Attachment SCL Application.pdf

This document pretains to SCL-T/C-20151125-00032 for Transfer of Control on a Submarine Cable Landing filing.

IBFS_SCLTC2015112500032_1116326

Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Allstream Fiber US, Inc. ) Licensees, ) File No. SCL-T/C-2015______ ) MTS Inc. ) Transferor, ) ) and ) ) Zayo Group, LLC ) Transferee ) ) Application for Transfer of Control of ) Submarine Cable Landing License ) JOINT APPLICATION FOR TRANSFER OF CONTROL OF CABLE LANDING LICENSE MTS Inc. (“MTS” or “Transferor”) and Zayo Group, LLC (“Zayo” or “Transferee”) (to- gether, “Applicants”), pursuant to the Act Relating to the Landing and Operation of Submarine Cables in the United States, 47 U.S.C. §§34-39 (1994), Executive Order No. 10530, Exec. Ord. No. 10530 reprinted as amended in 3 U.S.C. §301, and Section 1.767 of the Rules of the Federal Communications Commission (“Commission”), 47 C.F.R. §1.767, request approval for the transfer of control of Allstream Fiber US, Inc. (“Allstream-US” or “Licensee”), the holder of a submarine cable landing license, from MTS to Zayo. I. THE APPLICANTS A. Allstream Fiber US, Inc. (Licensee) and MTS Inc. (Transferor) Allstream-US provides telecommunications to customers on a private carriage basis, be- tween the United State and Canada. Allstream-US is a wholly owned direct subsidiary of Trans- feror. Transferor is a wholly owned direct subsidiary of MTS Allstream Holdings Inc. (“MTS

Holdings”), a corporation organized under the laws of Canada. MTS Holdings is a wholly owned direct subsidiary of Manitoba Telecom Services Inc., a corporation organized under the laws of Manitoba, Canada. Licensee holds a submarine cable landing license as described below.1 Licensee does not provide intrastate or interstate telecommunications services in the United States. B. Zayo Group, LLC (Transferee) Zayo is a provider of bandwidth infrastructure and network neutral colocation and inter- connection services over regional and metropolitan fiber networks. These services enable cus- tomers to manage, operate, and scale their telecommunications and data networks. Such customers consist primarily of wireless service providers, national and regional telecommunica- tions carriers and other communications service providers, media and content companies, schools, hospitals, governments, banks and other bandwidth-intensive enterprises. Zayo does not currently hold any submarine cable landing licenses from the Commission. Zayo holds international Section 214 authority to provide global or limited global facilities-based and resale services granted in IB File No. ITC-214-20091106-00475.2 Zayo also holds blanket domestic Section 214 authority to provide interstate telecommunications services. II. DESCRIPTION OF THE PROPOSED TRANSACTION Pursuant to an agreement entered into on November 21, 2015, Zayo will acquire 100 per- cent of equity of Licensee (the “Transaction”). Following Commission approval of this Applica- tion ownership and control of Licensee will be transferred to Zayo. 1 Licensee also holds international Section 214 authority, but only provides telecommuni- cations on a private carriage basis. Therefore, Licensee is, by separate letter, contemporaneously surrendering its international Section 214 authority. See IB File No. ITC-214-19981207-00852. 2 Zayo’s indirect subsidiary, Zayo Group EU Limited (f/k/a AboveNet Communications Europe Limited), provides international telecommunications services, pursuant to Section 63.21(h), under the international Section 214 authorization of Zayo. 2

The Transaction is one part of a larger transaction whereby Zayo will acquire Allstream, Inc. (“Allstream”), which is also a subsidiary of MTS Holdings. Allstream is a Canadian provid- er of IP communications that works exclusively with business customers. Allstream does not provide common carrier telecommunications services in the United States or between Canada and the United States. The operations of Licensee form a very small part of the overall Allstream business and the only portion of the Allstream business involving an authorization issued by the Commission. III. PUBLIC INTEREST CONSIDERATIONS Applicants respectfully submit that the Transaction will serve the public interest, conven- ience and necessity. The Transaction will be seamless to consumers and will not adversely affect Licensee’s carrier customer(s) in the United States or Canada. Applicants anticipate that, imme- diately following completion of the Transaction, Licensee will continue to provide high-quality private carrier services while gaining access to the additional resources and operational expertise of Zayo. The network of Licensee (and Allstream) complements Zayo’s network and the acquisi- tion will increase Zayo’s existing fiber footprint in the United States and Canada. As a result, the combined company will be able to better compete against larger carriers in both the United States and Canada. The Commission’s public interest analysis of proposed transactions requires the Commis- sion to balance the potential harms posed by a transaction with the potential benefits. Under the Commission’s “sliding scale approach” to evaluating benefit claims, “where potential harms appear both substantial and likely … the demonstration of claimed benefits must reveal a higher 3

