**DA 04-1849**

**Released: June 24, 2004**

**DOMESTIC SECTION 214 APPLICATION FILED FOR ACQUISITION OF ASSETS OF
COVISTA BY PAETEC COMMUNICATIONS, INC.**

**STREAMLINED Pleading Cycle Established**

**WC Docket No. 04-221**

**Comments Due: July 8, 2004**

**Reply Comments Due: July 15, 2004**

On June 3, 2004, PAETEC Communications, Inc. (PAETEC or Transferee) and
Covista, Inc. (Covista), Covista of New York (Covista-NY), and Capsule
Communications, Inc. (Capsule) (Covista, Covista-NY, and Capsule,
together, the Covista Companies or Transferors) (together, Applicants)
filed an application, pursuant to sections 63.03 and 63.04 of the
Commission's rules,[^1] requesting approval for the Covista Companies to
transfer to PAETEC certain telecommunications assets (the Covista
Assets), including certain commercial long distance customers served by
Covista and Covista-NY.[^2] The Applicants request expedited treatment
of their application.

Applicants assert that the proposed transaction is eligible for
presumptive streamlined treatment under section 63.03(b)(2)(i) of the
Commission's rules because the proposed transaction will result in 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 (if at all) exclusively in
geographic areas served by a dominant local exchange carrier that is not
a party to the transaction; and none of the Applicants are dominant with
respect to any service.

PAETEC is a Delaware corporation located in Fairpoint, New York. PAETEC
provides broadband services, including advanced voice and video,
enhanced data and communications management services to medium-sized and
large businesses, educational institutions, governmental organizations
and other entities in 27 U.S. markets. PAETEC offers local and long
distance services in New Jersey, New York and Pennsylvania. PAETEC is
wholly-owned by PAETEC Corp., a holding company. Madison Dearborn
Capital Partners III. L.P. (19.8 percent) and Blackstone CCC Capital
Partners, L.P. (14.1 percent) own a ten percent or greater equity share
in PAETEC. Madison Dearborn Capital Partners III, L.P. holds a 25.3
percent ownership interest in CBeyond Communications, LLC, which is a
competitive LEC.[^3] Blackstone CCC Capital Partners, L.P. holds a 24
percent ownership interest in Centennial Communications Corp., which
operates as a competitive LEC and as a wireless carrier.[^4] Arunas A.
Chesonis, by virtue of super-voting rights associated with the class of
PAETEC Corp. stock he holds, controls PAETEC Corp.

Covista and Covista-NY are organized under the laws of New Jersey.
Covista, Inc. and Capsule Communications are direct, wholly-owned
subsidiaries of Covista Communications, Inc., a holding company. Covista
of New York, Inc. is a direct, wholly-owned subsidiary of Covista, Inc.
The Covista Companies offer facilities-based and/or resold local and
long distance telecommunications, Internet and data services to retail
and wholesale customers principally in the Northeast region of the
United States. Covista offers local and long distance services in New
Jersey, Pennsylvania, California, Delaware, Florida and Ohio.[^5]
Covista-NY offers local and long distance services in New York. Capsule
is organized under the laws of Delaware. Capsule does not currently
offer service in any geographic markets.

Applicants request approval for PAETEC to acquire certain assets of the
Covista Companies and a portion of their commercial long distance
customer base. PAETEC seeks to acquire commercial long distance customer
accounts and two switches, including associated equipment, from the
Covista Companies.[^6] The assets involved are located in New Jersey,
New York, Pennsylvania, California, Delaware, Florida and Ohio. The
affected customers are served in the same states.

The Applicants claim that this proposed application will serve the
public interest, convenience and necessity by promoting competition
among telecommunications carriers. Specifically, Applicants contend that
approval of the proposed asset transfer will enable PAETEC to strengthen
its competitive presence in the affected markets and to concentrate its
resources and expertise on providing innovative and diversified service
offerings to their costumers. Applicants maintain that these
enhancements will inure directly to the benefit of affected customers of
Covista and Covista-NY, as well as indirectly to consumers generally in
the telecommunications marketplace.

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

The acquisition of assets 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 acquisition
of assets 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 8,
2004** and **reply comments on or before July 15, 2004**.[^7] Unless
otherwise notified by the Commission, Applicants are permitted to
transfer assets on the 31^st^ day after the date of this notice.[^8]
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 12th Street, SW, Room CY-B402, Washington, DC 20554,
    telephone 1-800-378-3160, or via e-mail
    [[www.bcpiweb.com]{.underline}](http://WWW.BCPIWEB.COM/).

(2) Tracey Wilson, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 5-C212, Washington, D.C.
    20554; e-mail: <tracey.wilson-parker@fcc.gov>;

(3) Dennis Johnson, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 6-A461, Washington, D.C.
    20554; e-mail: <dennis.johnson@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) Susan O'Connell, Policy Division, International Bureau, 445 12^th^
    Street, S.W., Room 7-B544, Washington, D.C. 20554; email:
    [susan.o'connell@fcc.gov](mailto:cynthia.bryant@fcc.gov); and

(6) 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, 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]{.underline}](http://WWW.BCPIWEB.COM/).

For further information, please contact Tracey Wilson, at (202)
418-1394, or Dennis Johnson at (202) 418-0809.

\- **FCC** -

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

[^2]: The Applicants are also filing an application for consent to
    transfer assets for international services. Any action on this
    domestic section 214 application is without prejudice to Commission
    action on other related pending applications.

[^3]: *See* Letter from Grace R. Chiu, Counsel for PAETEC
    Communications, Inc., to Marlene H. Dortch, Secretary, Federal
    Communications Commission, WC Docket No. 04-221 (filed June 17,
    2004).

[^4]: *Id.*

[^5]: *See* Letter from Grace R. Chiu, Counsel for PAETEC
    Communications, Inc., to Marlene H. Dortch, Secretary, Federal
    Communications Commission, WC Docket No. 04-221 (filed June 21,
    2004).

[^6]: *Id.*

[^7]: *See* 47 C.F.R. § 63.03(a).

[^8]: Such authorization is conditioned upon receipt of any other
    necessary approvals from the Commission in connection with the
    proposed transaction.