Attachment Letter

This document pretains to ITC-ASG-20070206-00062 for Assignment on a International Telecommunications filing.

IBFS_ITCASG2007020600062_551682

Federal Communications Commission FCC 07-226 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Applications Filed for the Transfer of Certain ) Spectrum Licenses and Section 214 ) Authorizations in the States of Maine, New ) WC Docket No. 07-22 Hampshire, and Vermont from Verizon ) Communications Inc. and its Subsidiaries to ) FairPoint Communications, Inc. ) MEMORANDUM OPINION AND ORDER Adopted: December 20, 2007 Released: January 9, 2008 By the Commission: Commissioners Copps and Adelstein dissenting and issuing separate statements. TABLE OF CONTENTS Para. I. INTRODUCTION ........................................................................................................................... 1 II. BACKGROUND ............................................................................................................................. 3 A. Description of the Applicants ............................................................................................. 3 1. The Transferor ....................................................................................................... 3 2. The Transferee ....................................................................................................... 6 B. Description of the Transaction............................................................................................ 7 C. Applications and Review Process ..................................................................................... 10 III. STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK.................................... 11 IV. POTENTIAL PUBLIC INTEREST HARMS ............................................................................... 15 A. Market Concentration ....................................................................................................... 16 B. Access to Wholesale Inputs .............................................................................................. 17 C. FairPoint’s Qualifications to Acquire Control of Verizon’s Licenses .............................. 18 V. POTENTIAL PUBLIC INTEREST BENEFITS ........................................................................... 25 A. Introduction....................................................................................................................... 25 B. Analytical Framework....................................................................................................... 26 C. Analysis............................................................................................................................. 29 VI. OTHER ISSUES ............................................................................................................................ 33 VII. CONCLUSION.............................................................................................................................. 41 VIII. ORDERING CLAUSES ................................................................................................................ 42 Appendix A – List of Commenters Appendix B – List of Licenses and Authorizations Subject to Transfer of Control I. INTRODUCTION 1. Verizon Communications Inc. (Verizon Communications) and its subsidiaries1 (collectively, Verizon) and FairPoint Communications, Inc. (FairPoint) (together with Verizon, the Applicants) filed a 1 The Verizon Communications Inc. subsidiaries are Verizon New England Inc. (Verizon New England), NYNEX Long Distance Company (NYNEX Long Distance), Bell Atlantic Communications, Inc. (BACI), Verizon Select (continued....)

