2. The Nature of the Companies and the Transaction

ATC is a Delaware corporation with headquarters in New York. ATC provides internet technology products and services to mid-sized businesses and entities. These services include web site design, web hosting and internet connectivity services. An exhibit attached to the application shows that ATC has $77 million in assets and $38 million in 1999 gross revenues. In 1999 ATC suffered an operating loss of $15.3 million.

CRL operates as a non-dominant interexchange carrier providing interstate and intrastate services. It also has facilities-based competitive local carrier authority, but that authority has not been exercised. CRL is a California corporation. We granted CRL competitive local carrier authority in Cal. P.U.C. Dec. No. (D.) 98-03-066, 1998 Cal. PUC LEXIS 181. Interexchange authority was granted in D.98-05-071, 1998 Cal. PUC LEXIS 388. Financial statements attached to the application show that CRL in 1999 had assets totaling $3.9 million. The company showed a net loss of $2.5 million in 1999.

The application states that ATC acquired control of CRL by purchasing 100% of CRL's stock. ATC paid $42 million for CRL. According to applicants, CRL continues to operate as it has in the past, with no changes in rates, terms or conditions of service. Applicants state that the infusion of capital provided to CRL by ATC has permitted CRL to operate more efficiently.