Attachment DA-12-1264A1.pdf

DA-12-1264A1.pdf

PUBLIC NOTICE

Public Notice

2012-09-07

This document pretains to ITC-T/C-20120716-00183 for Transfer of Control on a International Telecommunications filing.

IBFS_ITCTC2012071600183_965466

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. In the Matter of Applications Filed for the Transfer of WC Docket No. 12-206 Control of Wavecom Solutions Corp. to Hawaiian Telcom, Inc. COMMENTS IN SUPPORT OF CONDITIONAL APPROVAL L’Office des postes et télécommunications de Polynésie française (“OPT”) supports a grant of Commission consent to the acquisition by Hawaiian Telcom, Inc. (“HT”) of Wavecom Solutions Corporation (“Wavecom”) (the “Proposed Transaction”), subject to a condition that would preclude Wavecom from engaging in further discriminatory and anticompetitive behavior of the sort suffered to date by OPT. OPT’s Honotua Cable System lands at Wavecom’s Kawaihae cable station on the Big Island of Hawaii. Since 2010, Wavecom has engaged in a series of discriminatory and anticompetitive actions that have impaired OPT’s operation of its Honotua Cable System by preventing OPT from obtaining competitive backhaul and interconnection arrangements. Wavecom has leveraged its cable station as a bottleneck facility in order to favor Wavecom’s own backhaul services on the Big Island-Oahu route in violation of its obligations under Sections 201, 202, and 251 of the Communications Act of 1934, as amended (the “Act”). The combined HT-Wavecom would have an economic incentive to continue such actions, as consummation of the Proposed Transaction would give HT considerable market power in the inter-island connectivity and backhaul market, with control of

75 percent of available fiber capacity on the Big Island-Oahu route. The Commission has often conditioned transaction approvals on compliance with competitive safeguards, and OPT requests that the Commission impose such a remedy here. I. BACKGROUND ON OPT’S HAWAII LANDING ARRANGEMENTS WITH WAVECOM OPT owns and operates the Honotua Cable System, the international segment of which connects Tahiti to Hawaii. 1 Before Honotua entered into commercial service in 2010, French Polynesia relied entirely on satellites for international connectivity. 2 Since that time, French Polynesia has come to depend critically on Honotua for high-speed Internet connectivity, high- quality voice and data communications, transmission of television programming, telemedicine, and a host of economic activities. 3 Through its operating divisions and subsidiaries, OPT French Polynesia is the incumbent provider of fixed and mobile telecommunications, Internet access, video programming, and postal services in French Polynesia and is wholly owned by the French Polynesia Government. Although government-owned, OPT is financially autonomous from the French Polynesia Government. Its telecommunications activities are subject to regulation by the Digital Regulatory Agency (Agence de Réglementation Numérique (“ARN”)). 4 1 Actions Taken Under the Cable Landing License Act, Public Notice, File No. SCL-LIC- 20081008-00017, 25 FCC Rcd. 17,049 (Int’l Bur. 2010) (granting a cable landing license for the Honotua Cable System) (“Honotua Cable Landing License”); International Authorizations Granted, Public Notice, File No. ITC-214-20081008-00453, 25 FCC Rcd. 17,052 (Int’l Bur. 2010) (granting an international Section 214 authorization for the Honotua Cable System) (“Honotua 214”). 2 Declaration of Patrick Ellacott at ¶ 3 (“Ellacott Decl.”). 3 Id. ¶ 3. 4 Until September 2011, ARN’s functions were handled by a predecessor agency, the Service de postes et télécommunications (“SPT”). 2

