PUBLIC NOTICE Federal Communications Commission 445 12th 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 10-1169 Released: June 25, 2010 APPLICATIONS OF FAIRPOINT COMMUNICATIONS, INC., DEBTOR-IN-POSSESSION, AND FAIRPOINT COMMUNICATIONS, INC. FOR ASSIGNMENT AND TRANSFER OF CONTROL OF SECTION 214 AUTHORITY PLEADING CYCLE ESTABLISHED WC Docket No. 10-126 Comments Due: July 26, 2010 Reply Comments Due: August 10, 2010 FairPoint Communications, Inc. (FairPoint), Debtor-in-Possession before the United States Bankruptcy Court (Court), filed a series of applications pursuant to sections 214 and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 214, 310(d), seeking approval for various assignments and transfers of control of licenses and authorizations,1 as well as a petition for declaratory ruling pursuant to section 310(b)(4) of the Communications Act. FairPoint, a widely-held, publicly-traded Delaware corporation, operates 33 local exchange companies in 18 states2 through its direct and wholly-owned subsidiaries,3 and provides service to approximately 1.6 million access line equivalents. FairPoint provides local, long distance, international and wireless communications services to residential and business customers. On October 26, 2009, FairPoint and all of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. This resulted in the involuntary, pro forma assignment of the Commission licenses and authorizations held by each of FairPoint’s direct and indirect subsidiaries to those subsidiaries as debtors-in-possession. The Company continues to operate its business with FairPoint and each subsidiary operating as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. Under the Plan of Reorganization, substantially approved by the Court on May 1 FairPoint Communications, Inc., Debtor-in-Possession and FairPoint Communications, Inc., Application for Consent to Assign Domestic Section 214 Authority, WC Docket No. 10-126 (filed June 3, 2010) (Application). 2 The 18 states are: Alabama, Colorado, Florida, Georgia, Idaho, Illinois, Kansas, Maine, Massachusetts, Missouri, New Hampshire, New York, Ohio, Oklahoma, Pennsylvania, Vermont, Virginia, and Washington. 3 FairPoint lists 51 subsidiaries organized under the laws of Delaware, Idaho, Florida, Illinois, Kansas, Maine, Missouri, New York, Ohio, Oklahoma, Pennsylvania, Virginia, and Washington. FairPoint does not wholly own one subsidiary, Sunflower Telephone Company, Inc. Two shares, accounting for less than 0.5 percent of the ownership interests in that entity, are held by a third party. 2 14, 2010,4 all existing equity interests in FairPoint will be cancelled and extinguished, and a single class of new voting common stock in FairPoint will be issued to certain holders of FairPoint’s secured debt and unsecured indebtedness. The secured lenders will collectively receive approximately 92 percent of this stock. FairPoint’s common stock will be listed on a national securities exchange as of the effective date of FairPoint’s emergence from bankruptcy, which will require that FairPoint have at least 400 shareholders. FairPoint states that only a single investor group will own or control a 10 percent or greater ownership interest in FairPoint after the reorganization. Specifically, investment fund vehicles directly or indirectly controlled by AG Funds, L.P. will hold “an aggregate beneficial equity interest in FairPoint of approximately 15 percent.”5 Applicants assert that none of these investment fund vehicles, nor any other subsidiary of AG Funds, L.P., will individually hold a 10 percent or greater ownership interest in FairPoint. A.G. Funds, L.P., a management company organized under Delaware law, has one limited partner6 and one general partner, AG Funds GP, L.P, also a management company organized under Delaware law. The sole general partner of AG Funds GP, L.P. is JM Funds LLC, a management company organized under Delaware law. The two members of JM Funds LLC, each of which may be deemed to control that entity, are John M. Angelo and Michael L. Gordon, both of whom are U.S. citizens. FairPoint reports that, with the exception of Mssrs. Angelo and Gordon, no limited partner of AG Funds GP, LP will hold a 10 percent or greater ownership interest in FairPoint. Following consummation of the proposed transactions, FairPoint will have no interlocking directorates. FairPoint’s current Chief Executive Officer, Chief Financial Officer, President, and Chairman of the Board will continue to serve in those capacities. Additionally, FairPoint’s interest in each subsidiary may be held through one or more wholly-owned holding companies directly or indirectly owning 100 percent of the equity of that subsidiary. FairPoint reports that each such holding company is formed under the laws of the United States and, as its principal business, serves as a holding company for a wireline telecommunications and/or information services provider. SECTION 214 AUTHORIZATIONS A. International The following applications for consent to the assignment of certain international section 214 authorizations have been assigned the file numbers listed below. File Number Authorization Holder Authorization Number ITC-ASG-20100614-00234 FairPoint Carrier Services, Inc., Debtor- In-Possession ITC-214-19980610-00403 ITC-ASG-20100614-00235 B E Mobile Communications Inc, Debtor-In-Possession ITC-214-19970710-00391 ITC-ASG-20100614-00236 Berkshire Cable Corp., Debtor-In- ITC-214-19970416-00213 4 FairPoint Communications, Inc., et al., Ch. 11, Case No. 09-16335, Order Confirming the Joint Chapter 11 Plan of Reorganization of FairPoint Communications, Inc. and its Debtor Affiliates (Bank. S.D.N.Y. May 14, 2010) (Plan of Reorganization). 