*Pages 1--56 from Microsoft Word - 2022.doc* Federal Communications Commission FCC 00- 210 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of ) ) ) Review of Commission Consideration ) IB Docket No. 00- 106 of Applications under the Cable Landing ) License Act ) NOTICE OF PROPOSED RULE MAKING Adopted: June 8, 2000 Released: June 22, 2000 Comment Deadline: August 21, 2000 Reply Comment Date: September 20, 2000 By the Commission: Commissioner Ness issuing a statement; Commissioner Furchtgott- Roth dissenting and issuing a statement. Table of Contents: I. Introduction II. Background III. Streamlining Opt ions A. Compet it ive Rout e B. Compet it ive Capacit y Expansion C. Pro- Competitive Arrangements IV. St reamlining Met hods V. Common Carrier/ Non- Common Carrier Dist inct ion VI. Conditions Routinely Imposed on Cable Landing Licenses VII. Who Should be Required to be Included on Application as Licensee VIII. Licensing and Regulatory Fees IX. Conclusion X. Procedural Matters XI. Ordering Clauses Appendix A: Init ial Regulat ory Flexibilit y Analysis 1 Federal Communications Commission FCC 00- 210 2 I. INTRODUCTION 1. In recent years, there has been explosive growth in the number and capacity of submarine cables triggered in large part by increased Internet and data traffic. Because of this increased demand for capacity, the rapid pace of technological development, and the emergence of non- traditional ownership and financing structures in the submarine cable marketplace, the International Bureau has undertaken a review of the Commission’s policies for licensing submarine cables. The result of this review is the initiation of this proceeding to establish streamlined rules for processing applications for submarine cable landing licenses. 2. This streamlining proposal is designed to provide guidance for industry in submitting applications and for the Commission in reviewing such applications. The current precedent analyzing competitive issues in the submarine cable market is not extensive. In the absence of extensive precedent, the guidance contained in the proposed streamlining options should help ensure expeditious action on applications. In addition, the streamlining proposals in this NPRM seek to provide incentives for the development of facilities- based competition and capacity expansion to meet increasing demands. 3. This approach reflects broad input from participants in the submarine cable industry. In November 1999 the International Bureau held a Public Forum 1 and has held numerous informal meetings with individual industry participants to solicit views about ways the Commission might improve its regulation of the submarine cable landing licensing process to further promote consumer benefits from increased cable capacity and facilities- based competition. Industry participants expressed three objectives: expedited processing of applications, careful review of certain applications to guard against anticompetitive behavior, and encouragement of pro- competitive licensing procedures in other countries. To accomplish and balance these three objectives, we propose streamlining that reflects pro- competitive policies. This approach is designed to provide more certainty and flexibility for participants in the application process, to promote increased investment and infrastructure development by multiple providers, and to decrease application processing time. 4. To achieve these goals, we propose a mechanism under which an applicant for a submarine cable landing license will have three options to qualify presumptively for grant on a streamlined basis. We propose below the following three streamlining options: (1) a demonstration that the route on which the proposed cable would operate is or will become competitive; (2) a demonstration of sufficient independence of control of the proposed cable from control of existing capacity on the route; or (3) the existence of certain pro- competitive arrangements. We believe that, on balance, the streamlining policies we propose are pro-competitive, and that, if an application falls within one of these three categories, we can presume that it is unlikely that we will have competitive concerns about the cable. We note that, if an 1 See International Bureau To Hold Public Forum on Submarine Cable Landing Licenses, Public Notice, DA 99- 2148 (rel. Oct. 8, 1999) (Forum Public Notice). 2 Federal Communications Commission FCC 00- 210 3 application does not qualify for streamlining, it will be reviewed on a non- streamlined basis without prejudice. 5. Our proposal to streamline the submarine cable landing licensing process is part of a continuing streamlining effort. The proposal’s structure of identifying categories of applications eligible for streamlined processing is consistent with our process for streamlining Section 214 applications. 2 The Commission continually seeks ways to grant licenses more quickly to allow parties to enter the market rapidly, especially as new technological developments make speed to market crucial for firms competing in the ever changing Internet- driven communications market. We encourage not only submarine cable landing license applicants to comment on our proposals in this NPRM, but also users of submarine cable service such as Internet service providers (ISPs) that lease capacity or purchase indefeasible rights of use (IRUs) on cable systems. II. BACKGROUND 6. The Commission's authority to grant, withhold, or condition cable landing licenses derives from the Cable Landing License Act 3 and Executive Order No. 10530. 4 Section 34 of the Cable Landing License Act prohibits any person from landing or operating in the United States "any submarine cable directly or indirectly connecting the United States with any foreign country, or connecting one portion of the United States with any other portion thereof, unless a written license to land or operate such cable has been issued by the President of the United States." 5 Section 34 states further that "[ t] he conditions of sections 34 to 39 of this title shall not apply to cables, all of which, including both terminals, lie wholly within the continental United States." 6 Section 35 of the Cable Landing License Act provides that the President may withhold or revoke such license when he shall be satisfied after due notice and hearing that such action will assist in securing rights for the landing or operation of cables in foreign countries, or in maintaining the rights or interests of the United States or of its citizens in foreign countries, or will promote the security of the United States, or may grant such license upon such terms as shall be necessary to assure just and reasonable rates and service 2 See Streamlining the International Section 214 Authorization Process and Tariff Requirements, IB Docket No. 95- 118, Notice of Proposed Rulemaking, 10 FCC Rcd 13477, 13478, para. 1 (1995) (International 214 Streamlining NPRM). 3 47 U. S. C. §§ 34- 39. 4 Exec. Ord. No. 10530, Sec. 5( a), reprinted as amended in 3 U. S. C. § 301 (1994). 5 47 U. S. C. § 34. 6 Id. 3 Federal Communications Commission FCC 00- 210 4 in the operation and use of cables so licensed. 7 The President's authority under the Cable Landing License Act has been delegated to the Commission, provided that "no such license shall be granted or revoked by the Commission except after obtaining approval of the Secretary of State and such advice from any executive department or establishment of the Government as the Commission may deem necessary." 8 7. Over the years, the Commission has sought to streamline the submarine cable landing licensing process. Following is a synopsis of some of these streamlining efforts, as well as a description of several policies the Commission has adopted for considering submarine cable landing license applications. The orders described in this background do not represent an exhaustive list and merely are intended to highlight a few significant actions the Commission has taken in recent years. 8. Previous Submarine Cable Streamlining. In 1996, the Commission further streamlined the authorization process for certain categories of international Section 214 applications identified by the Commission by creating an expedited process for global, facilities-based Section 214 applications. With respect to submarine cable landing license applications, the Commission eliminated the Section 214 authorization requirement to add circuits on U. S. licensed non- common carrier submarine cable facilities. 9 The Commission also replaced the Section 214 authorization requirement for dominant carriers seeking to dispose of transmission capacity in submarine cables with a requirement that they notify the Commission of their conveyances, which the International Bureau would then put on public notice. 10 The Commission reasoned that reducing the regulatory burdens imposed on dominant carriers by replacing the Section 214 requirement with a notification requirement would, in turn, enable dominant carriers to act more quickly to upgrade their facilities, and, therefore, would result in higher quality service for their customers. 11 The Commission also decided no longer to require applicants to specify the proposed use, need, and desirability of the cable in their cable landing license applications and to allow a general geographic description of the landing points in the initial application, to be later supplemented with specific information. 12 The Commission also stated that it would continue to 7 47 U. S. C. § 35. 8 Exec. Ord. No. 10530 § 5( a). 9 See Streamlining the International Section 214 Authorization Process and Tariff Requirements, IB Docket No. 95- 118, Report and Order, 11 FCC Rcd 12884, 12901, para. 38 (1996) (International 214 Streamlining Order). The Commission began the international Section 214 streamlining process in 1985. See International Competitive Carrier Policies, CC Docket No. 85- 107, Report and Order, 102 FCC2d 812 (1985), recon. denied, 60 RR2d 1435 (1986). 10 See International 214 Streamlining Order, 11 FCC Rcd at 12903, para. 44. 11 See id., 11 FCC Rcd at 12903, para. 45. 12 See id., 11 FCC Rcd at 12907, para. 54. For a discussion of the specific requirements of the specific landing point information to be filed by applicants, see infra Section IV, “Streamlining Methods.” 4 Federal Communications Commission FCC 00- 210 5 require cable landing license applicants to give detailed ownership information, a description of the submarine cable, including the type, number of channels, capacity, information as to whether the cable will be operated on a common carrier or non- common carrier basis, and other information as necessary for the Commission to act on the application. 13 In addition, the Commission decided to require the type of ownership information needed to act on non- common carrier applications and decided to require all applicants to disclose to any interested party, upon written request, accurate information regarding the location and timing for construction of the cable facility. 14 9. In March 1999, as part of its biennial regulatory review process, the Commission further streamlined its procedures for granting international Section 214 authorizations and increased the categories of applications eligible for streamlined processing. 15 With respect to submarine cable landing license applications, the Commission allowed any authorized facilities-based carrier to use any non- U. S. licensed submarine cable system without specific approval. 16 In order to fulfill the intent of Congress to collect comparable application fees for comparable applications, the Commission declined to adopt its initial proposal to eliminate the requirement for separate Section 214 authority to build new common carrier submarine cables. The Commission directed its Office of Legislative Affairs to submit a legislative request to Congress recommending that there be only one application fee for cable landing licenses and that the separate application fee for "overseas cable construction" be eliminated. The Commission encouraged parties applying for common carrier submarine cable authority to file one application containing the necessary information for both the Section 214 authority and the cable landing license authority. 17 The Commission also amended its rules to require an applicant for a cable landing license to provide ownership information with respect to the cable landing station when the applicant provides the specific information about the cable system’s proposed U. S. landing points. 18 In addition, the Commission adopted a categorical exclusion under the environmental rules for the construction of new submarine cables systems. 19 We note that the Commission currently has pending a petition for rulemaking filed by the Public Employees for Environmental Responsibility (PEER) on May 17, 2000, making broad requests for the Commission to reform its environmental rules. The requests in the petition include, but are not limited to, submarine cable landing license issues. We do not address this petition here. 13 See id., 11 FCC Rcd at 12907, para. 54. 14 See id., 11 FCC Rcd at 12907- 908, paras. 55- 56. 15 See 1998 Biennial Regulatory Review- Review of International Common Carrier Regulations, IB Docket No. 98- 118, Report and Order, 14 FCC Rcd 4909 (1999) (1998 International Common Carrier Biennial Regulatory Review Order), recon. pending. 16 Id., 14 FCC Rcd at 4911, para. 6. 17 Id., 14 FCC Rcd at 4935- 37, paras. 64- 66. See infra Section VIII, for a discussion of licensing and regulatory fees. 18 Id., 14 FCC Rcd at 4938, para. 70. 19 Id., 14 FCC Rcd at 4937- 38, paras. 67- 69. 5 Federal Communications Commission FCC 00- 210 6 10. "Private" Submarine Cable Policy: Tel- Optik Order. Since 1985, the Commission has authorized the construction of "private," or non- common carrier international submarine cables. In 1985, the Commission granted applications filed by Tel- Optik Limited (Tel- Optik) and Submarine Lightwave Cable Company (SLC), who sought licenses to land and operate in the United States high capacity, fiber optic digital transatlantic submarine cable systems. 20 Tel- Optik and SLC planned to sell bulk capacity on the cable systems to private users on a non- common carrier basis. 21 In granting their applications, the Commission expressed a general policy direction on private alternative submarine cable systems for the North Atlantic region. The Commission encouraged private cable systems in order to further stimulate competition in the market. Specifically, the Commission concluded that private systems in which bulk transmission capacity is sold or leased on a non- common carrier basis would result in increased competition in the provision of North Atlantic transmission capacity, and would provide the same user benefits that were then offered by the private sale of domestic satellite transponders and would further stimulate technology and service development to the benefit of international users. 22 11. Standard of Review: Foreign Participation Order. In 1997, the Commission adopted the Foreign Participation Order, which was designed to increase competition in the U. S. telecommunications market by facilitating entry by foreign service providers and investors. 23 In the Foreign Participation Order, the Commission adopted a presumption in favor of granting applications by carriers from WTO members in light of the WTO Agreement on Basic Telecommunications Services (WTO Basic Telecom Agreement), the market- opening commitments of other WTO members, and the Commission's improved competitive safeguards governing U. S. international services. 12. In a section entitled "Foreign Ownership under the Submarine Cable Landing License Act," the Commission discussed how it would analyze foreign involvement in the context of an application for a cable landing license. 24 Prior to the Foreign Participation Order, the 20 See Tel- Optik Limited, Application for a License to Land and Operate in The United States a Submarine Cable Extending Between the United States and the United Kingdom, File Nos. I- SCL- 84- 002, I- SCL-84- 003, Submarine Lightwave Cable Company, Application for a License to Land and Operate in the United States a High Capacity Fiber Optic Digital Submarine Cable Extending between the United States and other North American Countries, on the Other Hand, Memorandum Opinion and Order, 100 FCC 2d 1033, 1033- 34, para. 1 (1985) (Tel- Optik Order). 21 See id., 100 FCC 2d at 1040, para. 16. 22 See id., 100 FCC 2d at 1053, para. 43. 23 Rules and Policies on Foreign Participation in the U. S. Telecommunications Market, IB Docket No. 97- 142, Market Entry and Regulation of Foreign- Affiliated Entities, IB Docket No. 95- 22, Report and Order and Order on Reconsideration, Foreign Participation Order, 12 FCC Rcd 23891, 23932- 35, paras. 87- 96 (Foreign Participation Order), recon pending. 24 Id., 12 FCC Rcd at 23932- 35, paras. 87- 96. 6 Federal Communications Commission FCC 00- 210 7 Commission had evaluated cable landing license applications filed by foreign carriers or their affiliates under the analysis set forth in the Commission’s ECO test. 25 In the Foreign Participation Order, the Commission concluded that it would no longer require applicants with market power in WTO members (or applicants affiliated with such carriers) to demonstrate that the foreign markets offer effective competitive opportunities to obtain section 214 authority to serve those countries, or a cable landing license to land or operate a cable in those countries. 26 The Commission determined that it would analyze foreign affiliation in the context of an application for a cable landing license in the same manner it evaluated section 214 authorizations. 27 To that end, the Commission concluded that, where the applicant is a foreign carrier, or affiliated with a foreign carrier, that has market power in a WTO member where the cable lands, the application is evaluated under a strong presumption that it should be granted. 28 13. In the Foreign Participation Order, the Commission found that, because of the implementation of the WTO Basic Telecom Agreement, foreign carriers from WTO members would rarely be able to harm competition in the U. S. market by acting anticompetitively. The Commission further noted that, “[ e] ven if a particular application presents unusual risks to competition, most potential problems can be addressed by imposing conditions on the license," 29 and discussed examples of the kinds of conditions the Commission has imposed on cable landing licenses. For example, the International Bureau imposed recordkeeping requirements on a licensee where it was deemed necessary to address anticompetitive concerns specific to one proposed submarine cable system. 30 The Commission also stated that, when considering an application to land and operate a submarine cable that will connect to a non- WTO member, it would consider whether the applicant is, or is affiliated with, a carrier that has market power in a market where the cable lands, and if so, would consider whether that destination market offers effective competitive opportunities for U. S. companies to land or operate a submarine cable in 25 See, e. g., Telefonica Larga Distancia de Puerto Rico, Inc., Review of Nondiscrimination Safeguards Imposed, Application for Submarine Cable Landing License for the COLUMBUS II Cable System, Section 214 Application to Provide Service to Spain on the COLUMBUS II Cable System, File Nos. ITC- 92- 116- AL, SCL- 93- 001, ITC- 93- 029, Memorandum Opinion and Order, 12 FCC Rcd 5173 (1997). The "effective competitive opportunities" analysis was developed and discussed in the Foreign Carrier Entry Order. See Market Entry and Regulation of Foreign- Affiliated Entities, RM- 8355, RM- 8392, IB Docket No. 95- 22, Report and Order, 11 FCC Rcd 3873 (1995). 