Attachment Broadsmart Attachmen

This document pretains to ITC-T/C-20180313-00053 for Transfer of Control on a International Telecommunications filing.

IBFS_ITCTC2018031300053_1354697

                                    Before the
                      FEDERAL COMMUNICATIONS COMMISSION
                               Washington, D.C. 20554


In the Matter of                                           )
                                                           )
Broadsmart Florida, Inc.,                                  ) WC Docket No. ___________
                                                           )
and                                                        )
                                                           ) ITC- _____________________
Nexxis Inc.                                                )
                                                           )
Application for Consent to Acquire Control                 )
of an Authorized Provider of Domestic Interstate           )
and International Telecommunications Services              )
Pursuant to Section 214 of the Communications              )
Act of 1934, as Amended                                    )


               JOINT DOMESTIC AND INTERNATIONAL APPLICATION

        Broadsmart Florida, Inc. (“Broadsmart Florida” or the “Company”) and Nexxis Inc.

(“Nexxis” and, together with Broadsmart Florida, the “Applicants”) hereby respectfully request

authority pursuant to section 214 of the Communications Act of 1934, as amended (the Act),1

and sections 63.04 and 63.24(c),(e) of the Commission’s rules,2 to transfer control of Broadsmart

Florida from its current shareholders to Nexxis.

        Broadsmart Florida is a competitive provider of telecommunications services, serving

customers in the State of Florida. Nexxis is a recently-formed provider of Voice-over-Internet-

Protocol (“VoIP”) services.

        Pursuant to section 63.04(b) of the Commission’s rules, 3 the Applicants are filing a

combined application for the proposed transfer of control of Broadsmart Florida. The Applicants


1   47 U.S.C. § 214.
2   47 CFR §§ 63.04, 63.24(c),(e).
3   47 C.F.R. § 63.04(b).


provide below the information required by section 63.24(e)(2) of the Commission’s rules. 4

Exhibit A provides the additional information requested in section 63.04(a)(6) through (a)(12) of

the Commission’s rules. 5

          The Applicants seek streamlined treatment for both the international and domestic

portions of this Application. The Applicants request streamlined treatment for the international

portion of this Application pursuant to section 63.12(a) of the Commission’s rules, 6 because the

exceptions identified in section 63.12(c)7 do not apply. Applicants are not affiliated with a

foreign carrier and will not become affiliated with any foreign carrier as a result of the proposed

transaction. Applicants also are not affiliated with any dominant U.S. carrier whose international

switched or private line services Broadsmart Florida or Nexxis seeks authority to resell, nor will

Applicants be so affiliated after the Transaction is closed.8

          The Applicants similarly seek streamlined treatment for the domestic portion of this

Application pursuant to section 63.03(b)(2).9 Post-close, the Applicants (and their Affiliates)

will have a market share in the interstate, interexchange market of less than 10 percent.

Applicants (and their Affiliates) will provide competitive telephone exchange services or

exchange access services (if at all) exclusively in geographic areas served by a dominant local

exchange carrier that is not a party to the transaction. Finally, no Applicant is dominant with

respect to any service.10



4    47 C.F.R. § 63.24(e)(2).
5    47 C.F.R. § 63.04(a)(6)-(12).
6    47 C.F.R. § 63.12(a).
7    47 C.F.R. § 63.12(c).
8
     The third scenario provided in section 63.12(c) only applies post-filing.
9    47 C.F.R. § 63.03(b)(2).
10
     See 47 C.F.R. § 63.03(b)(2)(i).
                                                    2


I.     DESCRIPTION OF THE APPLICANTS

       A. Broadsmart Florida and its Shareholders

       Broadsmart Florida (FRN: 0025528258) is a corporation organized under the laws of

Florida. Its principal place of business is 305 S. Andrews Avenue, 9th Floor, Fort Lauderdale, FL

33301. Broadsmart Florida holds blanket domestic and international section 214 authority from

the Commission. 11 The Company holds intrastate authority, insofar as required, to provide local

exchange and interexchange telecommunications services in Florida. Broadsmart Florida

provides competitive telecommunications services -- primarily “plain old telephone service” – to

Florida-based small business customers.

       The ownership interests in Broadsmart Florida are held in equal shares by two U.S.

citizens, Todd A. Correll and Thomas J. Tharrington. Neither of these individuals offers

domestic or international telecommunications services, except through Broadsmart Florida. The

Company has no subsidiaries. Broadsmart Florida is not a foreign carrier and is not affiliated

with foreign carriers in any market.

       A diagram showing the pre-close corporate structure of Broadsmart Florida is provided in

Exhibit B.

