*Pages 1--5 from  Microsoft Word - 24258.doc*
 PUBLIC  NOTICE  Federal  Communications  Commission  445  12  th  Street,  S.  W.  Washington,  D.  C.  20554  News  Media  Information  202  /  418-  0500  Fax-  On-  Demand  202  /  418-  2830  TTY  202  /  418-  2555  Internet:  http://  www.  fcc.  gov  ftp.  fcc.  gov 
 DA  03-  66  Released:  January  10,  2003 
 DOMESTIC  SECTION  214  APPLICATION  FILED  FOR  ACQUISITION  OF  ASSETS  OF  YIPES  TRANSMISSION,  INC.  AS  PART  OF  BANKRUPTCY  REORGANIZATION 
 STREAMLINED  PLEADING  CYCLE  ESTABLISHED 
 WC  Docket  No.  03-  01 
 On  December  16,  2002,  Yipes  Enterprise  Services,  Inc.  (  New  Yipes)  and  Yipes  Transmission,  Inc.  (Debtor-  in-  Possession)  (  Old  Yipes)  (together  Applicants),  filed  an 

 application  pursuant  to  section  63.03  of  the  Commissions  rules,  1  for  consent  to  enable  New  Yipes  to  acquire  the  assets  of  Old  Yipes.  Since  April  19,  2002,  Old  Yipes  has  been  operating 
 under  the  protection  of  the  Bankruptcy  Court  for  the  Northern  District  of  California  (San  Francisco  Division)  pursuant  to  Chapter  11  of  the  Bankruptcy  Code.  2  New  Yipes  has  agreed  to 
 acquire  the  operations,  authorizations  and  assets  of  Old  Yipes,  subject  to  necessary  approvals.  The  proposed  transaction  will  be  accomplished  by  implementation  of  the  Plan  of  Reorganization 
 (  Plan),  jointly  sponsored  by  Applicants  and  approved  by  the  Bankruptcy  Court  on  November  8,  2002. 

 Applicants  assert  that  this  transaction  is  entitled  to  presumptive  streamlined  treatment  pursuant  to  section  63.03(  b)(  2)(  i)  of  the  Commissions  rules  because  immediately  following  the 
 transaction,  (1)  New  Yipes  an  its  affiliates  will  hold  less  than  a  ten  percent  (10%)  share  of  the  interstate,  interexchange  market;  (2)  neither  Applicant  currently  provides  presubscribed  local 
 exchange  service  and  immediately  following  the  transaction,  New  Yipes  will  provide  local  exchange  service,  if  at  all,  only  in  areas  served  by  dominant  local  exchange  carriers  (none  of 
 which  are  parties  to  the  transaction)  and;  (3)  none  of  the  Applicants  or  their  affiliates  are  dominant  with  respect  to  any  service.  3 

 1  47  C.  F.  R    63.03;  see  47  U.  S.  C.    214. 
 2  See  In  re  Yipes  Transmission,  Inc.  and  Yipes  Transmission  Virginia,  Inc.,  Case  No.  02-  30750-  DM 
 (Bankr.  N.  D.  Cal.  (San  Francisco)).  Pursuant  to  section  63.03(  d)  of  the  Commissions  rules,  47  C.  F.  R.    63.03(  d),  Old  Yipes  advised  the  Commission  of  the  status  of  Old  Yipes  as  Debtor-  in-  Possession  by  letter  dated  December 

 12,  2002. 
 3  47  C.  F.  R.    63.03(  b)(  2)(  i). 
1
 2 
 New  Yipes  is  a  Delaware  corporation  with  principal  offices  located  at  114  Sansome  Street,  San  Francisco,  California.  At  the  time  that  the  Plan  is  implemented,  New  Yipes  will  be  a 
 wholly  owned  subsidiary  of  Yipes  Holdings,  Inc.  (  Yipes  Holdings),  a  Delaware  corporation.  Yipes  Holdings  will,  in  turn,  be  owned  by  a  number  of  institutional  investors,  the  largest  of 
 which  include  affiliates  of  Norwest  Investing  Funds,  New  Enterprise  Investing  Funds,  Sprout  Investing  Funds  and  J.  P.  Morgan  Partners  Investing  Funds  (  Investors).  None  of  the  Investors 
 holds  a  controlling  interest  in  Yipes  Holdings  or,  therefore,  in  New  Yipes  and,  as  a  result,  ultimate  corporate  control  of  New  Yipes  will  remain  with  Yipes  Holdings.  4 

 New  Yipes  states  that  it  has  the  financial  resources  required  to  acquire  the  assets  of  Old  Yipes  and  provide  service  and  assume  responsibility  for  the  interstate  operations  of  Old  Yipes. 
 In  particular,  Yipes  obtained  commitment  on  a  round  of  funding  from  its  Investors  in  the  amount  of  approximately  $57  million.  New  Yipes  has  already  received  more  than  $40  million  of  this 
 funding  and  New  Yipes  expects  that  it  will  receive  the  balance  of  the  funds  after  a  second  closing  scheduled  to  occur  later  this  year.  New  Yipes  expects  that  the  most  recent  funding  round 
 should  suffice  to  allow  the  company  to  operate  until  New  Yipes  turns  cash  flow  positive,  which  is  expected  to  occur  near  the  end  of  next  year. 