degree of magnitude and likelihood....”3 However, where potential harms appear unlikely or less likely and less substantial, the Commission will accept a lesser showing.4 In contrast to the expected benefits to the Licensee and its current and prospective customers in the United States and Canada, the Transaction poses no competitive harm. Further, Zayo and its subsidiaries do not hold a submarine cable landing license. The Transaction therefore serves the public interest. IV. INFORMATION REQUIRED BY SECTION 1.767 OF COMMISSION’S RULES Applicants provide the following information in support of this Application as required by 47 C.F.R. §1.767: (1) Name, address and telephone number of Applicants: Licensee Allstream Fiber US, Inc. FRN: 0007477755 21st Floor, 333 Main Street Winnipeg, Manitoba, Canada R3C 3V6 Tel: 204-941-4754 Transferor: MTS Inc. FRN: 0008310682 21st Floor, 333 Main Street Winnipeg, Manitoba, Canada R3C 3V6 Tel: 204-941-4754 Transferee: Zayo Group, LLC FRN: 0016555849 1805 29th Street, Suite 2050 Boulder, CO 80301 Tel: 303-381-4683 (2) Place of Formation: Licensee: Allstream-US is organized under the laws of the State of Delaware. Transferor: MTS is organized under the laws of Canada. Transferee: Zayo is organized under the laws of the State of Delaware. 3 See e.g., Applications of Softbank Corp., Starburst II, Inc., Sprint Nextel Corporation, and Clearwire Corporation for Consent to Transfer Control of Licenses and Authorizations; Petitions for Reconsideration of Applications of Clearwire Corporation for Pro Forma Transfer of Control, IB Docket No. 12-343, Memorandum Opinion and Order, Declaratory Ruling, and Order on Reconsideration, 28 FCC Rcd 9642 at 9677-78, para. 91 (2013). 4 See e.g., id. at 9678-79, para. 93. 4

(3) Correspondence concerning this Application should be sent to : For Transferee: For Transferor and Licensee: Russell M. Blau Lawrence J. Movshin Brett P. Ferenchak Jennifer L. Kostyu Morgan, Lewis & Bockius LLP Wilkinson Barker Knauer LLP 2020 K Street, N.W., Suite 1100 1800 M Street, N.W., Suite 800N Washington, DC 20006-1806 Washington, DC 20036 202-373-6000 (tel) 202-783-4141 (tel) 202-373-6001 (fax) 202-783-5851 (fax) russell.blau@morganlewis.com lmovshin@wbklaw.com brett.ferenchak@morganlewis.com jkostyu@wbklaw.com with a copy to: with a copy to: Christopher P. Yost, General Counsel Paul Beauregard Zayo Group, LLC Chief Corporate and Strategy Officer & 1805 29th Street Corporate Secretary Boulder, CO 80301 MTS Inc. 303-381-4677 (tel) 21st Floor, 333 Main Street christopher.yost@zayo.com Winnipeg, Manitoba, Canada R3C 3V6 204.941.4754 (tel) paul.beauregard@mtsallstream.com (4) Description of the Cable System: Licensee is a co-licensee in the Submarine Cable Landing License that is authorized to land and operate in the United States a private submarine fiber optic cable extending between the United States and Canada (the AmeriCan-1 submarine cable) pursuant to Section 1.767 of the Commission’s Rules, 47 C.F.R. § 1.767. See IB File No. SCL-LIC-19980123-00002 & SCL- MOD-19990901-00016. (5) Landing Points: The landing points are near Seattle, Washington and Victoria, Canada. Additional details of the Landing points are available in File No. SCL-LIC-19980123-00002. 5