Federal Communications Commission FCC 07-226 series of applications2 pursuant to sections 214 and 310(d) of the Communications Act of 1934, as amended (Communications Act or Act).3 Grant of these applications will result in the transfer of domestic section 214 authority and the assignment of certain spectrum licenses and international section 214 authorizations. 2. In accordance with the terms of sections 214(a) and 310(d), we must determine whether the Applicants have demonstrated that the proposed transactions would serve the public interest, convenience, and necessity.4 Based on the record before us, we find that the transaction meets this standard.5 We (...continued from previous page) Services Inc. (VSSI), Northern New England Spinco Inc. (Spinco), and Northern New England Telephone Operations Inc. (Telco). 2 See Applications Filed for the Transfer of Certain Spectrum Licenses and Section 214 Authorizations in the States of Maine, New Hampshire, and Vermont from Verizon Communications Inc. and its Subsidiaries to FairPoint Communications, Inc., WC Docket No. 07-22, Public Notice, 22 FCC Rcd 5035 (2007) (Public Notice); see also Verizon New England, Inc., NYNEX Long Distance Company, Bell Atlantic Communications, Inc., Verizon Select Services Inc., Verizon Communications Inc., and Northern New England Spinco Inc., Transferors, and FairPoint Communications, Inc., Transferee, for Consent to Transfer Certain Assets and Long-Distance Customer Relationships in the States of Maine, New Hampshire, and Vermont, Consolidated Application for Consent to Transfer Assets, WC Docket No. 07-22 at 7 (filed Jan. 31, 2007) (FairPoint/Verizon Application); ITC-ASG- 20070206-00059; ITC-ASG-20070206-00060; ITC-ASG-20070206-00061; ITC-ASG-20070206-00062; ULS File Nos. 0002921062, 0002921107, 50005CFTC07. The Public Notice set due dates of April 13, 2007 for the filing of Comments and Petitions to Deny; April 23, 2007 for Responses and Oppositions; and April 30, 2007 for Replies. Public Notice, 22 FCC Rcd at 2035. On April 11, 2007, the Wireline Competition Bureau (Bureau) extended the pleading cycle deadlines by two weeks in response to a petition by the Communications Workers of America and International Brotherhood of Electrical Workers. See Applications Filed for the Transfer of Certain Spectrum Licenses and Section 214 Authorizations in the States of Maine, New Hampshire, and Vermont from Verizon Communications Inc. and its Subsidiaries to FairPoint Communications, Inc., WC Docket No. 07-22, Order, 22 FCC Rcd 6897 (WCB 2007). Appendix A lists the parties that filed formal pleadings in this proceeding. In addition to those formal pleadings, we have received ex parte submissions. All pleadings and comments are available on the Commission’s Electronic Comment Filing System (ECFS) website at www.fcc.gov/cgb/ecfs/. Public Notice, 22 FCC Rcd at 5039. 3 See 47 U.S.C. §§ 214, 310(d). Pursuant to section 214 of the Communications Act, the Applicants filed applications seeking Commission approval to transfer domestic and assign international section 214 authorizations held by Verizon and its subsidiaries to FairPoint. 47 U.S.C. § 214. Pursuant to section 310(d) of the Communications Act, the Applicants filed applications seeking Commission approval of (1) the pro forma assignment of Part 101 Common Carrier Fixed Point-to-Point Microwave and Industrial/Business Pool licenses from Verizon New England to Telco, as controlled by Spinco and ultimately the Verizon shareholders, as part of a multi-step pro forma reorganization, see discussion infra Part II.B, and (2) an application seeking Commission approval of the transfer of control of the licenses held by Telco from Spinco to FairPoint. 47 U.S.C. § 310(d); see also Appendix B (listing the applications for assignment and transfer of control of wireless licenses filed by the Applicants). In the pro forma assignment applications, Verizon New England is partially assigning six of its wireless licenses and fully assigning 24 others. The authority provided by these licenses for all other areas will remain with Verizon New England. Due to limitations in the ability of the Universal Licensing System (ULS) to accommodate five of the six partial assignment applications, the Applicants request that five licenses be partitioned such that the portions of the licenses providing authority to operate in Maine, New Hampshire, and Vermont are assigned to Telco. Applicants request that Verizon New England retain the currently issued call signs for these five licenses and requests that new call signs be issued to the portions of the licenses assigned to Telco. See ULS File No. 0002921065 at Attachment 3 (amended Mar. 2, 2007). 4 See, e.g., AT&T Inc. and BellSouth Corporation Application for Transfer of Control, WC Docket No. 06-74, Memorandum Opinion and Order, 22 FCC Rcd 5664, 5664, para. 2 (2007) (AT&T/BellSouth Order); SBC Communications, Inc. and AT&T Corp. Applications for Approval of Transfer of Control, WC Docket No. 05-65, Memorandum Opinion and Order, 20 FCC Rcd 18290, 18292, para. 2 (2005) (SBC/AT&T Order); Verizon Communications, Inc. and MCI, Inc. Applications for Approval of Transfer of Control, WC Docket No. 05-75, (continued....) 2

