[Federal Register Volume 62, Number 236 (Tuesday, December 9, 1997)]
[Rules and Regulations]
[Pages 64741-64759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32013]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 43, 63, and 64
[IB Docket No. 97-142, FCC 97-398]
Foreign Participation in the U.S. Telecommunications Market
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: On November 25, 1997, the Federal Communications Commission
adopted a Report and Order that creates a new regulatory framework for
international telecommunications. This action is a result of the recent
World Trade Organization agreement on basic telecommunications services
recently concluded wherein 69 countries, including the United States
and virtually all of its major trading partners, agreed to open their
markets for basic telecommunications services to competition from
foreign carriers. Due to these changed circumstances, the Commission
initiated a proceeding to revisit its rules governing foreign
participation in the U.S. telecommunications market. In addition, the
Commission's order addresses related issues raised in petitions for
reconsideration of the Foreign Carrier Entry Order. The new rules will
have significant benefits for consumers. Entry by foreign suppliers of
telecommunications services will stimulate the U.S. market for
international services, creating incentives for carriers to offer
existing services at lower prices and adopt innovative new services to
attract residential and small business customers. Further opening the
U.S. market to foreign carrier entry, along with U.S. carrier entry
into foreign markets, will allow carriers to capitalize on newly found
efficiencies by offering one-stop shopping, which allows customers to
have a single service provider in multiple markets, thereby reducing
administrative costs to users.
This final rule contains information collections subject to the
Paperwork Reduction Act of 1995 (PRA), Pub. L. No. 104-13. It will be
submitted to the Office of Management and Budget (OMB) for review under
the PRA. OMB, the general public and other Federal agencies are invited
to comment on the information collections contained in the final rule.
DATES: The amendments to Secs. 43.51(d) and 64.1001(b) are effective
January 8, 1998. All other regulations contain information collection
requirements and are not effective until approved by the Office of
Management and Budget (OMB), subject to 5 U.S.C. Sec. 801(a)(3). A
document announcing the effective date of these regulations will be
published in the Federal Register.
The agency reserves the right to reconsider the effective date of
this decision if the WTO Basic Telecom Agreement does not take effect
on January 1, 1998. If these final rules are postponed, the agency will
give timely notice in the Federal Register.
Written comments by the public on the information collection
requirements are due February 9, 1998.
[[Page 64742]]
ADDRESSES: A copy of any comments on the information collections
contained herein should be submitted to Judy Boley, Federal
Communications Commission, Room 234, 1919 M Street, N.W., Washington,
D.C. 20554, or via the Internet to jboley@fcc.gov.
FOR FURTHER INFORMATION CONTACT: Douglas A. Klein, Attorney-Advisor,
Policy and Facilities Branch, Telecommunications Division,
International Bureau, (202) 418-0424; Susan O'Connell, Attorney-
Advisor, Policy and Facilities Branch, Telecommunications Division,
International Bureau, (202) 418-1484. For additional information
concerning the information collections contained in this Order contact
Judy Boley at 202-418-0214, or via the Internet at jboley@fcc.gov.
SUPPLEMENTARY INFORMATION:
1. On June 4, 1997, the Commission released a Notice of Proposed
Rulemaking in the Matter of Rules and Policies on Foreign Participation
in the U.S. Telecommunications Market, IB Docket No. 97-142 (62 FR
32966, June 17, 1997). The Notice proposed changes to the rules and
policies governing foreign participation in the U.S. market for basic
telecommunications services that had been previously adopted by the
Commission in the Foreign Carrier Entry proceeding. The Commission
initiated this proceeding to consider more appropriate rules in the
liberalized competitive environment that will exist when the recent
World Trade Organization (WTO) agreement on basic telecommunications
services takes effect on January 1, 1998. The WTO agreement was
concluded on February 15, 1997, when 69 countries, including the United
States and virtually all of its major trading partners, agreed to open
their markets for basic telecommunications services to competition from
foreign carriers. This agreement covers 95 percent of the global market
for basic telecommunications services. Sixty-five of these countries,
including the United States, have committed to enforce fair rules of
competition for basic telecommunications services that are modeled on
U.S. law and regulations. Fifty-two of these countries, which account
for approximately 90 percent of telecommunications revenues in WTO
Member countries, have granted market access for international
services. Thus, most of the world's major trading nations have made
binding commitments to transition rapidly from monopoly provision of
basic telecommunications services to open entry and procompetitive
regulation of these services.
2. The order removes the effective competitive opportunities (ECO)
test and replaces it with an open entry standard. In its Foreign
Carrier Entry Order, the Commission adopted the ECO test as part of an
overall public interest analysis for both international Section 214
authorizations and indirect foreign ownership of common carrier radio
licenses under Section 310(b)(4). (See 60 FR 67332, December 29, 1995.)
The Commission replaces the ECO test with a rebuttable presumption that
applications for Section 214 authority from carriers from WTO countries
do not pose concerns that would justify denial of an application on
competitive grounds. The Commission also adopts a rebuttable
presumption that WTO country applicants filing cable landing license
applications, as well as applications to exceed the 25 percent foreign
ownership benchmark in a common carrier radio licensee under Section
310(b)(4) of the Act, similarly do not pose such competitive concerns.
The Commission finds that adopting a presumption in favor of entry will
have significant public interest benefits.
3. The Commission recognizes, however, that in exceptional
circumstances, entry into the U.S. market by an applicant affiliated
with a foreign telecommunications carrier from a WTO country may pose
competitive risks by virtue of the applicant's ability to exercise
market power in a relevant foreign market. In such exceptional
circumstances, the Commission will have the ability to attach
additional conditions to or even deny a particular application. The
Commission believes this approach provides protection against possible
competitive harms while favoring neither foreign nor domestic
applications.
4. The Commission also intends to apply its new open entry policies
to cable landing license applicants. The Commission will continue,
however, to analyze each application while seeking the approval of the
State Department as required by Executive Order 10530. The Commission
will no longer routinely impose a restriction on foreign ownership of
cable landing stations. Should the Department of State, pursuant to
Executive Order 10530, condition its approval of a particular cable
landing license on such a restriction, the Commission will include a
condition to that effect in the particular cable landing license. Any
such restriction would be necessary to protect the national security of
the United States.
5. In the Foreign Carrier Entry Order, the Commission adopted an
ECO test as part of the public interest analysis under Section
310(b)(4) for applicants seeking authority to acquire greater than 25
percent indirect foreign ownership in a common carrier radio licensee.
In this Order, the Commission replaces the current ECO test as applied
to foreign investment from WTO Member countries in common carrier radio
licenses with its new open entry policies. The Commission retains its
general requirement that such licensees seek Commission approval before
they accept foreign ownership that would put them over the 25 percent
benchmark under Section 310(b)(4). The Commission will also continue to
require licensees who have already received approval to exceed the 25
percent benchmark up to a certain level of indirect foreign ownership
to seek further approval in order to increase that level of indirect
foreign ownership. The Commission will continue to use the ``principal
place of business'' test to determine the nationality or ``home
market'' of foreign investors, but it will consider other means of
determining an applicant's nationality if requested to do so by an
applicant or if so advised by the Executive Branch.
6. The Commission will treat aeronautical enroute and aeronautical
fixed services in the same manner as it treats common carrier services
under Section 310(b)(4) and not apply an ECO test to indirect foreign
ownership by entities from WTO Member countries. The Commission
declines to address the rule limiting the number of aeronautical
enroute licenses to one per location because the rule is beyond the
scope of this proceeding. The Commission does, however, suggest several
options for parties seeking to provide aeronautical services in the
United States.
7. The Commission will continue to apply the ECO and equivalency
tests to non-WTO Member countries. The Commission believes that
continuing to apply the ECO test to non-WTO Member countries may
encourage some of those countries to take unilateral or bilateral steps
toward opening their markets to competition and may provide incentives
for them to join the WTO. In the case of Section 214 applications to
provide facilities-based, resold switched, and resold non-
interconnected private line services, the Commission will continue to
apply the ECO test as part of the public interest inquiry when
presented with an application from a foreign carrier or a carrier
affiliated with a foreign carrier where the foreign carrier is from a
non-WTO Member country and has market power in the destination
[[Page 64743]]
market. The ECO test will be applied in a similar manner as part of the
Commission's analysis under Section 2 of the Submarine Cable Landing
License Act. The Commission will maintain the equivalency test as part
of its standard for permitting the provision of switched services over
private lines, whether facilities-based or through resale, for non-WTO
Member countries. The ECO test will be applied as part of the
Commission's general public interest analysis under Section 310(b)(4)
regarding foreign investment by entities from non-WTO Member countries
in common carrier radio licensees. The Commission will retain the ECO
test as the threshold standard for permitting accounting rate
flexibility with carriers from countries that are non-WTO Members.
8. In the Notice, the Commission noted that there were outstanding
petitions for reconsideration of the Foreign Carrier Entry Order. In
light of the WTO Agreement, the Commission requested comment on whether
it should, for purposes of countries that are not WTO Members, apply
the ECO test to U.S. carriers that own more than 25 percent of, or
control, a foreign carrier from a non-WTO country. In the Order, the
Commission recognizes that in the more liberalized environment that
will result from the WTO Basic Telecom Agreement it will become
increasingly difficult to define a ``U.S. carrier'' for the purpose of
distinguishing between U.S.-carrier and foreign-carrier ownership of
carriers. In addition, the GATS principle of National Treatment
obligates the U.S. Government to treat investments by carriers from WTO
Member countries no less favorably than it treats investments by
domestic carriers. Thus, the Commission modifies its conclusion in the
Foreign Carrier Entry Order and it will apply the ECO test where a U.S.
carrier, or a company that owns more than 25 percent of a U.S. carrier,
owns a controlling interest in a foreign carrier that has market power
in a non-WTO country.
9. Given the new open entry approach, the Commission found it
necessary to revise the competitive safeguards governing foreign-
affiliated carrier provision of basic telecommunications services in
the U.S. market and, more broadly, U.S. carrier dealings with foreign
carriers. The Commission establishes a regulatory framework that
modifies or eliminates rules that could hamper competition while
balancing a need to monitor and detect anticompetitive behavior in the
U.S. market without imposing burdensome regulations. For the purposes
of applying the dominant carrier safeguards and No Special Concessions
rule, the Commission creates a rebuttable presumption that a foreign
carrier with less than 50 percent market share in each of the relevant
markets on the foreign end of a U.S. international route lacks
sufficient market power to affect competition adversely in the U.S.
market. The Commission states that this presumption is rebuttable.
Carriers may file petitions with the Commission seeking a declaratory
ruling on whether a foreign carrier with a market share of 50 percent
or more in any relevant market should be allowed to grant a special
concession or be regulated as non-dominant because it lacks the ability
to affect competition adversely in the U.S. market.
10. The Commission narrows its No Special Concessions rule to allow
U.S. carriers to accept special concessions granted by foreign carriers
that do not possess market power in a relevant foreign market without
first obtaining specific approval from the Commission. The Commission
concludes that its No Special Concessions rule should be limited to
exclusive dealings involving services, facilities, or functions on the
foreign end of a U.S. international route that are necessary for the
provision of U.S. basic international service. The Commission did not
adopt its proposal to specify a prohibition on special concessions
involving the joint handling of basic U.S. traffic originating or
terminating in third countries.
11. The Commission prohibits U.S. carriers from receiving
proprietary or confidential information obtained by any foreign carrier
in the course of its regular business dealings with a competing U.S.
carrier, unless the competing U.S. carrier provides its specific
permission in writing. Where a U.S. carrier is affiliated with a
foreign carrier, the proprietary or confidential information of other
U.S. carriers obtained by that foreign affiliate may not be used for
any purpose other than for conducting the correspondent relationships
with the carriers from whom the information was obtained. This rule
will serve as a general requirement on all existing, pending, and
future authorizations to provide U.S. international services.
12. The Commission concludes that safeguards are necessary given
the privacy and anticompetitive effects that may result from the use of
foreign-derived U.S. customer proprietary network information (CPNI).