       B. Nexxis and its Shareholders

       Nexxis (FRN: 0027172212) is a Nevada corporation with principal offices located at 68

South Service Road, Suite 100, Melville, NY 11747. Nexxis was formed in late 2017 to develop

hosted Voice-over-Internet-Protocol (VoIP) and carrier services, including next-generation voice

and data services to help companies speed up their communications, increase revenue and reduce


11
   See File No. ITC-ASG-20160509-00154 (pro forma assignment of international section 214
authorization (File No. ITC-214-20010508-00295) from North America Telecommunications
Corporation to its commonly-owned affiliate, Broadsmart Florida, effective May 5, 2016).
                                                3


costs. Nexxis does not hold Section 214 authority or any state telecommunications services

authorizations.

       The majority interests in Nexxis (80%) are held by Data Storage Corporation (“DSC”), a

Nevada corporation with principal offices at 68 South Service Road, Suite 100, Melville, NY

11747. DSC is a public company (OTCQB: DTST) providing diverse business continuity and

disaster recovery protection solutions to customer sectors including healthcare, banking and

finance, distribution services, manufacturing, construction, education and government. DSC is

not a telecommunications provider and does not hold any telecommunications regulatory

authorizations. The majority of the interests in DSC are held by three U.S. citizens: Charles

Piluso, Harold J. Schwartz and Thomas C. Kempster (together, the “Majority Shareholders”).

No other entity or individual holds a 10 percent or greater ownership interest in DSC. The

remaining twenty percent interest in Nexxis is held by John Camello, a U.S. citizen.

       Post-close, the ownership interests in Broadsmart Florida will be held directly by Nexxis

and indirectly by DSC and Mr. Camello. DSC, the Majority Shareholders and Mr. Camello do not

hold any other interests in telecommunications companies. DSC is not a foreign carrier and

DSC, the Majority Shareholders and Mr. Camello are not affiliated with any foreign carriers.

       Relevant details of the pre-close corporate structure of Nexxis are provided in Exhibit B.

II.    DESCRIPTION OF THE TRANSACTION

       On Oct 19, 2017, the shareholders of Broadsmart Florida and Nexxis reached an

agreement for Nexxis to acquire controlling ownership of the Company. At closing, Nexxis will

acquire all of the interests in Broadsmart Florida. As a result, the Company will become a direct

wholly-owned subsidiary of Nexxis. DSC, through its majority interest in and control of Nexxis,

will hold indirectly the majority interests in and control of Broadsmart Florida.


                                                 4


         The transaction will have no direct effect upon Broadsmart Florida’s customers and,

indeed, will be invisible to them. All existing customers of Broadsmart Florida will continue to

be served by the Company pursuant to its international and domestic section 214 authorizations.

These customers will continue to receive the same services they do today, pursuant to the same

rates, terms and conditions.

         A diagram of the post-close corporate structure of Broadsmart Florida and Nexxis is

provided in Exhibit B.


III.     PUBLIC INTEREST STATEMENT

         Pursuant to section 214 of the Act, control of a competitive carrier may be transferred

provided the Commission finds that the public interest, convenience and necessity will be served

thereby. 12 As discussed below, the proposed change to Broadsmart Florida’s ownership will

serve the public interest because it will strengthen the Company to the ultimate benefit of

consumers without harming customers or competition in any market.

         First, the proposed Transaction ensures continuity of operations for Broadsmart Florida.

The Company’s current shareholders have determined to refocus their investment commitments

in another direction. Thus, the acquisition of Broadsmart Florida by Nexxis will serve the public

interest by bringing to the Company new committed financial resources as well as the

commercial acumen and managerial strengths of the Nexxis shareholders. These resources will

ensure that Broadsmart Florida continues to offer competitive, high-quality wireline service

plans to consumers throughout its operating territory. At the same time, the proposed transaction




12   See 47 U.S.C. § 214.
                                                  5


will have no adverse impact on Broadsmart Florida’s current customers, which, as noted, will

continue to receive their existing services at the same rates, terms and conditions. 13

       Nexxis’ acquisition of Broadsmart Florida will have no adverse effects upon the domestic

telecommunications market. The Company has a very limited share of the domestic local

exchange and interexchange services market. Moreover, as a reseller, Broadsmart Florida cannot

leverage network resources to the detriment of competitors. Finally, the transaction will not

eliminate any market participants nor will it, in any respect, reduce the service choices available

to consumers.

       Similarly, the transaction poses no risk whatsoever of anticompetitive impact on the U.S.

international telecommunications marketplace. Broadsmart Florida has, at most, a miniscule

share of the international telecommunications market and provides international services only on

a resale basis. Further, neither Broadsmart Florida nor Nexxis is a foreign carrier and neither is

affiliated with a foreign carrier in any market. Consequently, the Transaction has no potential to

adversely affect competition in the international telecommunications market.