5 These investment vehicles “will include: (i) thirteen investment funds (‘AG Funds’) that are structured as limited partnerships and ultimately are managed and controlled by [Mssrs. Angelo and Gordon] and (ii) one unaffiliated investment vehicle, GAM Arbitrage Investments, Inc., that ultimately is managed by [Mssrs. Angelo and Gordon], and that will hold an interest in FairPoint of less than one-half of one percent.” See Application at 5. 6 Applicants state that this limited partner is insulated and holds only a de minimis equity interest in AG Funds, L.P. 3 File Number Authorization Holder Authorization Number Possession ITC-ASG-20100614-00237 Taconic Telecom Corp., Debtor-In- Possession ITC-214-19970219-00095 ITC-ASG-20100614-00238 UI Long Distance, Inc., Debtor-In- Possession ITC-214-20030206-00049 ITC-ASG-20100614-00239 St. Joe Communications, Inc., Debtor-In- Possession ITC-214-19950920-00045 ITC-ASG-20100614-00240 Chautauqua & Erie Communications, Inc., Debtor-In-Possession ITC-214-19940509-00155 ITC-ASG-20100614-00241 Comerco, Inc., Debtor-In-Possession ITC-214-20030521-00254 ITC-ASG-20100614-00242 C-R Long Distance, Inc., Debtor-In- Possession ITC-214-19960404-00139 ITC-214-20000320-00156 ITC-ASG-20100614-00243 Elltel Long Distance Corp., Debtor-In- Possession ITC-214-19981228-00891 ITC-ASG-20100614-00244 Enhanced Communications of Northern New England Inc., Debtor-In-Possession ITC-214-20070206-00437 ITC-ASG-20100614-00245 El Paso Long Distance Company, Debtor-In-Possession ITC-214-19960626-00271 ITC-ASG-20100614-00246 Germantown Long Distance Company, Debtor-In-Possession ITC-214-19970113-00018 ITC-ASG-20100614-00247 GTC, Inc., Debtor-In-Possession ITC-214-20011019-00531 ITC-ASG-20100614-00248 Fretel Communications, LLC, Debtor-In- Possession ITC-214-19990125-00037 ITC-ASG-20100614-00249 Northern New England Telephone Operations LLC, Debtor-In-Possession ITC-214-20030516-00243 ITC-ASG-20100614-00250 Orwell Communications, Inc., Debtor-In- Possession ITC-214-20001019-00628 ITC-ASG-20100614-00251 Marianna Tel, Inc., Debtor-In-Possession ITC-214-20011025-00599 ITC-ASG-20100614-00252 Quality One Technologies, Inc., Debtor- In-Possession ITC-214-19990713-00464 ITC-ASG-20100614-00253 ST Long Distance, Debtor-In-Possession ITC-214-19961118-00578 ITC-ASG-20100614-00254 Peoples Mutual Long Distance, Debtor- In-Possession ITC-214-20001207-00717 B. Domestic The applicants filed an application for consent to assign and transfer control of domestic section 214 authority in connection with the proposed transaction.7 In light of the multiple applications pending before the Commission with respect to this transaction and the public interest review associated with them, this domestic assignment/transfer of control application is not subject to streamlined treatment.8 7 FairPoint Communications, Inc., Debtor-in-Possession and FairPoint Communications, Inc., Application for Consent to Assign Domestic Section 214 Authority, WC Docket No. 10-126 (filed June 3, 2010). 8 See Implementation of Further Streamlining Measures for Domestic Section 214 Authorizations, Report and Order, 17 FCC Rcd 5517, 5535, para. 34 (2002). 4 SECTION 310(d) APPLICATION The following applications for consent to the assignment of licenses under section 310(d) have been assigned the file numbers listed below. File Number Licensee9 Lead Call Sign 000426005010 Northern New England Telephone Operations LLC KCK72 0004265946 Berkshire Cable Corporation KPE254 0004265965 Berkshire Telephone Corp. WPPA850 0004265999 Columbine Acquisition Corp. KNCY636 0004266008 Community Service Telephone Co. WXH844 0004266011 Ellensburg Telephone Company KTW706 0004266014 FairPoint Communications, Inc. WQIM469 0004266028 Fremont Telcom KPW88 0004266064 GTC, Inc. WPEZ784 0004266229 Odin Telephone Exchange, Inc. KXQ365 0004266258 Peoples Mutual Telephone Company WYK256 0004266264 Sunflower Telephone Company, Inc. KNDR226 0004266268 Taconic Telephone Corp. KCQ829 0004266273 Telephone Operating Company of Vermont LLC WQJB443 0004266279 YCOM Networks, Inc. KAX660 PETITION FOR DECLARATORY RULING UNDER SECTION 310(b)(4) Applicants have filed a petition, pursuant to section 310(b)(4) of the Communications Act of 1934, as amended, and the Commission’s Foreign Participation Order,11 for a declaratory ruling that it is in the public interest to allow up to 100 percent indirect foreign ownership of FairPoint and its subsidiary common carrier license holders, as a result of share purchases in FairPoint, as long as less than 25 percent of its ownership is attributable to countries that are not Members of the World Trade Organization (WTO). According to Applicants, the anticipated approximate allocation of the ownership interests in FairPoint upon emergence of bankruptcy will be among: banks, insurance companies, pension plans, foundations, and