 New  Yipes  also  asserts  that  it  has  the  managerial  and  technical  resources  necessary  to  operate  the  interstate  operations  of  Old  Yipes  that  New  Yipes  proposes  to  acquire.  Because 
 certain  key  members  of  Old  Yipess  former  senior  management  team  hold  comparable  management  positions  with  New  Yipes,  upon  closing  of  the  Plan,  New  Yipes  will  have 
 managerial  qualifications  similar  to  those  of  Old  Yipes. 
 Old  Yipes  is  a  California  corporation  with  principal  offices  at  114  Sansome  Street,  San  Francisco,  California.  Old  Yipes  is  authorized  to  provide  facilities-  based  competitive  local 
 exchange  services  in  more  than  ten  states,  and  Old  Yipes  provides  interstate  services  on  a  deregulated  basis. 

 Through  implementation  of  the  Plan,  New  Yipes  will  acquire  the  interstate  operations  of  Old  Yipes.  Thereafter,  New  Yipes  will  continue  to  provide  services  to  existing  customers  under 
 the  same  rates,  terms  and  conditions  of  services  as  that  service  is  currently  provided.  New  Yipes  will  continue  to  provide  service  under  the  Yipes  brand  name.  As  a  result,  Applicants  state  that 
 implementation  of  the  Plan  will  be  virtually  transparent  to  customers  because  they  will  experience  no  change  in  the  services  they  receive.  In  order  to  avoid  customer  confusion, 
 Applicants  will  provide  pre-  consummation  notice  of  the  Plan  to  customers. 

 4  Although  a  number  of  investment  companies  have  made  investments  in  Yipes  Holdings,  only  four 
 entities  hold  interests  greater  than  ten  percent  (10%)  of  Yipes  Holdings.  Those  entities  are  Norwest  Venture  Partners  IX,  L.  P.,  Sprout  Capital  VIII,  L.  P.,  J.  P.  Morgan  Partners  (BHCA),  L.  P.  and  New  Enterprise  Associates 

 10,  L.  P.  Although  collectively  these  entities  own  nearly  eight  percent  (80%)  of  Yipes  Holdings,  the  shares  are  distributed  such  that  no  entity  owns  or  controls  more  than  thirty  percent  (30%)  of  Yipes  Holdings.  Applicants 
 assert  that  the  four  investors  do  not  act  in  concert  and  none  of  these  entities  will  exercise  control  over  the  day  to  day  operations  of  New  Yipes. 
2
 3 
 Applicants  state  that  this  application  will  serve  the  public  interest.  In  particular,  Applicants  assert  that  consummation  of  the  Plan  will  increase  competition  in  the  interstate 
 telecommunications  market  by  reinforcing  Applicants  status  as  a  viable  competitor.  Applicants  state  that  the  proposed  transaction  will  allow  New  Yipes  to  build  on  the  foundation  provided  by 
 Old  Yipes  and  position  New  Yipes  to  compete  effectively  as  a  leading  provider  of  services  using  Gigabit  Ethernet  and  Internet  Protocol.  Furthermore,  Applicants  state  that  this  transaction  will 
 facilitate  the  ability  of  New  Yipes  to  offer  alternative  high-  quality,  competitively  priced  services  to  a  substantial  number  of  potential  customers  in  its  operating  areas  under  a  refocused  business 
 plan  and  with  an  ability  to  compete  effectively  with  the  incumbents  and  other  providers  of  telecommunications  services. 

 Applicants  state  that  existing  Yipes  customers,  in  particular,  will  realize  significant  public  interest  benefits  from  consummation  of  the  Plan.  In  light  of  the  precarious  financial 
 position  of  Old  Yipes,  the  proposed  Plan  will  provide  greater  stability  to  customers  who  receive  services  from  New  Yipes  and  ensure  that  those  customers  can  continue  to  enjoy  high  quality, 
 affordable  service  without  interruption.  Moreover,  given  that  the  Plan  will  not  cause  a  change  in  the  rates,  terms  and  conditions  of  services  that  Yipes  customers  currently  receive,  Applicants 
 expect  that  implementation  of  the  Plan  will  be  virtually  transparent  to  customers. 

 GENERAL  INFORMATION 
 The  transfer  of  control  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  transfer  of  control  application  if,  upon  further  examination,  it  is  determined  to  be  defective  and  not  in  conformance  with  the  Commissions  rules  and  policies.  Interested  parties 
 may  file  comments  within  14  days  and  reply  comments  within  21  days  of  this  notice.  5  Unless  otherwise  notified  by  the  Commission,  an  applicant  is  permitted  to  transfer  control  of  the 
 domestic  lines  or  authorization  to  operate  on  the  31  st  day  after  the  date  of  this  notice.  6  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, 
 5  See  47  C.  F.  R.    63.03(  a). 
 6  Such  authorization  is  conditioned  upon  receipt  of  any  other  necessary  approvals  from  the  Commission  in 
 connection  with  the  proposed  transaction. 
3
 4 
 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  an  e-mail  to  ecfs@  fcc.  gov,  and  should  include  the  following  words  in  the  body  of  the  message,  "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  appear  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  Commissions  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,  and 

 (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,  and 
 (4)  William  Dever,  Competition  Policy  Division,  Wireline  Competition  Bureau,  445  12  th  Street,  S.  W.,  Room  ,  5-  C266,  Washington,  D.  C.  20554;  e-  mail:  wdever@  fcc.  gov;  and 
 (5)  Nandan  Joshi,  Office  of  General  Counsel,  445  12  th  Street,  S.  W.,  Room  8-  A820,  Washington,  D.  C.  20554;  e-  mail:  njoshi@  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 
4
 5 
 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,  Dennis  Johnson  (202)  418-  0809,  or  William  Dever,  Competition  Policy,  Wireline  Competition  Bureau 
 at  (202)  418-  1578. 

 -  FCC  - 
5