[Federal Register Volume 60, Number 250 (Friday, December 29, 1995)]
[Rules and Regulations]
[Pages 67332-67339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31099]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 63
[IB Docket No. 95-22, FCC 95-475]
Market Entry and Regulation of Foreign-affiliated Entities
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This Report and Order contains information collections subject
to the Paperwork Reduction Act of 1995 (PRA). It has been submitted to
the Office of Management and Budget (OMB) for review under section
3507(d) of the PRA, OMB, the general public, and other Federal agencies
are invited to comment on the information collections contained in this
proceeding
On November 28, 1995, the Federal Communications Commission adopted
a Report and Order in response to a Notice of Proposed Rulemaking which
the Commission adopted on February 7, 1995, that establishes a market
entry standard for foreign carriers seeking to provide basic
international telecommunications services under section 214 of the
Communications Act of 1934, a amended (``the Act''). The Report and
Order also establishes a standard by which the Commission will review
whether it is in the public interest to permit foreign investment in
licensees of common carrier radio facilities in excess of the
benchmarks contained in section 310(b)(4) of the Act. The Report and
Order was adopted. The Report and Order makes additional changes to the
Commission's regulations of international common carriers.
In reviewing applicants for international section 214 authority
filed by a foreign carrier or its U.S. affiliate (collectively
``foreign carrier''), the Commission will examine, as an important part
of its public interest analysis, whether competitive opportunities
exist for U.S. carriers in destination markets in which the foreign
carrier has market power. The Commission will apply a similar analysis
in reviewing indirect foreign investment in licensees of common carrier
radio facilities under section 310(b)(4), but it will limit its review
to the ``home market'' of the foreign investor. In addition to
considering effective competitive opportunities, the Commission will
examine additional public interest factors that might weigh in favor
of, or against, approving the foreign carrier's international section
214 application, or permitting the indirect foreign investment in a
common carrier radio licensee to exceed the section 310(b)(4)
benchmark.
In taking this action, the Commission's primary goal is to advance
the public interest by promoting effective competition in the U.S.
telecommunications services market, particularly the market for
international services. The action also reaffirms the Commission's
goals to prevent anticompetitive conduct in the provisions of
international services or facilities, and to encourage foreign
governments to open their communications markets.
EFFECTIVE DATE: The rules adopted in this Report and Order will become
effective January 29, 1996. However, if OMB has not approved the
information collections contained in these rules by this date, the
Commission will publish a document to delay the effective date of these
rules.
Written comments by the public on the information collections are
due January 10, 1996.
ADDRESSES: Submit all comments concerning the Paperwork Reduction Act
to Dorothy Conway, Federal Communications Commission, Room 234, 1919 M
Street, NW., Washington, DC 20554, or via the Internet to dconway@fcc., and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725-17th
Street, NW., Washington, DC 20503 or via the Internet to t@al.eop.gov.
FOR FURTHER INFORMATION CONTACT: For additional information concerning
the information collections contained in this Report and Order contact
Dorothy Conway at 202-418-0217, or via the Internet as dconway@fcc.gov.
For further information on the Report and Order contact: Susan
O'Connell, Attorney, International Bureau, (202) 418-1484, Ken
Schagrin, Attorney, International Bureau, (202) 418-1407, or Robert
McDonald, Attorney, International Bureau, (202) 418-1467.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order adopted on November 28, 1995, and released November 30, 1995
(FCC 95-475). The full text of this Report and Order is available for
inspection and copying during normal hours in the FCC Reference Center
(Room 239), 1919 M St., NW., Washington, DC. The complete text also may
be purchased from the Commission's Copy contractor, International
Transcription Service, Inc., (202) 857-3800, 2100 M Street, NW., Suite
140, Washington, DC 20037
Paperwork Reduction Act
The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collections
contained in this Report and Order. Comments should address: (a)
Whether the collection of information is necessary for the proper
performance of the functions of the Commission, including whether the
information shall have practical utility; (b) the accuracy of the
Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology.
This Report and Order contains information collection requirements.
Written comments by the public on the information collections are due
January 10, 1996. Written comments must be submitted by OMB on the
information collections on or before January 15, 1996.
OMB Approval Number: New Collection.
Title: Market Entry and Regulation of Foreign-affiliated Carriers.
Type of Review: New collection.
Respondents: Business or other for-profit.
Number of Respondents: 431 per year.
Estimated Time Per Response: 9.5 hours.
Total Annual Burden: 4127 hours.
Needs and Uses: The collections of information for which approval
is here sought are contained in amendments to part 63 and in the Report
and Order adopting such amendments. These information collections are
authorized and necessary for the Commission to carry out its statutory
mandate, pursuant to sections 4, 214, 219, 303(r) and 403 of the
Communications Act, 47 U.S.C. 154, 214, 219, 303(r) and 403.
The information collections contained in amendments to Secs. 63.01
(r) and (s) and 63.11 and 63.17(b)(4) of the Commission's rules are
necessary to determine whether, and under what conditions, the public
interest, convenience, and necessity will be served by authorizing
particular foreign carriers, or their U.S. affiliates, to provide
international common carrier services between the United States and
countries where these foreign carriers have market power, i.e., the
ability to
[[Page 67333]]
discriminate against unaffiliated U.S. carriers through control of
``bottleneck services or facilities'' on the foreign end of a U.S.
international route. ``Bottleneck services or facilities'' are those
that are necessary to terminate U.S. international traffic.
