**DA 03-2524**

**Released: July 29, 2003**

**DOMESTIC SECTION 214 APPLICATION FILED FOR TRANSFER OF CONTROL OF
FIBERNET, INC., AND ITC\^ DELTACOM COMMUNICATIONS, INC. TO WELSH,
CARSON, ANDERSON & STOWE VIII., TOGETHER WITH CERTAIN AFFILIATES**

**STREAMLINED Pleading Cycle Established**

**WC Docket No. 03-165**

On July 9, 2003, ITC\^DeltaCom, Inc. (ITC), Interstate FiberNet, Inc.
(FiberNet), ITC\^DeltaCom Communications, Inc. (DeltaCom), and Welsh,
Carson, Anderson & Stow VIII, L.P., WCAS Capital Partners III, L.P., and
WCAS Information Partners, L.P. (together, Welsh Carson) (ITC, FiberNet,
DeltaCom, and Welsh Carson, together, Applicants) filed an application,
pursuant to sections 63.03 and 63.04 of the Commission's rules,[^1] for
consent to transfer control of FiberNet and DeltaCom to Welsh
Carson.[^2]

Applicants assert that the proposed transaction is eligible for
presumptive streamlined treatment under section 63.03(b)(2)(ii) of the
Commission's rules because the transferee will have a market share in
the interstate interexchange market of less than 10 percent, the
transferee will provide competitive telephone exchange services or
exchange access services exclusively in geographic areas served by a
dominant local exchange carrier that is not a party to the proposed
transaction, and the Applicants are a dominant carrier and a
non-dominant carrier that provides services exclusively outside the
geographic area where the dominant carrier is dominant.[^3]

ITC offers local, long distance and enhanced services to retail business
customers. ITC also offers wholesale services, including operator
services and directory assistance, PRI local connections, and broadband
transport. ITC's 10,000 route-miles of fiber-optic backbone extends to
10 states[^4] and includes 188 points of presence. ITC has 12 voice
switches for local and long distance offerings, as well as local
facilities collocated in incumbent local exchange central offices, and
provides local services in 35 local markets. In the first calendar
quarter of 2003, ITC also began offering bundled local and long distance
services to residential customers.

ITC's subsidiaries DeltaCom and FiberNet, which are headquartered in
Georgia, together own or manage approximately 10,000 route-miles of a
fiber-optic network covering portions of ten states in the southern
United States. Other Welsh Carson subsidiaries (together, BTI Operating)
provide facilities-based competitive local exchange services in the
southeast United States.[^5] BTI Operating offers business customers a
variety of telecommunications and information services including local
dial tone, long distance, frame relay and private line, dedicated,
dial-up or DSL Internet access, and advanced ancillary services. Its
network operations extend through a 13-state footprint with 4,400
route-miles of fiber-optic facilities and include 81 points of presence,
25 frame relay switches, 4 ATM switches, 14 local voice switches and 4
long distance voice switches.[^6] BTI Operating's fiber-optic facilities
are concentrated in the eastern coastal states and stretch from the
southern tip of Florida to New York, although a significant number of
BTI Operating's switching facilities and fiber POP sites are located in
North Carolina. BTI Operating also provides local voice services through
resale of incumbent local exchange carrier services and UNE-Platform in
several states in addition to those states where BTI Operating has its
own network operations.

The Welsh Carson entities are affiliates of Welsh, Carson, Anderson and
Stowe, a private equity investment firm that has managerial and
financial expertise in numerous fields including telecommunications. The
Welsh Carson entities that are the transferees are not commonly owned,
but are ultimately managed and controlled by the same group of
individuals. Welsh Carson currently holds approximately 49.3 percent of
the common stock of ITC. Welsh Carson, through various limited
partnerships, holds majority interests in two communications companies
subject to FCC jurisdiction, in addition to its interest in BTI. Welsh
Carson is a majority shareholder in the publicly traded Centennial
Communications Corporation, a provider of wireless rural telephone
systems in the continental United State, and a provider of integrated
communications services in the Caribbean, including the islands of
Puerto Rico and the U.S. Virgin Islands. Welsh Carson is a majority
investor in Valor Telecommunications L.L.C., an independent local
exchange offering services in primarily rural exchange areas within the
state of Texas, Oklahoma and New Mexico. Valor also provides long
distance, wireless and information services.