Under Section 222(a) of the Communications Act, every
telecommunications carrier has a duty to protect the confidentiality of
customer information. The Commission finds that if a U.S. carrier
desires to make use of foreign-derived CPNI pertaining to a specific
U.S. customer, it must first obtain appropriate consent from that
customer. In doing so, the U.S. carrier also must notify the customer
that he or she may require the U.S. carrier to disclose the CPNI to
unaffiliated third parties upon written request by the customer. The
Commission finds that these procedures will balance Section 222's
privacy and competitive issues while not burdening or preventing U.S.
carriers from offering one-stop shopping options.
13. The Commission declines to address issues raised by parties
concerning the benchmark authorization conditions imposed on
facilities-based carriers in the Benchmarks Order (62 FR 45758, August
29, 1997). The Commission will condition a carrier's facilities-based
authorization to serve an affiliated market on the foreign carrier
offering U.S.-licensed international carriers a settlement rate for the
affiliated market at or below the relevant benchmark adopted in the
Benchmarks Order.
14. The Commission addresses the issue of whether to apply its
benchmark condition to authorizations to provide switched resale
service from the United States to an affiliated market, which was not
resolved in the Benchmarks Order. The Commission declines to apply the
settlement rate benchmark condition to switched resale providers. The
Commission finds that a switched reseller is less likely to attempt a
predatory price squeeze. The Commission also finds here that it would
be easier to detect a price squeeze in the switched resale context than
in the facilities-based contest. The easier detection should deter
switched resellers from attempting a price squeeze and will allow the
Commission to take action in the event a carrier does attempt a price
squeeze. The Commission will monitor the switched resale market
carefully, and if it finds substantial evidence of anticompetitive
behavior that causes harm to competition and consumers in the U.S.
market, it may reconsider its decision not to apply the benchmark
condition to the provision of switched resale. The Commission also
adopts a quarterly traffic and revenue reporting requirement that
applies to switched resellers that possess market power on the foreign
end of the route and that have settlement rates with U.S. carriers.
15. The Commission adopts a dominant carrier regulatory framework
aimed at detecting and deterring anticompetitive behavior in the U.S.
market by foreign carriers and their
[[Page 64744]]
affiliated U.S. carriers. It will retain a single-tier dominant carrier
regulatory approach and classify any U.S.-licensed carriers as dominant
on a particular route if it is affiliated with a foreign carrier that
possesses market power in a relevant market on the foreign end of that
route. The Commission did not adopt its proposal to ban exclusive
arrangements involving joint marketing, customer steering, and the use
of foreign market telephone customer information. The Commission adopts
its tentative conclusion to continue its current regulatory treatment
of co-marketing and other non-equity business arrangements between U.S.
carriers and their foreign counterparts that affect the provision of
U.S. international services. The Commission also found that it would be
an unnecessary burden to apply dominant classification to all non-
equity arrangements absent a finding of substantial risk of competitive
harm. The Commission also declined to adopt a filing requirement for
non-equity business relationships.
16. The Commission adopts a number of competitive safeguards as
part of its dominant carrier regulatory framework. Dominant foreign-
affiliated carriers will be permitted to file tariffs on one day's
notice with a presumption of lawfulness rather than the current
fourteen-day advance notice. The Commission also eliminates its prior
approval requirement for circuit additions and discontinuances on the
dominant route. The Commission declines to adopt a quarterly
notification of circuit additions or discontinuances requirement. If
the Commission finds that an affiliated carrier is engaged in
anticompetitive behavior, it may apply the prior approval requirement
on that route.
17. Although the Commission currently has in place a number of
safeguards to prevent anticompetitive behavior, it finds that a minimal
level of structural separation for dominant carriers is necessary. The
Commission will require a foreign-affiliated U.S. international carrier
regulated as dominant to provide service in the U.S. market through a
corporation that is separate from the foreign affiliate, maintain
separate books of account, and not jointly own switching and
transmission facilities with its foreign carrier affiliate.
18. The Order imposes a number of reporting requirements to assist
the Commission in monitoring and detecting anticompetitive behavior.
Foreign-affiliated dominant carriers will be required to file quarterly
traffic and revenue reports for their dominant routes. The Commission
requires that each dominant foreign-affiliated carrier file quarterly
reports summarizing the provisioning and maintenance of all basic
network facilities and services it procures from its foreign affiliate,
including, but not limited to, correspondent or other basic facilities
procured on behalf of customers of joint venture offerings. Although
the Commission does not dictate the format for the provisioning and
maintenance reports, the Commission describes the information that it
requires. The Commission directs the International Bureau to adopt a
standard reporting manual if it feels that one would be helpful, and
permits the Bureau to modify the contents of the filing requirements as
necessary. Carriers subject to this requirement will be able to seek a
protective order to ensure that parties to whom confidential
information is made available limit the persons who will have access to
the information and the purposes for which the information will be
used.
19. All dominant foreign-affiliated facilities-based carriers will
file quarterly circuit status reports. Although the Commission proposed
quarterly notifications of circuit changes, the quarterly circuit
status reports will provide information that can be more readily
compared to the information provided by all U.S. international carriers
on an annual basis under Section 43.82 of our rules. The Commission
does not require dominant foreign-affiliated private line resale
carriers to file quarterly circuit status reports, given that they rely
on underlying U.S. facilities-based carriers to make arrangements with
their affiliated carriers. The Commission directs the International
Bureau to modify the Section 43.82 reporting manual as necessary to
accommodate these changes. The Commission recognizes that the quarterly
circuit status reports contain commercially sensitive information
similar to the provisioning and maintenance reports. Thus, the
Commission will allow dominant foreign-affiliated carriers to request
the standard protective order for the three quarterly circuit status
reports that dominant foreign-affiliated carriers must file.
20. The Commission does not adopt an expedited procedure to prevent
competitive harm in the U.S. market. Rather, the Commission will rely
on the various remedies currently available for addressing
anticompetitive conduct. The Commission does, however, adopt a general
rule that would enable it to impose additional requirements on U.S.
international carriers in circumstances where it appears that harm to
competition is occurring on one or more U.S. international routes. The
Commission notes that it is presently reviewing its rules to ensure
that the Commission provides a forum for the prompt resolution of all
formal complaints against telecommunications carriers involving claims
of unreasonably discriminatory or otherwise unlawful conduct in
violation of the Communications Act or its rules.
21. In the Flexibility Order (62 FR 5535, February 6, 1997), the
Commission developed a new approach for permitting alternative
settlement arrangements. In this proceeding, the Commission will no
longer apply the ECO test as a threshold standard for determining when
to permit accounting rate flexibility. Instead, it will apply a
rebuttable presumption that flexibility is permitted for carriers from
WTO Member countries. In order to rebut this presumption, a party
opposing a flexible arrangement must demonstrate that the foreign
carrier is not subject to competition in its home market from multiple
(more than one) facilities-based carriers that possess the ability to
terminate international traffic and serve existing customers in the
foreign market. The Commission also makes minor changes to conform its
procedures for U.S. carriers to enter into an alternative payment
arrangements, and it will apply the new policies and procedures to all
flexibility petitions pending before the Commission in any procedural
status at the time the new rules become effective. The Commission will
continue to apply the safeguards developed in the Flexibility Order (62
FR 5535, February 6, 1997). The Commission will continue to allow the
proponent of an alternative settlement arrangement with a carrier from
a WTO Member country to make an alternative showing where the
presumption in favor of flexibility can be rebutted.
22. The Order streamlines the Section 214 applications of carriers
that demonstrate clearly and convincingly that the foreign carrier
affiliate has less than a 50 percent market share in reach relevant
terminating market in the destination foreign country (international,
intercity, and local exchange access). Streamlined processing of
Section 214 applications will be available to any applicant whose
foreign affiliate is from a WTO Member country if the applicant
requests authority only to serve that country solely by reselling the
switched services of unaffiliated U.S. international carriers.
Streamlining will be available for foreign-affiliated carriers not
otherwise eligible for streamlined processing as long as the applicant
[[Page 64745]]
certifies that it will comply with the dominant carrier regulations of
the Order. In addition, the Commission will streamline applications for
assignments and transfers of control of Section 214 authorizations in
circumstances where an initial Section 214 application filed by the
assignee or transferee would be eligible for streamlined processing.
The Commission will streamline Section 310(b)(4) requests when they
meet the criteria described in the Order. In all circumstances,
Commission staff will have discretion to deem an application ineligible
for streamlined processing either because it raises market power
concerns or because an Executive Branch agency raises concerns with
respect to issues within its expertise. In such cases the Commission
will issue a public notice that the application has been removed from
the streamlined process, and within ninety days of the public notice it
will either issue an order acting upon the application or provide
public notice that, because the application raises issues of
extraordinary complexity, an additional 90-day period for review is
needed. Each successive 90-day period may be so extended.
23. The Commission amends its rules to raise the level of foreign
ownership that requires prior notification from 10 percent to greater
than 25 percent. This change will eliminate the requirement that
authorized carriers notify the Commission before accepting foreign
carrier investments of 25 percent or less. An authorized carrier will,
however, be required to notify the Commission sixty days before it, or
a company that owns more than 25 percent of it, acquires a direct or
indirect controlling interest in a foreign carrier.
24. The Commission dismisses arguments that the Commission's public
interest analysis is invalid under the General Agreement on Trade in
Services (GATS). The Commission states that the Order establishes the
parameters for reviewing applications to provide international
services. The Commission also found that its safeguards are consistent
with the GATS.
25. Finally, the Commission disposes of the pending petitions for
reconsideration of the Foreign Carrier Entry Order because of their
close relationship with the substance of this proceeding.
26. The Commission states that it will largely rely on reporting
requirements, rather than restrictions on capacity changes or service
options, to prevent carriers from causing competitive harm in the U.S.
market. The Commission declines to adopt its proposal for a
supplemental tier of dominant carrier safeguards for U.S. carriers
affiliated with foreign carriers that do not face facilities-based
competition on the foreign end of a particular route. The Commission
retains authority to impose sanctions, in the event it finds evidence
of anticompetitive conduct.
Final Regulatory Flexibility Analysis
27. As required by the Regulatory Flexibility Act (RFA), an Initial
Regulatory Flexibility Analysis (IRFA) was included in the Notice of
Proposed Rulemaking in this proceeding. The Commission sought written
public comment on the proposals in the Notice, including comment on the
IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to the
RFA. This analysis also serves as the FRFA for the issues disposed of
here on reconsideration of the Foreign Carrier Entry Order.
Need for, and Objectives of, the Rules and Policies Adopted Here
28. This Report and Order and Order on Reconsideration adopts a
liberalized standard for participation by foreign and foreign-
affiliated entities in the U.S. telecommunications markets. This open
entry standard will apply to the provision of international
telecommunications services under Section 214 of the Communications
Act, indirect foreign ownership of common carrier radio licensees under
Section 310(b)(4), and cable landing licenses under the Submarine Cable
Landing License Act. It also revises the Commission's regulatory
safeguards governing the provision of international telecommunications
services in light of recent changes in the world's telecommunications
market and the Commission's liberalized standard for participation by
foreign and foreign-affiliated entities. The Commission has deemed
these changes appropriate in light of the recent World Trade
Organization (WTO) Basic Telecommunications Services Agreement and the
worldwide trend toward deregulation and competition in the provision of
telecommunications services. Our objective is to increase competition
in the U.S. telecommunications markets while minimizing the risk of
anticompetitive harm and encouraging foreign governments to open their
telecommunications markets. In light of the changed circumstances that
will result from the WTO Basic Telecom Agreement and our nearly two
years of experience with our current rules on market entry and
regulation of foreign-affiliated entities, we find that reducing entry
barriers for applicants affiliated with entities from WTO Member
countries is the appropriate way to accomplish that objective. The
Commission believes that it is no longer necessary to apply the
``effective competitive opportunities'' (ECO) test developed in the
1995 Foreign Carrier Entry Order to countries that are Members of the
WTO. Instead, we will rely primarily on regulatory safeguards and
benchmark settlement rates to reduce the potential for anticompetitive
conduct in the U.S. market. We revise some of those safeguards in this
Order.
