**DA 06-667**

**Released: March 27, 2006**

**DOMESTIC SECTION 214 APPLICATION FILED FOR THE TRANSFER OF CONTROL OF
THE CTC COMMUNICATIONS GROUP, INC. AND**

**THE CHOICE ONE COMMUNICATIONS, INC. SUBSIDIARIES**

**TO SURVIVING CORPORATION**

**STREAMLINED Pleading Cycle Established**

**WC Docket No. 06-47**

**Comments Due: April 10, 2006**

**Reply Comments Due: April 17, 2006**

On February 22, 2006, CTC Communications Group, Inc., ("CTC Group") and
Choice One Communications Inc. ("Choice One") (together "Applicants")
filed an application, pursuant to sections 63.03 and 63.04 of the
Commission's rules,[^1] seeking authority to transfer control of the CTC
Group subsidiaries ("CTC Subsidiaries")[^2] and the Choice One
subsidiaries ("Choice One Subsidiaries")[^3] as a result of the merger
of CTC Group with and into Choice One.[^4]

The Applicants assert that this transaction is entitled to presumptive
streamlined treatment under section 63.03(b)(2)(i), of the Commission's
rules because the: (1) proposed transaction will result in the merged
entity ("Surviving Corporation")[^5] and its affiliates (as that term is
defined in Section 3(1) of the Act) having a market share in the
interstate, interexchange market of less than 10 percent; (2) Surviving
Corporation (including its affiliates) 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 (3) neither Applicants nor any
of their affiliates are regulated as dominant with respect to any
service.[^6]

CTC Group is a wholly-owned subsidiary of Columbia Venture Broadband LLC
("CVC Broadband"), which is, in turn, a wholly-owned subsidiary of
Columbia Ventures Corporation ("CVC"). CVC Broadband, a Washington
limited liability company, is a holding company. CVC, a Washington
corporation, owns and operates a portfolio of telecommunications
companies and a small number of manufacturing businesses around the
world.[^7] Neither CVC nor CVC Broadband provide telecommunications
services. Kenneth D. Peterson, Jr., a U.S. citizen, holds 100% of the
ownership interest in CVC and is Chief Executive Officer, Chairman and
Founder of CVC. Other than CVC, none of Mr. Peterson's ownership
interests in U.S. telecommunications service providers outside of CVC
exceed 10%. Mr. Peterson owns 100% of European Access Providers Limited
("LEAP"), a competitive provider of wireless and Internet over DSL
services in Ireland. LEAP holds less than a 50% market share in the
international transport and local access market in Ireland.

In August 2004, CVC notified the Commission that a number of
wholly-owned CVC subsidiaries, including CVC Acquisition Company
(Ireland) Limited (now known as Hibernia Atlantic Cable System Limited
or "Hibernia Ireland"), CVC Acquisition Company (UK) Limited (now known
as Hibernia Atlantic (UK) Limited or "Hibernia UK"), CVC Acquisition
Company (Canada) Ltd.(now known as Hibernia Atlantic Communications
(Canada) Company or "Hibernia Canada"), and Columbia Ventures U.S.
Acquisition LLC (now known as Hibernia Atlantic U.S. LLC or "Hibernia
USA") -- would operate under CVC's Section 214 authority.[^8] The CVC
companies listed (the "Hibernia Atlantic Companies") have ownership
interests in Hibernia Atlantic (formerly known as the 360atlantic Cable
Network), a submarine cable network extending between the U.S., Canada,
the U.K., and Ireland. In the U.S. the Hibernia Companies provide only
high-capacity international circuits at this time. CVC also holds
ownership interests in two other foreign telecommunications carriers,
Globestar Australia and Magnet Networks Limited ("Magnet Networks").
CVC's wholly-owned subsidiary, Columbia Ventures (Australia) Pty. Ltd.,
holds a 50% interest in Globestar Australia, a provider of competitive
wireless services in Australia. Magnet Networks is a wholly-owned
indirect subsidiary of CVC and a provider of voice, data, and television
services in Ireland. CVC also owns two other telecommunications
companies that operate in the U.S. -- Fiberlink LLC, d/b/a Columbia
Fiber Solutions, a Washington limited liability company and a dark fiber
provider. CVC also owns a 12.3 percent ownership interest in Metro One
Telecommunications, Inc., an Oregon corporation, which provides
directory assistance and information services via a nationwide network
of call centers.

