[Federal Register Volume 62, Number 25 (Thursday, February 6, 1997)]
[Rules and Regulations]
[Pages 5535-5542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2922]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 43 and 64
[CC Docket No. 90-337, FCC 96-459]
Regulation of International Accounting Rates
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Commission adopted a Report and Order that will permit
flexibility in its accounting rate polices. The Commission concluded
that U.S. carriers should be permitted to negotiate alternative
settlement payment arrangements that deviate from the International
Settlements Policy (ISP) with foreign correspondents in
[[Page 5536]]
countries that satisfy the Commission's economic competitive
opportunity (ECO) test. In addition, the Commission will consider
alternative settlement arrangements between a U.S. carrier and a
foreign correspondent in a country that does not satisfy the ECO test
where the U.S. carrier can demonstrate that deviation from the ISP will
promote market-oriented pricing and competition, while precluding abuse
of market power by the foreign correspondent. The Commission also
adopted safeguards to ensure that its new flexibility policy does not
have anticompetitive effects in the international market. The
safeguards that are alternative arrangements between affiliated
carriers and those involved in non-equity joint ventures must be filed
with the Commission and made public, and alternative arrangements
affecting more than twenty-five percent of the inbound or twenty-five
percent of the outbound traffic on a particular route must be filed
with the Commission and made public, and not contain unreasonably
discriminatory terms and conditions. The Commission's action will
encourage the development of competitive market conditions in other
countries and lead to more economically efficient contractual
arrangements for terminating service that ultimately will benefit U.S.
consumers through lower calling prices.
DATES: The amendments to Secs. 43.51 and 64.1001 will become effective
March 10, 1997. The amendments to Secs. 43.61 and 64.1002 take effect
either upon approval by the Office of Management and Budget (OMB) or
March 10, 1997, whichever occurs later. When approval is received, the
agency will publish a document announcing the effective date.
FOR FURTHER INFORMATION CONTACT: Kathryn O'Brien, Attorney-Advisor,
Policy and Facilities Branch, Telecommunications Division,
International Bureau, (202) 418-1470.
SUPPLEMENTARY INFORMATION This is a summary of the Commission's Fourth
Report and Order in CC Docket 90-337, Phase II, adopted on November 26,
1996, and released on December 3, 1996 (FCC 96-459). The full text of
the decision is available for inspection and copying during normal
business hours in the FCC's Docket Reference Center, Room 239, 1919 M
Street, NW., Washington, DC 20554. Copies also may be obtained from the
Commission's contractor for public service records duplication: ITS,
Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037, (202)
857-3800.
Summary of Fourth Report and Order
1. For years, U.S. carriers have been required to comply with the
Commission's International Settlements Policy (ISP) in their bilateral
accounting rate negotiations with monopoly foreign carriers. The ISP
prevents foreign carriers from discriminating among U.S. carriers and
requires: (1) The equal division of accounting rates; (2)
nondiscriminatory treatment of U.S. carriers; and (3) proportionate
return of inbound traffic. On January 31, 1996, the Commission issued a
Policy Statement (61 FR 11163, March 19, 1996) that set forth a new
approach for regulating accounting rates that could, when appropriate,
rely on competitive forces to determine termination costs and efficient
resource allocation. This was one of the Commission's initial steps to
lower international telephone costs by reforming the international
accounting rate system. In light of the Policy Statement the Commission
reopened the record in CC Docket No. 90-337, Phase II, In the Matter of
Regulation of International Accounting Rates (Second Further Notice of
Proposed Rulemaking) (58 FR 3522, January 11, 1993) for the submission
of supplemental comments and reply comments. (Public Notices Seeking
Additional Comments, 61 FR 11172 (March 19, 1996) and 61 FR 11173
(March 19, 1996).
2. On December 3, 1996, the Commission released the Fourth Report
and Order (FCC 96-459) adopting rules to permit flexibility in
international accounting rate policies. With this additional step to
reform the accounting rate system, the Commission created a framework
for competition in the market for U.S. international telecommunications
services that is more closely patterned on the competitive market for
domestic long distance services. The Commission concluded that the new
rules should increase options for U.S. carriers to negotiate
arrangements to terminate their international traffic and result in
lower prices and greater choices for U.S. consumers. In its decision,
the Commission fully describes the differences between the new flexible
approach and the current accounting rate policies.