Summary of Significant Issues Raised by Public Comments in Response to
the IRFA
29. No comments were submitted specifically in response to the
IRFA. Nevertheless, we have considered, in developing these rules and
policies, any potential significant economic impact on small entities.
We have attempted to minimize the burdens imposed on all entities,
including small entities, in order to promote participation by new
entrants in the U.S. telecommunications markets.
30. NextWave raised comments in response to the Notice specific to
the impact of our policy toward indirect foreign investment in C-block
and F-block licensees. Those blocks, known as ``entrepreneur'' blocks,
are reserved for small businesses and entrepreneurs. NextWave states
that it and other entrepreneurial carriers are dependent on financing
from a variety of sources, including foreign investment, and that
access to foreign capital is vital to their financial viability.
NextWave argues that indirect foreign investment in C-block and F-block
licensees presents ``no conceivable risk to competition'' because those
licenses are held by entrepreneurs who are new entrants into the
markets. NextWave proposes that, for that reason, the Commission should
conclude that indirect foreign investment in C-block and F-block
personal communications systems (PCS) licensees by any entity whose
home market is a WTO Member country serves the public interest and
should not be subject to prior Commission approval. NextWave also urges
the Commission, in the alternative, to establish an expedited process
and timetable for addressing applications to exceed the 25 percent
benchmark for indirect foreign ownership of common carrier wireless
licensees.
31. Telephone and Data Systems (TDS) proposed that the Commission
permit without prior approval any amount of indirect foreign ownership
of common carrier radio licensees held in the form of registered
securities when
[[Page 64746]]
the foreign investor is not a carrier and comes from one of the 64
other WTO Member countries that has committed to enforce fair rules of
competition for basic telecommunications. Under TDS's proposal, the
Commission would continue to require prior approval for investors from
other WTO Member countries, for investors from non-WTO countries, and
from all foreign carriers. TDS suggested that we scrutinize filings
with the Securities and Exchange Commission to monitor foreign
ownership of registered securities and that we rely on revocation,
instead of prior approval, to protect the public interest pursuant to
Section 310(b)(4). TDS states that adoption of its proposal would
significantly reduce burdens on common carrier radio licensees, who
currently must research the nationalities of their individual
shareholders in order to remain in compliance with the restrictions on
foreign ownership.
Description and Estimate of the Number of Small Entities to Which the
Rules Will Apply
32. We received no comments in response to our estimates in the
IRFA of the number of small entities to which the proposed rules would
apply. We conclude that the IRFA's estimates are the best available
estimates of the number of small entities that the rules we adopt here
will affect and that those estimates are sufficiently useful in
enabling us to attempt to minimize the economic impact of our rules on
small entities.
33. The RFA generally defines small entity as having the same
meaning as the terms small business, small organization, and small
governmental jurisdiction and defines small business as having the same
meaning as the term small business concern under section 3 of the Small
Business Act unless the Commission has developed one or more
definitions that are appropriate for its activities. The Small Business
Act defines small business concern as one that (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA).
34. The rules adopted in this Order apply only to entities
providing international common carrier services pursuant to Section 214
of the Communications Act; entities providing domestic or international
wireless common carrier, aeronautical enroute, or aeronautical fixed
services under Section 309 of the Act; and entities licensed to
construct and operate submarine cables under the Cable Landing License
Act.
35. Because the small incumbent local exchange carriers (LECs)
subject to these rules are either dominant in their fields of
operations or are not independently owned and operated, consistent with
our prior practice, they are excluded from the definitions of small
entity and small business concern. Accordingly, our use of the terms
small entities and small businesses does not encompass small incumbent
LECs. Out of an abundance of caution, however, for the purposes of this
FRFA, we will consider small incumbent LECs to be within this analysis,
where a small incumbent LEC is any incumbent LEC that arguably might be
defined by the SBA as a ``small business concern.''
Section 214 International Common Carrier Services
36. Entities providing international common carrier service
pursuant to Section 214 of the Act fall into the SBA's Standard
Industrial Classification (SIC) categories for Radiotelephone
Communications (SIC 4812) and Telephone Communications, Except
Radiotelephone (SIC 4813). The SBA's definition of small entity for
those categories is one with fewer than 1,500 employees. We discuss
below the number of small entities falling within these two
subcategories that may be affected by the rules adopted in this Order.
37. The most reliable source of information regarding the number of
international common carriers is the data that we collect annually in
connection with the Telecommunications Industry Revenue:
Telecommunications Relay Service Fund Worksheet Data (TRS Worksheet).
In 1995, 445 toll carriers filed TRS fund worksheets. We believe that
between 50 and 200 carriers failed to file TRS fund worksheets. We
believe also that fewer than 10 toll carriers had 1,500 or more
employees. Thus, at most 635 international carriers would be classified
as small entities. Many TRS filers, however, are affiliated with other
carriers, and therefore the number of aggregated carriers is far fewer
than the preceding estimate. Of the 445 toll filers, 239 reported no
carrier affiliates. Adding 50 non-filers gives a lower estimate of 289
international carriers that would be classified as small entities.
Thus, our best estimate of the total number of small entities is
between 289 and 635. We are unable at this time to estimate with
greater precision the number of international carriers that would
qualify as small business entities under the SBA's definition. While
not all of these entities may have provided international service in
1995, we expect that many of these entities will seek to do so in the
future, as will additional entrants into the market.
b. Title III Common Carrier Services
38. Cellular licensees. Neither the Commission nor the SBA has
developed a definition of small entities applicable to cellular
licensees. The closest applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone (wireless)
companies (SIC 4812). The most reliable source of information regarding
the number of cellular services carriers nationwide of which we are
aware appears to be the data that the Commission collects annually in
connection with the TRS Worksheet. According to the most recent data,
792 companies reported that they were engaged in the provision of
cellular services. Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of cellular services carriers that would qualify
as small business concerns under the SBA's definition. Consequently, we
estimate that there are fewer than 792 small cellular service carriers.
39. 220 MHz Radio Services. Because the Commission has not yet
defined a small business with respect to 220 MHz radio services, we
will utilize the SBA's definition applicable to radiotelephone
companies--i.e., an entity employing less than 1,500 persons. With
respect to the 220 MHz services, the Commission has proposed a two-
tiered definition of small business for purposes of auctions: (1) For
Economic Area (EA) licensees, a firm with average annual gross revenues
of not more than $6 million for the preceding three years, and (2) for
regional and nationwide licensees, a firm with average annual gross
revenues of not more than $15 million for the preceding three years.
Since this definition has not yet been approved by the SBA, we will
utilize the SBA's definition applicable to radiotelephone companies.
Given the fact that nearly all radiotelephone companies employ fewer
than 1,000 employees, with respect to the approximately 3,800 incumbent
licensees in this service, we will consider them to be small businesses
under the SBA definition.
40. Common Carrier Paging. The Commission has proposed a two-tier
definition of small businesses in the context of auctioning licenses in
the Common Carrier Paging services. Because the SBA has not yet
approved this definition for paging services, we will utilize the SBA's
definition
[[Page 64747]]
applicable to radiotelephone companies, i.e., an entity employing fewer
than 1,500 persons. At present, there are approximately 74,000 Common
Carrier Paging licensees. We estimate that the majority of common
carrier paging providers would qualify as small businesses under the
SBA definition.
41. Mobile Service Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
mobile service carriers such as paging companies. The closest
applicable definition under the SBA rules is for radiotelephone
(wireless) companies. The most reliable source of information regarding
the number of mobile service carriers nationwide of which we are aware
appears to be the data that the Commission collects annually in
connection with the TRS Worksheet. According to the most recent data,
117 companies reported that they were engaged in the provision of
mobile services. Although it seems certain that some of these carriers
are not independently owned and operated, or have more than 1,500
employees, we are unable at this time to estimate with greater
precision the number of mobile service carriers that would qualify
under the SBA's definition. Consequently, we estimate that fewer than
117 mobile service carriers are small entities.
42. Broadband Personal Communications Services (PCS). The broadband
PCS spectrum is divided into six frequency blocks designated A through
F, and the Commission has held auctions for each block. The Commission
has defined small entity in the auctions for Blocks C and F as an
entity that has average gross revenues of less than $40 million in the
three previous calendar years. For Block F, an additional
classification for ``very small business'' was added and is defined as
an entity that, together with its affiliates, has average gross revenue
of not more than $15 million for the preceding three calendar years.
These regulations defining small entity in the context of broadband PCS
auctions have been approved by the SBA. No small business within the
SBA-approved definition bid successfully for licenses in Blocks A and
B. There were 90 winning bidders that qualified as small entities in
the Block C auctions. A total of 93 small and very small businesses won
approximately 40 percent of the 1,479 licenses for Blocks D, E, and F.
However, licenses for Blocks C through F have not been awarded fully;
therefore, there are few, if any, small businesses currently providing
PCS services. Based on this information, we conclude that the number of
small broadband PCS licensees will include the 90 winning bidders and
the 93 qualifying bidders in the D, E, and F Blocks, for a total of 183
small PCS providers as defined by the SBA and the Commission's auction
rules.
43. Narrowband PCS. The Commission does not know how many
narrowband PCS licenses will be granted or auctioned, as it has not yet
determined the size or number of such licenses. Two auctions of
narrowband PCS licenses have been conducted for a total of 41 licenses,
out of which 11 were obtained by small businesses owned by members of
minority groups and/or women. Small businesses were defined as those
with average gross revenues for the prior three fiscal years of $40
million or less. For purposes of this FRFA, the Commission is utilizing
the SBA definition applicable to radiotelephone companies, i.e., an
entity employing less than 1,500 persons. Not all of the narrowband PCS
licenses have yet been awarded. There is therefore no basis to
determine the number of licenses that will be awarded to small entities
in future auctions. Given the facts that nearly all radiotelephone
companies have fewer than 1,000 employees and that no reliable estimate
of the number of prospective narrowband PCS licensees can be made, we
assume, for purposes of the evaluations and conclusions in this FRFA,
that all the remaining narrowband PCS licenses will be awarded to small
entities.
44. Rural Radiotelephone Service. The Commission has not adopted a
definition of small business specific to the Rural Radiotelephone
Service, which is defined in Section 22.99 of the Commission's Rules. A
significant subset of the Rural Radiotelephone Service is BETRS, or
Basic Exchange Telephone Radio Systems (the parameters of which are
defined in Sections 22.757 and 22.759 of the Commission's Rules).
Accordingly, we will use the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing fewer than 1,500
persons. There are approximately 1,000 licensees in the Rural
Radiotelephone Service, and we estimate that almost all of them have
fewer than 1,500 employees.
45. Air-Ground Radiotelephone. The Commission has not adopted a
definition of small business specific to the Air-Ground Radiotelephone
Service, which is defined in Section 22.99 of the Commission's Rules.
Accordingly, we will use the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing fewer than 1,500
persons. There are approximately 100 licensees in the Air-Ground
Radiotelephone Service, and we estimate that almost all of them qualify
as small under the SBA definition.
46. Specialized Mobile Radio Licensees (SMR). Pursuant to Section
90.814(b)(1) of our rules, the Commission awards bidding credits in
auctions for geographic area 800 MHz and 900 MHz Specialized Mobile
Radio (SMR) licenses to firms that had revenues of less than $15
million in each of the three previous calendar years. This regulation
defining ``small entity'' in the context of 800 MHz and 900 MHz SMR has
been approved by the SBA. We do not know how many firms provide 800 MHz
or 900 MHz geographic area SMR service pursuant to extended
implementation authorizations or how many of these providers have
annual revenues of less than $15 million. We do know that one of these
firms has over $15 million in revenues. We assume that all of the
remaining existing extended implementation authorizations are held by
small entities, as that term is defined by the SBA. The Commission
recently held auctions for geographic area licenses in the 900 MHz SMR
band. There were 60 winning bidders who qualified as small entities in
the 900 MHz auction. Based on this information, we conclude that the
number of geographic area SMR licensees affected includes these 60
small entities.