Welsh Carson and ITC have entered into an agreement whereby Welsh
Carson's majority-owned BTI and its subsidiaries will join the ITC group
of corporate subsidiaries. To that end, BTI will merge with a newly
created subsidiary of ITC, with BTI surviving. Thus, BTI will become a
subsidiary of ITC. Welsh Carson's debt and equity interests in BTI will
be exchanged for or converted into common stock and warrants of ITC, and
Welsh Carson and certain of its affiliates will invest approximately
\$35 million in ITC in exchange for Series B preferred stock of ITC.
Immediately following the consummation of the proposed transaction Welsh
Carson will own stock of ITC controlling a majority of the outstanding
stockholder votes pertaining generally to matters presented for vote by
the holders of ITC's common stock.[^7] Thus, the proposed transaction
will result in a transfer to Welsh Carson of ultimate control of
FiberNet and DeltaCom. Because Welsh Carson currently controls BTI and
will continue to have ultimate control of BTI through its ownership of
ITC after consummation of the transaction, the merger of BTI with an ITC
subsidiary will result in a *pro forma* transfer of control of BTI
Operating. Following consummation of the proposed transaction,
Applicants state that DeltaCom, FiberNet, and BTI Operating (the
Companies) will continue to compete in the local and long distance
retail and wholesale telecommunications markets. Although the local and
long distance operations of the Companies overlap in some states, each
company will continue to face competition from incumbent local exchange
carriers, such as BellSouth and Verizon, larger long distance
competitors, and other providers of communications services, such as
wireless and cable providers.

Applicants state that the proposed transaction is in the public
interest, convenience, and necessity. Applicants assert that FiberNet
and DeltaCom, and their customers, will benefit from the improved
capitalization of ITC, which will help ensure continuity of service and
enhance FiberNet's and DeltaCom's ability to offer a broader range of
innovative products and services to customers. The Applicants expect
that the proposed transaction will generate annualized cost savings for
the combined company of approximately \$40 to \$60 million over a
three-year period, the majority of which is expected to be achieved by
the end of the first year. Applicants assert that the proposed
transaction will strengthen the ability of FiberNet and DeltaCom to
offer services in competition with other providers, including the
incumbent local exchange carriers, in their operating areas. Moreover,
the Applicants assert this proposed transaction will promote competition
in the local exchange, interexchange, and international
telecommunications, markets, which will serve the public interest.

**[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 within 14 days** and
**reply comments within 21 days** of this notice.[^8] Unless otherwise
notified by the Commission, Applicants are permitted to transfer control
on the 31^st^ day after the date of this notice.[^9] 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, 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);

(3) Dennis Johnson, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 6-A461, Washington, D.C.
    20554; e-mail: <dcjohnso@fcc.gov>;

(4) Jeremy Miller, Competition Policy Division, Wireline Competition
    Bureau, 445 12^th^ Street, S.W., Room 5-C211, Washington, D.C.
    20554; e-mail: <jemiller@fcc.gov>;

(5) Imani Ellis-Cheek, Telecommunications Division, International
    Bureau, 445 12^th^ Street, S.W., Room 6-A739, Washington, D.C.
    20554; email: <iellis@fcc.gov>;

(6) Christopher Killion, Office of General Counsel, 445 12^th^ Street,
    S.W., Room 8-C740, Washington, D.C. 20554; e-mail:
    <ckillion@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 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]: DeltaCom also holds satellite earth station licenses, and the
    Applicants are concurrently filing an application for consent to
    transfer control of these licenses. Any action on this domestic 214
    application is without prejudice to Commission action on other
    related pending applications.

[^3]: *See* Letter from Ruth Milkman, Lawler, Metzger & Milkman, LLC to
    Marlene H. Dortch, Secretary, Federal Communications Commission, WC
    Docket No. 03-165 (filed July 23, 2003).

[^4]: The states are Alabama, Arkansas, Florida, Georgia, Louisiana,
    Mississippi, North Carolina, South Carolina, Tennessee, and Texas.

[^5]: Welsh Carson owns a majority of shares (approximately 70% on a
    fully diluted basis) of BTI Telecom Corp. (BTI), which through its
    subsidiaries, Business Telecom, Inc. and Business Telecom of
    Virginia, Inc. (together, BTI Operating), is a regional
    facilities-based competitive local exchange, long distance and
    international service provider headquartered in North Carolina.

[^6]: The jurisdictions are Alabama, Delaware, the District of Columbia,
    Florida, Georgia, Maryland, New Jersey, New York, Pennsylvania,
    South Carolina, North Carolina, Tennessee, and Virginia.

[^7]: *See* Letter from Jonathan M. Rather, Chief Financial Officer,
    Welsh Carson to Marlene H. Dortch, Secretary, Federal Communications
    Commission, WC 03-165 (filed July 22, 2003) (providing
    post-transaction ownership percentages of Welsh Carson entities in
    ITC stock).

[^8]: *See* 47 C.F.R. § 63.03(a).

[^9]: Such authorization is conditioned upon receipt of any other
    necessary approvals from the Commission in connection with the
    proposed transaction.