IV.    INFORMATION REQUIRED BY SECTION 63.24(e) OF THE COMMISSION’S
       RULES
       The Applicants submit the following information pursuant to section 63.24(e) of the

Commission’s rules, including the information requested in section 63.18:14

(a)    Name, address and telephone number of the Applicants:
                Broadsmart Florida, Inc. [FRN: 0025528258]
                305 S. Andrews Avenue, 9th Floor
                Fort Lauderdale, FL 33301
                (954) 449-8000


13
   Any future changes to the Company’s rates, terms and conditions of service will be made
consistent with applicable Commission requirements.
14 47 C.F.R. § 63.18.


                                                  6


                 Nexxis Inc. [FRN: 0027172212]
                 68 South Service Road, Suite 100
                 Melville, NY 11747
                 (631) 247-0770

(b)       Broadsmart Florida is a Florida corporation. Nexxis is a Nevada corporation.

(c)       Correspondence concerning this Application should be sent to:
                 Winafred Brantl
                 KELLEY DRYE & WARREN LLP
                 3050 K Street NW, Suite 400
                 Washington, D.C. 20007
                 Tel: (202) 945-6649
                 Fax: (202) 342-8451
                 Email: wbrantl@kelleydrye.com

          with a copy to:
                   Todd A. Correll                           John Camello
                   Chief Executive Officer                   President
                   Broadsmart Florida, Inc.                  NEXXIS Inc.
                   305 S. Andrews Avenue, 9th Floor          68 South Service Rd, Suite 100
                   Fort Lauderdale, FL 33301                 Melville, NY 11747
                   Email: toddcorrell1@gmail.com             Email: jcamello@myNexxis.com

(d)       Broadsmart Florida holds domestic section 214 authority by operation of law, pursuant to
          section 63.01 of the Commission’s rules. 15 The Company also holds international section
          214 authority, granted in FCC File No. ITC-ASG-20160509-00154, to operate as a global
          or limited global facilities-based and resale carrier. Nexxis does not hold any Section
          214 telecommunications authority.

(h)       Post-close, Broadsmart Florida will be a direct wholly-owned subsidiary of:
          Name: Nexxis Inc.
          Address: 68 South Service Road, Suite 100, Melville, NY 11747
          Citizenship: U.S.
          Principal business: Voice & Data Services Provider
          Percent Ownership: 100 percent (direct)




15    47 C.F.R. § 63.01.
                                                    7


Post-close, the indirect interests in Broadsmart Florida will be held by:
1)     Name: Data Storage Corporation
       Address: 68 South Service Road, Suite 100, Melville, NY 11747
       Citizenship: U.S.
       Principal business: Cyber Security, Business Continuity, Cloud Services
       Percent Ownership Interest in Broadsmart Florida: 80 percent (indirect, through
       interests in Nexxis) with resulting attributed 100 percent indirect interest.

       DSC is a publicly held company. The following individuals or entities hold 10% or
       more ownership interest in DSC:

       Name: Charles Piluso
       Address: 68 South Service Road, Suite 100, Melville, NY 11747
       Citizenship: U.S.
       Principal business: Chairman/CEO
       Percent Ownership Interest in DSC: 25.52 percent (indirect, through interests in
       DSC) with resulting attributed 31.9 percent indirect interest.

       Name: Harold J. Schwartz
       Address: 68 South Service Road, Suite 100, Melville, NY 11747
       Citizenship: U.S.
       Principal business: President
       Percent Ownership Interest in DSC: 20.22 percent (indirect, through interests in
       DSC) with resulting attributed 25.27 percent indirect interest.

       Name: Thomas C. Kempster
       Address: 68 South Service Road, Suite 100, Melville, NY 11747
       Citizenship: U.S.
       Principal business: President of Service Operations
       Percent Ownership Interest in DSC: 20.20 percent (indirect, through interests in
       DSC) with resulting attributed 25.25 percent indirect interest.

2)     Name: John Camello
       Address: 68 South Service Road, Suite 100, Melville, NY 11747
       Citizenship: U.S.
       Principal business: President
       Percent Ownership: 20% (indirect, through interest in Nexxis)

Post-close, no other persons or entities will hold a 10% or greater equity and/or voting
interest in Broadsmart Florida pursuant to the Commission’s attribution rules. There will
be no interlocking directorates with any foreign carrier following consummation of the
proposed transaction.




                                           8


(i)   As confirmed by the signature of Nexxis’ representative to this Application, Nexxis
      certifies that (a) Nexxis is not a foreign carrier and is not affiliated with a foreign carrier,
      and (b) Nexxis will not become a foreign carrier or become affiliated with a foreign
      carrier post-close as a result of the transaction.