Second, the information collections contained in amendments to
Sec. 63.10 of the Commission's rules are necessary for the Commission
to maintain effective oversight of U.S. carriers that are affiliated
with, or involved in certain co-marketing or similar arrangements with,
foreign carriers that have market power.
Third, the information collections contained in amendments to
Sec. 63.01(k) of the Commission's rules are necessary to protect the
U.S. public interest in cost-based international telecommunications
services.
Fourth, the information collections under section 310(b)(4) of the
Act are necessary to determine, under that section, whether a greater
than 25 percent indirect foreign ownership interest in a U.S. common
carrier radio licensee would be inconsistent with the public interest.
The Order adopts a requirement that section 214 applicants amend
their pending applications to the extent they are inconsistent with the
new rules. Applications pending as of the effective date of the new
rules must be amended within thirty days of the effective date of the
new rules. This information will be used to process pending
applications under the Commission's public interest standard enunciated
in the Order.
The information will be used by the Commission staff in carrying
out its duties under the Communications Act. Common carrier applicants
providing or seeking to provide international service under part 63 of
the Commission's rules must comply with our rules.
Summary of Report and Order
In response to the Notice of Proposed Rulemaking (60 FR 11644
(March 2, 1995)), the Commission adopted a decision to further the goal
of promoting effective competition in the U.S. telecommunications
market, particularly the market for international services. In order to
promote effective competition in this market, the Commission's new
rules are designed to prevent anticompetitive conduct in the provision
of international services or facilities, and to encourage foreign
governments to open their communications markets.
With this Report and Order, the Commission adopts standards for
regulating the entry of foreign carriers into the United States market
for international telecommunications services. This Report and Order
explicitly sets forth the entry criteria necessary to promote effective
competition in the U.S. market for these services, including global,
seamless network services. As an important part of the Commission's
overall public interest analysis under Section 214 of the
Communications Act, it will examine whether effective competitive
opportunities exist for U.S. carriers in the destination markets of
foreign carriers seeking to enter the U.S. international services
market either directly or through an affiliation with a new or existing
U.S. carrier.
Similarly, in deciding whether it is in the public interest to
permit indirect foreign investment in licensees of common carrier
wireless facilities in excess of the benchmarks contained in section
310(b)(4) of the Act, the Commission will examine whether foreign
markets offer effective competitive opportunities to U.S. entities.
This approach is fully consistent not only with the Commission's
existing jurisdiction under section 310, but also with
telecommunications bills currently pending in Congress which would
specifically incorporate an effective competitive opportunities
analysis as part of a section 310(b)(4) determination.
The New Entry Standard
The Commission's effective competitive opportunities analysis under
section 214 of the Act will focus first on whether U.S. carriers have
the legal right to provide international basic services in the
destination markets where the foreign applicant has market power. If
there are no legal barriers to entry, the Commission also will consider
the practical ability for U.S. carriers to compete in those markets.
The Commission considers several factors essential to viable
competition. These factors include: First, whether there are reasonable
and nondiscriminatory terms and conditions for interconnection to a
foreign carrier's facilities; second, whether there are competitive
safeguards to protect against anticompetitive conduct; and third,
whether there is an effective regulatory framework to implement and
enforce these conditions and safeguards. The Commission will apply the
effective competitive opportunities analysis to foreign carriers
seeking to provide facilities-based or resale service in the United
States. The public interest analysis under section 214 also will
continue to consider additional public interest factors, including the
general significance of the proposed entry to the promotion of
competition in the U.S. communications services market, the presence of
cost-based accounting rates, as well as national security, law
enforcement issues, foreign policy, or trade concerns raised by the
Executive Branch.
The analysis under section 310 is similar to that under section
214, but with some important distinctions. Most notably, the
Commission's determination will focus on the foreign investor's ``home
market'', and will be applied to the specific service in which the
foreign entity seeks to invest in the United States, e.g., cellular
service. If the services in the U.S. and home markets are not precisely
matched, the Commission will use the most closely substitutable
wireless service in the home market, as determined from the consumer's
perspective. The Commission also will examine additional public
interest factors that might weigh in favor of, or against, allowing a
foreign investor to exceed the 25 percent benchmark contained in
section 310(b)(4). In determining a foreign investor's ``home market'',
the Commission will identify (1) the country of its incorporation,
organization, or charter; (2) the nationality of all investment
principals, officers, and directors; (3) the country in which its world
headquarters is located; (4) the country in which the majority of its
tangible property, including production, transmission, billing,
information, and control facilities, is located; and (5) the country
from which it derives the greatest sales and revenues from its
operations. If all five of these factors indicate that the same country
should be considered to be the entity's home market, it will be
presumed to be so, subject only to rebuttal based on clear and
convincing evidence to the contrary. If these five factors yield
inconsistent results, however, the Commission will balance them, as
well as any other information that is particularly relevant to the
case, to determine the appropriate home market under the totality of
the circumstances.
Affiliation
For purposes of implementing this entry standard, the Commission
adopts a new definition of ``affiliation''. It now defines affiliation
as an ownership interest of greater than 25 percent, or a controlling
interest at any level, in a U.S. carrier by a foreign carrier. The
Commission also will apply its effective competitive opportunities
analysis to foreign carrier investments of 25 percent or less if the
investment presents a significant potential impact on competition in
the U.S. market for
[[Page 67334]]
international telecommunications services. In addition, the Commission
will aggregate investments of two or more foreign carriers where they
are likely to act in concert and the combined interests either exceed
25 percent or constitute a controlling interest.