Federal Communications Commission FCC 07-226 conclude that it is unlikely the merger will result in any anticompetitive effects or other public interest harms. Specifically, the Applicants do not compete in any of the relevant local exchanges. Moreover, after consummation of the transaction, the Applicants will compete for large business and long distance customers. The transaction also is likely to produce public interest benefits, including the accelerated deployment of broadband throughout the region. II. BACKGROUND A. Description of the Applicants 1. The Transferor 3. Verizon Communications, a publicly traded Delaware corporation, owns operating subsidiaries that provide a range of communications services in the United States and throughout the world.6 The company’s operating subsidiaries offer local telephone service, as well as broadband, nationwide long distance, high-capacity connections, video, international, wireless, and other services.7 4. Verizon Communications, through Verizon New England, provides local exchange service and exchange access service to approximately 1.5 million access lines in 352 exchanges in Maine, New Hampshire, and Vermont.8 Verizon Communications also provides long distance services in Maine, New Hampshire, and Vermont, as well as other areas of the United States, through its subsidiaries, NYNEX Long Distance, BACI, and VSSI.9 (...continued from previous page) Memorandum Opinion and Order, 20 FCC Rcd 18433, 18435, para. 2 (2005) (Verizon/MCI Order); Applications of Nextel Communications, Inc. and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations, WT Docket No. 05-63, File Nos. 0002031766, et al., Memorandum Opinion and Order, 20 FCC Rcd 13967, 13976, para. 20 (2005) (Sprint/Nextel Order); Applications of NYNEX Corp., Transferor, and Bell Atlantic Corp., Transferee, For Consent to Transfer Control of NYNEX Corp. and Its Subsidiaries, File No. NSD-L-96-10, Memorandum Opinion and Order, 12 FCC Rcd 19985, 19987, para. 2 (1997) (Bell Atlantic/NYNEX Order); Merger of MCI Communications Corp. and British Telecommunications PLC, GN Docket No. 96-245, Memorandum Opinion and Order, 12 FCC Rcd 15351, 15353, para. 2 (1997) (BT/MCI Order). 5 We decline to address FairPoint’s “all-or-nothing” waiver petition in this Order because it is the subject matter of a pending Commission proceeding. See Petition of FairPoint Communications, Inc. for a Waiver of the All-or- Nothing Rule in Connection with its Acquisition of Certain Verizon Properties in Maine, New Hampshire and Vermont, WC Docket No. 07-66, Public Notice, 22 FCC Rcd 6723 (2007). 6 See FairPoint/Verizon Application at 6-8; see also ITC-ASG-20070206-00059; ITC-ASG-20070206-00060; ITC- ASG-20070206-00061; ITC-ASG-20070206-00062; ULS File Nos. 0002921062, 0002921107, 50005CFTC07. 7 See FairPoint/Verizon Application at 7. Further, Verizon Communications is a majority owner of Cellco Partnership d/b/a Verizon Wireless (Verizon Wireless), which services approximately 56 million wireless voice and data subscribers in the United States. See id. at 8. The transaction does not involve any of the wireless assets, section 214 authorizations, or Title III licenses that are held by Verizon Wireless. See id. at 2 n.1. 8 See id. at 11. Verizon New England is a direct, wholly owned subsidiary of NYNEX Corporation, a Delaware corporation, which in turn is a direct, wholly owned subsidiary of Verizon Communications, a Delaware corporation. See id. at 6. 9 See id. at 7. NYNEX Long Distance, a Delaware corporation, is a direct, wholly owned subsidiary of Bell Atlantic Worldwide Services Group, Inc. (Bell Atlantic Worldwide), a Delaware corporation, which in turn is a direct, wholly owned subsidiary of NYNEX Corporation. See id. at 6. BACI, a Delaware corporation, is a direct, wholly owned subsidiary of Verizon Communications. See id. at 7. VSSI, a Delaware corporation, is a wholly owned subsidiary of GTE Corporation, a New York corporation, which in turn is a wholly owned subsidiary of Verizon (continued....) 3


Document Created: 2007-02-23 15:55:15
Document Modified: 2007-02-23 15:55:15
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