47. Microwave Video Services. Microwave services includes common
carrier, private operational fixed, and broadcast auxiliary radio
services. At present, there are 22,015 common carrier licensees.
Inasmuch as the Commission has not yet defined small business with
respect to microwave services, we will utilize the SBA's definition
applicable to radiotelephone companies--i.e., an entity with less than
1,500 employees. Although some of these companies may have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of common carrier microwave service providers that
would qualify under the SBA's definition. We therefore estimate that
there are fewer than 22,015 small common carrier licensees in the
microwave video services.
48. Offshore Radiotelephone Service. This service operates on
several UHF TV broadcast channels that are not used for TV broadcasting
in the coastal area of the states bordering the Gulf of Mexico. At
present, there are approximately 55 licensees in this service. Some of
those licensees are common carriers. We are unable at this
[[Page 64748]]
time to estimate the number of licensees that would qualify as small
under the SBA's definition.
49. Local Multipoint Distribution Service (LMDS). The Commission
has so far licensed only one licensee in this service, and that
licensee is not providing service as a common carrier. There will be a
total of 986 LMDS licenses. Licensees will be permitted to decide
whether to provide common carrier service, and we have no way of
estimating how many will choose to do so. Because there will be no
restrictions on the number of licenses a given entity may acquire, we
have no way of estimating how many total licensees there will be. We
also cannot estimate the number of common carrier licensees that will
qualify as small entities.
50. Space Stations (Geostationary). Very few systems are currently
operated on a common carrier basis. Because we do not collect
information on annual revenue or number of employees of all these
licensees, we cannot estimate with precision the number of such
licensees that may constitute a small business entity. It is likely
that no more than one such entity that is currently operating as a
common carrier would constitute a small business entity. There may be a
small increase in the number of such entities in the future as a result
of recent licensing action in the Ka-band.
51. Space Stations (Non-geostationary). These systems by and large
do not operate as common carriers. Because we do not collect
information on annual revenue or number of employees, we cannot
estimate with precision whether any carrier that may choose to operate
on a common carrier basis constitutes a small business entity. The
trend is for such systems to operate on a non-common carrier basis.
These systems, of which there will be a limited number, by and large
are not yet operational and are still being licensed and constructed.
52. Earth Stations. The vast majority of earth stations licensed by
the Commission are not operated on a common carrier basis. Earth
stations that communicate with non-geostationary and Ka-band satellite
systems may operate on a common carrier basis but these systems are not
yet operational and are still being licensed and constructed. We are
unable to estimate at this time the number of earth stations
communicating with such systems that may operate on a common carrier
basis and, of those, the number that will be licensed to small business
entities.
c. Aeronautical Enroute and Aeronautical Fixed Licenses
53. The Commission has not adopted a definition of small business
specific to the aeronautical enroute and aeronautical fixed services.
Accordingly, we will use the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing fewer than 1,500
persons. There are 45 licensees providing aeronautical enroute and
aeronautical fixed services, including Aeronautical Radio Inc. (ARINC)
and its affiliates. All of the licensees are small businesses except
ARINC, which has approximately 2,000 employees. We therefore conclude
that there are 44 small businesses providing aeronautical enroute and
aeronautical fixed services.
d. Submarine Cable Landing Licenses
54. The new rules and policies adopted in this Order will affect
all holders of and future applicants for cable landing licenses,
whether or not they operate their cables as common carriers. It is
difficult to estimate how many applications for cable landing licenses
will be filed in coming years, but that number will likely increase if
we adopt our proposal to lower the barriers to granting licenses for
cables to WTO Member countries. Since 1992, there have been
approximately 40 applications for cable landing licenses. The total
number of licensees is difficult to determine, because many licenses
are jointly held by several licensees. Our rules will also permit more
current licensees to accept additional investment from entities from
WTO Member countries.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
55. The rules and policies adopted in this Report and Order and
Order on Reconsideration will affect large and small entities. We will
require that U.S. carriers whose foreign affiliates have market power
maintain or provide certain records regarding their foreign affiliates.
Our rules will in most cases reduce the burdens that are currently
imposed on such carriers, and we anticipate that the remaining
requirements will not impose a significant economic burden,
particularly on small entities. A variety of skills may be required to
comply with the proposed requirements, but all of the skills that may
be required are of the type needed to conduct a carrier's normal course
of business. No additional outside professional skills should be
required, with the possible exception of preparing an initial Section
214 or cable landing license application and of preparing a submission
for our consideration under Section 310(b)(4), most of which will be
simplified by the rules and policies we adopt here.
56. An applicant for a Section 214 authorization or a cable landing
license will no longer be required to show either that an affiliated
foreign carrier lacks market power or that the destination country
provides effective competitive opportunities (ECO) to U.S. carriers so
long as it shows that the destination country is a Member of the World
Trade Organization. Similarly, entities holding or seeking to hold
common carrier wireless licenses or aeronautical enroute or
aeronautical fixed licenses that have more than 25 percent indirect
foreign investment will not need to demonstrate that the home markets
of the foreign investor or investors from WTO Members offer effective
competitive opportunities for U.S. investors in the analogous service
sector.
57. Authorized international common carriers will no longer be
required to notify the Commission before accepting investments by
foreign carriers (or their affiliates) between 10 percent and 25
percent. We have retained a requirement that authorized carriers notify
the Commission before accepting investment greater than 25 percent. We
have added a requirement that authorized carriers notify the Commission
before they (or their affiliates) acquire a direct or indirect
controlling interest in a foreign carrier; previously, those interests
were subject only to a post hoc notification requirement. We continue
to require authorized carriers to notify the Commission within 30 days
after acquiring a direct or indirect interest greater than 25 percent
in a foreign carrier if the acquisition of that interest has not
otherwise been reported.
58. We have narrowed the application of our ``No Special
Concessions'' rule, which prohibits carriers from entering into
exclusive arrangements with foreign carriers. That rule will now apply
only to carriers' dealings with foreign carriers that have sufficient
market power in their home markets to adversely affect competition in
the U.S. market. Carriers wishing to enter into alternative settlement
arrangements with foreign carriers operating in WTO Member countries
will presumptively be allowed to do so. That presumption may be
overcome where an opponent demonstrates that there are not multiple
facilities-based carriers operating in the foreign carrier's market.
[[Page 64749]]
59. To ensure fair competition among authorized carriers and to be
consistent with our policy governing the confidentiality of competing
carrier information, all U.S. carriers will be prohibited from
receiving proprietary or confidential information about competing U.S.
carriers obtained by any foreign carrier in the course of its regular
business dealings with the competing U.S. carrier, unless the U.S.
carrier provides specific written permission. We will also require U.S.
carriers desiring to make use of foreign-derived customer proprietary
network information (CPNI) pertaining to a specific U.S. customer to
first obtain approval from that customer and notify that customer that
the customer may require the carrier to disclose the CPNI to
unaffiliated third parties.
60. An authorized carrier affiliated with a foreign carrier will be
subject to additional requirements. Its authorization to serve the
affiliated market will be conditioned on the foreign affiliate's
offering to all U.S.-licensed carriers a settlement rate at or below
the benchmark adopted for that country in the Commission's recent
Benchmarks Order. Foreign-affiliated carriers classified as dominant
are subject to additional reporting, recordkeeping, and compliance
requirements. In this Order, we substantially reduce the initial
showing that a foreign-affiliated carrier must make in order to be
presumptively classified as non-dominant by adopting a presumption that
a foreign carrier with less than 50 percent market share in certain
relevant terminating markets does not have sufficient market power to
affect competition adversely in the U.S. market. We remove existing
dominant carrier requirements that we find to be unnecessarily
burdensome and adopt a narrowly tailored dominant carrier framework
designed to address specific concerns of anticompetitive behavior. We
replace the requirement that dominant carriers file tariffs on fourteen
days' advance notice with a one-day advance notice requirement, and we
will accord these tariff filings a presumption of lawfulness. We will
no longer require foreign-affiliated carriers to obtain Commission
approval before adding or discontinuing circuits on the dominant route.
We require dominant carriers to provide service on the affiliated route
through a corporation that is separate from its foreign affiliate,
maintain separate books of account, and not jointly own switching or
transmission facilities with its foreign affiliate. Carriers regulated
as dominant will be required to file quarterly traffic and revenue
reports, provisioning and maintenance reports, and circuit status
reports on the dominant affiliated route. We decline to adopt the
proposal in the Notice to ban exclusive arrangements involving joint
marketing, customer steering, and the use of foreign market telephone
customer information.
61. Finally, we impose a reporting requirement on switched
resellers that are affiliated with a foreign carrier that has
sufficient market power on the foreign end of a route to affect
competition adversely in the U.S. market. We will require these
resellers to file quarterly traffic and revenue reports for their
switched resale traffic on the affiliated route.
Federal Rules That May Duplicate, Overlap, or Conflict With the Rules
Adopted Here
62. None.
Steps Taken To Minimize Significant Economic Impact on Small Entities,
and Significant Alternatives Considered
63. We have taken significant steps to minimize the procedural
burdens imposed on all affected entities. The application of the rules
we adopt in this Order does not vary depending on the size of the
entities involved. Some regulations may be more burdensome on large
carriers than on small carriers because large carriers may be more
likely to be dominant or to operate on a facilities basis than are
small carriers. That is, small carriers may be more likely to operate
as resellers of switched international services, which are less likely
to be subject to our most stringent regulation.
64. The revisions to our policies toward evaluating Section 214 and
cable landing license applications will significantly reduce burdens on
many current and potential international common carriers. A foreign-
affiliated carrier seeking to serve an affiliated route will no longer
be required to show either that its affiliate lacks market power or
that the destination country provides effective competitive
opportunities (ECO) to U.S. carriers so long as it shows that the
destination country is a Member of the World Trade Organization. We
believe this to be a minimal burden for most small entities and a
significantly lesser burden than the detailed showings required to
demonstrate either that the affiliate lacks market power or that the
destination country provides ECO. The ECO test, in particular, has
proven to be unusually burdensome both on applicants and on the
Commission.
65. Similarly, the revisions to our policy toward evaluating
Section 310(b)(4) requests by common carrier radio licensees and
aeronautical licensees to accept indirect foreign investment greater
than 25 percent will significantly reduce the burdens on licensees (and
prospective licensees) seeking to accept investment from entities in
WTO Member countries. Those applicants will no longer be required to
show that the home market of the investor offers effective competitive
opportunities for U.S. investors in the analogous service sector. This
will make those applications much simpler and less time-consuming and,
more importantly, will make it much easier for licensees to accept
foreign investment and for prospective licensees to plan their business
affairs. Common carrier radio licensees will continue to be required to
seek Commission approval before accepting indirect foreign investment
above a level for which they have previously received Commission
approval.
66. We have taken steps to facilitate entry into the U.S. market
for international telecommunications services by small carriers. Small
carriers often enter the market, at least initially, by reselling the
switched services of other authorized international carriers. In this
Order, we change our procedural rules to afford streamlined processing
to any applicant whose foreign affiliate is from a WTO Member country
if the applicant requests authority to serve that country solely by
reselling the switched services of unaffiliated U.S. international
carriers. We also will streamline process the Section 214 application
of any foreign-affiliated applicant whose affiliate is from a WTO
Member and that demonstrates clearly and convincingly that the foreign
affiliate has less than a 50 percent market share in certain relevant
terminating markets in the destination foreign country. In addition, we
will streamline process the Section 214 application of any applicant
whose affiliate is from a WTO Member and is not otherwise eligible for
streamlined processing if the applicant certifies that it will comply
with our dominant carrier regulations. Streamlined applications, unless
they are removed from the streamlined process, are granted 35 days from
the date they are placed on public notice.
