*Pages 1--5 from Microsoft Word - 50953.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 05- 2278 Released: August 11, 2005 DOMESTIC SECTION 214 APPLICATION FILED FOR TRANSFER OF CONTROL OF NII COMMUNICATIONS, LTD FROM NII COMMUNICATIONS, INC. TO CLEARTEL COMMUNICATIONS, INC. STREAMLINED PLEADING CYCLE ESTABLISHED WC Docket No. 05- 237 Comments Due: August 25, 2005 Reply Comments Due: September 1, 2005 On July 14, 2004, Cleartel Communications, Inc. (“ Cleartel”) and nii communications, inc. (“ Parent”) (together, “Applicants”), filed an application pursuant to sections 63.03 and 63.04 of the Commission’s rules 1 requesting authority to transfer of control of nii communications, ltd. (“ nii”), an authorized international and domestic interstate carrier. The proposed transactions will involve the purchase by Cleartel of all the equity interest of nii from Parent. 2 Applicants assert that this transaction is entitled to presumptive streamlined treatment under section 63.03( b)( 2)( i) of the Commission’s rules because, immediately following the proposed transactions, (1) Cleartel and its affiliates, including nii, will collectively hold less than a 10% share of the interstate, interexchange market; (2) Cleartel and its affiliates will provide competitive local exchange or exchange access services only in areas served by dominant local exchange carriers (none of which are parties to the proposed transactions); and (3) none of the Applicants or their affiliates are dominant with respect to any service. 3 Parent is a corporation organized under the laws of the state of Delaware. nii, a Texas limited partnership, is owned by Parent and nii communications gp, llc, a Texas limited liability 1 47 C. F. R §§ 63.03, 63.04; see 47 U. S. C. § 214. 2 Applicants have also filed an application for consent to transfer authorization for international services. Any action on this domestic 214 application is without prejudice to Commission action on other related pending applications. 3 47 C. F. R. § 63.03( b)( 2)( i). 1 2 company (“ General Partner”). Parent currently holds a 99% limited partnership in nii, while General Partner holds a 1% general partnership interest in nii. General Partner is a wholly-owned subsidiary of Parent. nii is a provider of local exchange, domestic and international long distance, and enhanced voice, data and internet services which operates in five states. After the consummation of the proposed transaction, nii will retain its authorization and will continue to provide services to its customers. Cleartel, a Delaware corporation, provides voice and data solutions to customers in the Northeast, Southeast, Southwest, and Midwestern United States. Through its wholly- owned subsidiaries, Cleartel Telecommunications, Inc., Cleartel Telecommunications of Virginia, Inc., NOW Communications, Inc., Telecon Communications, Corp., and IDS Telecom Corp., Cleartel offers local, Internet, and long distance services to both residential and business users in 29 states and the District of Columbia. 4 Cleartel is a portfolio investment company of MCG Capital Corporation (“ MCG”), a publicly- traded investment corporation organized under Delaware law. Eubel, Brady & Suttman Asset Management, Inc., a U. S. investment entity, owns 10% of MCG. No other entity owns or controls a 10% or greater interest in nii. In addition to its interest in Cleartel, MCG also holds interests in other competitive telecommunications companies, including BridgeCom International, Inc. (“ BridgeCom”), TruCom Corporation (“ TruCom”), Broadview Networks, Inc. (“ Broadview”), and Broadview NP Acquisition Corp (“ Broadview NP”). BridgeCom and TruCom provide resold and facilities-based competitive interexchange and local exchange services primarily in the New York/ New Jersey area. 5 Broadview provides resold and/ or facilities- based competitive interexchange and local exchange services in California, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Vermont, Virginia and West Virginia. 6 Broadview NP holds authority to provide interexchange service and, in some instances, competitive local exchange service, in the following 23 states: New York, Massachusetts, New Jersey, Virginia, Michigan, Delaware, Rhode Island, Pennsylvania, New Hampshire, Texas, California, Illinois, Maine, Maryland, Ohio, Vermont, West Virginia, Connecticut, Indiana, Montana, Nevada, Oklahoma and Colorado. 4 Cleartel’s operating subsidiaries provide competitive interexchange and local services in Alabama, Arkansas, California, Connecticut, the District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin. 5 BridgeCom also provides interexchange services in Arkansas, California, Connecticut, Florida, Georgia, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Ohio, Pennsylvania, Rhode Island, Texas and Washington. 6 Broadview also has two wholly- owned subsidiaries -- Broadview Networks, Inc. of Mass. and Broadview Networks, Inc. of VA -- that provide service in Massachusetts and Virginia only. 2 3 Applicants entered into a Purchase Agreement dated June 1, 2005 (“ Agreement”) under which Parent has agreed to sell all of the assets of nii. 7 Under the terms of the Agreement, IH NII Acquisition, Inc. (“ Acquisition”), a newly- created subsidiary of MCG (the ultimate owner of Cleartel), will acquire all of the membership and partnership interest of nii and General Partner from Parent. Immediately thereafter, Acquisition will become a wholly- owned subsidiary of Cleartel. Subsequently, Acquisition will be liquidated, and its assets, including the membership and partnership interests of General Partner and nii, will be transferred to Cleartel. As a result, upon completion of the proposed transaction, General Partner will be a wholly- owned, direct subsidiary of Cleartel, and General Partner and Cleartel will collectively own nii. Applicants emphasize that the proposed transaction is limited to a change in equity ownership of nii, and will not result in the transfer or discontinuance of any customers. Immediately following consummation of the proposed transaction, nii’s customers will continue to receive services under the same rates, terms and conditions of service as currently provided by nii. nii will continue to operate and provide services to customers, and its rates will continue to be governed by its tariffs and contracts, with any future change in rates subject to any requirements outlined in those tariffs and contracts. In addition, the proposed transaction will not result in a change in the name under which nii provides services. As a result, the proposed transaction will be transparent to nii’s customers. Applicants state the proposed transaction will serve the public interest because it will increase competition in the telecommunications market by reinforcing the status of nii as a viable competitor, and it will minimize the disruption of service and be transparent to nii’s customers. The proposed transaction is expected to facilitate competition by improving the operations position of nii and allowing nii to expand its service offerings in the future. Applicants indicate that, by creating a more effective and multifaceted telecommunications carrier, the proposed transaction will significantly enhance competitive choices for U. S. telecommunications customers. Moreover, Applicants assert that, because the proposed transaction will not directly affect nii’s rates, terms and conditions of service, the transaction will have no negative effects on customers. GENERAL INFORMATION 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 August 25, 2005 and reply comments on or before September 1, 2005. 8 Unless otherwise notified by the Commission, Applicants are permitted to transfer the 7 A copy of the Purchase Agreement will be provided upon request. 8 See 47 C. F. R. § 63.03( a). 3