Choice One, a Delaware corporation, is a holding company for the Choice
One Subsidiaries. The Choice One Subsidiaries are common carriers that
provide communications and information services to small and medium size
businesses predominately in the Northeast and Midwest regions
(Connecticut, Illinois, Indiana, Maine, Massachusetts, Michigan, New
Hampshire, New York, Ohio, Pennsylvania, Rhode Island, and Wisconsin).
The 10% or greater owners of Choice One[^9] are: Quantum Partners LDC,
("Quantum"), 24.8%; General Electric Capital Corporation, 14.0%;[^10]
and Varde Investment Partners, L.P., 11.6%.[^11] Quantum, is a Cayman
Islands limited duration corporation whose principal business is
investment. Quantum is wholly-owned by Quantum Emerging Growth Partners
C.V. ("Quantum Emerging"), a Netherlands Antilles limited partnership
whose principal business is investment. The managing general partner of
Quantum Emerging is Emerging Growth Fund Management C.V. ("Emerging
Growth"), a Netherlands Antilles limited partnership whose business is
investment.[^12] The managing general partner of Emerging Growth is
Quastro N.V. ("Quastro"), a Netherlands Antilles corporation whose
business is investment. The sole shareholder of Quastro is voted by
George Soros, a U.S. citizen whose principal business is being Chairman
of Soros Fund Management LLC ("SFM"), a Delaware limited liability
company, by virtue of a management agreement between SFM and Quantum,
exercises voting and dispositive power over the shares of Choice One
held by Quantum.

On February 9, 2006, CTC Group and Choice One entered into an Agreement
and Plan of Merger ("Merger Agreement"). Pursuant to the terms of the
Merger Agreement, CTC Group will merge with and into Choice One at
closing. Choice One will be the surviving corporation of the merger.
Following consummation of the transaction, the CTC Subsidiaries and the
Choice One Subsidiaries will be wholly-owned direct or indirect
subsidiaries of Surviving Corporation, a holding company incorporated
under Delaware law. The 10% or greater owners of the Surviving
Corporation will be as follows: CVC Broadband (will hold 50-70%);
Quantum (12.375%); and the stockholders of Choice One that exist at the
time of the merger (17.6-37.6 %). The Applicants state that it is
possible that some of the existing Choice One stockholders could sell
their shares of Surviving Corporation to CVC Broadband soon after
closing. Accordingly, the Applicants request authority for CVC Broadband
to acquire up to a 70 percent ownership interest in Surviving
Corporation and thus up to a 70 percent ownership in the CTC
Subsidiaries and Choice One Subsidiaries.[^13]

The Applicants assert that the proposed transaction serves the public
interest as consumers in the Northeast, the Mid-Atlantic, and Midwest
regions will benefit from the operation of these competitive local
exchange carriers ("CLECs") under one umbrella company, the Surviving
Corporation. The Applicants state that the merger of CTC Group into
Choice One will further strengthen the competitive position of the CTC
Subsidiaries and Choice One Subsidiaries as a leading regional
competitive telecommunications provider in the Northeast, Mid-Atlantic
and Midwest regions and will significantly strengthen the ability of the
combined companies to compete effectively in their markets.

**[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. Pursuant to sections 1.415 and 1.419 of the Commission's
rules, 47 CFR §§ 1.415, 1.419, interested parties may file **comments on
or before April 10, 2006** and **reply comments on or before April 17,
2006**.[^14] Unless otherwise notified by the Commission, Applicants are
permitted to transfer the assets and related control on the 31^st^ day
after the date of this notice.[^15] Comments may be filed using: (1) the
Commission's Electronic Comment Filing System (ECFS), (2) the Federal
Government's eRulemaking Portal, or (3) by filing paper copies. *See
Electronic Filing of Documents in Rulemaking Proceedings*, 63 FR 24121
(1998).

-   Electronic Filers: Comments may be filed electronically using the
    Internet by accessing the ECFS: <http://www.fcc.gov/cgb/ecfs/> or
    the Federal eRulemaking Portal:
    [http://www.regulations.gov](http://www.regulations.gov/). Filers
    should follow the instructions provided on the website for
    submitting comments.

-   For ECFS filers, if multiple docket or rulemaking numbers appear in
    the caption of this proceeding, filers must transmit one electronic
    copy of the comments for each docket or rulemaking number referenced
    in the caption. In completing the transmittal screen, filers 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, filers should send an e-mail to <ecfs@fcc.gov>, and
    include the following words in the body of the message, "get form."
    A sample form and directions will be sent in response.

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-   Paper Filers: 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, filers
    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). All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.

The Commission's contractor 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]{.underline} 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, Express, and
Priority mail should be addressed to 445 12th Street, S.W., Washington
D.C. 20554.

People with Disabilities: To request materials in accessible formats for
people with disabilities (braille, large print, electronic files, audio
format), send an e-mail to <fcc504@fcc.gov> or call the Consumer &
Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

**You may submit comments, identified by the above noted docket number,
by any of the following methods:**

-   Federal eRulemaking Portal:
    [http://www.regulations.gov](http://www.regulations.gov/). Follow
    the instructions for submitting comments.

-   Federal Communications Commission's Web Site:
    <http://www.fcc.gov/cgb/ecfs/>. Follow the instructions for
    submitting comments.

-   People with Disabilities: Contact the FCC to request reasonable
    accommodations (accessible format documents, sign language
    interpreters, CART, etc.) by e-mail: <FCC504@fcc.gov> or phone:
    202-418-0530 or TTY: 202-418-0432.