26 Foreign Participation Order, 12 FCC Rcd at 23932- 35, para. 87- 96. 27 Id. 28 Id. 29 Id., 12 FCC Rcd at 23934, para. 94. 30 See id., 12 FCC Rcd at 23934, para. 95 and n. 188, citing General Communication, Inc., Application for a License to Land and Operate in the United States a Digital Submarine Cable System Extending Between the Pacific Northwest United States and Alaska, File No. SCL- 97- 003, Cable Landing License, 12 FCC Rcd 18292 (IB, TD, rel. Nov. 7, 1997). 7 Federal Communications Commission FCC 00- 210 8 that country. 31 The Commission stated that it would also continue to consider, in addition to the de jure and de facto ECO criteria, other factors consistent with the Commission's discretion under the Cable Landing License Act that may weigh in favor of or against grant of a license. 32 14. Competitive Issues: Japan- U. S. Order. In the July 1999 Japan- U. S. Order, the Commission granted a joint application of AT& T, MCI, Sprint, and others, under the Cable Landing License Act, for authority to land and operate a non- common carrier submarine fiber optic cable system between the United States and Japan (the "Japan- U. S. Cable Network"). 33 During that licensing proceeding, Global Crossing raised "serious issues about the control of necessary inputs by entities with incentives to raise the costs of other carriers and deter construction of additional capacity." 34 The result of this control of inputs, according to Global Crossing, is that other carriers perceive a need to use capacity on consortium cables as opposed to alternatively owned and structured cables. 35 Global Crossing had alleged that carriers would be induced to cluster onto the consortium cable system, which arguably makes entry by competing cable systems less attractive, thereby ultimately discouraging additional capacity from being constructed. 36 Global Crossing also expressed specific concerns about restrictions on the ability of competitors to collocate to provide competitive backhaul and/ or to vote for capacity upgrades. 37 In addition, Global Crossing asserted that consortium cables do not offer efficiency benefits that offset this alleged competitive harm. 38 15. The Japan- U. S. Cable Network applicants amended their construction and maintenance agreement (C& MA) to provide for a more pro- competitive balance among the parties to that agreement. In particular, the parties amended the C& MA to allow any party to collocate to provide competitive backhaul and to reduce the majority of votes needed to expand 31 See Foreign Participation Order, 12 FCC Rcd at 23946, para. 130. 32 Id. 33 AT& T Corp. Et. Al., Joint Application for a License to Land and Operate a Submarine Cable Network Between the United States and Japan, File No. SCL- LIC- 19981117- 00025, Cable Landing License, 14 FCC Rcd 13066 (1999) (Japan- U. S. Order). 34 Id., 14 FCC Rcd at 13076, para. 25. 35 For purposes of this NPRM, when we refer to a "consortium cable" we mean any cable that is owned by more than one carrier or other owner, rather than a cable that is owned by a single carrier or other owner. 36 See Japan- U. S. Order, 14 FCC Rcd at 13070, para. 10. Clustering refers to landing parties inducing small carriers to join on their cable, to the exclusion of competitors’ cables. 37 See id., 14 FCC Rcd at 13070- 71, 13076, paras. 11- 12, 25- 26. 38 See id., 14 FCC Rcd at 13076, para. 25. 8 Federal Communications Commission FCC 00- 210 9 the capacity of the cable. 39 The Commission determined that these amendments would reduce certain potential competitive harms arising from the structure of the Japan- U. S. Cable Network. 40 By reducing the landing parties’ incentive to induce clustering, the Commission concluded that the amendments would, to some extent, address Global Crossing’s allegations that the consortium structure deters the construction and use of competing cable systems. 41 The Commission stated that the amendments also would address concerns about competition in backhaul the potential for delay in upgrade to design capacity. 42 The Commission concluded that the amendments to the C& MA, together with the commitments made by the Japanese Government that elaborate on or supplement its commitments under the WTO Basic Telecom Agreement, and with the Commission's regulatory safeguards, would reduce the risk that the Japan- U. S. Cable Network will cause competitive harm. 43 16. The Commission stated, however, that it did not find that all potential competitive harms had been solved by the recent amendments to the C& MA. 44 Rather, the Commission found that, given the amendments and the need for more capacity on the Japan- U. S. route, the benefits of licensing the cable system in that case outweighed the risk that doing so would have anticompetitive effects. 45 The Commission stated that it would in the near future commence a broader proceeding to examine how the Commission's policies regarding licensing submarine cables might best promote competition and benefit consumers. 46 17. Public Forum and Proposals. As noted above, in November 1999, the International Bureau held a Public Forum to solicit views about how the Commission might reform its regulation of the submarine cable landing licensing process to further promote competition. In addition, the International Bureau has held numerous meetings with individual industry participants with the same goal. At the Public Forum and individual meetings, staff solicited industry views on questions such as: (1) how the Commission might streamline or simplify the submarine cable landing licensing process; (2) whether conditions routinely imposed on submarine cable licenses remain necessary; (3) what sort of ownership should require an entity to be a licensee on a cable landing license; (4) whether the Commission should maintain the common carrier/ non- common carrier distinction for submarine cable landing license categories; 39 See id., 14 FCC Rcd at 13076- 77, paras. 26- 32. 40 See id., 14 FCC Rcd at 13077, para. 32. 41 Id. 42 Id. 43 Id., 14 FCC Rcd at 13077- 78, paras. 32- 34. 44 Id., 14 FCC Rcd at 13079, para. 36. 45 Id. 46 Id. 9 Federal Communications Commission FCC 00- 210 10 (5) whether certain submarine cable ownership structures raise competitive problems and how the Commission might address such problems; (6) how the Commission might address issues of competitive access to backhaul; (7) the circumstances, if any, under which price differentials, especially volume discounts, should be restricted; and (8) whether there are other competitive issues the Commission should address. 47 18. In addition to the information received at the Public Forum and individual meetings, several companies have sent proposals and informal comments to the Commission expressing their views on ways the Commission might reform the submarine cable landing licensing process. For example, Global Crossing, concerned about overly broad ownership structures for consortium cables, submitted a proposal it suggests the Commission use as a basis for addressing competitive issues in the submarine cable market in a Notice of Proposed Rulemaking. 48 Specifically, Global Crossing proposes a structural solution under which, for an applicant to receive a submarine cable landing license, the applicant would need to demonstrate that the landing parties at on the U. S. end of the cable do not have a combined share of more than 35 percent of the active half circuits, including half circuits of full circuits, on the U. S. side of the route served by the cable. 49 Level 3 filed comments detailing its suggestions for ways in which the Commission should streamline the submarine cable landing licensing process, while ensuring that competitive safeguards are in place. 50 Sprint, AT& T, and PSINet, in addition to participating in the Public Forum, and meeting with Commission staff individually, also submitted discussion outlines for use at the Public Forum. As noted above, we developed many of the options in this NPRM based upon recommendations made at the Public Forum and individual meetings. III. STREAMLINING OPTIONS 19. Under our proposal, an applicant for a submarine cable landing license may demonstrate that its application conforms with any one of the three streamlining options. If such a demonstration is made, the application presumptively will qualify for grant on a streamlined 47 See Forum Public Notice at 1- 2. 48 See Letter from Paul Kouroupas, Global Crossing, to Jackie Ruff, Federal Communications Commission, International Bureau, filed Mar. 6, 2000 at 1 (Global Crossing March 6 Letter). 49 See id. at 2. Global Crossing also asserts that the Commission “could decide that cable applications with permissible ownership structures would qualify for streamlined review.” See Global Crossing March 6 Letter at 1. See infra Section III, B, for description of our proposed competitive capacity expansion streamlining option and a detailed description of Global Crossing’s proposal about which we seek comment. 50 See Comments of Level 3 Communications, Inc., DA 99- 2148, at iii- iv, 4 (filed Feb. 11, 2000) (Level 3 Comments) (urging regulators around the world to develop "streamlined competition policies that promote open submarine cable markets," stating that the "role of the government should be to facilitate operators' provision of submarine cable capacity on expeditious and reasonable terms and conditions," and proposing the principles necessary to accomplish these goals). 10 Federal Communications Commission FCC 00- 210 11 basis 51 because we can presume that, on balance, there will not be concerns raised by the landing and operation of the proposed cable. We reiterate that, if an applicant does not qualify for streamlining, the application would be reviewed on a non- streamlined basis, without prejudice. Failure to qualify for streamlining would not mean that we would deny the application or delay the application beyond the normal processing time. 20. For each of the three options, we propose specific demonstrations an applicant could make to qualify for the particular streamlining option. We propose the following three streamlining options from which an applicant may choose: (1) a demonstration that the route on which the proposed cable would operate is or will become competitive; (2) a demonstration of sufficient independence of control of the proposed cable from control of existing capacity on the route; and (3) evidence of certain pro- competitive arrangements. We tentatively conclude that, if an application falls within one of these three categories, it is unlikely that the owners of the proposed cable system will have the ability to engage in anticompetitive conduct. We seek comment on this tentative conclusion. 21. We note that in proposing the three streamlining options, we seek comment on control of three key submarine facilities. These three key facilities are: (1) the wet link of a submarine cable system; 52 (2) cable landing stations serving a submarine cable system; and (3) exclusive backhaul facilities associated with the landing stations of a submarine cable system. Entities that control these facilities may have the ability to affect competition on particular routes. We therefore tentatively conclude that an examination of a firm's influence over these three key facilities is necessary to determine whether a cable project raises competitive concerns. We seek comment on this tentative conclusion. 22. We also propose that to meet any of the three streamlining options, an applicant must provide sufficient documentation. Such documentation should include, for example, cable landing license applications, Commission Orders, the International Bureau’s annual Circuit Status Report, 53 the various C& MAs or capacity purchase agreements for the cables, and industry press releases. We seek comment on other types of documentation that would be useful for applicants seeking to qualify for the streamlining options proposed below. 23. In addition, consistent with the Commission's statement in the Foreign Participation Order, when considering an application to land and operate a submarine cable that will connect to a non- WTO member, we propose to consider whether the applicant is, or is 51 See infra Section IV, “Streamlining Methods.” 52 The "wet link" of a cable system is the part of the cable in the water linking one cable landing point on the cable system to another cable landing point on the system. 53 See, e. g., International Bureau Report: 1998 Section 43.82 Circuit Status Data, Report No. IN 99- 36 (IB, rel. Dec. 17, 1999). This report can be downloaded from the International Bureau home page on the World Wide Web (www. fcc. gov/ ib/ td/ pf/ csmanual. html). 11 Federal Communications Commission FCC 00- 210 12 affiliated with, a carrier that has market power in a market where the cable lands If so, we propose to consider whether that destination market offers effective competitive opportunities for U. S. companies to land or operate a submarine cable in that country. 54 Therefore, such a cable would not qualify presumptively for grant on a streamlined basis, and, in addition to the de jure and de facto ECO criteria, we would continue to consider other factors consistent with the Commission's discretion under the Cable Landing License Act that may weigh in favor of or against grant of a license. 55 24. Finally, we propose that the streamlining options apply equally for initial applications to land and operate submarine cables and to applications to assign or transfer control of existing submarine cable landing licenses. We seek comment on this proposal. A. Competitive Route 25. As explained below, the first streamlining option we propose is a demonstration that the route in question is, or will become, competitive because there are multiple, independently controlled cables serving the route. Such a demonstration would enable us to presume that there will not be competitive problems on the route in question due to the operation of the proposed cable, and therefore the application would presumptively qualify for grant on a streamlined basis. With a demonstration that a route is competitive, even if owners of a proposed cable were to attempt to engage in anticompetitive conduct, the route on which they would operate the proposed cable presumptively would be sufficiently competitive to limit their ability to engage in such conduct. We discuss below the specific ways in which an applicant could make this demonstration. We note that many proposed cables likely will consist of connections between multiple landing points, and, therefore, multiple routes. We propose that an applicant for a cable landing license seeking to serve multiple routes would need to make the competitive route demonstration for each route the cable seeks to serve. 26. Definition of "Route". For purposes of deciding whether there is sufficient competition on a particular route to allow the application to qualify presumptively for grant on a streamlined basis, we seek comment on how we would define or measure the relevant route. For example, when seeking to make a competitive route demonstration in the manner described below, we would consider a “route” to be the connection between the U. S. and a landing point in a foreign country, 56 such as the U. S. to U. K. route. As noted above, an application for a cable landing license likely may cover connections between multiple routes. Under this proposed streamlining option, to demonstrate the existence of competition on a particular destination route, 54 See Foreign Participation Order, 12 FCC Rcd at 23946, para. 130. 55 See id. 56 In this context "country" includes any country, possession, commonwealth, colony, territorial collective, territories, or other similar area. 12 Federal Communications Commission FCC 00- 210 13 an applicant could choose to show that there are other economically comparable means to access the destination route through a landline or submarine connection using another cable or facility stemming from a point- to- point route other than the destination route (i. e., hubbing). 57 We seek comment on these methods of defining a route. 27. We note that in the context of reviewing certain mergers, the Commission has chosen to adopt a regional approach to analyzing the international transport market. 58 For example, in the MCI/ WorldCom Order, the Commission, with respect to U. S. international submarine cables, found that, "although [U. S. international submarine cables] terminate in a select number of countries, they tend to serve entire regions." 59 As an example, the Commission cited the TAT- 12/ 13 cable system which, although terminating in the United Kingdom and France, is used by carriers “to carry traffic destined for points throughout Europe." 60 The Commission found, therefore, that it was appropriate there to "aggregate international transport where point-to- point markets have competitive characteristics that are sufficiently similar to other point- to-point markets." 61 We seek comment on whether we should instead consider adopting a regional route approach in determining whether there are sufficient competitive options within the submarine cable market. Commenters advocating a regional route approach should address how we might define “region.” 28. Showing that the Route is or will Become Competitive. To satisfy this streamlining option, we propose that an applicant demonstrate that there are at least three independently controlled cables, including the applicant’s proposed cable, serving the route on which the applicant wishes to operate the proposed cable. We propose that an applicant rely only on cables that have become operational within 36 months of the filing of the current application. We seek comment on this proposal. The proposed 36- month cut- off would be intended to 57 We do not propose to consider satellite service as a close substitute for cable service, and, therefore, do not include satellite capacity in our proposals. See, e. g., Comsat Corporation, Petition Pursuant to Section 10( c) of the Communications Act of 1934, as amended, for Forbearance from Dominant Carrier Regulation and for Reclassification as a Non- Dominant Carrier, File No. 60- SAT- ISP- 97, Policies and Rules for Alternative Incentive Based Regulation of Comsat Corporation, IB Docket No. 98- 60, Comsat Corporation, Petition for Partial Relief From the Current Regulatory Treatment of Comsat World Systems' Video and Audio Services, File No. 14- SAT- ISP- 97, Comsat Corporation, Petition for Partial Relief From the Current Regulatory Treatment of Comsat World Systems' Switched Voice, Private- Line, and Video and Audio Services, RM- 7913, Panamsat Corporation, Petition to Reopen Changes in the Corporate Structure and Operations of the Communications Satellite Corporation, CC Docket No. 80- 634, Order and Notice of Proposed Rulemaking, 13 FCC Rcd 14083, at 14102, 14113, paras. 32, 56 (1998); Application of WorldCom, Inc. and MCI Communications Corporation for Transfer of Control of MCI Communications Corporation to WorldCom, Inc., Memorandum Opinion and Order, 13 FCC Rcd 18025, 18072, para. 83 (1998) (MCI/ WorldCom Order). 58 See, e. g., MCI/ WorldCom Order, 13 FCC Rcd at 18073, para. 84. 59 Id. 60 Id. 61 Id. 13 Federal Communications Commission FCC 00- 210 14 exclude cables built with older technologies that may not support significant capacity expansion. We seek comment on whether a cut- off period is necessary, and whether 36 months is the appropriate cut- off period for cables becoming operational. We also seek comment on whether, for the specific showings in this streamlining option, three is the appropriate minimum number of independent cables. Commenters arguing that three is not the appropriate minimum should suggest and support an alternative minimum number. 