affiliated with a telecommunications
provider, the Applicants assert in the alternative that this transaction
is also entitled to presumptive streamlined treatment pursuant to
63.03(b)(2)(ii) because (a) the transferee will have less than 10
percent of the interstate, interexchange market following the transfer
of interexchange customers in Hawaii from Verizon Long Distance and
VSSI; (b) the transferee does not provide competitive telephone exchange
or exchange access; and (c) the applicants are a dominant carrier and a
non-dominant entity (i.e. affiliate WCI Cable, Inc. ("WCI")) that
provides services exclusively outside the geographic area where the
dominant carrier is dominant.[^4]

Transferors Verizon Long Distance and VSSI provide domestic
interexchange services in the State of Hawaii and in other areas of the
United States. Transferor Verizon Hawaii provides local exchange service
and exchange access service in various exchanges throughout Hawaii. In
addition, affiliates of the Transferors provide a variety of local
exchange services, exchange access services, and interexchange services,
both wireline and wireless, in domestic telecommunications markets
throughout the United States. Verizon Hawaii and VSSI are wholly-owned
subsidiaries of GTE Corporation. More than 95% of GTE Corporation is
owned by Verizon Communications Inc. The balance is owned by NYNEX
Corporation, which is a wholly-owned subsidiary of Verizon
Communications, Inc. Verizon Long Distance is a wholly-owned subsidiary
of Verizon Communications Inc. No entity owns 10 percent or more of the
equity in Verizon Communications Inc.

Transferee Paradise MergerSub, Inc. is a wholly owned subsidiary of
Paradise HoldCo, Inc. ("Paradise HoldCo"). Carlyle Partners III Hawaii,
L.P. ("CP III Hawaii") and the affiliated investment partnerships
(Carlyle Partners III Hawaii A, L.P., Carlyle Hawaii Partners, L.P., and
Carlyle Hawaii Partners II, L.P., collectively, the "Carlyle
Partnerships") at closing will hold a 100 percent interest in Paradise
HoldCo. Although the exact equity ownership held by each of the Carlyle
Partnerships is not yet finalized, Applicants anticipate that each of
Carlyle Partners III Hawaii, L.P., Carlyle Partners III Hawaii A, L.P.,
and Carlyle Hawaii Partners II, L.P. will have a greater than 10 percent
interest in Paradise HoldCo, and that no other entity will hold a 10
percent or greater direct or indirect equity interest in Paradise
HoldCo.

Each of the Carlyle Partnerships is controlled by TC Group III, L.P.,
its sole general partner. In addition, there are limited partners in the
Carlyle Partnerships, some of whom are aliens. Applicants assert that
alien limited partners of the Carlyle Partnerships will in no event own
more than 25 percent of Transferee, and this alien ownership will be
widely dispersed among dozens of entities, with the largest alien
limited partnership interest equating to less than 3 percent of the
Transferee. The sole general partner of TC Group III, L.P. is TC Group
III, L.L.C. TC Group III, L.P. also has one limited partner, a U.S.
citizen. The sole member of TC Group III, L.L.C. is TC Group, L.L.C. The
sole managing member of TC Group, L.L.C. is TCG Holdings, L.L.C. ("TCG
Holdings"). TCG Holdings is managed by a committee comprised of three
managing members: William E. Conway, Jr., Daniel A. D'Aniello and David
M. Rubenstein. Each of these individuals is a United States citizen. In
addition, there are 30 other members (not managing members) of TCG
Holdings.

Applicants assert that, although the transferee is not currently a
telecommunications carrier, the transferee is affiliated with WCI . WCI
is an FCC licensee that owns and operates a submarine fiber-optic cable
connecting Alaska with the continental U.S. as well as certain
terrestrial facilities in Alaska, all of which it operates on a
non-common-carrier basis. WCI does not have any facilities in Hawaii. In
addition, Carlyle affiliates are parties to applications recently filed
with the Commission for transfer of control of PanAmSat Licensee Corp.
(a non-common carrier Title III licensee) to Carlyle Partners III
Telecommunications, L.P. and other Transferees.[^5]