(6) A Statement as to Whether the Cable Will be Operated on a Common Carrier or Non-Common Carrier Basis The AmeriCan-1 Cable is operated and, to Applicants’ knowledge, will continue to be operated on a non-common carrier basis. (7) Ownership Interest in the AmeriCan-1 Cable Allstream-US currently holds a one-quarter interest in the capacity and the related sup- port facilities and structures of the AmeriCan-1 submarine cable. Upon completion of the Trans- action, Allstream-US will be a wholly owned subsidiary of Zayo. (8) Certification and Ownership Information Required by Section 1.767(a)(8) of the Commission’s Rules, 47 C.F.R. §1.767(a)(8) Incorporating by Reference the Re- quirements of Section 63.18(h) and (o) of the Commission’s Rules, 47 C.F.R. §§63.18(h) and (o): Section 63.18(h) – Ten Percent or Great Shareholders: Upon completion of the Transaction, the following entities will hold, directly or indirect- ly, a 10% or greater interest5 in Licensee: The following entity will holds a ten percent (10%) or greater direct interest in Allstream Fiber U.S., Inc.: Name: Zayo Group, LLC (“Transferee” or “Zayo”) Address: 1805 29th Street Boulder, CO 80301 Citizenship: U.S. (Delaware) Principal Business: Telecommunications % Interest: 100% (directly in Zayo) 5 Unless otherwise indicated, the ownership interests provided herein represent both equity and voting interests. 6

The following entity currently holds a ten percent (10%) or greater direct interest in Zayo Group, LLC: Name: Zayo Group Holdings, Inc. (“Holdings”) Address: 1805 29th Street Boulder, CO 80301 Citizenship: U.S. (Delaware) Principal Business: Holding Company % Interest: 100% (directly in Zayo) The following entities and individuals currently hold a ten percent (10%) or greater, di- rect or indirect, interest in Zayo Group Holdings, Inc.6 Name: GTCR Partners X/A&C LP Address: 300 N. LaSalle Street, Suite 5600 Chicago, IL 60654 Citizenship: U.S. Principal Business: Investments % Interest: 18.70% (indirectly in Holdings as the general partner of (i) GTCR Fund X/A LP (9.31% direct interest in Holdings), (ii) GTCR Fund X/C LP (2.67% direct interest in Holdings) and (iii) GTCR Investors (CII) LP (6.73% direct interest in Holdings)) Name: GTCR Investment X LLC Address: 300 N. LaSalle Street, Suite 5600 Chicago, IL 60654 Citizenship: U.S. Principal Business: Investments % Interest: 18.79% (indirectly in Holdings as the general part- ner of (i) GTCR Partners X/A&C LP and (ii) GTCR Co-Invest X/C LP (0.08% direct interest in Hold- ings)) 6 Less than 5.0% of Holdings outstanding shares are held in escrow in Communications Investment Infrastructure LLC’s (“CII”) name; these shares are to be distributed to certain CII common unit holders and potentially Investors following resolution of contingent distributions among the preferred and common unit members of CII and upon the vesting of unvested CII common units. At that time, CII will be completely removed from the ownership chain of Holdings. 7

The following individuals are members of the board of managers of GTCR Investment X LLC, are all U.S. citizens, and can be reached through GTCR Investment X LLC: Mark M. Anderson Craig A. Bondy Philip A. Canfield David A. Donnini Constantine S. Mihas Collin E. Roche Sean L. Cunningham Aaron D. Cohen To Zayo’s knowledge, no other person or entity, directly or indirectly, owns or controls a 10% or greater interest in Holdings through GTCR Partners X/A&C LP or GTCR Investment X LLC. Holdings is a publicly traded company (NYSE: ZAYO) whose stock ownership varies on a daily basis. Based on information filed with the SEC with respect to Holdings and other information provided to Holdings, to the knowledge of Zayo’s management, no other person or entity currently holds a 10% or greater direct or indirect interest in Zayo. Additional information regarding Holdings’ ownership is available in Holdings’ most recent proxy statement available at: http://www.sec.gov/Archives/edgar/data/1608249/000162612915000213/0001626129-15- 000213-index.htm. Section 63.18(h) – Interlocking Directorates: Except for the foreign carrier subsidiaries listed below, which share certain directors as Zayo, Zayo does not have any interlocking directorates with a foreign carrier. 8