29. For purposes of this streamlining option, we seek comment on how to attribute control of proposed and existing cables. In other words, we seek comment on the extent of ownership in the three key submarine cable facilities (wet link, cable landing stations, and exclusive backhaul facilities) that would give a firm control of proposed or existing cables for purposes of this streamlining option. For example, one approach would be to attribute control of an entire cable to any entity that: (1) owns 50 percent or more of the equity in the wet link of the cable; (2) owns 50 percent or more of the equity in a landing station on the cable; (3) is the exclusive backhaul provider at a landing station of the cable; or (4) exercises de facto control over the wet link of the cable or a landing station on the cable. Alternatively, we seek comment on whether there may be other options to consider in determining what level of ownership of key submarine cable facilities would give a firm control of a cable system for purposes of this streamlining option. 30. With regard to the landing station element, we would not propose to attribute control of any of the cable system to an entity controlling fewer than all of the landing stations in a particular country. The reason for tentatively assuming that an entity controlling a landing station does not control the cable when there are multiple landing stations in a country is that users of the cable would have at least two different paths for obtaining access to that country. We seek comment on these possibilities for attributing control of a cable system and whether it is the appropriate way to analyze control for purposes of qualifying a route as competitive under this streamlining option. We also seek comment on whether there are alternative ways to consider control of a cable in this context. 31. We are concerned that including these demonstrations for all landing points for a proposed cable may create a disincentive for cable landing license applicants seeking to qualify for the competitive route streamlining option to include a loop on the cable system that serves a previously underserved country. We seek comment on whether, to remedy such a concern, we should adopt an exception under which a landing point on the route of a proposed cable would not need to be included in the competitive route analysis. We seek comment on what should qualify for such an exception for a particular cable. 32. In addition, we seek comment on whether the Commission should also entertain petitions for declaratory ruling regarding the competitiveness of certain routes in lieu of the case-by- case showings proposed above. A declaratory ruling that a particular route is competitive would obviate the need for any subsequent cable landing license applicant to make a case- by- case showing for that route. Commenters should identify specific showings that a petitioner would 14 Federal Communications Commission FCC 00- 210 15 need to make in order for the Commission to declare a particular route competitive in this manner. We also seek comment on whether the 36- month cut- off described above would no longer apply for a route we declared competitive. We seek comment on whether the benefits of the 36- month cut- off are so significant that we should not entertain petitions for declaratory ruling regarding the competitiveness of particular routes. We also seek comment on whether a declaratory ruling should remain effective, if, subsequent to the declaratory ruling, two or more firms that control facilities on the route have merged. B. Competitive Capacity Expansion 33. The second streamlining option we propose is a demonstration that the proposed cable system will be controlled predominantly by new entrants. If there is a group of independent carriers representing a share of retail traffic on the route that is sufficiently large to form the base for the introduction of new, independent capacity on the route if prices rise above competitive levels, competitive concerns are unlikely to be present. For purposes of this streamlining option, we propose to identify a “key applicant group” of a proposed cable. We seek comment on the extent of ownership in the three key submarine cable facilities (wet link, cable landing stations, and exclusive backhaul facilities) that would give a firm control of a cable system for purposes of including the firm in the key applicant group of a proposed cable. For example, one approach would be to include in the key applicant group any entity that: (1) owns 50 percent or more of the equity in the wet link of the proposed cable; (2) owns 50 percent or more of the equity in a landing station on the proposed cable; (3) is the exclusive backhaul provider at a landing station of the proposed cable; or (4) exercises de facto control over the wet link of the proposed cable or a landing station on the proposed cable. Alternatively, we seek comment on whether there may be other options to consider in determining what level of ownership of key submarine cable facilities would give a firm control of a cable system for purposes of including the firm in the key applicant group of the proposed cable. 34. The proposed streamlining option would consist of a demonstration that entities in the key applicant group of a proposed cable control less than 50 percent of existing wet link capacity on the route to be served by the proposed cable. An applicant that is providing service on the route for the first time could satisfy this proposed streamlining option simply by certifying that the key applicant group of the proposed cable does not control any existing wet link capacity on the route to be served by the proposed cable. In a situation in which an applicant is proposing to serve previously unserved routes, we seek comment on whether we should streamline the processing of such an application. 35. Alternatively, for a proposed cable whose key applicant group controls existing capacity on the route to be served by the proposed cable, the applicant could make a showing that it controls less than 50 percent of the existing wet link capacity on the route. We propose to attribute the entire capacity of an existing cable system to any entity that owns 50 percent or more of the equity in the wet link of the existing cable or exercises de facto control over the wet link of the existing cable. In addition, we seek comment on whether and to what extent we should 15 Federal Communications Commission FCC 00- 210 16 attribute to a firm capacity on an existing cable based on the firm's percentage of control of landing stations in any country in which that existing cable lands. 62 We invite alternative proposals for attributing capacity and seek comment on the appropriate treatment of joint ventures and affiliates in this context. 36. In demonstrating that they qualify for this streamlining option, we propose that applicants would need to provide a list of all firms in the key applicant group and a calculation of this group’s share of existing capacity on the route (excluding the newly proposed cable, but including cables under construction that are expected to be operating within one year). We believe that this information should be readily available through cable landing license applications, Commission Orders, the International Bureau’s annual Circuit Status Report, the various C& MAs and capacity purchase agreements for the cables, and industry press releases. We seek comment on whether this is the case. 37. In addition, as noted above, Global Crossing, concerned about overly broad ownership structures for consortium cables, submitted a proposal it suggests the Commission use as a basis for addressing competitive issues in the submarine cable market in a Notice of Proposed Rulemaking. 63 Specifically, Global Crossing proposes a structural solution under which, for an applicant to receive a submarine cable landing license, the applicant would need to demonstrate that the landing parties on the U. S. end of the cable do not have a combined share of more than 35 percent of the active half circuits, including half circuits of full circuits, on the U. S. side of the route served by the cable. 64 As part of its proposal Global Crossing provides for exemption for “thin routes.” 65 Global Crossing also provides for a “forbearance option in cases in which applicants can show markets are competitive.” 66 For Commission forbearance from the 35 62 We illustrate the possible attribution percentages with the following two examples. The first example is a firm that controls all the landing stations on an existing cable in a country in which the existing cable lands. In this situation, we could attribute 100 percent of capacity on that cable to the particular firm for purposes of applying this streamlining option. The second example is a firm that controls one out of two landing stations on an existing cable in any country in which the existing cable lands. In this situation, we could attribute 50 percent of capacity on that cable to the particular firm for purposes of applying this streamlining option. In this second example, we would only attribute a portion of the cable capacity to the landing station owner because there are alternatives available to customers. We seek comment on this attribution, and the possibility of using the same attribution principles with respect to entities that are exclusive backhaul providers at landing stations on the proposed cable. 63 See Global Crossing March 6 Letter at 1. 64 See id. at 2. 65 Id. (“[ i] f cable is on a thin route, with little traffic historically, and little capacity, FCC would grant landing license, absent traditional policy concerns, such as national security”). For purposes of this NPRM “thin routes” refer to routes where there currently is little or no cable capacity. 66 Id. at 2. 16 Federal Communications Commission FCC 00- 210 17 percent rule to be justified under Global Crossing’s proposal, an applicant would need to show that: (1) market conditions make country- to- country analysis inappropriate, and consideration of a particular region is instead appropriate; (2) the regional market is competitive because of effective hubbing or timely and cost- effective interconnection; and (3) nothing in the C& MA prevents the transfer or resale of capacity by any party at any time. 67 Global Crossing also asserts that the Commission “could decide that cable applications with permissible ownership structures would qualify for streamlined review.” 68 We seek comment on Global Crossing’s proposal. C. Pro- Competitive Arrangements 38. The third and final streamlining option we propose is the demonstration of sufficient pro- competitive arrangements. We tentatively conclude that, if an applicant demonstrates the existence of these pro- competitive arrangements, its application would qualify presumptively for grant on a streamlined basis. 39. As a general matter, the pro- competitive provisions should constrain the ability of major carriers on a cable to set supracompetitive prices by controlling backhaul and the timing of the final capacity upgrade of the cable system, which ultimately would result in higher prices for consumers. These proposed arrangements should constrain the incentive of landing parties to induce small carriers to join on their cable, to the exclusion of competitors’ cables, and, therefore, should aid against deterring the construction and use of competing cable systems. The provisions also should have the effect of lowering retail prices by introducing more competition into the backhaul markets and ensuring that the upgrade to design capacity is not delayed. 69 We seek comment on these general conclusions, and whether the Commission’s licensing process should reflect these goals. 40. Arrangements Regarding Landing Stations and Competitive Backhaul. As part of the pro- competitive policy, we propose that an applicant, in ownership and other documents, include specific provisions regarding landing stations and competitive backhaul. We seek comment below on two alternatives. 41. First, in order to qualify for streamlining, applicants might include in ownership or other documents general provisions allowing for sufficient collocation at a landing station by other owners or their designees and stating that there will be no restrictions on who can provide backhaul. 67 See id. at 2- 3. 68 See id. at 1. 69 See Japan- U. S. Order, 14 FCC Rcd at 13076, 77, paras. 26, 32. 17 Federal Communications Commission FCC 00- 210 18 42. Alternatively, , in order to qualify for streamlining, applicants might be required to make more specific demonstrations. For example, we might provide that an applicant include provisions explicitly stating that: (1) sufficient space at all landing stations in the United States, and at each foreign landing station on the route where applicants plan to land the proposed cable, will be made available to any other owner, or the designee of any other owner, for the purpose of collocating equipment to provide backhaul; (2) all owners or designees of owners may use such space for the provision by them of backhaul services to others; and (3) there will be no restrictions on the ability of any owner to subcontract the provision of backhaul. 70 43. To make specific demonstrations regarding backhaul, an applicant could include provisions in ownership or other documents explicitly stating that at least two separate parties will provide backhaul, rather than a single entity, at all landing stations in the United States, and at each foreign landing station on the route where applicants plan to land the proposed cable. 71 In this regard, at the Public Forum, PSINet asserted that with the Japan- U. S. cable, "there were parties that were not the traditional carriers, that insisted very strongly that there be a diversity in backhaul providers . . . . " 72 44. We seek comment on these two alternatives and any other alternative that commenters deem to be more appropriate. We also seek comment on whether collocation and backhaul rights provided by applicants should apply only to owners of equity or to IRU holders as well. 45. We also note that there has been some concern expressed about high rates charged for connection to cables and backhaul from cable landing stations. We seek comment on ways in which we might ensure the ability of carriers to obtain connection to a cable and backhaul to points of presence at competitive rates. 46. Arrangements Regarding Capacity Upgrades and Use of Capacity. In order to qualify under this streamlining option, we also propose that an applicant include certain provisions in ownership or other documents about wet link capacity upgrades and the use of capacity. We propose two specific provisions as part of this category. 47. First, we seek comment on the ability of a group of cable owners jointly to determine when capacity on its cable is to be increased and whether that group of owners could restrict capacity on a route in an effort to jointly raise price. We therefore seek comment on whether, in order to qualify for this streamlining option, a provision should be included in ownership or other documents that would allow the capacity of a cable to be upgraded either by a 70 See id., 14 FCC Rcd at 13077, para. 29. 71 See, e. g., PSINet Statement in Forum Transcript at 35- 36 and 40 (arguing generally that it is preferable to have more than one party providing backhaul at a landing station). 72 Id. at 40. 18 Federal Communications Commission FCC 00- 210 19 51 percent vote of the owners or by any group of owners voting to fully fund the cost of the upgrade. In the latter case, ownership or other documents would indicate that all owners, not just owners voting to fully fund the upgrade, will have the right to buy into the upgrade consistent with their contractual rights. We also seek comment on whether a firm's interest in a cable should be measured in terms of circuits, dollar value of investment or some other measure. 48. Second, we seek comment on whether, in order to qualify for this streamlining option, an applicant should include provisions in ownership or other documents explicitly stating that, after the initial capacity has been funded, there will be no restrictions on resale or transfer of capacity and no restrictions on parties reselling their ownership shares and/ or reselling or leasing their rights on the cable. 73 We seek comment whether an applicant should explicitly state that there will be no unreasonable charges assessed on owners wishing to resell or transfer capacity or ownership shares, or wishing to resell or lease their rights on the cable. 49. We also seek comment on whether, as an additional pro- competitive arrangement, an applicant should include a provision in ownership or other documents explicitly allowing smaller firms to combine their capacity requirements for the purpose of obtaining volume discounts. The issue of volume discounts, as they relate to smaller firms, has been raised in the context of the Columbus III cable. Specifically, WorldxChange argued that the Columbus III volume discount pricing schedule was discriminatory and anticompetitive and violated a Commission policy of equal access and equal basic unit pricing on common carrier submarine cables. 74 WorldxChange argued that the pricing of Columbus III offered substantial preferences to large carrier- purchasers and commensurate harm to small carrier- purchasers. 75 The International Bureau found in the Columbus III Section 214 Order that "there [was] nothing in the COLUMBUS- III Construction and Maintenance Agreement that prevented smaller carriers from combining their requirements for the purpose of obtaining the volume discounts offered for 73 See, e. g., MCI WorldCom Statement in Forum Transcript at 70 (stating that the Commission should be concerned if there are resale restrictions, but noting that, with the Japan- U. S. Cable System structure, there were no resale restrictions and there were 45 carriers free to resell capacity and compete against each other that way). 74 See AT& T Corp., MCI International, Inc., Pacific Gateway Exchange (Bermuda) Limited, the St. Thomas and San Juan Telephone Company, Inc., Star Telecommunications, Inc., Startec Global Communications, Inc., Telefonica Large Distancia de Puerto Rico, Inc., Teleglobe USA, Inc., IDB WorldCom Services, Inc., WorldxChange Communications, Joint Application for authorization pursuant to Section 214 of the Communications Act of 1934, as amended, to Construct, Acquire, and Operate Capacity in a Digital Submarine Cable System, the COLUMBUS III Cable System, File No. ITC- 98- 437, Memorandum Opinion, Order and Authorization, 14 FCC Rcd 13436, 439, para. 9 (IB/ TD, rel. Aug. 20, 1999) (Columbus III Section 214 Order), application for review pending. We note that there currently is pending with the Commission an application for review of the Columbus III cable landing license and related Section 214 license. We do not intend to prejudge the outcome of that proceeding here. 75 See id., 14 FCC Rcd at 13439, para. 9. 19 Federal Communications Commission FCC 00- 210 20 large investments." 76 50. We believe that an application including these or similar pro- competitive provisions or arrangements would warrant streamlined treatment. We tentatively conclude that these arrangements would not be enforceable by the Commission because they are subject to private contractual enforcement. We seek comment on this tentative conclusion. IV. STREAMLINING METHODS 51. Several submarine cable licensees have suggested specific methods of streamlining our process. At the Public Forum, Sprint suggested that the Commission adopt an "autogrant" for submarine cable landing licenses, modeled after the Section 214 streamlined licensing process. 