3. The Commission rejected arguments to delay adopting a more
flexible regulatory framework until effectively competitive markets
exist. The Commission concluded that creating a more flexible
regulatory framework at this time will serve its objectives to promote
competitive behavior, improve economic performance, and rely on
competitive market forces to determine call termination charges to the
maximum extent permitted by market conditions. The new framework for
flexibility permits carriers to deviate from the ISP only with carriers
in markets where the legal, regulatory, and economic conditions support
competition and in certain other limited circumstances. The Commission
adopted competitive safeguards to ensure that where it permits
flexibility, it does not lead to anticompetitive effects in the U.S.
market for international services.
4. The Commission adopted a framework for alternative payment
arrangements that affords U.S. carriers maximum flexibility to take
advantage of competitive pressures in foreign markets to negotiate
alternative arrangements that will enhance competition. At the same
time, this framework continues to safeguard against anticompetitive
behavior of foreign carriers that favors one correspondent U.S. carrier
at the expense of its U.S. competitors.
5. The Commission concluded U.S. carriers will be allowed to
negotiate alternative settlement arrangements that deviate from the ISP
with foreign correspondents in countries that satisfy the ECO test set
forth in Section 63.18(h)(6) of the Commission's regulations. The
Commission stated that, where the ECO test has been satisfied, the
ability of foreign carriers to exercise market power is constrained by
the existence, or potential for, competitive entry. Where the FCC
permits flexibility in its ISP, new entrants in foreign markets will
have both the incentive and the opportunity to compete with the
incumbent foreign carrier to terminate U.S.-originated traffic. The
Commission will consider alternative settlement arrangements between a
U.S. carrier and a foreign correspondent in a country that does not
satisfy the ECO test where the U.S. carrier can demonstrate that
deviation from the ISP will promote market-oriented pricing and
competition, while precluding abuse of market power by the foreign
correspondent.
6. The Commission declined to limit its ISP flexibility policy to
certain categories of carriers, such as non-dominant foreign and U.S.
carriers or ``small'' carriers. Instead, it concluded that, subject to
certain safeguards, any U.S. carrier should be allowed to negotiate
alternative payment arrangements with any carrier in a foreign country
that satisfies the ECO test. This conclusion is consistent with the
policy of allowing market forces, where possible, to determine the
[[Page 5537]]
allocation of resources. Moreover, allowing flexibility in the ISP is
the best support for development of more competitive market structures
and therefore should not be unduly restricted. In addition, the
Commission rejected MFSI's proposal to preclude U.S. carriers with
market shares of greater than five percent of U.S.-outbound traffic
from entering into alternative settlement arrangements because the
proposal could impede the effectiveness in reducing U.S. carrier costs
to terminate traffic.
7. Although it declined to preclude dominant or large carriers from
negotiating alternative arrangements, the Commission adopted
competitive safeguards to protect against potential anticompetitive
actions by foreign and U.S. carriers with a significant share of their
markets, and to provide a ``safety net'' for possible unanticipated
consequences of its ISP flexibility policy. In particular, it will
require that a copy of all alternative settlement arrangements
affecting more than either twenty-five percent of the outbound traffic
on a particular route or twenty-five percent of the inbound traffic on
a particular route be filed with the Commission and made public. Also,
the Commission will require that any alternative arrangement that
affects more than twenty-five percent of the outbound traffic or
twenty-five percent of the inbound traffic on a particular route not
contain unreasonably discriminatory terms and conditions. This
safeguard will require carriers that negotiate innovative price and
return traffic terms in agreements that affect more than twenty-five
percent of either the inbound or outbound traffic on a given route to
demonstrate that the terms are not unreasonably discriminatory, or to
offer such terms on a nondiscriminatory basis to competing carriers.
This safeguard will apply whether the arrangement is between separate
carriers on the U.S. and foreign ends, between two affiliates, or when
a carrier is self-corresponding. The Commission will not permit
carriers to circumvent this twenty-five percent threshold by
negotiating two or more agreements with one individual correspondent
carrier or its affiliate, each of which affects less than twenty-five
percent of the inbound or outbound traffic on a particular route.