This definition of affiliation will apply both for purposes of
determining when to apply the effective competitive opportunities
analysis and of determining the regulatory status of all affiliated
carriers, including U.S.-based carriers that have a greater than 25
percent investment, or a controlling interest, in a foreign carrier.
The Commission also is adopting a prior notification and approval
requirement to determine whether a particular investment in a U.S.
carrier by a foreign carrier constitutes an affiliation with that
foreign carrier, and to determine whether the investment serves the
public interest, convenience and necessity. A U.S. international
carrier is required to notify the Commission 60 days prior to
acquisition by a foreign carrier of a 10 percent or greater interest in
that U.S. carrier.
Amendment of Pending Applications
The Report and Order adopts a requirement that section 214
applicants amend their pending applications to the extent they are
inconsistent with the new rules. The Report and Order requires that
applications pending as of the effective date of the new rules be
amended within thirty days of the effective date of the new rules.
Dominant Carrier and Other Operating Safeguards
This Report and Order also modifies the safeguards that apply to
foreign-affiliated carriers regulated as dominant under Sec. 63.10 of
the Commission's rules, 47 CFR 63.10, as amended in the Report and
Order. The modified dominant carrier safeguards also will apply to U.S.
carriers on particular routes where they are engaged in a co-marketing
or other arrangement with a dominant foreign carrier, and such
arrangement presents a substantial risk of anticompetitive effects in
the U.S. market for international telecommunications services.
The Commission has modified these safeguards to reduce regulatory
burdens while maintaining effective oversight over foreign-affiliated
or allied carriers. It allows dominant, foreign-affiliated or allied
carriers to file tariffs on 14 days notice instead of the previous 45
days and relieves those carriers of the burden of filing cost support
information. It also requires that a dominant, foreign-affiliated or
allied carrier maintain complete records of the provisioning and
maintenance of service and facilities it procures from its foreign
carrier affiliate or ally. The Order maintains the existing requirement
that a dominant foreign-affiliated carrier (and, under the new rules, a
dominant, allied carrier) receive specific section 214 authorization
before adding or removing circuits on routes where it is regulated as
dominant, and file quarterly traffic and revenue reports.
The Order also conforms the Commission's ``no special concessions''
prohibition and ``no exclusive arrangements'' condition that have
regularly been placed in section 214 authorizations and applies a ``no
special concessions'' prohibition to all U.S. international carriers.
This means that no U.S. carrier is allowed to accept a special
concession directly or indirectly from any foreign carrier with respect
to traffic or revenue flows between the United States and any foreign
country for which the U.S. carrier is authorized to provide service.
Additional Matters
The Order additionally adopts new rules relating to the provision
of international switched basic service via facilities-based and resold
private lines. These rules apply to all U.S. carriers, both those that
are affiliated and unaffiliated with a foreign carrier. And, it adopts
a modified definition of a U.S. international facilities-based carrier.
Final Regulatory Flexibility Act Analysis
Pursuant to section 603 of Title 5, United States Code, 5 U.S.C.
603, an initial Regulatory Flexibility Analysis was incorporated in the
Notice of Proposed Rulemaking in CC Docket No. 95-22. Written comments
on the proposals in the Notice, including the Regulatory Flexibility
Analysis, were requested.
A. Need and Purpose of this Action
This rulemaking proceeding establishes an effective competitive
opportunities analysis as an important public interest factor in the
Commission's overall public interest analysis of applications filed by
foreign carriers to enter the U.S. international telecommunications
market pursuant to section 214 of the Communications Act. It also
adopts a similar analysis for determining whether the public interest
would be disserved by permitting indirect foreign investment in common
carrier licensees in excess of the benchmarks contained in section
310(b)(4) of the Act. In addition, this proceeding modifies existing
rules and policies relating to the definition of a U.S. international
facilities-based carrier, the regulation of certain dominant carriers
in the provision of international service, and other rules governing
the provision of switched services over international private lines.
B. Issues Raised by the Public Comments in Response to the Regulatory
Flexibility Analysis
There were no comments submitted in response to the Regulatory
Flexibility Analysis. The Notice of Proposed Rulemaking offered a
number of alternatives for each issue raised. The Commission responded
to commenters' concerns and significantly altered the proposed market
entry standard. The new approach under section 214 is designed to focus
on foreign carrier entry that poses a substantial risk of
anticompetitive effects in the provision of international services. In
addition, the Commission is adopting a standard that is clear and
administratively feasible.
C. Significant Alternatives Considered
The Commission has attempted to balance all the commenters'
concerns with our public interest mandate under the Act in order to
adopt a clear and administratively feasible approach to market entry by
foreign carriers. Instead of examining whether effective competitive
opportunities exist for U.S. carriers in every primary market where a
foreign carrier operates, regardless of whether the foreign carrier
seeks to serve such market, the Commission will focus its analysis
under section 214 only on destination countries where the foreign
carrier holds market power. Our route-by-route approach reduces the
regulatory burden on all U.S. carriers seeking an affiliation with a
foreign carrier. The Commission has not adopted the suggestion of some
parties to exempt small U.S. carriers from the market entry rules.
Whether a dominant foreign carrier makes a significant investment in a
small U.S. carrier or a large one, there is a substantial risk of
anticompetitive effects. Therefore, the Commission declines to exempt
small U.S. carriers from these rules.