77 Specifically, Sprint suggested that, as with Section 214 applications, an application be released for public notice, and if no opposition is filed within a specified time or the staff do not identify problems independently, the license be considered granted after the passage of a certain number of days (such as, for example, 30 days or 45 days). 78 Viatel supported Sprint's proposal, stating that subjecting cable landing license applications to streamlining would improve the predictability of when applications would be granted. 79 Viatel also suggested a process similar to the process for International Simple Resale (ISR), where, if the Commission has found that a route is highly competitive or competitive, the Commission will automatically allow carriers to provide ISR on that route. 80 Level 3, in its comments, supported Commission streamlining of submarine cable landing license applications similar to the Section 214 process. 81 Level 3 suggested that, as with the streamlined Section 214 process, the Commission automatically grant an application after a prescribed number of days following the date of the public notice listing the 76 See id., 14 FCC Rcd at 13440, para. 13. 77 See Sprint Statement in Forum Transcript at 10. 78 See id. at 10. 79 See Viatel Statement in Forum Transcript at 12. 80 See id. at 12. ISR is the provision of switched services between the United States and a foreign point via international private lines interconnected with the public switched network at one or both ends. See, e. g., Petition of MCI WorldCom, Inc. for Declaratory Ruling Pursuant to Section 63.16 of the Commission's rules to Provide Switched Services via International Private Lines Interconnected to the Public Switched Network Between the United States and Singapore, File No. ISP- PDR- 19990802- 0007, Declaratory Ruling and Order, 14 FCC Rcd 19584 (IB/ TD, rel. Nov. 23, 1999) (granting MCI WorldCom's request for approval of ISR between the United States and Singapore). Once the Commission approves ISR between the United States and a foreign point, all carriers authorized by the Commission to provide ISR on other routes may also provide ISR on the approved route. See id., 14 FCC Rcd at 19586, para. 5 (stating this for the U. S.- Singapore route). For a discussion of the Commission's international resale policies, see Regulation of International Accounting Rates, Phase II, CC Docket No. 90- 337, First Report and Order, 7 FCC Rcd 559 (1991); Order on Reconsideration and Third Further Notice of Proposed Rulemaking, 7 FCC Rcd 7927 (1992); Third Report and Order and Order on Reconsideration, 11 FCC Rcd 12498 (1996). 81 See Level 3 Comments at 7- 8. 20 Federal Communications Commission FCC 00- 210 21 application as accepted for filing. 82 According to Level 3, if the Commission works out a review process with the Executive Branch similar to the Section 214 process, 21 days should be a sufficient period of time between the date when the application is placed on public notice and its grant date. 83 Level 3 argued further that, even if the application does not qualify for grant on a streamlined basis, consistent with the rules for Section 214 applications, the Commission should specify a fixed period for consideration of the application. 84 52. Because our authority to grant or revoke submarine cable landing licenses is conditioned on our obtaining approval of the Secretary of State, 85 we intend to coordinate closely with the Department of State in any streamlining measures we may undertake. 86 In this connection, PSINet suggested that the Commission work with the Department of State to establish a procedural timeline to determine when government responses would issue. 87 Level 3 suggested that the Commission work with the Executive Branch to identify ways to limit its involvement in the review process. 88 According to Level 3, multiple levels of review at the Commission and other Executive Branch agencies create delays and uncertainties in the licensing process. Level 3 asserted that "there is nothing special about submarine cables that should require such increased scrutiny by the Executive Branch [except that] the Executive Order requires the Commission to get Executive Branch approval . . . ." 89 According to Level 3, the Commission can "comply with this approval requirement while taking steps to make it more of a formality than a drawn out process." 90 Level 3 suggested that the Commission, instead of seeking an amendment to Executive Order No. 10530, should establish a streamlined two- week procedure 82 See id. at 8. 83 See id. 84 See id. At 8 and n. 18 (referring to Section 63. 12 of the Commission's rules, which states that if an application is deemed complete, but does not qualify for streamlined processing, the Commission will issue public notice that the application is incomplete, and will take action within 90 days of public notice). 85 See Exec. Ord. No. 10530 § 5( a) (delegating the President's authority under the Cable Landing License Act to the Commission, provided that "no such license shall be granted or revoked by the Commission except after obtaining approval of the Secretary of State and such advice from any executive department or establishment of the Government as the Commission may deem necessary.") 86 See, e. g., PSINet Statement in Forum Transcript at 10. 87 See, e. g., id. at 11. 88 See Level 3 Comments at 9- 11. 89 Id. at 9. 90 Id. 21 Federal Communications Commission FCC 00- 210 22 for obtaining Executive Branch approval of submarine cable landing license applications, and should model the procedure on the Section 214 procedures. 91 53. Section 63. 12 of the Commission's rules describes the way the Commission processes international Section 214 applications. 92 This section provides that the Commission will grant an application 14 days after the date of public notice listing the application as accepted for filing and that, subject to certain limitations, the applicant may commence operation on the 15th day after the date of that public notice. 93 Under our rules, the public notice of the grant of the authorization represents the applicant's Section 214 certificate. 94 Section 63.12 also specifies four categories of Section 214 applications that do not qualify for streamlined treatment. 95 Section 63. 12( d) provides that, if an application is deemed complete but ineligible for the streamlined processing procedures, the Commission will issue public notice indicating that the application is ineligible for streamlined processing, and will, within 90 days of the public notice, take action upon the application or provide public notice that, because the application raises questions of extraordinary complexity, an additional 90- day period for review is needed. 96 Section 63.12( d) also provides that the Commission may extend each successive 90- day period, and that the application shall not be deemed granted until the Commission affirmatively acts upon the application. 97 54. The Section 214 streamlining process has been, and continues to be, successful in expediting regulatory processing and enhancing the competitiveness of service providers in the global communications marketplace. Adopting this process for submarine cable landing license applications likely could serve the same purpose with respect to the submarine cable market. Because, however, of the unique role of the Executive Branch with respect to submarine cable landing licenses, and because we intend to coordinate closely with the Executive Branch, we do not propose a wholesale adoption of the Section 214 streamlining process for submarine cable landing license applications. With respect to timing for review of submarine cable landing license applications, we propose that, if an application qualifies presumptively for grant on a streamlined basis under one of the three streamlining options described above, the Commission will grant the 91 See id. at 10- 11. 92 See 47 C. F. R. § 63.12. 93 See 47 C. F. R. § 63.12( a), (b). 94 See 47 C. F. R. § 63.12( b). 95 See 47 C. F. R. § 63.12( c). 96 See 47 C. F. R. § 63.12( d). 97 See id. 22 Federal Communications Commission FCC 00- 210 23 application 60 days from the date the International Bureau issues a public notice accepting the application for filing, or indicate in a public notice why grant of the application within 60 days cannot be provided. We seek comment on this proposal. We expect that the period between the filing of an application and the release of a public notice ordinarily would not be lengthy because the International Bureau would put an application out on public notice promptly after determining that the application is complete. 55. We also might consider adoption of a conditional grant whereby we would condition our grant of authority on ultimate approval by the Department of State. This is consistent with certain of the Commission's procedures for granting submarine cable landing licenses. For example, when an applicant chooses to avail itself of the opportunity initially to file a general geographic description of landing points for a cable, the Commission grants the application conditioned on the Commission's final approval of a more specific description of the landing points to be filed by the applicant no later than 90 days prior to construction. 98 The Commission will then give public notice of the filing of this description, and grant of the license will be considered final if the Commission does not notify the applicant otherwise in writing no later than 60 days after receipt of the specific description of the landing points, unless the Commission designates a different time period. 99 We note, however, that close coordination with the State Department would be necessary for a proposal for such a conditional grant. 56. There are, however, several ways in which we could accelerate the submarine cable landing license review process independent of the Executive Branch. Under our proposal, if the Commission determines that an application qualifies presumptively for grant on a streamlined basis because we are satisfied that the application conforms to one of the three streamlining options described above, we propose to issue the license by Public Notice, rather than by issuing an order. As noted above, under the Commission's processes for Section 214 streamlining, the public notice of the grant of the authorization represents the applicant's Section 214 certificate. 100 We seek comment on whether issuing a public notice would satisfy the requirement under the Cable Landing License Act that grants be issued by “written license.” 101 We note that granting a submarine cable landing license by Public Notice would reduce substantially the amount of time between the filing of an application and the issuance of the license, therefore lessening regulatory delay which might forestall competition, and allowing companies to make efficient use of rapidly 98 See 47 C. F. R. § 1.767( a)( 5). 99 See id. 100 See 47 C. F. R. § 63.12( b). Section 214 applications that are granted on a streamlined basis are not issued by an order. In fact, not even all non- streamlined Section 214 applications are granted by formal order. The Commission recently amended its rules to ensure that an application that is not subject to streamlined processing may be granted without a formal written order if it is unnecessary to address any significant issues in writing or to impose any conditions that require written explanation. See 1998 International Common Carrier Biennial Regulatory Review Order, 14 FCC Rcd at 4913, para. 11. 101 See 47 U. S. C. § 34. 23 Federal Communications Commission FCC 00- 210 24 changing technology. We note, however, that transparency is crucial and the industry itself relies upon information regarding location of landing stations. In this vein, we propose to include in a Public Notice granting a submarine cable landing license information about the identity of the owners and their relative ownership percentages in the cable and foreign affiliations, as well as information about the location of landing points for the proposed cable. We seek comment on this proposal and on what other information we might include in a Public Notice granting a submarine cable landing license. Parties advocating inclusion of particular information should describe the pertinence of the information and why access to the information would benefit other participants in the submarine cable market. 57. We also note that, in February 1999, the International Bureau, as part of an electronic filing pilot program, created a submarine cable landing license electronic application form similar to the Section 214 electronic application form. 102 Few submarine cable landing license applicants have taken advantage of this electronic application form. We seek comment on whether it would significantly speed and facilitate the submarine cable landing licensing process if we were to encourage or mandate submarine cable landing license applicants to use the existing electronic application form for submarine cable landing licenses, in lieu of filing written applications. 58. We also seek comment on whether, with submarine cable landing license applications, as is the case currently with streamlined Section 214 applications, we should decline to routinely seek comment on competitive or other issues that parties may seek to raise in the context of streamlined applications. In the 1998 International Common Carrier Biennial Regulatory Review Order, the Commission reaffirmed its finding that applications that qualify for streamlined processing do not generally raise public interest issues and that existing safeguards and regulations, rather than denial of applications, will be sufficient to prevent anticompetitive effects in the U. S. market. 103 The Commission further concluded that there is no reason routinely to seek comment on competitive or other issues that parties may seek to raise in the context of streamlined applications. 104 In so concluding, the Commission noted that the likelihood that the Commission would deem a competitive or other issue raised by a commenter sufficiently serious to warrant denying a streamlined application is "so remote that the potential benefits of seeking such comment are outweighed by the real benefits of eliminating the possibility that such comments would render an application ineligible for streamlining.” 105 The “real benefits” the Commission noted included: “a shorter period of time from filing an application to grant of the 102 See International Bureau On- Line Reports and Electronic Filing Pilot Program, Report No. IBFS- 99- 0001, Public Notice (IB, rel. Feb. 10, 1999). 103 1998 International Common Carrier Biennial Regulatory Review Order, 14 FCC Rcd at 4913- 14, para. 12. 104 Id. 105 Id. 24 Federal Communications Commission FCC 00- 210 25 application and, significantly, the added certainty that an applicant would have as a result of knowing that its application cannot be held up by a vaguely drafted petition to deny filed by its competitors." 106 The Commission concluded therefore that "as a result of meaningful economic competition in international telecommunications, it is no longer necessary in the public interest to deny streamlined processing to an application that has been opposed." 107 We seek comment on whether the same policies should apply. For example, we seek comment on whether existing safeguards and regulations, rather than denial of applications, will be sufficient to prevent anticompetitive effects in the U. S. market. We also seek comment on the advantages and disadvantages of these and other streamlining methods. 59. We intend to continue our current practice, applicable not only to submarine cable landing license applications and Section 214 applications, but also applicable to other applications before the Commission, of not accepting incomplete applications. For example, in setting out the new procedure for streamlined processing of international Section 214 applications in the 1998 International Common Carrier Biennial Regulatory Review Order, the Commission stated that the staff of the International Bureau will review an application to determine whether it is complete and eligible for streamlined processing, and that, if an application is deemed incomplete and not acceptable for filing, the staff will notify the applicant and give the applicant an opportunity to provide the missing information. 108 60. We cannot anticipate every possible issue that might arise with a particular cable landing license application. Therefore, as the Commission did with respect to streamlined assignments and transfers of control of international Section 214 authorizations, we propose here to "delegate to the International Bureau the authority to identify those particular applications that do warrant public comment and additional Commission scrutiny under current stated Commission policies." 109 The Commission stated that, for example, "additional scrutiny may be required where an application may present a significant potential adverse impact on competition." 110 The Commission reasoned that "[ b] ecause this process gives the staff an opportunity to identify any 106 Id. 107 Id., 14 FCC Rcd at 4914, para. 13. 108 Id., 14 FCC Rcd at 4913, para. 10. The Commission stated further that, once an application is deemed complete and eligible for streamlined processing, the Commission will issue a public notice noting that the application has been accepted for filing and will be subject to streamlined processing pursuant to Section 63. 12. See also, e. g., Non Streamlined International Applications Accepted For Filing, Report No. TEL- 00180NS, Public Notice (IB/ TD, rel. Jan. 14, 2000) (stating that all applications listed in the Public Notice "are subject to further consideration and review, and may be returned and/ or dismissed if not found to be in accordance with the Commission's rules, regulations, and other requirements."). 109 1998 International Common Carrier Biennial Regulatory Review Order, 14 FCC Rcd at 4920- 21, para. 25 . 110 Id. 25 Federal Communications Commission FCC 00- 210 26 extraordinary applications that may warrant public comment, we are able to include within this procedure a broader class of applications . . . ." 111 We also note, that in the Foreign Participation Order, with respect to streamlined Section 214 applications of carriers that qualify for a presumption of nondominance, the Commission stated that "[ i] n all circumstances, Commission staff will have the discretion to deem an application ineligible for streamlined processing either because it raises market power concerns or because an Executive Branch agency raises concerns with respect to issues within its expertise." 112 With respect to the process for determining that an application will not be granted on a streamlined basis, we propose adoption of the Section 214 streamlining procedures, which provide in relevant part that the streamlined processing procedures do not apply where, among other things, "[ t] he Commission has informed the applicant in writing, within 14 days after the date of public notice listing the application as accepted for filing, that the application is not eligible for streamlined processing." 113 We anticipate that situations would be rare in which Commission staff would deem a cable landing license application ineligible for streamlined processing after initially determining that the application qualified presumptively for grant on a streamlined basis. V. Common Carrier/ Non- Common Carrier Distinction 61. The Commission allows submarine cables to be operated on either a common carrier or non- common carrier basis. In its application for a cable landing license, an applicant must indicate under which of these two regulatory categories it wishes to operate the cable. 114 Most recent applicants have sought to operate submarine cables on a non- common carrier basis. 115 111 Id. 112 See Foreign Participation Order, 12 FCC Rcd at 24033, para. 324. 