Carriers will be required to file a summary of the terms and conditions
of all arrangements that do not trigger the Commission's safeguards and
a full copy of all alternative arrangements that do trigger these
safeguards. The Commission reserved the right to request a full copy of
arrangements that do not trigger its safeguards in order to detect any
potential circumvention of the safeguards by carriers.
8. As an additional measure to guard against unintended market
disruptions as a result of the new policy, the Commission will not
permit U.S.-inbound traffic that still is subject to the ISP (i.e.,
traffic from a foreign carrier with whom a U.S. carrier does not have
an alternative payment arrangement) to be routed through a foreign
carrier that has an alternative payment arrangement with a U.S.
carrier. The Commission reserved the right to impose additional
safeguards on a case-by-case basis as a condition of granting approval
to enter an alternative payment arrangement if it finds that such
safeguards are necessary to prevent market distortions in the U.S. IMTS
market or to prevent significant adverse results on net settlements
payments with a foreign country. If alternative settlement arrangements
indicate a need, the Commission will consider additional safeguards in
the future.
9. Because the new policy has an impact on the ``no special
concessions'' policy which was established in the Foreign Carrier Entry
Order, the Commission created an exception to that rule. This exception
applies only to alternative payment arrangements that between U.S.
carriers and foreign carriers in countries that satisfy the ECO test,
or foreign carriers in countries that do not satisfy the ECO test where
the U.S. carrier can demonstrate that deviation from the ISP will
promote market-oriented pricing and competition. Where these criteria
have not been met, the Commission will continue to enforce vigorously
its no special concessions policy. The Commission amended Section 63.14
of its rules to reflect this limited exception to the no special
concessions policy.
10. The Commission determined that the issue of tailoring
settlement policies to address the special circumstances presented by
developing countries, would be better considered in the context of a
separate proceeding. Thus, the Commission transferred the record on
this issue to its future benchmarks proceeding.
11. To ensure that U.S. carriers are not faced with undue delay in
implementing alternative payment arrangements, the Commission
established an expedited process whereby U.S. carriers may obtain
approval to enter an alternative payment arrangement by filing a
detailed petition for declaratory ruling that the alternative payment
arrangement is permitted under the criteria for deviating from the ISP.
Each petition for declaratory ruling will be placed on public notice
and interested parties will be allowed to file a formal opposition to
the petition within twenty-one days of the date of public notice. If no
formal opposition is filed and the Commission's International Bureau
has not notified the carrier that grant of the petition may not serve
the public interest and that implementation of the alternative
arrangement must await formal staff action on the petition, the
petition will be deemed granted and the alternative settlement
arrangement may be implemented as of the twenty-eighth day after the
date of public notice without any formal staff action being taken. If a
formal opposition is filed, the requesting carrier may file a response
pursuant to Sec. 1.45 of the Commission's rules, and implementation of
the alternative payment arrangement must await formal action by the
FCC's International Bureau.
12. A U.S. carrier may seek approval to enter an alternative
payment arrangement with a foreign carrier in a country that has
already been found to satisfy the ECO test in the context of a prior
Section 214 facilities application to serve that country. When a U.S.
carrier seeks approval to enter an alternative payment arrangement with
a carrier in a foreign country where the Commission has not yet made an
ECO determination, the carrier must submit sufficient evidence to
support a finding that either the ECO test has been satisfied, or that
deviation from the ISP will promote market-oriented pricing and
competition, while precluding abuse of market power by the foreign
correspondent. In all cases, a petitioning carrier must state whether
the alternative arrangement triggers our safeguards, either because the
arrangement affects more than twenty-five percent of the inbound or
twenty-five percent of the outbound traffic on the affected route, or
because the U.S. carrier and its foreign correspondent are affiliated
or involved in a non-equity joint venture affecting the provision of
basic services on the affected route.
13. The Commission required that a full copy of all negotiated
alternative arrangements that trigger its safeguards be filed with each
petition. Where an alternative arrangement does not trigger the
safeguards, a summary of the terms and conditions must be filed with
each petition, and the Commission reserved the right to request a copy
of the arrangement. Where an alternative arrangement does not trigger
the safeguards, the Commission's review generally will focus on whether
the criteria for allowing flexibility have
[[Page 5538]]
been met, rather than on the specific terms of the alternative
arrangement. The Commission reserved the right to review and, if need
be, reject the terms and conditions of all alternative arrangements,
regardless of whether they trigger the safeguards, to ensure that they
meet the FCC's policy objectives and will not have a significant
adverse impact on U.S. net settlement payments and resulting traffic
volumes.