67. In revising our regulations that apply to authorized
international common carriers, we have developed a targeted approach
designed to monitor and detect anticompetitive behavior in the U.S.
market without imposing regulations that are more burdensome than
necessary. In doing so, we have
[[Page 64750]]
attempted to minimize burdens on entities that are unlikely to pose a
threat to competition. We also have removed restrictions on whole
categories of activities that we have concluded do not pose a threat to
competition in the developing competitive marketplace. Our approach
relies in large part on reporting requirements, rather than
restrictions on capacity changes or service options, to prevent
affiliated carriers from causing competitive harms in the U.S.
international services market.
68. We have significantly reduced the scope of our rule that
prohibits carriers from entering into certain exclusive arrangements
with foreign carriers. Our ``No Special Concessions'' rule will now
prohibit accepting certain specified arrangements only from foreign
carriers that have sufficient market power in their home markets to
adversely affect competition in the U.S. market. We adopt a presumption
that foreign carriers with less than 50 percent market share in the
relevant terminating markets do not have such sufficient market power.
We anticipate that delineating those arrangements that are subject to
the prohibition and adopting this presumption will significantly
clarify the circumstances in which authorized carriers will be
permitted to accept special concessions from foreign carriers. This
more targeted rule also will allow authorized carriers substantially
more flexibility in arranging their business affairs.
69. Carriers wishing to enter into alternative settlement
arrangements with foreign carriers operating in WTO Member countries
will presumptively be allowed to do so. This presumption may be
overcome by a demonstration that there are not multiple facilities-
based carriers operating in the foreign carrier's market. We expect to
allow alternative settlements more as a rule than as an exception, and
the issue of whether there are multiple facilities-based carriers
operating in the foreign market will be less burdensome than the issue
of whether the foreign market offers effective competitive
opportunities, which is the standard being replaced.
70. We have declined, in this Order, to adopt certain proposals in
the Notice that would have restricted the business strategies of
carriers classified as dominant. Instead, we will impose reporting
requirements that will enable us to detect and deter anticompetitive
behavior. We have declined to adopt proposals in the Notice to ban
exclusive arrangements involving joint marketing, customer steering,
and the use of foreign market telephone customer information. We have
found that such proscriptive safeguards would be unduly burdensome and
could unnecessarily impede business activities. We choose to rely
instead on the general prohibition on accepting special concessions
combined with additional reporting and disclosure requirements, instead
of proscriptive safeguards, for carriers with foreign affiliations. We
have also relieved carriers of the requirement to notify the Commission
of investments by foreign carriers of 10 percent or more; they now must
report an investment by a foreign carrier only when that investment
exceeds 25 percent. We conclude that none of the safeguards we impose
specifically on carriers classified as dominant will impose significant
economic burdens.
71. We have also declined to impose on switched resellers a
condition that their foreign affiliates maintain settlement rates at or
below the benchmark settlement rates we adopted in the Benchmarks
Order. We find that such a condition would be unnecessarily burdensome
inasmuch as resellers have less ability to engage in anticompetitive
conduct than facilities-based carriers and we have a greater ability to
detect anticompetitive conduct by switched resellers. Imposing a
benchmark condition on switched resellers would impose significant
economic impact on resellers, many of whom are small entities, that
could prevent some new entrants from entering the U.S. market and
affect the ability of existing carriers to provide service. To address
concerns about traffic distortions related to resale, however, we have
decided to impose a requirement on switched resellers that are
affiliated with a carrier that has sufficient market power to affect
competition adversely in the U.S. market. We will require those
resellers to file quarterly traffic and revenue reports for their
traffic on the affiliated route in order to enable the Commission to
determine whether switched resellers are engaging in anticompetitive
conduct.
72. In the Notice, we sought comment on whether to adopt, as an
additional dominant carrier safeguard, some level of structural
separation between a U.S. carrier and its affiliated foreign carrier.
We adopt here a requirement that a foreign-affiliated U.S.
international carrier regulated as dominant provide service in the U.S.
market through a corporation that is separate from the foreign
affiliate, maintain separate books of account, and not jointly own
switching and transmission facilities with its foreign carrier
affiliate. We find that, without such separation, discrimination, cost-
misallocation, and the possibility of a predatory price squeeze by such
a foreign-affiliated carrier would have the potential to cause
substantial harm to consumers, competition, and production efficiency
in the U.S. international services market. These requirements will not
impose a significant burden on such carriers because most foreign-
affiliated carriers operating in the United States do so in a manner
that is consistent with the requirements we adopt here. We have
considered imposing more stringent structural separation requirements
but have found them to be unnecessary and to potentially impose a
significant burden on foreign-affiliated carriers that operate in the
U.S. market.
73. We are unable to adopt NextWave's proposal to state that
indirect foreign investment in C-block and F-block PCS licensees by any
entity whose home market is a WTO Member country serves the public
interest and will not be subject to prior Commission approval. We have
found that prior approval is necessary in all instances of indirect
foreign investment in excess of 25 percent because of the need to
review such investments for national security, law enforcement, foreign
policy, and trade concerns as well as for the exceptional case that
poses a very high risk to competition. We do, however, adopt NextWave's
alternative proposal to establish an expedited process and timetable
for addressing those applications: These applications will generally be
added to the International Bureau's streamlined process and usually
granted within 35 days from the date the International Bureau places
the application on public notice. We expect that application of our
open entry standard and streamlined process will both minimize
procedural burdens on small entities and present substantial new
opportunities for obtaining foreign capital.
74. We are unable to adopt TDS's proposal to disregard investments
in common carrier radio licensees by non-carriers held as publicly
traded securities. We accept the concerns of Executive Branch agencies
that a prior approval process is necessary for all investments and that
even small investments in publicly traded securities could, if
aggregated, nevertheless create a degree of control or influence over a
licensee that would be contrary to U.S. national security or law
enforcement issues.
75. We have also decided not to adopt a policy that a common
carrier radio licensee need not seek Commission approval before
accepting increases in indirect foreign ownership once they
[[Page 64751]]
have obtained Commission authority to exceed 25 percent indirect
foreign ownership. We have determined that every such increase requires
Commission review in order to consider the effect of the ownership on
national security and law enforcement interests.
76. We conclude that these steps we have taken to minimize
significant economic impact on small entities will advance the small
business goals of Section 257 of the Act, as added by the
Telecommunications Act of 1996.
Report to Congress
77. The Commission will send a copy of this Report and Order and
Order on Reconsideration, including this FRFA, in a report to be sent
to Congress pursuant to the Small Business Regulatory Enforcement
Fairness Act of 1996, see 5 U.S.C. Sec. 801(a)(1)(A). A summary of this
Report and Order and Order on Reconsideration, and a copy of this FRFA,
will also be published in the Federal Register, see 5 U.S.C.
Sec. 604(b), and will be sent to the Chief Counsel for Advocacy of the
Small Business Administration.
Paperwork Reduction Act of 1995 Analysis
78. This Report and Order contains a modified information
collection. 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 order, as required by the Paperwork Reduction Act of
1995, Pub. L. No. 104-13. Public and agency comments are due February
9, 1998. 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.
79. Public reporting burden for the collections of information is
estimated as follows:
OMB Control Number: 3060-0686.
Title: Streamlining the International Section 214 Authorization
Process and Tariff Requirements.
Type of Review: Revision of existing collection.
Respondents: Business or other For-Profit.
Number of Respondents: 3,251.
Estimated Time Per Response: 2 hours.
Total Annual Burden: 145,895 hours.
Estimated costs per respondent: $3,192.
Needs and Uses: The information collections pertaining to Parts 1
and 63 are necessary largely to determine the qualifications of
applicants to provide common carrier international telecommunications
services, or to construct and operate submarine cables, including
applicants that are affiliated with foreign carriers, and to determine
whether and under what conditions the authorizations are in the public
interest, convenience, and necessity. 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.
The information collected pursuant to part 61 of the rules is necessary
for the Commission to ensure that rates, terms and conditions for
international service are just and reasonable, as required by the
Communications Act of 1934.
80. The information collections under Sec. 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
ratio licensee would be inconsistent with the public interest.
81. We do not anticipate that the rules will have any impact on the
paperwork burden imposed under the Commission's Flexibility Policy
established in the Fourth Report and Order, CC Docket No. 90-337, Phase
I (62 FR 5535, February 6, 1997), OMB Control Nos. 3060-0160 and 3060-
0764.
Ordering Clauses
82. Accordingly, it is ordered that, pursuant to Sections 1, 2,
4(i), 201, 203, 205, 214, 303(r), and 310 of the Communications Act of
1934, as amended, 47 U.S.C. Sections 151, 152, 154(i), 201, 205, 214,
303(r), 310, the policies, rules, and requirements discussed herein are
adopted and parts 43, 63, and 64, 47 CFR parts 43, 63, and 64 are
revised.
83. It is further ordered that authority is delegated to the Chief,
International Bureau as discussed in this Order.
84. It is further ordered that the petitions for reconsideration in
IB Docket No. 95-22 are granted in part, denied in part, and deferred
as discussed in this Order.
85. It is further ordered that the Commission's Office of Managing
Director shall send a copy of this Report and Order and Order on
Reconsideration, including the Final Regulatory Flexibility Analysis,
to the Chief Counsel for Advocacy of the Small Business Administration.
86. It is further ordered that the policies, rules, and
requirements established in this decision shall take effect January 8,
1998 or in accordance with the requirements of 5 U.S.C. 801(a)(3) and
44 U.S.C. 3507. The Commission will publish a document at a later date
announcing the effective date. The Commission reserves the right to
reconsider the effective date of this decision if the WTO Basic Telecom
Agreement does not take effect on January 1, 1998.
List of Subjects in 47 CFR Parts 43, 63, and 64
Communications common carriers, Reporting and recordkeeping
requirements.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Final Rules
Parts 43, 63, and 64 of Title 47 of the Code of Federal Regulations
are amended as follows:
PART 43--REPORTS OF COMMUNICATION COMMON CARRIERS AND CERTAIN
AFFILIATES
1. The authority citation for Part 43 continues to read as follows:
Authority: 47 U.S.C. 154.
2. Sec. 43.51 is amended by revising paragraph (d) to read as
follows:
Sec. 43.51 Contracts and concessions.
* * * * *
(d) Any U.S. carrier that interconnects an international private
line to the U.S. public switched network, at its switch, including any
switch in which the carrier obtains capacity either through lease or
otherwise, shall file annually with the Chief of the International
Bureau a certified statement containing the number and type (e.g., a
64-kbps circuit) of private lines interconnected in such a manner. The
certified statement shall specify the number and type of interconnected
private lines on a country specific basis. The identity of the customer
need not be reported, and the Commission will treat the country of
origin information as confidential. Carriers need not file their
contracts for such interconnections, unless they are specifically
requested to do so. These reports shall be filed on a consolidated
basis on February 1 (covering international private lines
interconnected during the preceding January 1 to December 31 period) of
each year. International private lines to countries for which the
Commission has authorized the provision of switched
[[Page 64752]]
basic services over private lines at any time during a particular
reporting period are exempt from this requirement.
3. Sec. 43.61 is amended by revising paragraph (c) to read as
follows:
Sec. 43.61 Reports of international telecommunications traffic.
* * * * *
(c) Each common carrier engaged in the resale of international
switched services that has an affiliation with a foreign carrier that
has sufficient market power on the foreign end of an international
route to affect competition adversely in the U.S. market and that
collects settlement payments from U.S. carriers shall file a quarterly
version of the report required in paragraph (a) of this section for its
switched resale services on the dominant route within 90 days from the
end of each calendar quarter. For purposes of this paragraph,
``affiliation'' is defined in Sec. 63.18(h)(1)(i) of this chapter and
``foreign carrier'' is defined in Sec. 63.18(h)(1)(ii) of this chapter.
* * * * *
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: 47 U.S.C. 151, 154(i), 154(j), 201-205, 218, 403, 533
unless otherwise noted.
2. Sec. 63.10 is revised to read as follows:
Sec. 63.10 Regulatory classification of U.S. international carriers.