Section 1.767(a)(8)(ii) – Certification Regarding Foreign Carrier Status and Foreign Affiliation: Zayo holds a Reseller Registration and Basic International Telecommunication Services License in Canada and thus is itself a non-dominant foreign carrier in Canada. As described in prior filings by Zayo,7 Zayo also is affiliated with its following foreign carrier subsidiaries: Country Affiliate Name Description of the Company Canada 360networks Vancou- 360networks is a wholly owned direct subsidiary of (WTO Member) ver Ltd. Zayo. (“360networks”) 360networks holds a Reseller Registration and Basic A Canadian entity International Telecommunication Services in Canada. 360networks has less than a 50% market share in the international transport and local access markets in Canada. Canada AboveNet Canada Inc. ABN-Canada is a wholly owned direct subsidiary of (WTO Member) (“ABN-Canada”) Zayo. A Canadian entity ABN-Canada was formed in connection with a planned entry into Canadian telecom market and holds a Reseller Registration, but did not undertake any significant service activity, and is in the process of being dissolved. ABN-Canada has less than a 50% market share in the international transport and local access markets in Canada. Canada. France, Zayo Group EU Zayo-EU is a wholly owned indirect subsidiary of Germany, Limited (“Zayo-EU”) Zayo. Netherlands United Kingdom A UK entity Zayo-EU provides primarily lit services between the (WTO Members) United Kingdom and France, Germany and Nether- lands. Zayo-EU has less than a 50% market share in the international transport and local access markets in the countries where it operates. 7 See IB File Nos. FCN-NEW-20141126-00019, ITC-ASG-20130628-00178 and ITC- ASG-20130506-00131. 9

Country Affiliate Name Description of the Company Germany and Zayo Group UK Zayo-UK is a wholly owned indirect subsidiary of United Kingdom Limited Zayo. (WTO Members) (“Zayo-UK”) Zayo-UK provides dedicated fiber networks primari- A UK entity ly used for data services, lit services, and access to network facilities. Zayo-UK has less than a 50% market share in the international transport and local access markets in the United Kingdom and Germany. Japan MFN Japan KK ABN-Japan is a wholly owned direct subsidiary of (WTO Member) (“ABN-Japan”) Zayo.\ A Japanese entity. ABN-Japan formerly provided peering services but is essentially dormant at this time. ABN-Japan has less than a 50% market share in the international transport and local access markets in Japan. United Kingdom Geo Networks Limited. Geo Networks is a wholly owned indirect subsidiary and Ireland (“Geo Networks”) of Zayo. (WTO Members) A U.K. entity. Geo Networks provides dedicated fiber networks primarily used for data services and access to net- work facilities. Geo Networks has less than a 50% market share in the international transport and local access markets in the United Kingdom and Ireland. United Kingdom Geo Metro Limited Geo Metro is a wholly owned direct subsidiary of (WTO Member) (“Geo Metro”) Geo Networks. A U.K. entity. Geo Metro provides dedicated fiber networks primar- ily used for data services and access to network facilities. Geo Metro has less than a 50% market share in the international transport and local access markets in the United Kingdom 10

Country Affiliate Name Description of the Company United Kingdom FibreSpeed Limited FibreSpeed is a wholly owned direct subsidiary of (WTO Member) (“FibreSpeed”) GEO. A U.K. entity. FibreSpeed provides dedicated fiber networks primarily used for data services and access to net- work facilities. FibreSpeed has less than a 50% market share in the international transport and local access markets in the United Kingdom France, Zayo France SAS Zayo-France is a wholly owned indirect subsidiary of United Kingdom, (formerly known as Zayo. Spain, Neo Telecoms SAS) Germany, (“Zayo-France”) Zayo-France provides fiber networks primarily used Austria, Switzer- for data services, IP transit, lit services, and cloud land, Nether- A French entity. services. Zayo-France has less than a 50% market lands, share in the international transport and local access Luxembourg, markets in each of the countries where it operates. Belgium (WTO Members) France Neocenter Est SARL Zayo-France directly owns approximately 32.86% of (WTO Member) (“Neo-Est”) Neo-Est. Neo telecom Group SAS, the direct parent company of Zayo-France, directly owns approxi- A French entity. mately 17.14% of Neo-Est. As the indirect parent of Zayo-France and Neo telecom Group SAS, Zayo indirectly owns approximately 50% of Neo-Est. Neo-Est provides lit services, colocation and related services. Neo-Est has less than a 50% market share in the international transport and local access markets in France. France Neocenter Ouest SAS Zayo-France directly owns approximately 36.58% of (WTO Member) (“Neo-Ouest”) Neo-Ouest. A French entity. Neo-Ouest provides lit services, colocation and related services. Neo-Ouest has less than a 50% market share in the international transport and local access markets in France. Zayo and each of its subsidiaries listed above are non-dominant in the countries where they are foreign carriers since they each hold less than a 50% market share in the international 11