14. The Commission will conduct periodic reviews of alternative
settlement arrangements to ensure that the arrangements meet the
objectives of creating a competitive market for IMTS and achieving
cost-based accounting rates. The Commission will monitor the operating
results of alternative arrangements along with foreign market
conditions to ensure that the arrangements fulfill its objective of
achieving market-determined terms and conditions of payment that
approximate competitive levels. As part of the evaluation of
alternative arrangements, the Commission will compare the results of
each individual arrangement with other alternative arrangements and
with its benchmark accounting rates.
15. The Commission will monitor the operating results of approved
alternative arrangements to ensure that they do not have significant
adverse impacts on traffic volumes and U.S. net settlement payments. In
their annual report of international telecommunications traffic filed
pursuant to Section 43.61, U.S. carriers will be required to include
the number of minutes of outbound and inbound traffic settled pursuant
to each alternative arrangement. In the event an alternative
arrangement causes significant increases in net settlement payments
with a foreign country, the Commission will consider appropriate
action, including unilaterally ordering an end to the arrangement and
reinstituting traditional settlement practices. The Commission
emphasized its concern about increases in net settlement outpayments
that result from distortions in market competition that harm consumer
interests.
16. The Commission amended Secs. 43.51 and 64.1001 of its rules to
refer to ``waiver requests'' submitted under Sec. 64.1001 as
``modification requests''. This change conforms its rules to the
historic practice of treating waiver requests filed under Sec. 64.1001
as non-restricted proceedings, in the same manner as Section 214(a)
proceedings are treated under the Commission's ex parte rules. Because
this rule change involves agency practice and procedure, the notice and
comment provisions of the Administrative Procedure Act are
inapplicable.
17. The Commission codified its proportionate return policy as a
rule. The issue of whether to codify the policy was initially raised in
the Foreign Carrier Entry proceeding, but the record was transferred to
this proceeding. The proportionate return requirement has long been a
cornerstone of the Commission's ISP, and the Commission contends that
by codifying this requirement, it is sending a strong signal to foreign
carriers that the FCC does not allow U.S. carriers to be whipsawed.
18. The Commission decided not to apply the ISP to the global MSS
industry. Based on the record, the Commission found no clear evidence
that the global MSS market necessarily shares the anticompetitive
characteristics addressed by the ISP. The Commission encouraged the MSS
industry to adopt an approach to terminating international traffic that
leads to more cost-based results than the current accounting rate
regime. The Commission reserved the authority to apply the ISP or other
safeguards to the MSS industry in the future if it finds that market
conditions merit such actions.
Final Regulatory Flexibility Act Analysis
As required by Section 603 of the Regulatory Flexibility Act, 5
U.S.C. 603 (``RFA''), an Initial Regulatory Flexibility Analysis
(``IRFA'') was incorporated into the Second Report and Order and Second
Further Notice of Proposed Rulemaking (``Second Further NPRM'') in CC
Docket No. 90-337, Phase II. The Commission sought written public
comments on the proposals in the Second Further NPRM, including the
IRFA. The Commission's Final Regulatory Flexibility Analysis (``FRFA'')
in this Report and Order conforms to the RFA, as amended by the
Contract With America Advancement Act of 1996 (CWAAA), Public Law 104-
121, 110 Stat. 847 (1996).
A. Need For and Objective of the Rules
This Report and Order: (1) Permits U.S. carriers to deviate from
the requirements of the Commission's International Settlements Policy
(ISP) where appropriate market conditions exist; and (2) codifies the
Commission's preexisting proportionate return policy, which is one of
the requirements of the ISP, as a rule of general applicability to all
facilities-based carriers.
With respect to our action permitting U.S. carriers to deviate from
the requirements of the Commission's ISP where appropriate market
conditions exist, our objective is to create a more flexible framework
for regulating international accounting rates that permits U.S.
carriers to take advantage of competitive market conditions in foreign
countries to negotiate more economically efficient settlement rates.