113 47 C. F. R. § 63.12( c)( 4). 114 47 C. F. R. § 1.767( a)( 6). 115 See, e. g., SAC Landing Corp., Application for a License to Land and Operate in the United States a Digital Submarine Cable System between the U. S. Virgin Islands, Brazil, Argentina, Chile, Peru, Colombia, and Panama, File No. SCL- LIC- 19990823- 00015, Cable Landing License, DA 00- 310 (IB/ TD, rel. Feb. 17, 2000) (non- common carrier cable); Level 3 International, Inc., Application For a License to Land and Operate in the United States a Private Fiber Optic Submarine Cable System Extending Between the United States and the United Kingdom, File No. SCL- LIC- 19990913- 0001, Cable Landing License, 15 FCC Rcd 842 (IB/ TD, rel. Jan. 21, 2000) (non- common carrier cable) (Level 3 Order); Worldwide Telecom (USA) Inc., Application for a License to Land and Operate in the United States a Private Fiber Optic Submarine Cable System Extending Between the United States, Canada, Ireland, and the United Kingdom, File No. SCL- LIC- 19990804- 00012, Cable Landing License, 15 FCC Rcd 765 (IB/ TD, rel. Jan. 14, 2000) (non- common carrier cable) (Worldwide Telecom Order); AT& T Corp., BellSouth Communications, Inc., MCI WorldCom, Inc., RSL COM U. S. A., Sprint Communications, L. P., Star Telecommunications, Inc., Teleglobe USA, Inc., Tricom USA, Inc., WorldxChange Communications, Joint Application for a License to Land and Operate a Digital Submarine Cable System Between the United States, the Cayman Islands, Colombia, Costa Rica, Honduras, Mexico, and Panama, the MAYA- 1 26 Federal Communications Commission FCC 00- 210 27 62. All submarine cables were originally operated on a common carrier basis. In addition to obtaining a cable landing license, common carriers also obtained authority from the Commission to construct and operate the cable pursuant to Section 214 of the Communications Act. 116 As a common carrier, a cable landing licensee is subject to the requirements of Title II of the Communications Act. 117 The obligations of a common carrier include offering facilities and service at reasonable rates on a nondiscriminatory basis. 118 Common carriers are also subject to the complaint process set forth in Section 208 of the Communications Act. 119 63. Since 1985, the Commission has allowed submarine cables to be operated on a non- common carrier basis. 120 The Commission has used this “private submarine cable policy” to promote competition in the provision of international transmission facilities. 121 In the Tel- Optik Order, the Commission found that private systems in which bulk transmission capacity is sold or leased on a non- common carrier basis would result in increased competition in the provision of North Atlantic transmission capacity, and would provide the same user benefits that were offered by the private sale of domestic satellite transponders and would further stimulate technology and service development to the benefit of international users. 122 In concluding that allowing non-common carrier cable systems would provide the same benefits to users that were offered by non-common carrier domestic satellite transponder sales, 123 the Commission found that non- common Cable Network, File No. SCL- LIC- 19990325- 00006, Cable Landing License, 14 FCC Rcd 19456 (IB/ TD, rel. Nov. 18, 1999) (common carrier cable) (MAYA- 1 Cable Landing License Order). 116 47 U. S. C. § 214. See, e. g., AT& T Corp., BellSouth Communications, Inc., MCI WorldCom, Inc., RSL COM U. S. A., Sprint Communications, L. P.., Star Telecommunications, Inc., Teleglobe USA, Inc., Tricom USA, Inc., WorldxChange Communications, Joint Application for Authorization Pursuant to Section 214 of the Communications Act of 1934, as Amended, to Construct, Acquire, and Operate Capacity in a Digital Submarine Cable Network, the MAYA- 1 Cable Network, File No. ITC- 214- 19990325- 00153, Memorandum Opinion, Order and Authorization, 14 FCC Rcd 19449 (IB/ TD, rel. Nov. 18, 1999) (MAYA- 1 214 Order). 117 47 U. S. C. § 201 et seq. 118 47 U. S. C. §§ 201, 202. See AT& T Corp., MCI International, Inc., SBCI- Pacific Networks, Inc., Sprint Communications Company, L. P., Teleglobe USA, Inc, Joint Application for a License to Land and Operate in the United States a Digital Submarine Cable System Extending Between the United States, China, Taiwan, Japan, South Korea, and Guam, File No. SCL- 98- 002, Cable Landing License, 13 FCC Rcd 16232, 16237, para. 15 (IB/ TD, rel. Aug. 28, 1998) (China- U. S. Order). 119 47 U. S. C. § 208. 120 See Tel- Optik Order. 121 See Japan- U. S. Order, 14 FCC Rcd at 13080, para. 38; Cable & Wireless, PLC, Application for a License to Land and Operate in the United States a Private Submarine Fiber Optic Cable Extending Between the United States and the United Kingdom, File No. SCL- 96- 005, Cable Landing License, 12 FCC Rcd 8516, 8520, para. 11 (1997) (Cable and Wireless Order). 122 Tel- Optik Order, 100 FCC 2d at 1053, para. 43. 123 Id., 100 FCC 2d at 1041, para. 19, citing Domestic Fixed- Satellite Transponder Sales, 27 Federal Communications Commission FCC 00- 210 28 carrier cable systems would provide users with new alternatives to satisfy their capacity needs and any special operational or technical requirements, and could also stimulate technological development in cable systems. 124 The Commission further found that there was no need to require submarine cable systems to operate as common carriers. 125 64. In determining whether a cable system qualifies to be operated on a non- common carrier basis, the Commission uses the two- part test set forth in NARUC I. 126 The test first looks to whether there is a legal compulsion on the applicant to serve the public indifferently, and, if not, then to whether there are reasons implicit in the nature of the operations of the submarine cable system to expect an indifferent holding- out to the eligible user public. 127 65. In applying the first prong of the NARUC I test to submarine cable authorizations, the Commission has stated that there will be no legal compulsion to serve the public indifferently where there is no public interest reason to require facilities to be offered on a common carrier basis. 128 This public interest analysis has generally focused on the availability of alternative common carrier facilities. 129 Where there are sufficient alternatives, the Commission has found that the public interest does not require the licensee to offer capacity on the proposed cable on a common carrier basis, but rather that, in those circumstances, the public interest would be served by allowing a submarine cable to be operated on a non- common carrier basis. 130 Although this Applications of Hughes Communications, Inc., Southern Pacific Communications Company, RCA American Communications, Inc., Western Union Telegraph Company, for Modification of Domestic Fixed Satellite Space Station Authorizations to Permit Non Common Carrier Transponder Sales, CC Docket No. 82- 45, File Nos. 995- dss- mp/ ml-( 3)- 82 996- dss- mp/ ml-( 4)- 82 997- dss- mp/ ml- 82 998- dss- MP/ ML-( 3)- 82, Memorandum Opinion, Order and Authorization, 90 FCC 2d 1238, 1251- 52, paras. 33- 34, 1255, para. 41 (1982) (Domestic Fixed- Satellite Transponder Sales Order), aff’d, World Communications Inc. v. FCC¸ 735 F. 2d 1465 (D. C. Cir. 1984). 124 Tel- Optik Order, 12 FCC Rcd at 1041- 42, paras. 19- 20. 125 Id., 12 FCC Rcd at 1034, para. 4, 1041 para. 18. 126 National Association of Regulatory Utility Commissioners v. FCC, 525 F. 2d 630, 642 (D. C. Cir. 1976) (NARUC I), cert. Denied, 425 U. S. 992 (1976). The D. C. Circuit recently affirmed the continuing use of the NARUC I test in light of the addition of the terms “telecommunications carrier” and "telecommunications service” in the Communications Act as part of the Telecommunications Act of 1996. See Virgin Islands Telephone Corporation v. FCC, 198 F. 3d 921 (D. C. Cir. 1999). 127 NARUC I, 525 F. 2d at 642. See also Japan- U. S. Order, 14 FCC Rcd at 13080, para. 38; Cable & Wireless Order, 12 FCC Rcd at 8522, para. 14. 128 See, e. g., Japan- U. S. Order, 14 FCC Rcd at 13080, para. 39; Cable & Wireless Order, 12 FCC Rcd at 8522- 23, paras. 14- 15. 129 Cable & Wireless Order, 12 FCC Rcd at 8522- 23, paras. 15- 17. 130 Id. In the context of satellite services, the Commission has found that if the barriers to entry for new satellite operators are low and alternative competitive sources of satellite services are available to consumers, satellite operators will have an incentive to offer service efficiently at low rates. In such an environment, the Commission has held that it is not necessary to compel space station operators to offer their services indifferently 28 Federal Communications Commission FCC 00- 210 29 public interest analysis has generally focused on the availability of alternative common carrier facilities, 131 the Commission has not limited itself to that reasoning. For example, in the Japan-U. S. Order, the Commission found that competing non- common carrier facilities will at least partially constrain the operations of the Japan- U. S. Cable Network. 132 The International Bureau has also found that alternative means to the destination point can also constrain the ability of a licensee to engage in anti- competitive practices, and thus satisfy the first prong of the NARUC I test. 133 66. If the Commission finds that there is no public interest reason to require the submarine cable facilities to be offered on a common carrier basis, then, under the second prong of the NARUC I test, the Commission considers whether there is reason to expect an indifferent "holding- out" to the eligible user public. In making this determination, the Commission generally relies on a statement of the applicant's intentions in this regard (including the language of any applicable terms for control of the cable system, such as a C& MA). If the Commission finds that an applicant has shown that it will make individualized decisions whether and on what terms to provide service and will not undertake to serve all people indifferently, the Commission has held that the second prong of the test has been met. 134 In the Japan- U. S. Order, the Commission found that it is reasonable to conclude that competition will require parties selling capacity to make flexible offers and not to offer capacity indifferently, and concluded that there is no reason to expect an indifferent holding- out to the eligible user public. 135 67. Notwithstanding a Commission decision not to require a submarine cable system to be operated on a common carrier basis, the Commission retains the ability to impose common carrier or common- carrier- like obligations on the operations of that cable system if the public interest so requires. 136 Furthermore, the Commission has always maintained the authority to the public as common carriers because competition will achieve the same result for purchasers of space segment capacity as regulation, that is, efficient service at low prices. See Domestic Fixed Satellite Transponder Sales, 90 FCC 2d at 1254- 55, paras. 39- 41. 131 See, e. g., Cable & Wireless Order, 12 FCC Rcd at 8522- 23, paras. 15- 17; Tel- Optik Order, 100 FCC 2d at 1047, para. 29; Optel Communications, Inc., Application for a license to land and operate in the United States a submarine cable extending between Canada and the United States, File No. SCL- 92- 004, Conditional Cable Landing License, 8 FCC Rcd 2267, 2268, para. 11 (1993). 132 Japan- U. S. Order, 14 FCC Rcd at 13080, para. 39. The Commission noted that the U. S.- Japan route is also served by a number of existing and planned fiber optic cable systems, as well as by satellite capacity. Japan- U. S. Order, 14 FCC Rcd at 13080 n. 56. 133 China- U. S. Order, 13 FCC Rcd at 16236, para 13. In the Japan- U. S. Order, the Commission also noted that U. S.- Japan traffic can also be carried indirectly over alternative cable systems, such as FLAG, which connect Japan to the United Kingdom. Japan- U. S. Order, 14 FCC Rcd at 13080 n. 56. 134 See Cable & Wireless Order, 12 FCC Rcd at 8522, para. 14. 135 See Japan- U. S. Order, 14 FCC Rcd at 13081, para. 41. 136 See, e. g., id., 14 FCC Rcd at 13080- 81, para. 40. See also Cable Landing License Act, 47 U. S. C. § 35 (providing that a license may be granted "upon such terms as shall be necessary to assure just and reasonable 29 Federal Communications Commission FCC 00- 210 30 subsequently to classify facilities as common carrier facilities subject to Title II of the Communications Act if the public interest requires that the facilities be offered to the public indifferently. 137 68. At the Public Forum and in subsequent presentations, several parties addressed the issue of whether there continues to be a rationale for maintaining the distinctions between cable systems that are operated on a common carrier or non- common carrier basis. AT& T argued that there continues to be merit in distinguishing between common carrier and non- common carrier cable systems and stated that there is no reason to change the Commission’s approach at this time. 138 Level 3, in its comments, disagreed and suggested that the Commission should eliminate the common carrier/ non- common carrier distinction. 139 Level 3 suggested that instead, the Commission could create meaningful categories of licensing conditions that can be applied based on market conditions at the foreign end of the cable and in the U. S., and on the ownership structure of the cable system. 140 PSINet argued that there is no reason to require a common carrier operation of a cable system where there is competition on the route, but noted that it may be appropriate to require nondiscrimination on "thin routes" where there is lack of facilities- based competition. 141 AT& T argued that its "concern would be that private cables, by their very nature, are unregulated, required to discriminate, and that could be a very dangerous precedent when you [are] creating what you describe as a bottleneck facility. . . . [A] nd if there is no competition on the route, the obligation to hold oneself out indifferently would appear to be a fundamental requirement." 142 Facilicom, on the other hand, argued that even on thin routes there is competition from alternative technologies such as satellite services. 143 Global Crossing cautioned that common carrier regulation provides remedies that are valuable as safeguards against anti-competitive behavior by the cable operator. 144 69. Since the Commission espoused its private submarine cable policy in the 1985 Tel- rates and service in the operation and use of cables so licensed."). 137 See, e. g., Foreign Participation Order, 12 FCC Rcd at 23934, para. 95; Cable & Wireless Order, 12 FCC Rcd at 8530, para. 39; China- U. S. Order, 13 FCC Rcd at 16237, para. 15. 138 AT& T Statement in Forum Transcript at 13- 14. 139 See Level 3 Comments at 17- 18 (asserting that the Cable Landing License Act makes no distinctions between common carrier and non- common carrier licenses, that the legal distinctions between the two categories of carriers is vague, which leads to uncertainty in the marketplace as to what regulations will apply to a given proposed submarine cable system). 140 See id. at 18. 141 PSINet Statement in Forum Transcript at 16. 142 AT& T Statement in Forum Transcript at 21. 143 Facilicom Statement in Forum Transcript at 18. 144 Global Crossing Statement in Forum Transcript at 14. 30 Federal Communications Commission FCC 00- 210 31 Optik Order, the Commission has not denied non- common carrier status to a submarine cable applicant that has requested it. We intend to continue our private submarine cable policy, in order to further stimulate competition in the market. We do not, however, propose to abandon the distinction between submarine cable systems which operate on a common carrier and a non-common carrier basis. Maintaining both types of bases for operating a submarine cable system provides both licensees and the Commission flexibility in determining how a cable system will be operated. For example, although most recent cable systems have been licensed to operate on a non- common carrier basis, some applicants have continued to propose to operate their cable system on a common carrier basis. 145 We also believe that there may be limits to our ability to forgo from considering a licensee a common carrier if it does not meet the NARUC I test; in other words if it holds itself out to serve the public indifferently or if there is a public policy reason to require it to do so. 146 In addition, under Section 35 of the Cable Landing License Act, the Commission, under the authority delegated to it, may grant cable landing licenses "upon such terms as shall be necessary to assure just and reasonable rates and service in the operation and use of cables so licensed." 147 We seek comment on this tentative conclusion to maintain our private submarine cable policy and retain the distinctions between cables operated on a common carrier and a non- common carrier basis. 70. As discussed above, some participants in the Public Forum stated that there may be some situations, particularly thin routes, 148 where the imposition of nondiscrimination requirements on a cable operator may be warranted. We seek comment on whether, in a situation in which an applicant is proposing to serve previously unserved routes, we should impose conditions, such as a nondiscrimination requirement, on the license, regardless of whether we grant the license on a streamlined basis. We also seek comment on the types of situations in which it might be appropriate for the Commission to require a cable to be operated on a common carrier basis. Commenters are also asked to address whether the Commission should consider indirect means to a destination point in determining the level of competition on a route and whether a route is a thin route. We note that under the competitive route streamlining option proposed above, we state that, to demonstrate the existence of competition on a particular 145 See MAYA- 1 Cable Landing License Order; AT& T Corp., MCI International, Inc., Pacific Gateway Exchange (Bermuda) Limited, the St. Thomas and San Juan Telephone Company, Inc., Star Telecommunications, Inc., Startec Global Communications, Inc., Telefonica Large Distancia de Puerto Rico, Inc., Teleglobe USA, Inc., WorldxChange Communications, Joint Application for a license to land and operate a digital submarine cable system between Hollywood, Florida, in the United States, Italy, Spain and Portugal, the Columbus III Cable System, File No. SCL- 98- 005, Cable Landing License, 14 FCC Rcd 13428 (IB/ TD, rel. Aug. 20, 1999) (Columbus III Cable Landing License Order), application for review pending. 146 See NARUC I, 525 F. 2d at 642. 147 Cable Landing License Act, 47 U. S. C. § 35. For delegation of authority to the Commission, see Exec. Ord. No. 10530 § 5( a). 148 As noted above, for purposes of this NPRM “thin routes” refer to routes where there currently is little or no cable capacity. 31 Federal Communications Commission FCC 00- 210 32 destination route, an applicant could choose to show that there are other economically comparable means to access the destination route through a landline or submarine connection using another cable or facility stemming from a point- to- point route other than the destination route (i. e., hubbing). 149 71. We also seek comment on what effect, if any, the imposition of common carrier regulations or common carrier- like obligations may have on a company’s business decision whether to build a cable. VI. Conditions Routinely Imposed on Cable Landing Licenses 72. The Commission grants cable landing licenses with a number of routine conditions. 