(a) Unless otherwise determined by the Commission, any party
authorized to provide an international communications service under
this part shall be classified as either dominant or non-dominant for
the provision of particular international communications services on
particular routes as set forth in this section. The rules set forth in
this section shall also apply to determinations of regulatory status
pursuant to Secs. 63.11 and 63.13. For purposes of paragraphs (a)(1)
through (a)(3) of this section, ``affiliation'' and ``foreign carrier''
are defined as set forth in Sec. 63.18(h)(1)(i) and (ii), respectively.
For purposes of paragraphs (a)(2) and (a)(3) of this section, the
relevant markets on the foreign end of a U.S. international route
include: international transport facilities or services, including
cable landing station access and backhaul facilities; inter-city
facilities or services; and local access facilities or services on the
foreign end of a particular route.
(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) shall presumptively be considered
non-dominant for the provision of international communications services
on that route;
(2) Except as provided in paragraph (a)(4) of this section, a U.S.
carrier that is, or that has or acquires an affiliation with a foreign
carrier that is a monopoly provider of communications services in a
relevant market in a destination country shall 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 provider of
communications services in a relevant market 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 sufficient market power on
the foreign end of the route to affect competition adversely in the
U.S. market. If the U.S. carrier demonstrates that the foreign
affiliate lacks 50 percent market share in the international transport
and the local access markets on the foreign end of the route, the U.S.
carrier shall presumptively be classified as non-dominant.
(4) A carrier that is authorized under this part to provide to a
particular destination country a particular international
communications service, and that provides such service solely through
the resale of an unaffiliated U.S. facilities-based carrier's
international switched services (either directly or indirectly through
the resale of another U.S. resale carrier's international switched
services), shall presumptively be classified as non-dominant for the
provision of the authorized service. The existence of an affiliation
with a U.S. facilities-based international carrier shall be assessed in
accordance with the definition of affiliation contained in
Sec. 63.18(h)(1)(i) of this chapter, except that the phrase ``U.S.
facilities-based international carrier'' shall be substituted for the
phrase ``foreign carrier.''
(b) Any party that seeks to defeat the presumptions in paragraph
(a) of this section shall bear the burden of proof upon any issue it
raises as to the proper classification of the U.S. carrier.
(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 one day's notice without
cost support;
(2) Provide services as an entity that is separate from its foreign
carrier affiliate, in compliance with the following requirements:
(i) The authorized carrier shall maintain separate books of account
from its affiliated foreign carrier. These separate books of account do
not need to comply with Part 32 of this chapter; and
(ii) The authorized carrier shall not jointly own transmission or
switching facilities with its affiliated foreign carrier. Nothing in
this section prohibits the U.S. carrier from sharing personnel or other
resources or assets with its foreign affiliate;
(3) File quarterly reports on traffic and revenue, consistent with
the reporting requirements authorized pursuant to Sec. 43.61, within 90
days from the end of each calendar quarter;
(4) File quarterly reports summarizing the provisioning and
maintenance of all 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 authorized carrier and the foreign carrier
participate, within 90 days from the end of each calendar quarter.
These reports should contain the following: the types of circuits and
services provided; the average time intervals between order and
delivery; the number of outages and intervals between fault report and
service restoration; and for circuits used to provide international
switched service, the percentage of ``peak hour'' calls that failed to
complete;
(5) In the case of an authorized facilities-based carrier, file
quarterly circuit status reports within 90 days from the end of each
calendar quarter in the format set out by the Sec. 43.82 annual circuit
status manual, with two exceptions: activated or idle circuits must be
reported on a facility-by-facility basis; and the derived circuits need
not be specified in the three quarterly reports due on June 30,
September 30, and December 31. For purposes of this paragraph,
``facilities-based carrier'' is defined in Sec. 63.18 note 2 to
paragraph (h).
[[Page 64753]]
(d) A carrier classified as dominant under this section shall file
an original and two copies of each report required by paragraphs
(c)(3), (c)(4), and (c)(5) of this section with the Chief,
International Bureau. The carrier shall include with its filings
separate computer diskettes for the reports required by paragraphs
(c)(3) and (c)(5), in the format specified by the Sec. 43.61 and
Sec. 43.82 filing manuals, respectively. The carrier shall also file
one paper copy of these reports, accompanied by the appropriate
computer diskettes, with the Commission's copy contractor. The
transmittal letter accompanying each report shall clearly identify the
report as responsive to the appropriate paragraph of Sec. 63.10(c).
3. Sec. 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 an affiliation with a foreign
carrier.
(a) Any carrier authorized to provide international communications
service under this part shall notify the Commission sixty days prior to
the consummation of either of the following acquisitions of direct or
indirect controlling interests in or by foreign carriers:
(1) acquisition of a direct or indirect controlling interest in a
foreign carrier (as defined in Sec. 63.18(h)(1)(ii)) by the authorized
carrier, or by any entity that directly or indirectly controls the
authorized carrier, or that directly or indirectly owns more than 25
percent of the capital stock of the authorized carrier; or
(2) acquisition of a direct or indirect interest in the capital
stock of the authorized carrier by a foreign carrier or by an entity
that directly or indirectly controls a foreign carrier where the
interest would create an affiliation within the meaning of
Sec. 63.18(h)(1)(i)(B).
(b) Any carrier authorized to provide international communications
service under this part that becomes affiliated with a foreign carrier
within the meaning of Sec. 63.18(h)(1) that has not previously notified
the Commission pursuant to this section or Sec. 63.18 shall notify the
Commission within thirty days after acquiring the affiliation. In
particular, acquisition by an authorized carrier (or by any entity that
directly or indirectly controls, is controlled by, or is under direct
or indirect common control with the authorized carrier) of a direct or
indirect interest in a foreign carrier that is greater than 25 percent
but not controlling is subject to this paragraph but not to paragraph
(a).
(c) The notification required under paragraphs (a) and (b) of this
section shall contain a list of the affiliated foreign carriers named
in paragraphs (a) and (b) of this section and shall state individually
the country or countries in which the foreign carriers are authorized
to provide telecommunications services to the public. It shall
additionally specify which, if any, of these countries is a Member of
the World Trade Organization; 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. The notification shall
certify to the information specified in this paragraph.
(1) The carrier also should specify, where applicable, those
countries named in paragraph (c) of this section for which it provides
a specified international communications service solely through the
resale of the international switched services of U.S. facilities-based
carriers with which the resale carrier does not have an affiliation.
Such an affiliation is defined in Sec. 63.18(h)(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. 63.18(h)(2); and
(ii) A ``special concessions'' certification as required to be
submitted pursuant to Sec. 63.18(i).
(d) In order to retain non-dominant status on the affiliated route,
the carrier notifying the Commission of a foreign carrier affiliation
under paragraph (a) or (b) of this section should provide information
to demonstrate that it qualifies for non-dominant classification
pursuant to Sec. 63.10.
(e) After the Commission issues a public notice of the submissions
made under this section, interested parties may file comments within 14
days of the public notice.
(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) 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 investment raises a substantial and material question, then the
carrier shall not consummate the planned investment until it has filed
an application under Sec. 63.18 and submitted the information specified
under Sec. 63.18(h)(5) or (6) as applicable, and Sec. 63.18(h)(7) and
(8), as applicable, and the Commission has approved the application by
formal written order.
(f) All authorized carriers are responsible for the continuing
accuracy of certifications with regard to affiliations with foreign
carriers made under this section and under Sec. 63.18. Whenever the
substance of any such certification is no longer accurate, the carrier
shall as promptly as possible, and in any event within thirty 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)(ii) of this
section or Sec. 63.18(i) are no longer true. See Sec. 63.18(i). This
information may be used by the Commission to determine whether a change
in regulatory status may be warranted under Sec. 63.10.
Note to Sec. 63.11: ``Control'' as used in this section includes
actual working control in whatever manner exercised and is not limited
to majority stock ownership.
4. Sec. 63.12 is revised to read as follows:
Sec. 63.12 Processing of international Section 214 applications.
(a) Except as provided by paragraph (c) of this section, a complete
application seeking authorization under Sec. 63.18 shall be granted by
the Commission 35 days after the date of public notice listing the
application as accepted for filing.
(b) Issuance of public notice of the grant shall be deemed the
issuance of Section 214 certification to the applicant, which may
commence operation on the 36th day after the date of public notice
listing the application as accepted for filing, but only in accordance
with the operations proposed in its application and the rules,
regulations, and policies of the Commission.
(c) The streamlined processing procedures provided by paragraphs
(a) and (b) of this section shall not apply where:
[[Page 64754]]
(1) The applicant has an affiliation within the meaning of
Sec. 63.18(h)(1)(i) with a foreign carrier in a destination market, and
the Commission has not yet made a determination as to whether that
foreign carrier lacks sufficient market power in that destination
market to affect competition adversely in the U.S. market, unless the
applicant clearly demonstrates in its application at least one of the
following:
(i) The applicant qualifies for a presumption of non-dominance
under Sec. 63.10(a)(3);
(ii) The affiliated destination market is a WTO Member country and
the applicant qualifies for a presumption of non-dominance under
Sec. 63.10(a)(4); or
(iii) The affiliated destination market is a WTO Member country and
the applicant agrees to be classified as a dominant carrier to the
affiliated destination country under Sec. 63.10, without prejudice to
its right to petition for reclassification at a later date; or
(2) The applicant has an affiliation within the meaning of
Sec. 63.18(h)(1)(i) with a dominant U.S. 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), unless the applicant agrees to be classified as a
dominant carrier to the affiliated destination country under Sec. 63.10
(without prejudice to its right to petition for reclassification at a
later date); or
(3) The applicant seeks authority to provide switched basic
services over private lines to a country for which the Commission has
not previously authorized the provision of switched services over
private lines; or
(4) The application is formally opposed by a pleading meeting the
following criteria:
(i) The caption and text of the pleading make it unmistakably clear
that the pleading is intended to be a formal opposition;
(ii) The pleading is served upon the other parties to the
proceeding; and
(iii) The pleading is filed within the time period prescribed for
the filing of objections or comments; or
(5) The Commission has informed the applicant in writing, within 28
days after the date of public notice accepting the application for
filing, that the application is not eligible for streamlined processing
under this section.
(d) Any complete application that is subject to paragraph (c) of
this section will be acted upon only by formal written order, and
operation for which such authorization is sought may not commence
except in accordance with such order. The Commission will issue public
notice that the application is ineligible for streamlined processing.
Within 90 days of the public notice, the Commission will issue an order
acting upon the application or provide public notice that, because the
application raises questions of extraordinary complexity, an additional
90-day period for review is needed. Each successive 90-day period may
be so extended.
5. Sec. 63.13 is revised to read as follows:
Sec. 63.13 Procedures for modifying regulatory classification of U.S.
international carriers from dominant to non-dominant.
Any party that desires to modify its regulatory status from
dominant to non-dominant for the provision of particular international
communications services on a particular route should provide
information in its application to demonstrate that it qualifies for
non-dominant classification pursuant to Sec. 63.10.
6. Sec. 63.14 is revised to read as follows:
Sec. 63.14 Prohibition on agreeing to accept special concessions.
(a) Any carrier authorized to provide international communications
service under this part shall be prohibited from agreeing to accept
special concessions directly or indirectly from any foreign carrier
with respect to any U.S. international route where the foreign carrier
possesses sufficient market power on the foreign end of the route to
affect competition adversely in the U.S. market, as described in
paragraph (c) of this section, and from agreeing to accept special
concessions in the future. For purposes of this section, ``foreign
carrier'' is defined in Sec. 63.18(h)(1)(ii).