The Commission proposed to modify its standard for determining when
a U.S. carrier is affiliated with a foreign carrier for purposes of
both the market entry analysis and post-entry regulation. The
Commission considered investment levels ranging from greater than ten
percent to controlling interests at any level. It also considered
adopting an affiliation standard based on: The dollar amount of the
investment; the percentage of the investment; or the
[[Page 67335]]
amount of traffic carried by the U.S. carrier in correspondence with
the foreign carrier. The Commission additionally considered adopting a
reciprocal affiliation standard. Based on the record, the Commission
has modified its definition of affiliation and will now consider
affiliated any U.S. carrier with either: (1) A greater than 25 percent
interest (or a controlling interest at any level) held by a foreign
carrier; or (2) a greater than 25 percent interest in, or control of, a
foreign carrier.
The Commission will apply its effective competitive opportunities
analysis to the first category of affiliated U.S. carriers on routes
where the affiliated foreign carrier has market powers in the
destination country. It will apply its dominant carrier safeguards to
all affiliated U.S. carriers on routes where the affiliated foreign
carrier has market power. These safeguards will also now apply to U.S.
carriers on routes for which they have formed a non-exclusive co-
marketing arrangement or other joint venture with a dominant foreign
carrier, where such arrangements present a substantial risk of
anticompetitive effects.
The Commission has eliminated the requirement that dominant,
foreign-affiliated carriers file cost support with their tariffs. This
will reduce burdensome filing requirements. The Commission also adopts
its proposed 14-day notice period (currently 45 days) for the filing of
international service tariffs by dominant, foreign-affiliated carriers.
The Commission adopts a new recordkeeping requirement that a dominant,
foreign-affiliated carrier maintain complete records of the
provisioning and maintenance of network facilities and services it
procures from its foreign affiliate or ally. The Commission found that
although this requirement is a minor burden, its benefit in preventing
anticompetitive conduct outweighs such a burden. The Commission adopts
new rules related to the provision of switched services using
international private lines. These rules will enhance opportunities for
U.S. carriers to serve U.S. consumers more efficiently. The Commission
also adopts a definition of ``U.S. international facilities-based
carrier'' that may facilitate the ability of smaller U.S. carriers to
obtain operating agreements.
Ordering clauses
Accordingly, it is ordered that the policies, rules, and
requirements adopted herein, except those needing OMB approval, will
become effective January 29, 1996.
Matters subject to OMB approval, pursuant to the Paperwork
Reduction Act of 1995, Public Law 104-13, will become effective upon
such approval.
This action is taken pursuant to sections 4, 214, 219, 303(r) and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 154, 214,
219, 303(r) and 403.
It is further ordered That this proceeding is hereby terminated.
List of Subjects in 47 CFR Part 63
Communications common carriers, Reporting and recordkeeping
requirements, Telegraph, Telephone.
Federal Communications Commission,
LaVera Marshall,
Acting Secretary.
Final Rules
Part 63 of Title 47 of the Code of Federal Regulations is amended
as follows:
PART 63--EXTENSION OF LINES AND DISCONTINUANCE, REDUCTION, OUTAGE
AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF
RECOGNIZED PRIVATE OPERATING AGENCY STATUS
1.The authority citation for part 63 continues to read as follows:
Authority: Secs. 1, 4(i), 4(j), 201-205, 218, and 403 of the
Communications Act of 1934, as amended, and sec. 613 of the Cable
Communications Policy Act of 1984, 47 U.S.C. secs. 151, 154(i),
15(j), 201-205, 218, 403, and 533 unless otherwise noted.
2. Section 63.01 is amended by revising paragraphs (k)(5) and (r),
redesignating paragraph (k)(6) as paragraph (k)(7), and adding new
paragraphs (k)(6), (s) and Notes 1 through 4 to paragraph (r) to read
as follows:
Sec. 63.01 Contents of applications.
* * * * *
(k) * * *
(5) The procedures set forth in this section are subject to
Commission policies on resale of international private lines in CC
Docket No. 90-337 as amended in IB Docket No. 95-22. If proposed
facilities are to be acquired through the resale of private lines for
the purpose of providing international switched basic services,
applicant shall demonstrate for each country to which it seeks to
provide such services that the country affords resale opportunities
equivalent to those available under U.S. law. In this regard, applicant
shall:
(i) State whether the Commission has previously determined that
equivalent resale opportunities exist between the United States and the
subject country; or
(ii) Include other evidence demonstrating that equivalent resale
opportunities exist between the United States and the subject country,
including any relevant bilateral agreements between the administrations
involved. Parties must demonstrate that the foreign country at the
other end of the private line provides U.S. carriers with:
(A) The legal right to resell international private lines,
interconnected at both ends, for the provision of switched services;
(B) Nondiscriminatory charges, terms and conditions for
interconnection to foreign domestic carrier facilities for termination
and origination of international services, with adequate means of
enforcement;
(C) Competitive safeguards to protect against anticompetitive and
discriminatory practices affecting private line resale; and
(D) Fair and transparent regulatory procedures, including
separation between the regulator and operator of international
facilities-based services.
(6) Except as otherwise provided in this paragraph, any carrier
authorized under this part to acquire and operate international private
line facilities other than through resale shall, for each country for
which it seeks to provide switched basic service over its authorized
private lines facilities, request such authority by formal application.