150 For example, one condition requires that the location of a cable system within U. S. territorial waters be in conformity with plans approved by the Secretary of the Army, and allows for the Secretary of the Army to request that the licensee move the cable for purposes of national defense or for the maintenance or improvement of harbors for navigational purposes. 151 In addition, if the licensee does not provide the precise landing points in the application, it must do so no later than 90 days prior to commencing construction at that landing location. 152 73. We seek comment on whether any of the routine conditions currently imposed on cable landing licenses should be eliminated or modified. At the Public Forum, Sprint recommended that we look at whether it is still necessary to include a condition that the licensee must move the cable at the request of the Secretary of the Army. 153 Sprint also suggested that we review the requirement that the licensee file a letter with the Commission’s Secretary accepting the terms and conditions of the license within 30 days after grant. 154 AT& T, on the other hand, asserted that the conditions are not causing any problems in the market. 155 We note that substantial change to some of the conditions may require consultation with the Executive Branch, i. e., the State Department and Department of Defense. Parties arguing that specific conditions are not sufficiently clear or precise should submit specific suggestions as to how the Commission might amend the conditions. 149 See Section III, A supra. 150 See, e. g., Japan- U. S. Order, 14 FCC Rcd at 13082- 84, para. 45; Level 3 Order, 15 FCC Rcd at 847- 848, para. 16; Worldwide Telecom Order, 15 FCC Rcd at 770- 772, para. 16. 151 See International 214 Streamlining NPRM, 10 FCC Rcd at 13490- 91, para. 39. 152 See International 214 Streamlining Order, 11 FCC Rcd at 12907, para. 54. 153 See Sprint Statement in Forum Transcript at 86. 154 See id. at 86- 87. 155 See AT& T Statement in Forum Transcript at 87. 32 Federal Communications Commission FCC 00- 210 33 74. Level 3 requested that the Commission develop clear and publicly available standard conditions and urged the Commission to place them in a rule, as is currently done with Section 214 authorizations. 156 Level 3 further suggested that if the conditions are publicly available so that the applicant knows them in advance, the Commission could eliminate the requirement that the applicant notify the Commission within 30 days of grant of the application that it accepts the terms of the license. 157 We seek comment on whether we should codify the routine conditions in a rule. We note that even if we decided to codify a set of conditions in a rule we would still retain the ability to impose unique conditions on particular licenses if we were to deem it necessary. We also seek comment on whether we should continue to require the applicant to submit a letter affirmatively accepting the terms and conditions of the cable landing license or whether we should adopt a negative option whereby the license automatically takes effect within 30 days after grant of the application unless the applicant notifies us that it does not accept the terms and conditions of the license. 75. In addition, Level 3 suggested that the Commission develop special conditions for the licenses of submarine cables whose participants include carriers that are "major suppliers," regardless of whether those carriers are U. S.- licensed carriers. 158 Level 3 defines a "major supplier" as that term is defined in the Reference Paper to the WTO Basic Telecom Agreement: "a supplier which has the ability to materially affect the terms of participation (having regard to price and supply) in the relevant market for basic telecommunications services as a result of : (a) control over essential facilities; or (b) use of its position in the market." 159 76. Specifically, Level 3 argued that to prevent such carriers from acting anticompetitively in the submarine cable market, the Commission should impose conditions relating to: (1) cable station access (requiring a major supplier to provide competing carriers with, for example, physical collocation at the cable station, circuit provisioning and interconnection intervals); 160 (2) backhaul (requiring a major supplier to allow competing carriers to a negotiate a backhaul contract with the major supplier on a timely and reasonable basis with nondiscriminatory pricing); 161 and (3) procedures (requiring a major supplier to expedite orders for service with 156 See Level 3 Comments at 12- 13, citing 47 C. F. R. §§ 63.21- 23. 157 See id. at 13. See, e. g., Japan- U. S. Order at 13084, para. 45 (stating that "[ t] he terms and conditions upon which this license is given shall be accepted by the Licensees by filing a letter with the Secretary, Federal Communications Commission, Washington, D. C. 20554 within 30 days of the release of the cable landing license.") 158 See Level 3 Comments at 19- 22. 159 See id. at n. 1, citing Fourth Protocol to the General Agreement on Trade in Services (WTO 1997), 36 I. L. M. 354, 367 (1997). 160 See id. at 20. 161 See id. at 21. 33 Federal Communications Commission FCC 00- 210 34 reasonable times and reasonable charges, to ensure freely available information, and, for consortium cables, to separate submarine cable and related operations from terrestrial operations). 162 77. We seek comment on Level 3's suggestions. Commenters advocating that we adopt Level 3's suggestions should indicate whether we should define "major supplier" as Level 3 defines the term, or whether we should adopt an alternative definition, and explain how the proposed definition would work in practice. VII. Who Should be Required to be Included in Application as Licensee 78. To provide more certainty to potential cable landing license applicants, we propose below a method for determining who should be included as an applicant for a cable landing license. Through the International Bureau's Public Forum and its meetings with individual parties, it became clear that companies considering building submarine cable systems would benefit from a Commission statement on this issue. 79. For this reason, at the Public Forum, representatives of the International Bureau asked participants who they thought should be required to be included as an applicant for a cable landing license. 163 Sprint argued that only landing station owners should be required to be licensees. 164 Sprint argued that ownership does not need to be licensed because, the Cable Landing License Act "requires a license to land the submarine cable." 165 Sprint argued, therefore, that only the "terminal parties" (or the owners of the landing stations) should be required to be licensees, and noted that, on consortium cables, a review of C& MAs reveals that the owner of the landing station also owns "all the way down to what they call the beach joint, which is where the cable comes out of the water." 166 In its comments, Level 3 also argued that only U. S. landing parties should be licensees. 167 According to Level 3, "in large consortium cables, it no longer makes sense to require all carriers with ownership interests to be co- applicants [because] non-landing parties generally tend to be small U. S. and WTO member country carriers with little market power and a non- controlling interest in the consortium." 168 According to Level 3, while landing parties may control facilities, such as cable landing stations, and potentially possess the 162 See id. at 21- 22. 163 See Forum Transcript at 24- 33 for the complete discussion of this issue at the Public Forum. 164 See Sprint Statement in Forum Transcript at 24- 25. 165 See id. at 24. 166 See id. at 24- 25. 167 See Level 3 Comments at 11- 12. 168 See id. 34 Federal Communications Commission FCC 00- 210 35 power and incentive to act anticompetitively by charging monopoly rents and ultimately discouraging additional capacity from being constructed, the same is not true for non- landing parties who are rarely in a position to deter the construction of additional capacity (which, according to Level 3 is a central focus of the Commission's cable landing license public interest analysis). 169 Level 3 also argued that, in the same vein, the Commission should eliminate the requirement for prior approval to add new, non- landing parties. 170 80. Global Crossing agreed with Sprint that the landing parties are the most significant for purposes of regulating the market in a procompetitive manner, but also noted the importance of issuing a license as a means of obtaining "key market information that is relevant to judging the nature of concentration of market power." 171 PSINet agreed with Global Crossing about the importance of this information. 172 PSINet also argued that if "you have anything to do with control or operation of the system, then you have to be a licensee." 173 PSINet cautioned, however, that it is important to consider whether a company is in fact terminating capacity for use in the United States or is really only passing through (such as landing a cable on the seashore in the United States to get to Mexico with another cable). 174 PSINet expressed concern over such a situation in which the United States would be "assert[ ing] its jurisdiction over carriers that are simply terminating in the United States just to interconnect [because] it would cause an issue for us overseas, where it would allow other countries to assert jurisdiction over us, where we're simply using that for transit services." 175 Sprint concurred with PSINet and noted that the Commission does not regulate traffic that neither originates nor terminates in the United States, but that merely proceeds to another location. 176 AT& T argued that not every United States owner of a cable system should be required to be a licensee, and, in fact, the Commission should allow the parties to decide who should be on the license. 177 81. We propose that an entity should be included as an applicant for a cable landing license for a proposed cable system (regardless of whether the entity also is a Section 214 licensee) if the entity is a landing station owner or: (1) the entity has a five percent or greater ownership interest in the proposed cable which includes voting rights (except if the ownership is 169 Id. at 12, citing Japan- U. S. Order, 14 FCC Rcd at 13076, para. 25. 170 See Level 3 Comments at 12. 171 See Global Crossing Statement in Forum Transcript at 25- 26. 172 See PSINet Statement in Forum Transcript at 25. 173 Id. 174 See id. at 28- 29. 175 ID at 29. 176 See Sprint Statement in Forum Transcript at 30. 177 See AT& T Statement in Forum Transcript at 31. 35 Federal Communications Commission FCC 00- 210 36 exclusively at foreign points on the cable system); and (2) the entity will use the U. S. points of the cable system in any capacity (unless the capacity merely is "hard- patched" through and is not dropping traffic in the U. S. or using the U. S. points of the cable system to re- originate traffic). Under this proposal, if an entity, at the time it files the application and the license is granted does not plan to use the U. S.- points of the cable system, but later decides to do so, that entity would need to file an application to be added to the license. 82. We note that the greater a firm’s investment in a cable system, the greater ability the firm has to influence the way in which a cable is operated. This falls squarely within the ambit of the Cable Landing License Act which requires a license to "land or operate" a submarine cable. 178 Firms with a greater ability to affect the operation of a cable system would expect to be subject to all conditions and responsibilities that that come with the right to land or operate the cable system. Entities with minimal investment in a cable system, on the other hand, do not have the same ability to affect the operation of the cable system. There is not the same need, therefore, to subject these entities to the conditions and responsibilities that come with a cable landing license. We seek comment, therefore, on whether a five percent or greater ownership interest would ensure that we include entities with a significant ability to affect the operation of a cable system, but that we not burden smaller carriers or investors. We note that, under a five percent or greater ownership threshold, fewer entities will be required to obtain licenses than under the current practice. This means that fewer entities will be subject to the conditions and responsibilities that come with the right to land or operate a cable. We seek comment on whether a different percentage would be appropriate to accomplish these goals. We note that, even if, at the time of the application, an entity is not a Section 214 licensee, if the proposed cable would operate as a common carrier, the entity, in addition to applying for a cable landing license, also would need to obtain Section 214 authority. 83. In addition, if an entity meets the standard proposed above for requiring a cable landing license for a cable either for which there is a pending application or for which there is an existing license, we seek comment on whether all initial applicants or licensees should be required to amend the application or modify the license, respectively, in order to add this new entity as an applicant or licensee. We also seek comment on whether we should require the initial licensees to modify an existing license to add a licensee in the following scenario: an entity whose ownership is exclusively at foreign points on the cable system, that was an initial owner but not a joint applicant or licensee at the time the license was granted and was not providing service on the cable at the time the license was granted, now decides to provide service over the cable on an end- to end basis. We seek comment whether this entity should be added to the license for the U. S.- portion of this end- to- end service. Finally, under this proposal, an entity that is a licensee for an existing submarine cable but does not own a landing station and has less than a five percent ownership interest in the cable, may file with the Commission a request that its license be relinquished. 178 See Cable Landing License Act, 47 U. S. C. § 34 (emphasis added). 36 Federal Communications Commission FCC 00- 210 37 VIII. Licensing and Regulatory Fees 84. Level 3, in its comments, asserted that licensing, regulatory and other fees should be non- recurring, reasonable, and related to recovering the actual administrative cost of licensing. 179 Level 3 therefore urged the Commission to waive or forbear from applying licensing and regulatory fees on submarine cable license applications, or to modify the fee structure. For the reasons discussed below, we decline to propose modifying or waiving licensing or regulatory fees. 85. Level 3 acknowledged the Commission's efforts to address licensing fees in the 1998 International Common Carrier Biennial Regulatory Review Order, but asserted that the Commission did not address the more general issue of the reasonableness of all the fees, including the recurring regulatory fees, assessed on cable landing licenses. 180 Level 3 asserted that, although Section 8 of the Communications Act 181 details fees applicable to cable landing licenses, “it also permits the Commission to waive or defer payment of an application fee in any specific instance for good cause shown, where such an action would promote the public interest.” 182 Level 3 argued that the fees included in Section 8 are supposed to reflect the Commission's cost of processing an application, and that the process of reviewing submarine cable applications has been streamlined with no corresponding reduction in fees. 183 According to Level 3, in light of the reduced costs to process applications with the streamlining the Commission is contemplating, we would be justified in waiving or forbearing from applying licensing fees assessed on submarine cable license applicants. 184 86. Level 3 also urged the Commission to modify the regulatory fee structure as it applies to international bearer circuits on submarine cables. 185 Level 3 argued that the annual fee of $7.00 per 64 KB active circuit on submarine cables that the Commission charges carriers is excessive and puts a disproportionate burden on the owners of submarine cables. 186 In addition, 179 See Level 3 Comments at 14. 180 See id. at 15. 181 47 U. S. C. § 158. 182 See Level 3 Comments at 15. 183 See id. 184 See id. at 15- 16. 185 See id. at 16. 186 See id. 37 Federal Communications Commission FCC 00- 210 38 Level 3 argued that "in today's world of high capacity submarine cables, carrying both voice, data, broadband and IP- based services, it does not make sense to charge regulatory fees that are based on a 64 KB circuit model . . . [and] ultimately these excessive fees discourage the building of private cables . . . [and] serve as bad precedent to foreign regulators that might be looking for ways to increase government revenues." 187 87. Under our current rules, applicants for common carrier cable landing licenses are required to file two applications: a cable landing license application under Section 1.767 of the Commission's rules 188 and a Section 214 application for the construction of new lines under Section 63.18( e)( 6) of the Commission's rules. As noted above, the Cable Landing License Act, which the Commission is charged with executing, requires that a cable landing license be obtained for any submarine cable directly or indirectly connecting the United States with any foreign country. In the 1998 International Common Carrier Biennial Regulatory Review NPRM, the Commission proposed to eliminate the requirement that a carrier that is authorized to serve a given route on a facilities basis must apply for additional Section 214 authority for the construction of a new submarine cable on that route. The Commission acknowledged, however, that if it were to adopt this proposal, a change in the application fees for cable landing licenses and Section 214 authorizations would be necessary, and that these fees, which are set by Congress cannot be changed by the Commission. 189 Specifically, the Commission noted that, if it were to eliminate the requirement that carriers apply for the accompanying Section 214 authorization, the application fee for a common carrier cable landing license would be approximately one- tenth of the fee for a non- common carrier cable landing license. The Commission stated that it would consider asking Congress to consolidate the application fees for cable landing licenses, and may not be able to adopt the proposal without such a fee change. 190 88. At the time the Commission issued the 1998 International Common Carrier Biennial Regulatory Review Order, the application fee for a non- common carrier cable landing license was $12,975, while the fee for a common carrier cable landing license was only $1,310. 191 The application fee for a Section 214 authorization for "overseas cable construction" was $11,665, bringing the total of the application fees for a common carrier submarine cable to $12,975. In the 1998 International Common Carrier Biennial Regulatory Review Order, the Commission stated that it believed that the fact that the total fees are the same is not 187 Id. 188 See 47 C. F. R. § 1.767. 189 See 1998 Biennial Regulatory Review — Review of International Common Carrier Regulations, IB Docket No. 98- 118, Notice of Proposed Rulemaking, 13 FCC Rcd 13713, 13725- 27, paras. 29- 33 (1998) (1998 International Common Carrier Biennial Regulatory Review NPRM). 190 Id., 13 FCC Rcd at 13727, para. 33. 191 Id., 14 FCC Rcd at 4936- 37, para. 66. 38 Federal Communications Commission FCC 00- 210 39 happenstance, but is a good indication of congressional intent that the application fees be the same whether the applicant intends to construct a common carrier or non– common carrier cable system. 