(b) For purposes of this section and Secs. 63.11(c)(2)(ii) and
63.18(i), a special concession is defined as an exclusive arrangement
involving services, facilities, or functions on the foreign end of a
U.S. international route that are necessary for the provision of basic
telecommunications services where the arrangement is not offered to
similarly situated U.S.-licensed carriers and involves:
(1) Operating agreements for the provision of basic services;
(2) Distribution arrangements or interconnection arrangements,
including pricing, technical specifications, functional capabilities,
or other quality and operational characteristics, such as provisioning
and maintenance times; or
(3) Any information, prior to public disclosure, about a foreign
carrier's basic network services that affects either the provision of
basic or enhanced services or interconnection to the foreign country's
domestic network by U.S. carriers or their U.S. customers.
(c) A U.S. carrier that seeks to enter a special concession with a
foreign carrier bears the burden of submitting information, as part of
the requirement to file the agreement with the Commission pursuant to
Sec. 43.51, sufficient to demonstrate that the foreign carrier lacks
sufficient market power on the foreign end of the route to affect
competition adversely in the U.S. market. If the U.S. carrier makes a
showing that the foreign carrier lacks 50 percent market share in the
international transport and the local access markets on the foreign end
of the route, the U.S. carrier will presumptively be allowed to agree
to accept the special concession.
(d) Any party that seeks to defeat the presumption in paragraph (c)
of this section shall bear the burden of proof upon any issue it raises
as to the ability of the foreign carrier to affect competition
adversely in the U.S. market.
7. Sec. 63.17 is amended by revising paragraph (b) to read as
follows:
Sec. 63.17 Special provisions for U.S. international common carriers.
* * * * *
(b) Except as provided in paragraph (b)(4) of this section, a U.S.
common carrier, whether a reseller or facilities-based carrier, may
engage in ``switched hubbing'' to countries for which the Commission
has not authorized the provision of switched basic services over
private lines provided the carrier complies with the following
conditions:
(1) U.S.-outbound switched traffic shall be routed over the
carrier's authorized U.S. international private lines to a country for
which the Commission has authorized the provision of switched services
over private lines (i.e., the ``hub'' country), and then forwarded to
the third country only by taking at published rates and reselling the
international message telephone service (IMTS) of a carrier in the hub
country;
(2) U.S.-inbound switched traffic shall be carried to a country for
which the Commission has authorized the provision of switched services
over private lines (i.e., the ``hub'' country) as part of the IMTS
traffic flow from a third country and then terminated in the United
States over U.S. international private lines from the hub country;
(3) U.S. common carriers that route U.S.-billed traffic via
switched hubbing shall tariff their service on a ``through'' basis
between the United States and the
[[Page 64755]]
ultimate point of origination or termination;
(4) No U.S. common carrier may engage in switched hubbing to or
from a third country where it has an affiliation with a foreign carrier
unless and until it has received authority to serve that country under
Sec. 63.18(e)(1), (e)(2), or (e)(6).
8. Sec. 63.18 is amended to revise paragraphs (e), (h) and (i) and
to add new paragraph (k) to read as follows:
Sec. 63.18 Contents of applications for international common carriers.
* * * * *
(e) One or more of the following statements, as pertinent:
(1) If applying for authority to acquire interests in facilities
previously authorized by the Commission in order to provide
international basic switched, private line, data, television and
business services to all international points, the applicant shall:
(i) State that it is requesting Section 214 authority to operate as
a facilities-based carrier pursuant to the terms and conditions of
paragraph (e)(1) of this section.
(ii) Comply with the following terms and conditions:
(A) Authority to provide services to all international points under
this part extends to those countries for which the applicant qualifies
for non-dominant regulation as set forth in Sec. 63.10, except in the
following circumstance: If an applicant is affiliated with a foreign
carrier in a destination market and the Commission has not determined
that the foreign carrier lacks sufficient market power in the
destination market to affect competition adversely in the U.S. market
(see Sec. 63.10(a)), the applicant shall not commence service on any
such route until it receives specific authority to do so under
paragraph (e)(6) of this section.
(B) The applicant may only provide service using half-circuits on
appropriately licensed U.S. common and non-common carrier facilities
(under either Title III of the Communications Act of 1934, as amended,
or the Submarine Cable Landing License Act, 47 U.S.C. 34 et al.)
provided that these facilities do not appear on an exclusion list
published by the Commission and any necessary overseas connecting
facilities. Applicants may not use non-U.S. licensed facilities unless
and until the Commission specifically approves their use and so
indicates on the exclusion list, and only then for service to the
countries indicated thereon.
(C) The applicant may provide service to any country not included
on an exclusion list published by the Commission.
(D) The applicant may provide international basic switched, private
line, data, television and business services.
(E) The authority granted under this paragraph shall be subject to
all Commission rules and regulations and any conditions stated in the
Commission's public notice or order that serves as the applicant's
Section 214 certificate. See Sec. 63.12.
(2) If applying for authority to resell the international services
of authorized U.S. common carriers for the provision of international
basic switched, private line, data, television and business services to
all international points, the applicant shall:
(i) State that it is requesting Section 214 authority to operate as
a resale carrier pursuant to the terms and conditions of
Sec. 63.18(e)(2).
(ii) Comply with the following terms and conditions:
(A) Authority to provide resold services to all international
points under this part extends to those countries and services for
which the applicant qualifies for non-dominant regulation as set forth
in Sec. 63.10, except in the following circumstances, in which case an
applicant shall not commence service until it receives specific
authority to do so under paragraph (e)(6) of this section:
(1) An application to provide switched resold services to a non-WTO
Member country where the applicant is affiliated with a foreign
carrier; and
(2) An application to resell private line services to a destination
market where the applicant is affiliated with a foreign carrier and the
Commission has not determined that the foreign carrier lacks sufficient
market power in the destination market to affect competition adversely
in the U.S. market (see Sec. 63.10(a)).
(B) The applicant may resell the international services of any
authorized common carrier, except affiliated carriers regulated as
dominant on the route to be served, pursuant to that carrier's tariff
or contract duly filed with the Commission, for the provision of
international basic switched, private line, data, television and
business services to all international points;
(C) The applicant may resell private line services for the
provision of international switched basic services only in
circumstances where the Commission has specifically authorized the
provision of switched basic services over private lines to the
particular country at the foreign end of the private line. In making
determinations about particular destination countries, the Commission
will follow the policies adopted in IB Docket Nos. 96-261 and 97-142
(these documents are available at the FCC's Reference Operations
Division, Washington, D.C. 20554, and on the FCC's World Wide Web Site
at http://www.fcc.gov). The Commission will provide public notice of
its decisions to authorize the provision of switched basic services
over private lines to particular countries.
(D) The authority granted under this paragraph shall be subject to
all Commission rules and regulations, including the limitation in
Sec. 63.21 on the use of private lines for the provision of switched
services, and any conditions stated in the Commission's public notice
or order that serves as the applicant's Section 214 certificate. See
Secs. 63.12, 63.21.
(3) If applying for authority to provide international switched
basic services over resold private lines between the United States and
a WTO Member country for which the Commission has not previously
authorized the provision of switched services over private lines, the
applicant shall demonstrate either that settlement rates for at least
50 percent of the settled U.S.-billed traffic between the United States
and the country at the foreign end of the private line are at or below
the benchmark settlement rate adopted for that country in IB Docket No.
96-261 or that the country affords resale opportunities equivalent to
those available under U.S. law. If applying for authority to provide
international switched basic services over resold private lines between
the United States and a non-WTO Member country for which the Commission
has not previously authorized the provision of switched services over
private lines, the applicant shall demonstrate that settlement rates
for at least 50 percent of the settled U.S.-billed traffic between the
United States and the country at the foreign end of the private line
are at or below the benchmark settlement rate adopted for that country
in IB Docket No. 96-261 and that the country affords resale
opportunities equivalent to those available under U.S. law. With regard
to showing that a destination country affords resale opportunities
equivalent to those available under U.S. law, an applicant shall
include evidence demonstrating that equivalent resale opportunities
exist between the United States and the subject country, including any
relevant bilateral or multilateral agreements between the
administrations involved. Parties must demonstrate that the foreign
country at the other end of the private line provides U.S.-based
carriers with:
[[Page 64756]]
(i) The legal right to resell international private lines,
interconnected at both ends, for the provision of switched services;
(ii) Reasonable and nondiscriminatory charges, terms and conditions
for interconnection to foreign domestic carrier facilities for
termination and origination of international services, with adequate
means of enforcement;
(iii) Competitive safeguards to protect against anticompetitive and
discriminatory practices affecting private line resale; and
(iv) Fair and transparent regulatory procedures, including
separation between the regulator and operator of international
facilities-based services.
(4) Any carrier authorized under this section to acquire and
operate international private line facilities other than through resale
may use those private lines to provide switched basic services only in
circumstances where the Commission has previously authorized the
provision of switched services over private lines to the particular
country at the foreign end of the private line. The Commission will
provide public notice of its decisions to authorize the provision of
switched services over private lines to particular countries pursuant
to its policies adopted in IB Docket Nos. 96-261 and 97-142. This
provision is subject to the following exceptions and conditions:
(i) The applicant shall not initiate such service on a particular
route absent a grant of specific authority under paragraph (e)(6) of
this section in circumstances where the applicant is affiliated with a
carrier in the country at the foreign end of the private line and the
Commission has not determined that the foreign carrier lacks sufficient
market power in the country at the foreign end of the private line to
affect competition adversely in the U.S. market. See Sec. 63.10(a).
(ii) The applicant is subject to all applicable Commission rules
and regulations, including the limitation Sec. 63.21 on the use of
private lines for the provision of switched services, and any
conditions stated in the Commission's public notice or order that
serves as the applicant's Section 214 certificate. See Secs. 63.12,
63.21.
(A) Except as provided in paragraph (e)(4)(ii)(B) of this section,
any carrier that seeks to provide international switched basic services
over its authorized private line facilities between the United States
and a WTO Member country for which the Commission has not previously
authorized the provision of switched services over private lines shall
demonstrate that settlement rates for at least 50 percent of the
settled U.S.-billed traffic between the United States and the country
at the foreign end of the private line are at or below the benchmark
settlement rate adopted for that country in IB Docket No. 96-261 or
that the country affords resale opportunities equivalent to those
available under U.S. law. With regard to showing that a destination
country affords resale opportunities equivalent to those available
under U.S. law, an applicant shall include the information required by
paragraph (e)(3) of this section.
(B) No formal application is required under paragraph (e)(4) of
this section 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.
(5) If applying for authority to acquire facilities through the
transfer of control of a common carrier holding international Section
214 authorization, or through the assignment of another carrier's
existing authorization, the applicant shall complete paragraphs (a)
through (d) of this section for both the transferor/assignor and the
transferee/assignee. Paragraph (g) of this section is not applicable,
and only the transferee/assignee needs to complete paragraphs (h)
through (k) of this section. At the beginning of the application, the
applicant should also include a narrative of the means by which the
transfer or assignment will take place. The Commission reserves the
right to request additional information as to the particulars of the
transaction to aid it in making its public interest determination.
(6) If applying for authority to acquire facilities or to provide
services not covered by Sec. 63.18(e) (1) through (5), the applicant
shall provide a description of the facilities and services for which it
seeks authorization. Such description also shall include any additional
information the Commission shall have specified previously in an order,
public notice or other official action as necessary for authorization.
Applicants for new submarine cable facilities also shall include a list
of the proposed owners of the cable, their voting interests and
ownership interests by segment in the cable.
* * * * *
(h) 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 percent ownership of capital stock, or
controlling interest at 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 percent 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, which includes entities
authorized to engage in the provision of domestic telecommunications
services if such carriers have the ability to originate or terminate
telecommunications services to or from points outside their country.
(2) In support of the required certification, each applicant shall
also provide the name, address, citizenship and principal businesses of
its ten 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
[[Page 64757]]
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 (h)(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 and carrier authorized to provide international
communications service under this part is responsible for the
continuing accuracy of the certifications required by paragraphs (h)(1)
through (3) 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 thirty days file with the
Secretary in duplicate a corrected certification referencing the FCC
File No. under which the original certification was provided. The
information may be used by the Commission to determine whether a change
in regulatory status may be warranted under Sec. 63.10.