Such application shall be accompanied by a demonstration that that
country affords resale opportunities equivalent to those available
under U.S. law. In this regard, applicant shall include the information
required by paragraph (k)(5) of this section.
(i) No formal application is required under this paragraph in
circumstances where the carrier's previously authorized private line
facility is interconnected to the public switched network only on one
end--either the U.S. or the foreign end--and where the carrier is not
operating the facility in correspondence with a carrier that directly
or indirectly owns the private line facility in the foreign country at
the other end of the private line.
* * * * *
(r) A certification as to whether or not the applicant is, or has
an affiliation with, a foreign carrier.
(1) The certification shall state with specificity each foreign
country in which the applicant is, or has an affiliation with, a
foreign carrier. For purposes of this certification:
(i) Affiliation is defined to include;
(A) A greater than 25% ownership of capital stock, or controlling
interest at
[[Page 67336]]
any level, by the applicant, or by any entity that directly or
indirectly controls or is controlled by it, or that is under direct or
indirect common control with it, in a foreign carrier or in any entity
that directly or indirectly controls a foreign carrier; or
(B) A greater than 25% ownership of capital stock, or controlling
interest at any level, in the applicant by a foreign carrier, or by any
entity that directly or indirectly controls or is controlled by a
foreign carrier, or that is under direct or indirect common control
with a foreign carrier; or by two or more foreign carriers investing in
the applicant in the same manner in circumstances where the foreign
carriers are parties to, or the beneficiaries of, a contractual
relation (e.g., a joint venture or market alliance) affecting the
provision or marketing of basic international telecommunications
services in the United States. A U.S. carrier also will be considered
to be affiliated with a foreign carrier where the foreign carrier
controls, is controlled by, or is under common control with a second
foreign carrier already found to be affiliated with that U.S. carrier
under this section.
(ii) Foreign carrier is defined as any entity that is authorized
within a foreign country to engage in the provision of international
telecommunications services offered to the public in that country
within the meaning of the International Telecommunication Regulations,
see Final Acts of the World Administrative Telegraph and Telephone
Conference, Melbourne, 1988 (WATTC-88), Art 1.
(2) In support of the required certification, each applicant shall
also provide the name, address, citizenship and principal businesses of
its 10 percent or greater direct and indirect shareholders or other
equity holders and identify any interlocking directorates.
(3) Each applicant that proposes to acquire facilities through the
resale of the international switched or private line services of
another U.S. carrier shall additionally certify as to whether or not
the applicant has an affiliation with the U.S. carrier(s) whose
facilities-based service(s) the applicant proposes to resell (either
directly or indirectly through the resale of another reseller's
service). For purposes of this paragraph, affiliation is defined as in
paragraph (r)(1)(i) of this section, except that the phrase ``U.S.
facilities-based international carrier'' shall be substituted for the
phrase ``foreign carrier.''
(4) Each applicant that certifies under this section that it has an
affiliation with a foreign carrier and that proposes to acquire
facilities through the resale of the international private line
services of another U.S. carrier shall additionally certify as to
whether or not the affiliated foreign carrier owns or controls
telecommunications facilities in the particular country(ies) to which
the applicant proposes to provide service (i.e., the destination
country(ies)). For purposes of this paragraph, telecommunication
facilities are defined as the underlying telecommunications transport
means, including intercity and local access facilities, used by a
foreign carrier to provide international telecommunications services
offered to the public.
(5) Each applicant and carrier authorized to provide international
communications service under this part is responsible for the
continuing accuracy of the certifications required by paragraphs (r)(3)
and (4) of this section. Whenever the substance of any such
certification is no longer accurate, the applicant/carrier shall as
promptly as possible and in any event within 30 days file with the
Secretary in duplicate a corrected certification referencing the FCC
File No. under which the original certification was provided. This
information may be used by the Commission to determine whether a change
in regulatory status may be warranted under Sec. 63.10.
(6) Each applicant that certifies that it is, or that it has an
affiliation, a foreign carrier, as defined in paragraphs (r)(1)(i)(B)
and (r)(1)(ii) of this section, in a named foreign country and that
desires to operate as a U.S. facilities-based international carrier to
that country from the United States shall provide information in its
application filed under this part to demonstrate that either:
(i) The named foreign country (i.e., the destination foreign
country) provides effective competitive opportunities to U.S. carriers
to compete in that country's international facilities-based market; or
(ii) Its affiliated foreign carrier does not have the ability to
discriminate against unaffiliated U.S. international carriers through
control of bottleneck services or facilities in the destination
country.
(A) The demonstration specified by paragraph (r)(6)(i) of this
section should address the following factors:
(1) The legal, or de jure, ability of U.S. carriers to enter the
foreign market and provide facilities-based international services, in
particular, international message telephone service (IMTS);
(2) Whether there exist reasonable and nondiscriminatory charges,
terms and conditions for interconnection to a foreign carrier's
domestic facilities for termination and origination of international
services;
(3) Whether competitive safeguards exist in the foreign country to
protect against anticompetitive practices, including safeguards such
as:
(i) Existence of cost-allocation rules in the foreign country to
prevent cross-subsidization;
(ii) Timely and nondiscriminatory disclosure of technical
information needed to use, or interconnect with, carriers' facilities;
(iii) Protection of carrier and customer proprietary information;
and
(4) Whether there is an effective regulatory framework in the
foreign country to develop, implement and enforce legal requirements,
interconnection arrangements and other safeguards; and
(5) Any other factors the applicant deems relevant to its
demonstration.