192 The Commission noted that there was no change in the application fees since it issued the 1998 International Common Carrier Biennial Regulatory Review NPRM, and noted also that no commenter suggested a way to reconcile the fee disparity with elimination of the Section 214 application. 193 89. Therefore, in order to fulfill the intent of Congress to collect comparable application fees for comparable applications, the Commission did not adopt its proposal to eliminate the requirement that a carrier that is authorized to serve a given route on a facilities basis must apply for additional Section 214 authority for the construction of a new submarine cable on that route. Instead, the Commission directed its Office of Legislative and Intergovernmental Affairs to submit a legislative request to Congress recommending that there be only one application fee for cable landing licenses and that the separate application fee for "overseas cable construction" be eliminated. 194 This direction to the Commission's Office of Legislative and Intergovernmental Affairs in the 1998 International Common Carrier Biennial Regulatory Review Order was consistent with the Commission's statement in the 1998 International Common Carrier Biennial Regulatory Review NPRM that it would consider asking Congress to consolidate the application fees, consistent with its proposal, albeit not adopted, to eliminate the requirement that a carrier that is authorized to serve a given route on a facilities basis must apply for additional Section 214 authority for the construction of a new submarine cable on that route. 90. In the meantime, in the 1998 International Common Carrier Biennial Regulatory Review Order, the Commission "encourage[ d] applicants for common carrier cable landing licenses to file a single application seeking authority under both the Cable Landing License Act and Section 214 of the Communications Act . . . [noting that] [i] nformation required in each application need not be repeated [and that] [t] he applicant should submit both of the applicable fees with its consolidated application." 195 There is no need for applicants to be burdened with filing the same information twice. 91. The applicable statutory provision does not permit the waiver of application fees that Level 3 proposes. Neither Section 8 of the Communications Act (which establishes the 192 See id. 193 See id. 194 See id., 14 FCC Rcd at 4936- 37, para. 66 and n. 132, citing 47 U. S. C. § 154( k)( 4) (which directs the Commission to make "specific recommendations to Congress as to additional legislation which the Commission deems necessary or desirable."). 195 See 1998 International Common Carrier Biennial Regulatory Review Order, 14 FCC Rcd at 4936- 37, para. 66. 39 Federal Communications Commission FCC 00- 210 40 schedule of application fees) nor the Commission's rules implementing that Section, allows us take such action. The only way the Commission may change the application fees set forth in Section 8 of the Communications Act, other than on a per- application basis as described below, is through Section 8( b)( 1), which directs that "the Schedule of Application Fees established under this section shall be reviewed by the Commission every two years after October 1, 1991, and adjusted by the Commission to reflect changes in the Consumer Price Index." 196 Under Section 8( d)( 2), the Commission may "waive or defer payment of an [sic] charge in any specific instance for good cause shown, where such action would promote the public interest." 197 Section 1.1117 of the Commission's rules addresses petitions for waiver or deferral of application fees. 198 Under this section, a waiver or deferral of a fee will only be possible on a per- application basis, and only after the fee has been paid by the entity seeking a waiver or deferral. 199 Section 1.1117 explicitly states that "requests for waivers or deferrals of entire classes of services will not be considered." 200 We, therefore, decline to propose an elimination or waiver of application fees for all cable landing licenses. 92. The Commission may modify the regulatory fee structure set in Section 9 of the Act 201 in the circumstances described below. This NPRM, however, is not the proper vehicle to propose a modification of the regulatory fees set by Congress in Section 9 as Level 3 requests. A proposal to change this regulatory fee would be dependent on the outcome of this rulemaking proceeding. Moreover, the Commission ordinarily proposes changes in regulatory fees through an annual rulemaking process specifically designated for this purpose. 202 93. There are two ways the Commission may change the regulatory fee schedule set by Congress in Section 9 of the Communications Act, other than on a per- application basis. The first is under Section 9( b)( 2), entitled "Mandatory Adjustment of Schedule": "[ f] or any fiscal year after fiscal year 1994, the Commission shall, by rule, revise the Schedule of Regulatory Fees by 196 See 47 U. S. C. § 158( b)( 1). See also 47 U. S. C. 158( g) (stating that, "[ u] ntil modified pursuant to subsection (b) of this section, the Schedule of Application Fees which the Federal Communications Commission shall prescribe pursuant to Section (a) of this section shall be as follows . . . ") 197 47 U. S. C. § 158( d)( 2) (emphasis added) (footnote omitted). 198 47 C. F. R. § 1.1117. 199 47 C. F. R. § 1.117( a)-( e). 200 47 C. F. R. § 1.117( b). 201 47 U. S. C. § 159. 202 See, e. g., Assessment and Collection of Regulatory Fees for Fiscal Year 1999, MD Docket No. 98- 200, Report and Order, FCC 99- 146 (rel. June 18, 1999). 40 Federal Communications Commission FCC 00- 210 41 proportionate increases or decreases to reflect, in accordance with paragraph 1( B), changes in the amount appropriated for the performance of the activities described in subsection (a) of this section for such fiscal year." 203 The second way the Commission may change the regulatory fee schedule set in Section 9, other than on a per- application basis, is under Section 9( b)( 3), entitled "Permitted Amendments": [I] n addition to the adjustments required by paragraph (2), the Commission shall, by regulation, amend the Schedule of Regulatory Fees if the Commission determines that the Schedule requires amendment . . . . In making such amendments, the Commission shall add, delete, or reclassify service in the Schedule to reflect the additions, deletions, or changes in the nature of its services as a consequence of Commission rulemaking proceedings or changes in law . . . ." 204 Although we decline at this time to propose a modification for the regulatory fees set for international bearer circuits on submarine cables as Level 3 requests, we seek comment generally on whether, if we ultimately adopt the streamlining measures proposed in this NPRM, it would be in the public interest to propose, pursuant to Section 9( b)( 3), a modification of the regulatory fees. 94. We also note that the applicable statutory provision does not permit the waiver of the regulatory fee structure. Neither Section 9 nor the Commission's rules implementing that Section, allows us to take such action. Under Section 9( d) of the Act, the Commission may "waive, reduce, or defer payment of a fee in any specific instance for good cause shown, where such action would promote the public interest." 205 Section 1.1166 of the Commission's rules addresses waivers, reductions, and deferrals of regulatory fees. 206 Under this section, a waiver or deferral of a fee will only be possible on a per- application basis, and only after the fee has been paid by the entity seeking a waiver or deferral. 207 Section 1.1166 explicitly states that "requests for waivers, reductions or deferrals of regulatory fees for entire categories of payors will not be considered." 208 We, therefore, decline to propose modifying or waiving regulatory fees for all cable landing licenses. 203 47 U. S. C. § 159( b)( 2). 204 47 U. S. C. § 159( b)( 3). 205 47 U. S. C. § 159( d) (emphasis added). 206 See 47 C. F. R. § 1.1166. 207 See 47 C. F. R. § 1.1166 (a)-( d). 208 See 47 C. F. R. § 1.1166. 41 Federal Communications Commission FCC 00- 210 42 IX. Conclusion 95. The proposals we adopt in this Notice of Proposed Rulemaking are intended to promote the rapid expansion of capacity and facilities- based competition, which will result in innovation and lower prices for U. S. consumers of international communications services. They also are designed to enable international carriers to respond to the demands of the market with minimum regulatory oversight and delay, saving time and money, both for industry and government, while preserving the Commission's ability to encourage competition. Finally, as we gain more experience with streamlining, we hope to expand streamlining possibilities even beyond those proposed here. We seek comment on whether we should conduct periodic reviews to determine whether, in light of changing technology or changing market conditions, our licensing scheme remains the most appropriate one. X. Procedural Matters A. Ex Parte Procedures 96. This NPRM is a permit but disclose notice and comment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided they are disclosed as provided in the Commission’s rules. 209 B. Comment Filing Procedures 97. Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 210 interested parties may file comments as follows: comments are due August 21, 2000, and reply comments are due September 20, 2000. Comments may be filed using the Commission’s Electronic Comment Filing System (ECFS) 211 or by filing paper copies. 98. 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, Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic copy 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 .” A 209 See generally 47 C. F. R. §§ 1.1202, 1.1203, 1.1206( a). 210 47 C. F. R. §§ 1.415, 1.419. 211 See Electronic Filing of Documents in Rulemaking Proceedings, GC Docket No. 97- 113, Report and Order, 13 FCC Rcd 11322 (1998). 42 Federal Communications Commission FCC 00- 210 43 sample form and directions will be sent in reply. 99. 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. All paper filings must be sent to the Commission’s Secretary, Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 Twelfth Street S. W., Room TW- A325, Washington, DC 20554. 100. Parties who choose to file by paper should also submit their comments on diskette to Elizabeth Nightingale, Telecommunications Division, International Bureau, Federal Communications Commission, 445 Twelfth Street S. W., Room 6- A729, Washington, DC 20554. Such a submission should be on a 3.5 inch diskette formatted in an IBM- compatible format using Microsoft Word for Windows, or a compatible software. The diskette should be accompanied by a cover letter and should be submitted in “read- only” mode. The diskette should be clearly labeled with the commenter’s name, proceeding, including the lead docket number in the proceeding (IB Docket No. 00- 106), type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase: "Disk Copy – Not an Original.” Each diskette should contain only one party’s pleadings, preferably in a single electronic file. In addition, commenters should sent diskette copies to the Commission’s copy contractor, International Transcription Service, Inc., 1231 20th St. N. W., Washington DC 20037. 101. Written comments by the public on the proposed and/ or modified information collections are due the same day comments on the Notice of Proposed Rulemaking are due, August 21, 2000. Written comments must be submitted by the Office of Management and Budget (OMB) on the proposed and/ or modified information collections on or before 60 days after the date of publication in the Federal Register of the Notice of Proposed Rulemaking. In addition to filing comments with the Secretary, a copy of any comments on the information collection( s) contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 1- C804, 445 12th Street, SW, Washington, DC 20554, or via the Internet to jboley@ fcc. gov and to Edward Springer, OMB Desk Officer, Room 10236 NEOB, 725 17th Street, N. W., Washington, DC 20503 or via the Internet to edward. springer@ omb. eop. gov. C. Initial Regulatory Flexibility Act Analysis 102. Pursuant to the Regulatory Flexibility Act (RFA), 212 the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and actions considered in this NPRM. The text of the IRFA is set 212 5 U. S. C. § 603. The RFA, see 5 U. S. C. § 601 et. seq., has been amended by the Contract with America Advancement Act of 1996, Pub. L. No. 104- 121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). 43 Federal Communications Commission FCC 00- 210 44 forth in Appendix A. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM. The Commission will send a copy of the NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration. 213 D. Paperwork Reduction Act of 1995 Analysis 103. This NPRM contains either a new or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information collections contained in this NPRM, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 104- 13. Public and agency comments are due 60 days from date of publication of this NPRM in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. XI. Ordering Clauses 104. Accordingly, IT IS ORDERED that, pursuant to Sections 1, 4( i) and (j), 201- 255 303( r) of the Communications Act as amended, 47 U. S. C. Sections 151, 154( i), 154( j), 201- 255, 303( r), and the Cable Landing License Act, 47 U. S. C. Sections 34- 39 and Executive Order No. 10530, Sec. 5( a), reprinted as amended in 3 U. S. C. § 301, this NOTICE OF PROPOSED RULEMAKING IS HEREBY ADOPTED and COMMENTS ARE REQUESTED as described above. 213 See 5 U. S. C. § 603( a). 44 Federal Communications Commission FCC 00- 210 45 105. IT IS FURTHER ORDERED that the Commission’s Consumer Information Bureau, Reference Information Center, SHALL SEND a copy of this NOTICE OF PROPOSED RULEMAKING, including the Initial Regulatory Flexibility Act Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary 45 Federal Communications Commission FCC 00- 210 46 APPENDIX A INITIAL REGULATORY FLEXIBILITY ANALYSIS 106. As required by the Regulatory Flexibility Act (RFA), 214 the Commission has prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies proposed in this Notice of Proposed Rulemaking (NPRM). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM provided above in Section IV, Subpart C. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration. 215 In addition, the NPRM and IRFA (or summaries thereof) will be published in the Federal Register. 216 A. Need for, and Objectives of, the Proposed Rules 107. In recent years, there has been explosive growth in the number and capacity of submarine cables triggered in large part by increased Internet and data traffic. Because of this increased demand for capacity, the rapid pace of technological development, and the emergence of non- traditional ownership and financing structures in the submarine cable marketplace, the International Bureau has undertaken a review of its policies for licensing submarine cables. The result of this review is the initiation of this proceeding to establish streamlined rules for processing applications for submarine cable landing licenses. 108. The streamlining proposal in the NPRM is designed to provide guidance for industry in submitting applications and for the Commission in reviewing such applications. The current precedent analyzing competitive issues in the submarine cable market is not extensive. In the absence of extensive precedent, the guidance contained in the proposed streamlining options should help ensure expeditious action on applications. In addition, the streamlining options in this NPRM seek to provide incentives for the development of facilities- based competition and capacity expansion to meet increasing demands. 109. This approach reflects broad input from participants in the submarine cable industry. In November 1999 the International Bureau held a Public Forum and has held numerous informal meetings with individual industry participants to solicit views about ways the Commission might improve its regulation of the submarine cable landing licensing process to 214 See 5 U. S. C. § 603. The RFA, see 5 U. S. C. § 601 et seq., has been amended by the Contract With America Advancement Act of 1996, Pub. L. No. 104- 121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). 215 5 U. S. C. § 603( a). 216 Id. 46 Federal Communications Commission FCC 00- 210 47 further promote consumer benefits from increased cable capacity and facilities- based competition. Industry participants expressed three objectives: expedited processing of applications, careful review of certain applications to guard against anticompetitive behavior, and encouragement of pro- competitive licensing procedures in other countries. To accomplish and balance these three objectives, the NPRM proposes streamlining that reflects pro- competitive policies. This approach is designed to provide more certainty and flexibility for participants in the application process, to promote increased investment and infrastructure development by multiple providers, and to decrease application processing time. 110. To achieve these goals, the NPRM proposes a mechanism under which an applicant for a submarine cable landing license will have three options to qualify presumptively for grant on a streamlined basis. The NPRM proposes the following three streamlining options: (1) a demonstration that the route on which the proposed cable would operate is or will become competitive; (2) a demonstration of sufficient independence of control of the proposed cable from control of existing capacity on the route; or (3) the existence of certain pro- competitive arrangements. We believe that, on balance, the streamlining policies proposed in the NPRM are pro- competitive, and that, if an application falls within one of these three categories, we can presume that it is unlikely that we will have competitive concerns about the cable. We note that, if an application does not qualify for streamlining, it will be reviewed on a non- streamlined basis without prejudice. 111. Our proposal to streamline the submarine cable landing licensing process is part of a continuing streamlining effort. The proposal’s structure of identifying categories of applications eligible for streamlined processing is consistent with our process for streamlining Section 214 applications. The Commission continually seeks ways to grant licenses more quickly to allow parties to enter the market rapidly, especially as new technological developments make speed to market crucial for firms competing in the ever changing Internet- driven communications market. B. Legal Basis 112. The NPRM is adopted pursuant to Sections 1, 4( i) and (j), 201- 255, 303( r) of the Communications Act as amended, 47 U. S. C. Sections 151, 154( i), 154( j), 201- 255, and the Cable Landing License Act, 47 U. S. C. Sections 34- 39 and Executive Order No. 10530, Sec. 5( a), reprinted as amended in 3 U. S. C. § 301. 47 Federal Communications Commission FCC 00- 210 48 C. Description and Estimate of the Number of Small entities to Which the Proposals will Apply 113. The RFA directs agencies to provide a description of, and, where feasible, estimate of the number of small entities that may be affected by the proposals, if adopted. 217 The Regulatory Flexibility Act defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small business concern” under Section 3 of the Small Business Act. 218 A small business concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. 219 114. The SBA has developed a definition of small entities for telephone communications companies other than radiotelephone (wireless) companies. The Census Bureau reports that there were 2,321 such companies that had been operating for at least one year at the end of 1992. 