(5) Any applicant that seeks to operate as a U.S. facilities-based
international carrier to a particular country and that is a foreign
carrier in that country, or directly or indirectly controls a foreign
carrier in that country, or has an affiliation within the meaning of
paragraph (h)(1)(i)(B) of this section with a foreign carrier in that
country shall provide the following information:
(i) The named foreign country (i.e., the destination foreign
country) is a Member of the World Trade Organization; or
(ii) The applicant's affiliated foreign carrier lacks sufficient
market power in the named foreign country to affect competition
adversely in the U.S. market; or
(iii) The named foreign country provides effective competitive
opportunities to U.S. carriers to compete in that country's
international facilities-based market. An effective competitive
opportunities demonstration should address the following factors:
(A) The legal ability of U.S. carriers to enter the foreign market
and provide facilities-based international services, in particular
international message telephone service (IMTS);
(B) 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;
(C) Whether competitive safeguards exist in the foreign country to
protect against anticompetitive practices, including safeguards such
as:
(1) Existence of cost-allocation rules in the foreign country to
prevent cross-subsidization;
(2) Timely and nondiscriminatory disclosure of technical
information needed to use, or interconnect with, carriers' facilities;
and
(3) Protection of carrier and customer proprietary information;
(D) Whether there is an effective regulatory framework in the
foreign country to develop, implement and enforce legal requirements,
interconnection arrangements and other safeguards; and
(E) Any other factors the applicant deems relevant to its
demonstration.
(6) Any applicant that proposes to resell the international
switched or non-interconnected private line services of another U.S.
carrier for the purpose of providing international communications
services to the named foreign country and that is a foreign carrier in
that country, or directly or indirectly controls a foreign carrier in
that country, or has an affiliation within the meaning of paragraph
(h)(1)(i)(B) of this section with a foreign carrier in the destination
country shall provide the following information (see also paragraph
(h)(7) of this section):
(i) The named foreign country (i.e., the destination foreign
country) is a Member of the World Trade Organization; or
(ii) The applicant's affiliated foreign carrier lacks sufficient
market power in the named foreign country to affect competition
adversely in the U.S. market; or
(iii) The named foreign country provides effective competitive
opportunities to U.S. carriers to resell international switched or non-
interconnected private line services, respectively. An effective
competitive opportunities demonstration should address the following
factors:
(A) The legal 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);
(B) Whether there exist reasonable and nondiscriminatory charges,
terms and conditions for the provision of the relevant resale service;
(C) Whether competitive safeguards exist in the foreign country to
protect against anticompetitive practices, including safeguards such
as:
(1) Existence of cost-allocation rules in the foreign country to
prevent cross-subsidization;
(2) Timely and nondiscriminatory disclosure of technical
information needed to use, or interconnect with, carriers' facilities;
and
(3) Protection of carrier and customer proprietary information;
(D) Whether there is an effective regulatory framework in the
foreign country to develop, implement and enforce legal requirements,
interconnection arrangements and other safeguards; and
(E) Any other factors the applicant deems relevant to its
demonstration.
(7) Any applicant that proposes to resell the international
switched services of an unaffiliated U.S. carrier for the purpose of
providing international communications services to the named foreign
country and that is a foreign carrier in that country or has an
affiliation with a foreign carrier in that country shall either provide
in its application a showing that would satisfy Sec. 63.10(a)(3) or
state that it will file the quarterly traffic reports required by
Sec. 43.61(c) of this chapter.
(8) With respect to regulatory classification under Sec. 63.10,
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 particular international
communications services to that country should provide information in
its application to demonstrate that it qualifies for non-dominant
classification pursuant to Sec. 63.10.
(i) Each applicant shall certify that the applicant has 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 sufficient market power on the foreign end of the
route to affect competition adversely in the U.S. market and will not
enter into such agreements in the future. This certification 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. For purposes of this section, ``special concession'' is
defined in Sec. 63.14(b) and ``foreign carrier'' is defined in
paragraph (h)(1)(ii) of this section.
* * * * *
(k) If the applicant desires streamlined processing pursuant to
[[Page 64758]]
Sec. 63.12, a statement of how the application qualifies for
streamlined processing.
9. Sec. 63.21 is amended to revise paragraph (a); to redesignate
paragraph (e) as paragraph (h); and to add paragraphs (e), (f), and (g)
to read as follows:
Sec. 63.21 Conditions applicable to international Section 214
authorizations.
* * * * *
(a) Carriers may not use their authorized facilities-based or
resold international private lines for the provision of switched basic
services between the United States and a WTO Member country unless and
until the Commission has determined that the country at the foreign end
of the private line provides equivalent resale opportunities or that
settlement rates for at least 50 percent of the settled U.S.-billed
traffic between the United States and that country are at or below the
benchmark settlement rate adopted for that country in IB Docket No. 96-
261 (this document is available at the FCC's Reference Operations
Division, Washington, D.C. 20554, and on the FCC's World Wide Web Site
at http://www.fcc.gov). Carriers may not use their authorized
facilities-based or resold international private lines for the
provision of switched basic services between the United States and a
non-WTO Member country unless and until the Commission has determined
that the country at the foreign end of the private line provides
equivalent resale opportunities and that settlement rates for at least
50 percent of the settled U.S.-billed traffic between the United States
and that country are at or below the benchmark settlement rate adopted
for that country in IB Docket No. 96-261. (See Sec. 63.18(e)(3)-(4).)
If at any time the Commission finds, after an initial determination of
compliance for a particular country, that the country no longer
provides equivalent resale opportunities or that market distortion has
occurred in the routing of traffic between the United States and that
country, carriers shall comply with enforcement actions taken by the
Commission. This condition shall not apply to a carrier's use of its
authorized facilities-based private lines to provide service as
described in Sec. 63.18(e)(4)(ii)(B).
* * * * *
(e) Authorized carriers may not access or make use of specific U.S.
customer proprietary network information that is derived from a foreign
network unless the carrier obtains approval from that U.S. customer. In
seeking to obtain approval, the carrier must notify the U.S. customer
that the customer may require the carrier to disclose the information
to unaffiliated third parties upon written request by the customer.
(f) Authorized carriers may not receive from a foreign carrier any
proprietary or confidential information pertaining to a competing U.S.
carrier, obtained by the foreign carrier in the course of its normal
business dealings, unless the competing U.S. carrier provides its
permission in writing.
(g) The Commission reserves the right to review a carrier's
authorization, and, if warranted, impose additional requirements on
U.S. international carriers in circumstances where it appears that harm
to competition is occurring on one or more U.S. international routes.
* * * * *
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
1. The authority citation of Part 64 is revised to read as follows:
Authority: 47 U.S.C. 154, 254(k). Interpret or apply 47 U.S.C.
201, 218, 226, 228, 254(k), 276 unless otherwise noted.
2. Sec. 64.1001 is amended by revising paragraphs (b), (c), and (d)
to read as follows:
Sec. 64.1001 International settlements policy and modification
requests.
* * * * *
(b) If the accounting rate referred to in Sec. 43.51(e)(1) of this
chapter is lower than the accounting rate in effect in the operating
agreement of another carrier providing service to or from the same
foreign point, and there is no modification in the other terms and
conditions referred to in Sec. 43.51(e)(1) of this chapter, the carrier
must file a notification letter under paragraph (e) of this section.
(c) If the amendment referred to in Sec. 43.51(e)(2) of this
chapter is a simple reduction in the accounting rate, and there is no
modification in the other terms and conditions referred to in
Sec. 43.51(e)(2) of this chapter, the carrier must file a notification
letter under paragraph (e) of this section.
(d) If the operating agreement or amendment referred to in
Secs. 43.51(e)(1) and (e)(2) of this chapter is not subject to
notification under paragraphs (b) and (c) of this section, the carrier
must file a modification request under paragraph (f) of this section.
* * * * *
3. Sec. 64.1002 is revised to read as follows:
Sec. 64.1002 Alternative settlement arrangements.
(a) A communications common carrier engaged in providing switched
voice, telex, telegraph, or packet switched service between the United
States and a foreign point may seek approval to enter into an operating
agreement with a foreign telecommunications administration containing
an alternative settlement arrangement that does not comply with the
requirements of Sec. 43.51(e)(1) and Sec. 63.14 of this chapter and
Sec. 64.1001 by filing a petition for declaratory ruling in compliance
with the requirements of this section.
(b) A petition for declaratory ruling must contain the following:
(1) Information to demonstrate that:
(i) The alternative settlement arrangement is on a route between
the United States and a World Trade Organization Member; or
(ii) For an alternative settlement arrangement on a route between
the United States and a non-World Trade Organization Member:
(A) The Commission has made a previous determination that the
effective competitive opportunities test in Sec. 63.18(h)(5)(iii) of
this chapter has been satisfied on the route covered by the alternative
settlement arrangement; or
(B) The effective competitive opportunities test in
Sec. 63.18(h)(5)(iii) of this chapter is satisfied on the route covered
by the alternative settlement arrangement; or
(iii) The alternative settlement arrangement is otherwise in the
public interest.
(2) A certification as to whether the alternative settlement
arrangement affects more than 25 percent of the outbound traffic or 25
percent of the inbound traffic on the route to which the alternative
settlement arrangement applies.
(3) A certification as to whether the parties to the alternative
settlement arrangement are affiliated, as defined in
Sec. 63.18(h)(1)(i) of this chapter, or involved in a non-equity joint
venture affecting the provision of basic services on the route to which
the alternative settlement arrangement applies.
(4) A copy of the alternative settlement arrangement if it affects
more than 25 percent of the outbound traffic or 25 percent of the
inbound traffic on the route to which the alternative settlement
arrangement applies, or if it is between parties that are affiliated,
as defined in Sec. 63.18(h)(1)(i) of this chapter, or that are involved
in a non-equity joint venture affecting the provision of basic services
on the route
[[Page 64759]]
to which the alternative settlement arrangement applies.
(5) A summary of the terms and conditions of the alternative
settlement arrangement if it does not come within the scope of
paragraph (b)(4) of this section. However, upon request by the
International Bureau, a full copy of such alternative settlement
arrangement must be forwarded promptly to the International Bureau.
(c) If the petition for declaratory ruling contains a certification
under paragraph (b)(1)(i) of this section that the proposed alternative
settlement arrangement is for service on a route between the United
States and a World Trade Organization Member, a party may oppose the
petition under paragraph (f) of this section with a showing that the
participating carrier on the foreign end of the route does not have
multiple (more than one) international facilities-based competitors. In
such a case, the petitioning party may make a showing under paragraph
(b)(1)(iii) of this section, pursuant to paragraph (g) of this section.
(d) An alternative settlement arrangement filed for approval under
this section cannot become effective until the petition for declaratory
ruling required by paragraph (a) of this section has been granted under
paragraph (f) of this section.
(e) On the same day the petition for declaratory ruling has been
filed, the filing carrier must serve a copy of the petition on all
carriers providing the same or similar service with the foreign carrier
identified in the petition.
(f) All petitions for declaratory ruling shall be subject to a 21-
day pleading period for objections or comments, commencing the day
after the date of public notice listing the petition as accepted for
filing. A petition for declaratory ruling shall be deemed granted as of
the 28th day without any formal staff action provided that:
(1) The petition is not formally opposed by a pleading meeting the
following criteria:
(i) The caption and text of the pleading make it unmistakably clear
that the pleading is intended to be a formal opposition;
(ii) The pleading is served upon the other parties to the
proceeding; and
(iii) the pleading is filed within the time period prescribed; or
(2) The International Bureau has not notified the filing carrier
that grant of the petition may not serve the public interest and that
implementation of the proposed alternative settlement arrangement must
await formal staff action on the petition.
(g) If objections or comments are filed, the petitioning carrier
may file a response pursuant to Sec. 1.45 of this chapter. Petitions
that are formally opposed must await formal action by the International
Bureau before the proposed alternative settlement arrangement may be
implemented.
[FR Doc. 97-32013 Filed 12-5-97; 10:03 am]
BILLING CODE 6712-01-P