(B) The demonstration specified in paragraph (r)(6)(ii) of this
section should include the same information requested by paragraph
(r)(8) of this section.
(7) Each applicant that certifies that it is, or that it has an
affiliation with, a foreign carrier, as defined in paragraphs
(r)(1)(i)(B) and (r)(1)(ii) of this section, in a named foreign country
and that desires to resell the international switched or non-
interconnected private line services, respectively, of another U.S.
carrier for the purpose of providing international communications
services to the name foreign country from the United States shall
provide information in its application filed under this part to
demonstrate that either.
(i) The named foreign country (i.e., the destination foreign
country) provides effective competitive opportunities to U.S. carriers
to resell international switched or noninterconnect private line
services, respectively; or
(ii) Its affiliated foreign carrier does not have the ability to
discriminate against unaffiliated U.S. international carriers through
control of bottleneck services or facilities in the destination
country.
(A) The demonstration specified by paragraph (r)(7)(i) of this
section should address the following factors:
(1) The legal, or de jure, ability of U.S. carriers to enter the
foreign market and provide resold international switched services (for
switched resale applications) or non-interconnected private line
services (for non-interconnected private line resale applications;
(2) Whether there exist reasonable and nondiscriminatory charges,
terms and conditions for the provision of the relevant resale service;
[[Page 67337]]
(3) Whether competitive safeguards exist in the foreign country to
protect against anticompetitive practices, including safeguards such
as:
(i) Existence of cost-allocation rules in the foreign country to
prevent cross-subsidization;
(ii) Timely and nondiscriminatory disclosure of technical
information needed to use, or interconnect with, carriers' facilities;
(iii) Protection of carrier and customer proprietary information;
and
(4) Whether there is an effective regulatory framework in the
foreign country to develop, implement and enforce legal requirements,
interconnection arrangements and other safeguards; and
(5) Any other factors the applicant deems relevant to its
demonstration.
(B) The demonstration specified in paragraph (r)(7)(ii) of this
section should include the same information requested by paragraph
(r)(8) of this section.
(8) Each applicant that certifies that it has an affiliation with a
foreign carrier in a named foreign country and that desires to be
regulated as non-dominant for the provision of international
communications service to that country may provide information in its
application filed under this part to demonstrate that its affiliated
foreign carrier does not have the ability to discriminate against
unaffiliated U.S. international carriers through control of bottleneck
services or facilities in the named foreign country. See Sec. 63.10,
Regulatory Classification of U.S. International Carriers.
(i) Such a demonstration should address the factors that relate to
the scope or degree of the foreign affiliate's bottleneck control, such
as:
(A) The monopoly, oligopoly or duopoly status of the destination
country; and
(B) Whether the foreign affiliate has the potential to discriminate
against unaffiliated U.S. international carriers through such means as
preferential operating agreements, preferential routing of traffic,
exclusive or more favorable transiting agreements, or preferential
domestic access and interconnection arrangements.
(ii) Such a demonstration may also address other factors the
applicant deems relevant to its demonstration, such as the
effectiveness of public regulation in the destination country.
(s) Each applicant shall certify that the applicant has not agreed
to accept special concessions directly or indirectly from any foreign
carrier or administration with respect to traffic or revenue flows
between the U.S. and any foreign country which the applicant may serve
under the authority granted under this part and will not enter into
such agreements in the future.
(1) For purposes of this paragraph, and of Secs. 63.11(c)(2)(iii),
63.13(a)(4), and 63.14, special concession is defined as any
arrangement that affects traffic or revenue flows to or from the U.S.
that is offered exclusively by a foreign carrier or administration to a
particular U.S. international carrier and not also to similarly
situated U.S. international carriers authorized to serve a particular
route.
(2) The special concessions certification required by this
paragraph and by Secs. 63.11(c)(2)(iii) and 63.13(a)(4) shall be viewed
as an ongoing representation to the Commission, and applicants/carriers
shall immediately inform the Commission if at any time the
representations in their certifications are no longer true. Failure to
so inform the Commission will be deemed a material misrepresentation to
the Commission.
Note 1 to paragraph (r): The word ``control'' as used herein is
not limited to majority stock ownership, but includes actual working
control in whatever manner exercised.
Note 2 to paragraph (r): The term ``U.S. facilities-based
international carrier'' means one that holds an ownership,
indefeasible-right-of-user, or leasehold interest in bare capacity
in an international facility, regardless of whether the underlying
facility is a common or noncommon carrier submarine cable, or an
INTELSAT or separate satellite system.
Note 3 to paragraph (r): The assessment of ``capital stock''
ownership will be made under the standards developed in Commission
case law for determining such ownership. See, e.g., Fox Television
Stations, Inc., 10 FCC Rcd 8452 (1995). ``Capital stock'' includes
all forms of equity ownership, including partnership interests.
Note 4 to paragraph (r): In applying the provisions of this
section, ownership and other interests in U.S. and foreign carriers
will be attributed to their holders and deemed cognizable pursuant
to the following criteria: Attribution of ownership interests in a
carrier that are held indirectly by any party through one or more
intervening corporations will be determined by successive
multiplication of the ownership percentages for each link in the
vertical ownership chain and application of the relevant attribution
benchmark to the resulting product, except that wherever the
ownership percentage for any link in the chain exceeds 50%, it shall
not be included for purposes of this multiplication. (For example,
if A owns 30% of company X, which owns 60% of company Y, which owns
26% of ``carrier,'' then X's interest in ``carrier'' would be 26%
(the same as Y's interest because X's interest in Y exceeds 50%),
and A's interest in ``carrier'' would be 7.8% (0.30 x 0.26). Under
the 25% attribution benchmark, X's interest in ``carrier'' would be
cognizable, while A's interest would not be cognizable.)