220 According to the SBA's definition, a wireline telephone company is a small business if it employs no more than 1,500 persons. 221 All but 26 of the 2,321 wireline companies listed by the Census Bureau were reported to have fewer than 1,000 employees. Thus, even if all 26 of those companies had more than 1,500 employees, there would still be 2, 295 wireline companies that might qualify as small entities or small incumbent LECs. Although it seems certain that some of these carriers are not independently owned and operated, we are unable at this time to estimate with greater precision the number of wireline carriers and service providers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that fewer than 2,295 of these wireline companies are small entities that might be affected by these proposals. 115. Specifically, the streamlining options contained in the NPRM apply to entities applying for a license to land or operate submarine cables under the Cable Landing License Act, (or entities applying to transfer control of existing submarine cable landing licenses). The proposals, however, may affect other entities as well, including users of submarine cable service such as Internet service providers (ISPs) that lease capacity or purchase indefeasible rights of use (IRUs) on cable systems. The Commission, therefore, encourages these entities to comment on the proposals in the NPRM. The proposals are intended to reduce the burden on all applicants regardless of size, by permitting applicants to seek to have their applications qualify presumptively 217 5 U. S. C. § 603( b)( 3). 218 5 U. S. C. § 601( 3). 219 5 U. S. C. § 632. 220 U. S. Department of Commerce, Bureau of the Census, 1992 Census of Transportation, Communications, and Utilities: Establishment and Firm Size, at Firm Size 1- 123 (1995). 221 13 C. F. R. § 121.201, Standard Industrial Classification (SIC) Code 4812. 48 Federal Communications Commission FCC 00- 210 49 for grant on a streamlined basis. At this time, we are not certain as to the number of small entities that will be affected by the proposals. Agency data indicates there have been approximately 50 cable landing applications filed with the Commission since 1992, but the total number of licensees is difficult to determine, because many licenses are jointly held by several licensees. Based on this information, we would estimate that there could be 50 or fewer applicants that might be a small entity. D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements 116. The reporting requirements proposed in the NPRM are voluntary and should not impose specific burdens on small entities. If an applicant for a submarine cable landing license wishes its application to qualify presumptively for a grant on a streamlined basis, the applicant could demonstrate that its application conforms to any one of the three streamlining options described in the NPRM. The NPRM seeks comment on the kinds of demonstrations an applicant could make to qualify for streamlining under the proposals. 117. The documentation proposed by the NPRM is not standardized. The information is unique to the applicant. Although the information could be submitted in a standardized format, creating such a format would impose a burden on an applicant because the applicant has several options from which to choose for streamlined processing. For example, the NPRM suggests types of documentation including cable landing license applications, Commission Orders, the International Bureau’s annual Circuit Status Report, the various C& MAs or capacity purchase agreements for the cables, and industry press releases. The NPRM also seeks comment on other types of documentation that would be useful for applicants seeking to qualify for the streamlining options proposed in the NPRM. 118. In addition, it is not possible or practical to estimate the costs and burdens associated with the documentation applicants would need to submit to demonstrate satisfaction of the streamlining options. We believe that the applicant’s documentation would be information that is maintained by the applicant in the normal course of business, and as such would not impose a significant burden on the applicant. We are seeking comments on possible costs and burdens associated with the documentation applicants would need to submit to qualify for streamlining under the options outlined in the NPRM. E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered 119. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, 49 Federal Communications Commission FCC 00- 210 50 consolidation, or simplification of compliance r reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage or the rule, or any part thereof, for small entities. 222 120. The proposals in this NPRM are designed to provide more certainty and flexibility for applicants, encourage investment and infrastructure development by multiple providers, expand available submarine cable capacity, and decrease application processing time. This may benefit small entities especially because the proposals would facilitate entry into the submarine cable market and expand international services. As described above, the Commission has proposed the following three options from which an entity may choose to qualify presumptively for streamlined processing: (1) a demonstration that the route on which the proposed cable would operate is or will become competitive; (2) a demonstration of sufficient independence of control of the proposed cable from control of existing capacity on the route; or (3) the existence of certain pro- competitive arrangements.. We request comment on these three streamlining options. 121. We request comment on whether small entities would be adversely affected by the proposals herein and whether the proposals will enable small entities to respond to the demands of the market with minimum regulatory oversight, delays, and expenses. We believe that our proposals will promote the rapid expansion of capacity and facilities- based competition, which will result in innovation and lower prices for U. S. consumers of international telecommunications services. We believe that our proposals would have either no impact, or would reduce, any economic burdens on small entities. 122. The NPRM seeks comment on policies of particular benefit to small entities. First, with respect to the proposal regarding which entities need to apply for cable landing licenses, the NPRM notes that the greater a firm’s investment in a cable system, the greater ability the firm has to influence the way in which a cable is operated. The NPRM further notes that firms with a greater ability to affect the operation of a cable system would expect to be subject to all conditions and responsibilities that that come with the right to land or operate the cable system. The NPRM notes that entities with minimal investment in a cable system, on the other hand, do not have the same ability to affect the operation of the cable system. There is not the same need, therefore, to subject these entities to the conditions and responsibilities that come with a cable landing license. Under the proposal in the NPRM, therefore, other than landing station owners, entities with less than a five percent ownership interest in a cable system would not need to be included as an applicant for the cable landing license for a proposed cable. The NPRM notes that, under a five percent or greater ownership threshold, fewer entities will be required to obtain licenses than under the current practice. This means that fewer entities will be subject to the conditions and responsibilities that come with the right to land or operate a cable. The NPRM seeks comment on whether a different percentage would be appropriate to accomplish these goals. In addition, the NPRM provides that an entity that is a licensee for an existing submarine 222 5 U. S. C. § 603( c). 50 Federal Communications Commission FCC 00- 210 51 cable but does not own a landing station and has less than a five percent ownership interest in the cable, may file with the Commission a request that its license be relinquished. F. Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rules 123. None. 51 Federal Communications Commission FCC 00- 210 SEPARATE STATEMENT OF COMMISSIONER SUSAN NESS Re: Review of Commission Consideration of Applications under the Cable Landing License Act Last July, the Commission granted a submarine cable landing license for the Japan- U. S. Cable Network (“ JUS CN”). 1 During the proceeding, it was alleged that the entities involved in the consortium controlled key inputs for other undersea cable systems serving the same routes, including access to landing stations, backhaul facilities, and local interconnection. 2 It was also alleged that such entities had the incentive and ability to deter construction of additional capacity. In granting the JUS CN cable license, 3 the Commission recognized the value of commencing a broader proceeding to examine the licensing of submarine cables and the best manner to promote competition and benefit consumers. 4 The recent increase in submarine cable capacity has been a tremendous success story, driven by the desire of more and more carriers to provide international data and Internet access services. Undersea cable capacity on transatlantic and transpacific routes has been increasing exponentially between 1995 and 1998. 5 Such capacity growth is expected to continue at least for the next few 1 AT& T Corp. et al., 14 FCC Rcd. 13066 (1999) (JUS Order). 2 Id. at 13070- 13073 ¶¶ 9- 18. 3 The Commission granted JUS CN its authorization after the applicants amended their Construction and Management Agreement to reduce the potential for competitive harms arising from the consortium structure. Id. at 13076- 13079 ¶¶ 28- 32. 4 Id. at 13079 ¶ 36. 5 FCC International Bureau, Report No. IN99- 36, 1998 Section 43.82 Circuit Status Data, at 33- 52 Federal Communications Commission FCC 00- 210 2 years. 6 At the same time, market prices for both transatlantic and transpacific bandwidth have fallen dramatically with increased supply. 7 It therefore seems truly appropriate to adopt policies that would streamline our procedures to expedite granting cable landing authority. For these reasons, I support this initiation of a proceeding to identify ways to promote competition in the operation of undersea cable systems, and at the same time streamline our submarine cable licensing process. The International Bureau has expended significant thought and effort in crafting very specific proposals that would permit more expeditious authorization of certain cable landing applications. I do not view these proposals as the end product of our process. Instead, in opening this proceeding, I hope that comment on these proposals will result in a simpler, and more extensive, streamlining of our processes. The Commission should try to avoid inadvertently raising the costs of entering the undersea cable market in the course of “streamlining” its processes. Thus, in addition to commenting on the efficacy of these proposals, I encourage parties to suggest ways to make these streamlining efforts more expansive. 34 (1999). 6 Id. 7 See, e. g., Bandwidth Index compiled by Band- X (http:// www. band- x. com/ bandwidth_ 1.cfm). Band- X runs an independent virtual market for international wholesale telecom capacity, maintaining price indices for bandwidth and switched minutes (http:// www. band- x. com). 53 Federal Communications Commission FCC 00- 210 DISSENTING STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT- ROTH Re: Review of Commission Consideration of Applications under the Cable Landing License Act, Notice of Proposed Rulemaking, IB Docket No. 00- 106 (adopted June 8, 2000) (rel. June 22, 2000). 1 I respectfully dissent from today’s item for two reasons. First, in my view, the Commission lacks authority over undersea cable landing licenses. Second, today’s order proposes a vast and unnecessary regulatory structure all in the name of “streamlining.” Indeed, today’s streamlining item looks more like yesterday’s command and control regulation than tomorrow’s deregulated and dynamically competitive marketplace. The Commission lacks clear authority to regulate cable landing licenses. I previously detailed my concerns in the FCC’s Order 2 finally approving the Japan- U. S. undersea cable. 3 I will not repeat those arguments here. However, it bears emphasizing that the Cable Landing License Act provides that “no person shall land or operate in the United States any submarine cable… unless a written license to land or operate such cable has been issued by the President of the United States.” 4 The majority has taken the position that the President may delegate such authority to the FCC. While I believe the President is free to delegate such responsibilities to the Executive Branch, it is not the President’s general prerogative to assign duties to an independent agency, such as the FCC. 5 The Commission’s independence from the Executive Branch is fundamental to its existence and it is our obligation to prevent any erosion of that core principle. Therefore, I believe the FCC must resolve the threshold legal issue of our jurisdiction before running headlong into a complicated streamlining proceeding. I encourage parties with concerns about the scope of the agency’s jurisdiction to file comments addressing this issue. 1 My final dissenting statement differs somewhat from the version released on June 8, 2000. These changes reflect the extensive modifications this item has undergone since its adoption. Although these edits were largely in a positive direction from a substantive standpoint, extensive post- adoption edits are a disturbing Commission practice. Although minor editorial post- adoption changes may be justifiable, the public would best be served by keeping these changes to an absolute minimum. 2 See AT& T Corp. Et. Al., Joint Application for a License to Land and Operate a Submarine Cable Network Between the United States and Japan, File No. SCL- LIC- 19981117- 00025, Cable Landing License, 14 FCC Rcd. 13066 (1999) (Japan- U. S. Order). 3 See Public Statement of Commissioner Harold Furchtgott- Roth, Re: Joint Application for a License to Land and Operate a Submarine Cable Network Between the United States and Japan, http:// www. fcc. gov/ Speeches/ Furchtgott_ Roth/ Statements/ sthfr932.html (July 9, 1999). 4 47 U. S. C. § 34. 5 This analysis may be different if there were a specific statutory provision calling for such delegation. 54 Federal Communications Commission FCC 00- 210 2 As I also stated in the Japan- U. S. proceeding, I am deeply troubled by the delays that have been associated with issuance of cable landing licenses. However, even if the FCC had clear authority over these licenses, I would be hard pressed to support much of today’s item. While I support streamlining and the goal of lending additional predictability to the FCC’s consideration of these license applications, I believe today’s item may fall short of these goals. What gets lost in today’s item is that applicants for cable landing licenses are, by definition, expanding overall capacity. Expanded capacity is inherently good news for consumers. Regardless of the circumstances, more capacity expands consumer choice and drives down prices. Also lost in today’s item is that the undersea cable market is more competitive than ever and all signs point towards additional dramatic increases in capacity over the next few years. 6 It seems like an odd time for the FCC to first enter this field of regulation and promulgate detailed rules, even in the name of streamlining. If the Notice applied a simple, straightforward test for streamlined treatment, and offered some hope that even non- streamlined applications would move more quickly, then I would have far fewer concerns. Instead, the Notice proposes three complicated “options” to assess eligibility for streamlining. 7 Each of those three options has numerous definitional elements and subparts. For example, under the third option, “pro- competitive arrangements,” there are two alternatives to consider: (1) landing stations and competitive backhaul and (2) capacity upgrades and use of capacity. 8 Under the first alternative, a license applicant would face two additional tests to show that the applicant ensures competition: sufficient collocation and lack of restrictions on who can provide backhaul. 9 Under the second alternative, a license applicant would have to make “more specific demonstrations” as to the sufficiency of the space at the cable landing stations for potential competitors, who can use that space, and who can perform backhaul. 10 Then there is the question of the second category, capacity upgrades and use of capacity. Under this second category there are two further provisions involving a voting scheme for upgrading capacity and 6 See Letter from Paul W. Kenefick, Director, International Regulatory Affairs, Cable & Wireless to Elizabeth Nightingale, International Bureau, FCC (January 13, 2000) (citing 6521% increase in Trans- Atlantic cable capacity and a 3607% increase in Trans- Pacific capacity from 1998 to 2001 corresponding to 96.7% and 90.7% decreases in the per circuit costs on the Trans- Atlantic and Trans- Pacific routes respectively from 1996 to 2001); IP Telephony Workshop, International Telecommunications Union, Geneva, ITU New Initiatives Programme, IPTEL/ 03, p. 11- 12 (May 29, 2000) (showing the recent “massive increase” in undersea cable capacity). 7 See Review of Commission Consideration of Applications under the Cable Landing License Act, Notice of Proposed Rulemaking, IB Docket No. 00- 106 at ¶ 20 (rel. June 21, 2000 ) (NPRM) 8 See NPRM, at ¶ 39. 9 See NPRM, at ¶¶ 40- 41. 10 See NPRM, at ¶¶ 42. 55 Federal Communications Commission FCC 00- 210 3 controls on resale or transfers of capacity. 11 This hardly seems like streamlining. 12 It is not so much that any of these components are ill conceived. I believe the majority has thought extensively about how submarine cables “should” operate. But therein lies the rub, the majority believes the FCC should consider forcing carriers to “do the right thing” in developing their submarine cable business. I am not at all confident that government can determine what the “right thing” is, and even if it could, I would be reluctant to support the level of detailed business engineering that is apparently required to achieve it. The “right thing” in regulatory engineering may be the wrong thing for consumers who may end up with nothing in expanded capacity or lower rates. For those who believe the FCC has authority over these licenses, I encourage proposals for a more simple and easy- to- apply streamlining test. In addition, I have recently learned that many of the delays and costs imposed on undersea cable ventures may stem from the actions of other governmental entities. Thus it would be informative for commenting parties to discuss the nature of any governmental barriers to entry and what steps the Commission may take under Section 253 to preempt such barriers. 13 These are dynamic and competitive times for the undersea cable industry, this streamlining order should focus on what this agency can do to get itself and others out of the way. 11 See NPRM, at ¶¶ 48- 50. 12 There is an additional impediment to the Commission’s streamlining efforts, because the license approved by the FCC must then be approved by the Secretary of State. See id. at ¶ 52. 13 See 47 U. S. C. § 253 (d); see also AT & T Communications of the Southwest, Inc. v. City of Austin, Tex., 42 F. Supp. 2d 708 (W. D. Tex. 1998) (holding the city ordinance requiring municipal consent before entrant could operate telecommunications services in the city was preempted by 47 U. S. C. § 253 and state law); Silver Star Telephone Company, 13 FCC Rcd. 16356 (1998). 56