This action is an important step toward a transition from the
traditional accounting rate system to competitive markets for
originating and terminating international traffic. A more flexible
approach to the accounting rate system will enable U.S. carriers to
respond more rapidly to changing conditions in the global
telecommunications market, reduce their call termination costs and the
U.S. net settlement payments, and provide for lower calling prices for
U.S. consumers.
With respect to our action codifying the Commission's preexisting
proportionate return policy, our objective is to restrict the ability
of foreign carriers to manipulate the allocation of return traffic and
whipsaw U.S. carriers. This policy has long been a cornerstone of our
ISP, and codifying it will send a strong signal to foreign carriers
that we will not allow U.S. carriers to be whipsawed. We note, however,
the flexible regulatory framework we adopt in this Report and Order
permits carriers to deviate from this requirement where appropriate
market conditions exist.
B. Summary of Issues Raised by the Public Comments in Response to the
IRFA
No comments were submitted in direct response to the IRFA. We also
reviewed the general comments for potential impact on small business.
Some commenters raised the concern that allowing flexibility for large
and/or dominant carriers would put smaller carriers at a disadvantage.
These commenters contend that larger carriers will be able to negotiate
more favorable terms and conditions than smaller carriers due to their
greater traffic volumes. We believe that these concerns are addressed
by the safeguards we adopt in this Report and Order.
C. Description and Estimate of Small Entities Subject to Which Rules
Will Apply
The Commission has not developed a definition of small entities
applicable to international facilities-based common carriers.
Therefore, the applicable definition of small entity is the definition
under the Small Business Administration (SBA) rules applicable to
Communications Services, Not Elsewhere Classified. This definition
provides that a small entity is expressed
[[Page 5539]]
as one with $11.0 million or less in annual receipts. Based on
preliminary 1995 data, at present there are 29 international
facilities-based common carriers that qualify as small entities
pursuant to the SBA's definition. The number of small international
facilities-based common carriers has been growing significantly, and by
the end of 1996 that number could increase to approximately 50. The
flexibility rules adopted in this decision will apply to these carriers
only if they enter an alternative accounting rate arrangement with a
foreign carrier, and the proportionate return rules codified in this
Report and Order apply to all these carriers that enter into an
operating agreement that provides for return traffic with a foreign
carrier.
The IRFA and a Public Notice seeking supplemental comments were
issued in November 1992 and January 1996, respectively. Therefore, the
record in this proceeding was closed prior to the effective date of
SBREFA. The Commission was thus unable to request information regarding
the number of international facilities-based common carriers that
qualify as small entities.
D. Projected Reporting, Recordkeeping and Other Compliance Requirements
of the Rules
International facilities-based common carriers must file a petition
for declaratory ruling and obtain Commission approval before
implementing an alternative settlement rate arrangement with a foreign
carrier that deviates from the regulatory requirements of the
Commission's ISP. In addition, carriers that implement such alternative
arrangements must include in their annual report of international
telecommunications traffic filed pursuant to Section 43.61 of the
Commission's rules the number of minutes of outbound and inbound
traffic settled pursuant to each alternative arrangement. Carriers
already are required to file this annual traffic report; this Report
and Order requires only that carriers that enter alternative
arrangements include in their annual traffic report a description of
the minutes settled pursuant to those arrangements. This reporting
requirement and the requirement that carriers obtain approval of
alternative arrangements are necessary to enable the Commission to
review and monitor alternative arrangements for possible adverse
effects on the U.S. market for international telecommunications
services. These rules apply only to those small entities that take
advantage of the opportunity to negotiate alternative settlement
arrangements that deviate from the regulatory requirements of the
Commission's ISP. Compliance with these rules may require the use of
accounting and legal skills.
A U.S. international facilities-based common carrier that enters
into an operating agreement with a foreign correspondent may not
receive an allocation of return traffic from the foreign correspondent
to the U.S. carrier that is not proportionate to the amount of traffic
that the U.S. carrier sends outbound to the foreign correspondent. This
requirement previously has applied to all carriers, including small
entities, as part of the Commission's ISP. This Report and Order also
adopts a flexible regulatory framework that permits carriers to deviate
from this requirement where appropriate market conditions exist.
Compliance with this rule may require the use of accounting and legal
skills.