transport and local access markets in the countries where they operate. Further, none of the entities are on the Commission’s list of foreign carriers presumed to possess market power.8 Section 1.767(a)(8)(iii) – Certification Regarding Destination Markets: By its signature to this application, Zayo certifies that following consummation of the Transaction, Zayo and one or more if its affiliates will provide international telecommunications services in the destination market of the AmeriCan-1 Cable: Canada. As stated above, Zayo, 360networks and ABN-Canada are all non-dominant foreign carriers in Canada. Section 1.767(a)(8)(iv) – Demonstration Regarding WTO Status and Market Power: Canada is a member of the WTO. Further, Zayo, 360networks and ABN-Canada all lack market power in Canada as discussed above. Section 63.18(o) – Certification Regarding Anti-Drug Abuse Act of 1988: Each Applicant certifies, pursuant to Sections 1.2001 through 1.2003 of the Commis- sion’s Rules, 47 C.F.R. §1.2001-1.2003 (implementing the Anti-Drug Abuse Act of 1988, 21 U.S.C. §3301), that it is not subject to a denial of Federal benefits pursuant to the Anti-Drug Abuse Act of 1988. (9) Certification of Compliance: Zayo certifies that it accepts and will abide by the routine conditions set forth in Section 1.767(g) of the Commission’s Rules, 47 C.F.R. §1.767(g). 8 See Public Notice, The International Bureau Revises and Reissues the Commission’s List of Foreign Telecommunications Carriers that Are Presumed to Possess Market Power in Foreign Telecommunications Markets, DA 07-233 (rel. Jan. 26, 2007). Following completion of the Transaction, Allstream-US will no longer be affiliated with Manitoba Telecom Services, which is included in that list with respect to Canada. 12

V. REQUEST FOR STREAMLINING Applicants request streamlined processing of this Application. This Application qualifies for streamlining because Zayo and its foreign carrier affiliates all lack market power for the reasons described above. VI. CONCLUSION For the foregoing reasons, MTS and Zayo respectfully submit that grant of this Applica- tion will serve the public interest, convenience and necessity. Respectfully submitted, /s/ Lawrence J. Movshin /s/ Brett P. Ferenchak Lawrence J. Movshin Russell M. Blau Jennifer L. Kostyu Brett P. Ferenchak Wilkinson Barker Knauer, LLP MORGAN, LEWIS & BOCKIUS LLP 1800 M Street, N.W., Suite 800N 2020 K Street, N.W. Washington, DC 20036 Washington, DC 20006 202-783-4141 (tel) 202-373-6000 (tel) 202-783-5851 (fax) 202-373-6001 (fax) lmovshin@wbklaw.com russell.blau@morganlewis.com jkostyu@wbklaw.com brett.ferenchak@morganlewis.com Counsel for MTS Inc. and Counsel for Zayo Group, LLC Allstream Fiber US, Inc. Dated: November 25, 2015 13

VERIFICATION I, Paul Beauregard, state that I am Chief Corporate and Strategy Officer & Corporate Secretary of MTS Inc. (“MTS”); that I am authorized to make this verification on behalf of MTS and its licensee subsidiary Allstream Fiber US, Inc. (“Licensee”); that the statements regarding the Transaction, MTS and the Licensees in the foregoing application are true and correct to the best of my knowledge and belief. I declare under the penalty of perjury that the foregoing is true and correct. __________________________ Paul Beauregard Chief Corporate and Strategy Officer & Corporate Secretary MTS Inc. 25 2015 Executed on November _____,

VERIFICATION I, Christopher P. Yost, state that I am acting General Counsel of Zayo Group, LLC (the "Company"), that I am authorized to make this verification on behalf of the Company; that the statements regarding the Transaction and the Company and the certifications contained in the foregoing application are true and correct to the best of my knowledge and belief. I declare under the penalty of perjury that the foregoing is true and correct. General Counsel Zayo Group, LLC Executed on November 25, 2015

CERTIFICATE OF SERVICE I, Brett P. Ferenchak, certify that on November 25, 2015, a copy of the foregoing Appli- cation for Transfer of Control of Submarine Cable Landing License was served by U.S. mail on the following: U.S. Coordinator, EB/CIP U.S. Department of State 2201 C Street, N.W. Washington, DC 20520-5818 Office of Chief Counsel/NTIA U.S. Department of Commerce 14th St. and Constitution Ave., N.W. Washington, DC 20230 Defense Information Systems Agency ATTN: GC/DO1 6910 Cooper Avenue Fort Meade, MD 20755-7088 /s/ Brett P. Ferenchak Brett P. Ferenchak


Document Created: 2015-11-25 15:49:23
Document Modified: 2015-11-25 15:49:23
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