On May 21, 2004, GTE Corporation and Verizon HoldCo LLC ("Verizon
HoldCo") entered into an Agreement of Merger (the "Merger Agreement")
with Paradise HoldCo and Paradise MergerSub. GTE Corporation currently
owns one hundred percent of the stock of Verizon Hawaii and one hundred
percent of the membership interest of Verizon HoldCo. Prior to the
effective time of the proposed merger, (i) GTE Corporation will transfer
the stock of Verizon Hawaii, to Verizon HoldCo and (ii) Verizon will
cause VSSI and Verizon Long Distance to assign certain assets related to
interstate interexchange telecommunications service and interstate long
distance customer relationships in the State of Hawaii to Verizon
AssetCo, an entity to be formed by and wholly owned by Verizon HoldCo.
The long-distance assets consist primarily of customer presubscriptions
and accounts receivable related to those customers. Pursuant to the
Merger Agreement, Verizon HoldCo will be merged with and into Paradise
MergerSub, and Paradise MergerSub will be the sole surviving company and
succeed to and assume all the rights and obligations of Verizon HoldCo
(including owning all of the stock of Verizon Hawaii and Verizon
AssetCo), with certain limited exceptions as set forth in the Merger
Agreement.

The applicants assert that the proposed transfer of control is in the
public interest. Applicants assert that the transferee will continue to
provide local exchange and domestic interstate interexchange services
after the closing of the transaction without reduction, impairment, or
discontinuance of service to any customer. The applicants assert that
the planned transfer of control will have no known immediate or
substantial adverse effect on the service provided to customers in these
exchanges in Hawaii. The applicants also state that there will be no
reduction in the number of competitors or the level of competition in
Hawaii as a result of the transfer of control to the Transferee.
Furthermore, the applicants state that the Transferee and its affiliates
do not currently provide local or long-distance telephone service in the
State of Hawaii, and thus the proposed transaction poses no competitive
concerns.

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

The transfer of control 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 on or before July 29,
2004** and **reply comments on or before August 5, 2004**.[^6] Unless
otherwise notified by the Commission, Applicants are permitted to
transfer control on the 31^st^ day after the date of this notice.[^7]
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 e-mail to ecfs@fcc.gov, and should include the following
words in the subject line \"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
appears 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, Natek, 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, Best Copy and Printing,
    Inc., 445 12^th^ Street, S.W., Room CY-B402, Washington, D.C. 20554;
    e-mail: [www.bcpiweb.com;]() phone: 1-800-378-3160;

(2) Tracey Wilson, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 5-C437, Washington, D.C.
    20554; e-mail: <tracey.wilson-parker@fcc.gov>;

(3) Kimberly Jackson, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 3-C403, Washington, D.C.
    20554; e-mail: <kimberly.jackson@fcc.gov>;

(4) Julie Veach, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 5-C124, Washington, D.C.
    20554; e-mail: <julie.veach@fcc.gov>;

(5) Christopher Killion, Office of General Counsel, 445 12^th^ Street,
    S.W., Room 8-C740, Washington, D.C. 20554; e-mail:
    <chris.killion@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, Best Copy and Printing, Inc., Portals II, 445 12th Street,
SW, Room CY-B402, Washington, DC, 20554, telephone 1-800-378-3160, or
via e-mail [www.bcpiweb.com](http://www.bcpiweb.com/).

For further information, please contact Tracey Wilson, at (202)
418-1394, or Kimberly Jackson at (202) 418-7393.

\- **FCC** -

[^1]: 47 C.F.R §§ 63.03, 63.04; *see* 47 U.S.C. § 214.

[^2]: Only VSSI and Verizon Long Distance assets and customers in Hawaii
    will be transferred as a result of this application. VSSI and
    Verizon Long Distance will retain authority granted by the
    Commission to provide interstate and international long-distance
    services.

[^3]: Applicants are also filing an application for consent to transfer
    control of authorization for international and wireless services.
    Any action on this domestic 214 application is without prejudice to
    Commission action on other related pending applications.

[^4]: The transferor Verizon Hawaii is classified by the Commission as a
    dominant carrier in the State of Hawaii, and Verizon Long Distance
    and VSSI are classified as nondominant carriers.

[^5]: *See The News Corporation Limited and The DIRECTV Group, Inc.
    (Transferors) and Constellation, LLC, Carlyle PanAmSat I, LLC,
    Carlyle PanAmSat II, LLC, PEP PAS, LLC and PEOP PAS LLC
    (Transferees) Seek Approval to Transfer Control of FCC Licenses and
    Authorizations Held by PanAmSat Licensee Corp., IB*, Public Notice,
    Docket No. 02-209, DA 04-1605 (rel. June 2, 4004).

[^6]: *See* 47 C.F.R. § 63.03(a).

[^7]: Such authorization is conditioned upon receipt of any other
    necessary approvals from the Commission in connection with the
    proposed transaction.