**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, S.W., Room CY-B402, Washington, D.C. 20554,
    [www.bcpiweb.com](http://www.bcpiweb.com/); phone: (202) 488-5300
    fax: (202) 488-5563;

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

(3) Denise A. Coca, Competition Policy Division, Wireline Competition
    Bureau, 445 12th Street, S.W., Room 5-, Washington, D.C. 20554;
    e-mail: <denise.coca@fcc.gov>;

(4) Susan O'Connell, Policy Division, International Bureau, 445 12th
    Street, S.W., Room 7-B544, Washington, D.C. 20554; email:
    [susan.o'connell@fcc.gov](mailto:cynthia.bryant@fcc.gov); and

(5) James Bird, Office of General Counsel, 445 12th Street, S.W., Room
    8-C824, Washington, D.C. 20554; e-mail: <james.bird@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, S.W., Room CY-A257, Washington,
D.C. 20554. They may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street,
S.W., Room CY-B402, Washington, D.C. 20554, telephone: (202) 488-5300,
fax: (202) 488-5563, or via e-mail
[www.bcpiweb.com](http://www.bcpiweb.com/).

For further information, please contact Tracey Wilson-Parker at (202)
418-1394, or Denise Coca at (202) 418-0574.

\- **FCC** -

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

[^2]: The CTC Subsidiaries holding blanket Section 214 authorizations
    are: CTC Communications Corp., a Massachusetts corporation; CTC
    Communications of Virginia, Inc., a Virginia corporation;
    Connecticut Telephone and Communication Systems, Inc., a Connecticut
    corporation; Connecticut Broadband, LLC, a Connecticut company; and
    Lightship Telecom, LLC, a Delaware company.

[^3]: The Choice One Subsidiaries holding blanket Section 214
    authorizations are: Choice One Communications of Connecticut Inc., a
    Connecticut corporation; Choice One Communications of Maine Inc., a
    Delaware corporation; Choice One Communications of Massachusetts
    Inc., a Delaware corporation; Choice One Communications of New York
    Inc., a Delaware corporation; Choice One Communications of Ohio
    Inc., a Delaware corporation; Choice One Communications of
    Pennsylvania Inc., a Delaware corporation; Choice One Communications
    of Rhode Island Inc., a Delaware corporation; Choice One
    Communications of Virginia Inc., a Virginia corporation; Choice One
    of New Hampshire Inc., a Delaware corporation; US Xchange of
    Illinois, LLC, a Delaware company; US Xchange of Indiana LLC, a
    Delaware company; US Xchange of Michigan, LLC, a Delaware company;
    and US Xchange of Wisconsin, LLC, a Delaware company.

[^4]: Applicants are also filing applications for transfer of control
    associated with authorization for international services. Any action
    on this domestic 214 application is without prejudice to Commission
    action on other related, pending applications.

[^5]: The name of the surviving corporation has yet to be determined.

[^6]: 47 C.F.R. § 63.03(b)(2)(i).

[^7]: Applicants state that CVC holds global facilities-based and resale
    international Section 214 authority as granted by the Commission on
    October 16, 1998 in IB File NO. ITC-214-19980820-00606 to a CTC
    Subsidiary, CTC Communications of Virginia, Inc. and subsequently
    assigned on a pro forma basis to CVC.

[^8]: As permitted under Section 63.21(h) of the Commission's rules, 47
    C.F.R. § 63.21(h).

[^9]: The Applicants state that these are the same entities that were
    disclosed to the FCC as the 10% or greater owners of Choice One in
    WC Docket No. 04-399. *See* Domestic Section 214 Application Filed
    for Transfer of Control of Choice One Communications, Inc. to Choice
    One Communications Reorganized, WC Docket No. 04-39, *Public
    Notice*, DA 04-3499 (rel. Nov. 1, 2004).

[^10]: General Electric Capital Corporation is wholly-owned by General
    Electric Capital Services Inc., which in turn is a wholly owned
    subsidiary of General Electric Company ("GE"), a widely held public
    corporation.

[^11]: Varde Investment Partners, L.P. is controlled by its general
    partner, Varde Investment Partners G.P., LLC ("VIP G.P."). Varde
    Partners, L.P. is a managing member of VIP G.P.. Varde Partners,
    L.P.'s general partner is Varde Partners, Inc. The 10% or greater
    owners of Varde Partners, Inc. are as follows: George G. Hicks,
    33.3%; Gregory S. McMillan, 33.3% and Marcia L. Page, 33.3%.

[^12]: Quantum Endowment Fund N.V. ("QEF NV") is a limited partner of
    Quantum Emerging with an equity interest of over 50%. No entity has
    an ownership or voting interest of 10% or more in QEF NV.

[^13]: The Applicants have not yet determined who will be the officers
    and directors of the CTC Subsidiaries and the Choice One
    Subsidiaries post-close and thus do not know at this time if their
    will be any interlocking directors.

[^14]: *See* 47 C.F.R. § 63.03(a).

[^15]: Such authorization is conditioned upon receipt of any other
    necessary approvals from the Commission in connection with the
    proposed transaction.