3. Section 63.10 is amended by revising paragraphs (a)(1) through
(a)(3), and adding paragraph (c) to read as follows:
Sec. 63.10 Regulatory classification of U.S. international carriers.
(a) * * *
(1) A U.S. carrier that has no affiliation with, and that itself is
not, a foreign carrier in a particular country to which it provides
service (i.e., a destination country) will presumptively be considered
non-dominant for the provision of international communications services
on that route;
(2) A U.S. carrier that is, or that has or acquires an affiliation
with a foreign carrier that is a monopoly in a destination country will
presumptively be classified as dominant for the provision of
international communications services on that route; and
(3) A U.S. carrier that is, or that has or acquires an affiliation
with a foreign carrier that is not a monopoly in a destination country
and that seeks to be regulated as non-dominant on that route bears the
burden of submitting information to the Commission sufficient to
demonstrate that its foreign affiliate lacks the ability to
discriminate against unaffiliated U.S. carriers through control of
bottleneck services or facilities in the destination country. Such a
demonstration should address the factors that relate to the scope or
degree of the foreign affiliate's bottleneck control, including those
listed in Sec. 63.01(r)(8).
* * * * *
(c) Any carrier classified as dominant for the provision of
particular services on particular routes under this section shall
comply with the following requirements in its provision of such
services on each such route:
(1) File international service tariffs on 14-days notice without
cost support;
(2) Maintain complete records of the provisioning and maintenance
of basic network facilities and services procured from its foreign
carrier affiliate or from an allied foreign carrier, including, but not
limited to, those it procures on behalf of customers of any joint
venture for the provision of U.S. basic or enhanced services in which
the U.S. and foreign carrier participate, which information shall be
made available to the Commission upon request;
(3) Obtain Commission approval pursuant to Sec. 63.01 before adding
or discontinuing circuits; and
(4) File quarterly reports of revenue, number of messages, and
number of
[[Page 67338]]
minutes of both originating and terminating traffic within 90 days from
the end of each calendar quarter.
4. Section 63.11 is revised to read as follows:
Sec. 63.11 Notification by and prior approval for U.S. international
carriers that have or propose to acquire ten percent investments by,
and/or an affiliation with, a foreign carrier.
(a) Any carrier authorized to provide international communications
service under this part that, as of the effective date of this rule as
amended in IB Docket No. 95-22, is, or has an affiliation with, a
foreign carrier within the meaning of Sec. 63.01(r)(1)(i)(A) or
(r)(1)(i)(B), or that as of such date knows of an existing ten percent
or greater interest, whether direct or indirect, in the capital stock
of the authorized carrier by a foreign carrier, or that after the
effective date of this rule becomes affiliated with a foreign carrier
within the meaning of Sec. 63.01(r)(1)(i)(A), shall notify the
Commission within thirty days of the effective date of this rule or
within thirty days of the acquisition of the affiliation, whichever
occurs later. For purposes of this section, ``foreign carrier'' is
defined as set forth in Sec. 63.01(r)(1)(ii).
(1) The notification shall certify to the information specified in
paragraph (c) of this section.
(2) Any carrier that has previously notified the Commission of an
affiliation with a foreign carrier, as defined by Sec. 63.01(r)(1)
immediately prior to the rule's amendment in IB Docket No. 95-22, need
not notify the Commission again of the same affiliation.
(b) Any carrier authorized to provide international communications
service under this part that knows of a planned investment by a foreign
carrier of a ten percent or greater interest, whether direct or
indirect, in the capital stock of the authorized carrier shall notify
the Commission within sixty days prior to the acquisition of such
interest. The notification shall certify to the information specified
in paragraph (c) of this section.
(c) The notification required under paragraphs (a) and (b) of this
section shall contain a list of all affiliated foreign carriers and
shall state individually the country or countries in which the foreign
carriers named in paragraphs (a) and (b) of this section are authorized
to provide telecommunications services offered to the public. It shall
additionally specify which, if any, of these countries the U.S. carrier
is authorized to serve under this part; what services it is authorized
to provide to each such country; and the FCC File No. under which each
such authorization was granted.
(1) The carrier should also specify, where applicable, those
countries named in paragraph (c) for which it provides a specified
international communications service solely through the resale of the
international switched or private line services of U.S. facilities-
based carriers with which the resale carrier does not have an
affiliation. Such an affiliation is defined as in Sec. 63.01(r)(1)(i),
except that the phrase ``U.S. facilities-based international carrier''
shall be substituted for the phrase ``foreign carrier.''
(2) The carrier shall also submit with its notification:
(i) The ownership information as required to be submitted pursuant
to Sec. 63.01(r)(2);
(ii) Where the carrier is authorized as a private line reseller on
a particular route for which it has an affiliation with a foreign
carrier, as defined in Sec. 63.01(r)(1)(i), a certification as required
to be submitted pursuant to Sec. 63.01(r)(4); and
(iii) A ``special concessions'' certification as required to be
submitted pursuant to Sec. 63.01(s).