In Hawaii, Honotua lands at Spencer Beach and a cable station at Kawaihae owned by Wavecom (“Wavecom Kawaihae Cable Station”), a facility licensed by the Commission on a common-carrier basis as part of the Hawaii-Fiber Network (“HIFN”). 5 Honotua interconnects in Hawaii with other providers for onward connectivity and Internet backbone connectivity. 6 The legal relationship between OPT and Wavecom is governed by a 2008 Landing Party Agreement (“LPA”), later amended in 2009. 7 Pursuant to the LPA, OPT retains operational authority over Honotua system facilities and provides direction to Wavecom in matters relating to Honotua. 8 Wavecom provides certain services that do not affect the operations of the system. OPT maintains certain Honotua terminal equipment in physical collocation space in the Wavecom Kawaihae Cable Station. 9 Wavecom’s obligations as a common carrier under Section 214 of the Act, and the Commission’s specific regulation of HIFN (and Wavecom’s interest therein) as a common-carrier facility, 10 obligate 5 Honotua Cable Landing License, 25 FCC Rcd. at 17,049; GST Pacwest Telecom Hawaii, Inc., Cable Landing License, File No. 95-003 (New File No. SCL-LIC-19950627-00024), 11 FCC Rcd. 3024 (Int’l Bur. 1996) (“HIFN Cable Landing License”). 6 Ellacott Decl. at ¶ 6. 7 Id. ¶ 4; Landing Party Agreement Between OPT and Pacific LightNet, Inc. (Sept. 5, 2008), as amended by Amendment No. 1 to the Landing Party Agreement between Office des Postes et Télécommunications de Polynésie française and Pacific LightNet, Inc., Cl. 3 (Sept. 16, 2009) (together, “Landing Party Agreement” or “LPA”). Pacific LightNet, Inc. began doing business as Wavecom in 2009 and legally changed its name in 2011. Pacific Lightnet Changes Its Name to Wavecom Solutions, Press Release (Jan. 14, 2011), www.wavecomsolutions.com/index.php/news/54-2011-01-14-wavecom-solutions-new- name. 8 See OPT Consolidated Amendments to Applications for a Cable Landing License and International Section 214 Authority, File Nos. SCL-LIC-20081008-00017 and ITC-214- 20081008-00453, at 12 (filed May 18, 2009). 9 Id. 10 See HIFN Cable Landing License, 11 FCC Rcd. at 3024 ¶ 1, 3024-25 ¶ 7. 3

Wavecom generally to offer OPT reasonable and non-discriminatory access to its services, including backhaul and interconnection. In an effort to increase connection diversity and achieve better pricing for onward connectivity, OPT has twice sought bids for connectivity between the Wavecom Kawaihae Cable Station and Oahu, so as to allow OPT to deliver traffic from Honotua throughout Hawaii and beyond. 11 As described below, however, Wavecom has acted unreasonably and discriminatorily to frustrate OPT’s efforts and to ensure that such services will be procured at a premium from Wavecom or at a premium via Wavecom. 12 II. WAVECOM’S CONDUCT TOWARDS OPT HAS VIOLATED TITLE II OF THE COMMUNICATIONS ACT Section 201(b) of the Act provides that “[a]ll charges, practices, classifications, and regulations” by common carriers engaged in interstate or foreign communication “shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful.” 13 Section 202 of the Act provides that “[i]t shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.” 14 Section 251 of the Act provides that telecommunications carriers have a “duty to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers.” 15 11 Ellacott Decl. at ¶ 7. 12 Declaration of Steve Brock at ¶¶ 6-9 (“Brock Decl.”); Ellacott Decl. at ¶ 9-12. 13 47 U.S.C. § 201(b). 14 Id. § 202(a). 15 Id. § 251(a). 4

Wavecom has consistently acted to frustrate OPT’s solicitation of contracts with third parties for onward connectivity from Kawaihae. 16 In particular, Wavecom, which itself submitted bids to provide such connectivity, has taken the position that any party connecting to Honotua must also purchase physical collocation from Wavecom, and that parties must do so even if Wavecom were to provide the cross-connect between OPT and the connecting party. 17 This demand alone could make backhaul and interconnection economically infeasible. But Wavecom also has told connecting parties that its charge for physical collocation is approximately $125,000, with an additional monthly recurring charge of $28,000, and that it would take approximately 42 weeks to deliver service. 18 In what appears to be an effort to keep OPT—or regulators—from learning of its anticompetitive conduct, Wavecom also told third- party bidders that it would sue them if they were to disclose the prices Wavecom quoted. 19 In May 2011, Wavecom refused to disclose to OPT the price list and terms it had proposed to potential third-party bidders, contending that this constituted “proprietary” information, 20 notwithstanding the fact that it holds itself out as, and is regulated as, a common carrier. Wavecom’s actions—charging unreasonably high, discriminatory rates in an effort to preclude OPT from contracting with third parties and to force OPT to purchase connectivity from Wavecom, as well as imposing an unreasonably lengthy service delivery date—violate its core common carrier obligations under Sections 201, 202, and 251 of the Act and the conditions of its cable landing license. Based on Wavecom’s past pattern of behavior, OPT therefore has 16 Brock Decl. at ¶¶ 6-9; Ellacott Decl. at ¶¶ 7-12. 17 Brock Decl. at ¶¶ 6, 8. 18 Id. ¶ 6. 19 Id. ¶ 7. 20 Id. ¶ 7; Ellacott Decl. at ¶ 10. 5


Document Created: 2012-09-07 10:48:06
Document Modified: 2012-09-07 10:48:06
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