(j)   As confirmed by the signature of Nexxis’ representative to this Application, Nexxis
      certifies that it does not seek to provide international telecommunications services to any
      destination country where (i) Nexxis or Broadsmart Florida is a foreign carrier; (ii)
      Nexxis or Broadsmart Florida controls a foreign carrier; (iii) any entity that owns more
      than 25 percent of Nexxis or Broadsmart Florida, or that controls Nexxis or Broadsmart
      Florida, controls a foreign carrier; or (iv) two or more foreign carriers (or parties that
      control foreign carriers) own, in the aggregate, more than 25 percent of Nexxis or
      Broadsmart Florida and are parties to, or the beneficiaries of, a contractual relation
      affecting the provision or marketing of international basic telecommunications services in
      the United States.

(k)   Not applicable.

(l)   [Reserved]

(m)   Not applicable.

(n)   As confirmed by the signatures of Applicants’ representatives to this Application,
      Applicants certify that they have not agreed to accept special concessions directly or
      indirectly from any foreign carrier with respect to any U.S. international route where the
      foreign carrier possesses market power on the foreign end of the route, and they will not
      enter into such agreements in the future.

(o)   As confirmed by the signatures of Applicants’ representatives to this Application,
      Applicants certify that, pursuant to sections 1.2001 through 1.2003 of the Commission’s
      rules, they are not subject to a denial of Federal benefits pursuant to section 5301 of the
      Anti-Drug Abuse Act of 1988.

(p)   Applicants request streamlined processing of the international portion of this Application
      pursuant to section 63.12 of the Commission’s rules, 47 C.F.R. § 63.12. This Application
      qualifies for streamlined treatment under section 63.12(a) of the Commission’s rules
      because (i) Applicants are not affiliated with a foreign carrier and will not become
      affiliated with any foreign carrier as a result of the proposed transaction; (ii) Applicants
      are not affiliated with any dominant U.S. carrier whose international switched or private
      line services Applicants seek authority to resell, nor will Applicants be so affiliated post-
      close; and (iii) none of the other scenarios outlined in section 63.12(c) of the
      Commission’s rules, 47 C.F.R. § 63.12, apply.




                                                 9


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                                        10


                          LIST OF EXHIBITS



EXHIBIT A – Information Required by 47 C.F.R. § 63.04

EXHIBIT B – Pre- and Post-Close Organizational Charts


                                              EXHIBIT A

                     INFORMATION REQUIRED BY 47 C.F.R. § 63.04

       In accordance with the requirements of section 63.04(b) of the Commission’s rules, 47

C.F.R. § 63.04(b), the Applicants provide the following information in support of their request.

63.04(b)(6):   Description of the Transactions

       The proposed transaction is described in Section II of the Application.

63.04(b)(7):   Description of Geographic Service Area and Services in Each Area

       A description of the geographic service areas and services provided in each area is

included in Section I of the Application.

63.04(b)(8):   Presumption of Non-Dominance and Qualification for Streamlining

       This Application is eligible for streamlined processing pursuant to section 63.03(b)(2) of

the Commission’s rules, 47 C.F.R. § 63.03(b)(2) for the reasons explained on page 2 of the

Application.

63.04(b)(9): Other Pending Commission Applications Concerning the Proposed
       Transaction

       None.

63.04(b)(10): Special Considerations

       None.

63.04(b)(11): Waiver Requests (If Any)

       None.

63.04(b)(12): Public Interest Statement

       Consummation of the proposed transaction will serve the public interest for the reasons

detailed in Section III of the Application.


              EXHIBIT B

Pre- and Post-Close Organizational Charts


Todd A. Correll            Thomas J. Tharrington


                  50%        50%


         Broadsmart Florida, Inc.




Broadsmart Florida Pre-Close Corporate Structure


                             Primary Shareholders
                             Charles Piluso (31.9%)       Shareholders with
                           Harold J. Schwartz (25.27%)      <10% interest
                          Thomas C. Kempster (25.25%)




                                      Data Storage Corporation
John Camello
               20%                     80%




                      Nexxis Inc.




                Nexxis Pre-Close Corporate Structure


                              Primary Shareholders
                              Charles Piluso (31.9%)           Shareholders with
                            Harold J. Schwartz (25.27%)          <10% interest
                           Thomas C. Kempster (25.25%)




John Camello                       Data Storage Corporation
               20%                    80%




                       Nexxis Inc.




                 Broadsmart Florida, Inc.




        Broadsmart Florida and Nexxis Post-Close Corporate Structure



Document Created: 2018-03-15 15:26:53
Document Modified: 2018-03-15 15:26:53

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