(3) The carrier is responsible for the continuing accuracy of the
certifications provided under this section. Whenever the substance of
any certification provided under this section is no longer accurate,
the carrier shall as promptly as possible, and in any event within 30
days, file with the Secretary in duplicate a corrected certification
referencing the FCC File No. under which the original certification was
provided, except that the carrier shall immediately inform the
Commission if at any time the representations in the ``special
concessions'' certification provided under paragraph (c)(2)(iii) of
this section are no longer true. See Sec. 63.01(s)(2). This information
may be used by the Commission to determine whether a change in
regulatory status may be warranted under Sec. 63.10.
(d) Unless the carrier notifying the Commission of a foreign
carrier affiliation under paragraph (a) of this section qualifies for
the presumption of non-dominant regulation pursuant to
Sec. 63.10(a)(4), it should submit the information specified in
Sec. 63.01(r)(8) to retain its non-dominant status on any affiliated
route.
(e) The Commission will issue public notice of the submissions made
under this section for 14 days.
(1) In the case of a notification filed under paragraph (a) of this
section, the Commission, if it deems it necessary, will by written
order at any time before or after the submission of public comments
impose dominant carrier regulation on the carrier for the affiliated
routes based on the provisions of Sec. 63.10.
(2) In the case of a planned investment by a foreign carrier of a
ten percent or greater interest, whether direct or indirect, in the
capital stock of the authorized carrier, the Commission will, unless it
notifies the carrier in writing within 30 days of issuance of the
public notice that the investment raises a substantial and material
question of fact as to whether the investment serves the public
interest, convenience and necessity, presume the investment to be in
the public interest. If notified that the acquisition raises a
substantial and material question, then the carrier shall not
consummate the planned investment until it has filed an application
under Sec. 63.01 and submitted the information specified under
paragraphs (r) (6) or (7), as applicable, and (8) of that section, and
the Commission has approved the application by formal written order.
5. Section 63.12 is amended by revising paragraph (c)(1) to read as
follows:
Sec. 63.12 Streamlined processing of certain international resale
applications.
* * * * *
(c) * * *
(1) The applicant has an affiliation within the meaning of
Sec. 63.01(r)(3), with the U.S. facilities-based carrier whose
international switched or private line services the applicant seeks
authority to resell (either directly or indirectly through the resale
of another reseller's services); or
* * * * *
6. Section 63.13 is amended by revising the last sentences of
paragraphs (a)(3) and (a)(5), and by revising paragraph (a)(4) to read
as follows:
Sec. 63.13 Streamlined procedures for modifying regulatory
classification of U.S. international carriers from dominant to
nondominant.
(a) * * *
(3) * * * For purposes of paragraph (a)(3), ``telecommunications
facilities'' are defined as in Sec. 63.01(r)(4).
(4) Any carrier filing a certified list pursuant to paragraph
(a)(2) of this section must also provide the ``special concessions''
certification as required to be submitted pursuant to Sec. 63.01(r)(3).
(5) * * * See Sec. 63.01(s)(2).
7. Section 63.14 is revised to read as follows:
Sec. 63.14 Prohibition on agreeing to accept special concessions.
Any carrier authorized to provide international communications
service
[[Page 67339]]
under this part shall be prohibited from agreeing to accept special
concessions directly or indirectly from any foreign carrier or
administration with respect to traffic or revenue flows between the
United States and any foreign country served under the authority of
this part and from agreeing to enter into such agreements in the
future. For purpose of this section, foreign carrier is defined as in
Sec. 63.01(r)(1)(ii); and special concession is defined as in
Sec. 63.01(s).
8. A new Sec. 63.17 is added to read as follows:
Sec. 63.17 Special Provisions For U.S. International Common Carriers.
(a) Unless otherwise prohibited by the terms of its Section 214
certificate, a U.S. common carrier authorized under this part to
provide international private line service, whether as a reseller or
facilities-based carrier, may interconnect its authorized private lines
to the public switched network on behalf of an end user customer for
the end user customer's own use.
(b) Except as provided in paragraph (b)(5) of this section, a U.S.
common carrier, whether a reseller or facilities-based, may engage in
``switched hubbing'' to countries not found to offer equivalent resale
opportunities under Sec. 63.01(k) (5) and (6) under the following
conditions:
(1) U.S.-outbound switched traffic shall be routed over the
carrier's authorized U.S. international private lines to an equivalent
country, and then forwarded to a third, nonequivalent country only by
taking at published rates and reselling the International Message
Telephone Service (IMTS) of a carrier in the equivalent country;
(2) U.S.-inbound switched traffic shall be carried to an equivalent
country as part of the IMTS traffic flow from a non-equivalent third
country and then terminated in the United States over U.S.
international private lines from the equivalent hub country;
(3) U.S. common carriers that route U.S.-outbound traffic via
switched hubbing through an equivalent country shall tariff their
service on a ``through'' basis from the United States to the ultimate
foreign destination.
(4) No U.S. common carrier may engage in switched hubbing under
this section to a country for which it has an affiliation with a
foreign carrier unless and until it receives specific authority to do
so under Sec. 63.01. For purposes of this paragraph, ``affiliation''
and ``foreign carrier'' are defined as set forth in Sec. 63.01(r)(1)
(i)(B) and (ii), respectively.
[FR Doc. 95-31099 Filed 12-28-95; 8:45 am]
BILLING CODE 6712-01-M