endowments organized in the U.S. and controlled by U.S. citizens (26.79%), private equity funds and management investment companies organized in the U.S. and with their principal places of business in the U.S. (6.65%); banks, insurance companies, pension plans, foundations, and endowments organized outside the U.S. or controlled by foreign citizens (6.27%, attributable to WTO member country jurisdictions Germany, Japan, Switzerland, United Kingdom), private equity funds and management investment companies organized outside the U.S. or with their principal places of business outside the U.S. (44.45%, attributable to WTO member country jurisdictions Australia, Bermuda, British Virgin Islands, Cayman Islands, Ireland, Japan, Luxembourg, Sweden, Switzerland, 9 All of the licensees are currently debtors-in-possession. 10 This is the lead wireless application. 11 Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, IB Docket Nos. 97-142 and 95-22, Report and Order and Order on Reconsideration, 12 FCC Rcd 23891 (1997) (Foreign Participation Order), Order on Reconsideration, 15 FCC Rcd 18158 (2000). 5 United Kingdom) and entities of unknown nationality and thus attributed non-WTO country status for the purpose of the Petition (15.83%).12 The Petition for Declaratory Ruling has been assigned File No. ISP-PDR-20100603-00010. EX PARTE STATUS OF THIS PROCEEDING Pursuant to section 1.1200(a) of the Commission’s rules,13 the Commission may adopt modified or more stringent ex parte procedures in particular proceedings if the public interest so requires. We announce that this proceeding will be governed by permit-but-disclose ex parte procedures that are applicable to non-restricted proceedings under section 1.1206 of the Commission’s rules.14 We direct parties making oral ex parte presentations to the Commission’s statement re- emphasizing the public’s responsibility in permit-but-disclose proceedings. Parties are reminded that memoranda summarizing the presentation must contain the presentation’s substance and not merely list the subjects discussed.15 More than a one- or two-sentence description of the views and arguments presented is generally required.16 Other rules pertaining to oral and written presentations are set forth in section 1.1206(b) as well.17 We urge parties to use the Electronic Comment Filing System (ECFS) to file ex parte submissions. GENERAL INFORMATION The applications referenced herein have been found, upon initial review, to be acceptable for filing. The Commission reserves the right to return any application if, upon further examination, it is determined to be defective and not in conformance with the Commission’s rules or policies. Final action on these applications will not be taken earlier than thirty-one days following the date of this Public Notice.18 Interested parties must file comments or petitions to deny no later than July 26, 2010. Persons and entities that timely file comments or petitions to deny may participate fully in the proceeding. Replies or oppositions to comments and petitions must be filed no later than August 10, 2010. All filings concerning matters referenced in this Public Notice should refer to DA 10-1169 and WC Docket No. 10-126, as well as the specific file numbers of the individual applications or other matters to which the filings pertain. § Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov. 12 Claims against the bankruptcy estate may be traded among the claimholders and with third parties during the pendency of the bankruptcy proceeding; the percentages set forth herein are based on information available as of May 28, 2010. 13 47 C.F.R. § 1.1200(a). 14 Id. § 1.1206. 15 See Commission Emphasizes the Public’s Responsibilities in Permit-But-Disclose Proceedings, Public Notice, 15 FCC Rcd 19945 (2000). 16 See 47 C.F.R. § 1.1206(b)(2). 17 Id. § 1.1206(b). 18 See 47 U.S.C. § 309(b). 6 § 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. All filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission. § Effective December 28, 2009, all hand-delivered or messenger-delivered paper filings for the Commission’s Secretary must be delivered to FCC Headquarters at 445 12th St., SW, Room TW- A325, Washington, DC 20554. 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, Express, and Priority mail must be addressed to 445 12th Street, SW, Washington DC 20554. Additionally, filers must deliver courtesy copies by email or facsimile to the following Commission staff: 1) Alex Johns, Competition Policy Division, Wireline Competition Bureau, at alexis.johns@fcc.gov or (202) 418-1413 (facsimile); 2) Jeff Tobias, Mobility Division, Wireless Telecommunications Bureau, at jeff.tobias@fcc.gov or (202) 418-7224 (facsimile); 3) David Krech, Policy Division, International Bureau, at david.krech@fcc.gov or (202) 418-2824 (facsimile); and 4) Neil Dellar, Office of General Counsel, at neil.dellar@fcc.gov or (202) 418-1234 (facsimile). 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). For further information, contact Alex Johns, Competition Policy Division, Wireline Competition Bureau, at (202) 418-1167; Jeff Tobias, Mobility Division, Wireless Telecommunications Bureau, at (202) 418-1617; or David Krech, Policy Division, International Bureau, at (202) 418-7443. – FCC –