E. Steps Taken to Minimize Significant Economic Impact on Small
Entities Consistent With Stated Objectives
We have not identified, and commenters have not provided, any
significant alternatives that may minimize the economic impact on small
entities consistent with the stated objectives. We recognize that all
carriers, including small entities, may have an increased paperwork
burden; however, this Report and Order will reduce regulatory
requirements on small entities that enter into operating agreements
with foreign correspondents that include a negotiated accounting rate.
Small entities entering alternative settlement arrangements pursuant to
this Report and Order will not have to comply with the requirements of
the Commission's ISP, including the proportionate return requirement
that is codified in this Report and Order.
Several parties raised concerns that allowing flexibility in our
ISP may harm smaller carriers because larger carriers may be able to
obtain more favorable alternative arrangements due to their large
market share. This Report and Order recognizes that there exists the
potential for anticompetitive behavior by large carriers. However,
rather than preclude large carriers from entering into alternative
arrangements or postpone our flexibility policy, this Report and Order
adopts competitive safeguards to help prevent potential anticompetitive
behavior. These safeguards address the concerns raised by commenters,
but at the same time enable the Commission to meet its objectives of
allowing U.S. carriers, including small entities, to respond more
rapidly to changing conditions in the global telecommunications market,
reduce their call termination costs and the U.S. net settlement
payments, and provide for lower calling prices for U.S. consumers.
The Commission shall send a copy of this Final Regulatory
Flexibility Analysis, along with this Report and Order, in a report to
Congress pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996, 5 U.S.C. 801(a)(1)(A). A copy of this FRFA will also be
published in the Federal Register.
Paperwork Reduction Act
The Report and Order revises an existing information collection and
imposes a new information collection. We recognize that the
implementation of these requirements will be subject to review and
approval of the Office of Management and Budget. Both the new and
revised information collections contained in these rules will be
submitted to the Office of Management and Budget for review under the
Paperwork Reduction Act of 1995. To obtain copies of the information
collections contact Dorothy Conway at (202) 418-0217 or via internet at
dconway@fcc.gov. Persons wishing to comment on this collection of
information should direct their comments to Dorothy Conway, Federal
Communications Commission, Records Management Division, Room 234,
Paperwork Reduction Project (3060-0572), Washington, D. C. 20554. For
Further information Contact Dorothy Conway, (202) 418-0217.
Comments are invited on (a) whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information shall have practical
utility; (b) the accuracy of the Commission's estimate of burden of the
proposed collection of information; (c) ways to enhance the quality,
utility, and clarity of the information to be collected and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology.
OMB Number: 3060-0106.
Title: Common Carrier International Telecommunications Services.
Type of Review: Revision of existing collection.
Respondents: U.S. common carriers providing international
telecommunications services.
Number of Respondents: 248 (based on number of international
carriers filing traffic reports in 1995).
Estimated Annual Burden: 8 hours including the time for reviewing
instructions, searching existing data
[[Page 5540]]
sources, segregating the data needed, and completing and reviewing the
collection of information.
Total Annual Burden: 1,984 hours.
Estimated costs per respondent: None.
Needs and Uses: The collection of information for which approval is
here sought is contained in amendments to Part 43 in the Order adopting
such amendments. The information collections are authorized and
necessary for the Commission to carry out its statutory mandate,
pursuant to Sections 1, 4, 201-205, 211, 214, 218-220, and 303 of the
Communications Act of 1934, as amended, 47 U.S.C. Sections 151, 154,
201-205, 211, 214, 218-220, and 303, and Part 43 of the Commission's
Rules.
The information collections contained in amendments to Part 43 are
necessary to assist us in reviewing the impact, if any, that
alternative settlement agreements have on our international accounting
rate policies. The information collections will also enhance the
ability of the Commission and interested parties to monitor this policy
for anticompetitive effects in the U.S. market for international
service, thus increasing competitive options for U.S. carriers and
resulting in lower prices and greater choices for U.S. consumers. The
information collection will enable the Commission to promote
competitive behavior, improve economic performance, and preserve the
integrity of our accounting rate policies. The information collections
also will enable the Commission and interested parties to determine
whether or not the competitive safeguards are sufficient to protect
U.S. carriers and consumers against harmful discriminatory practices by
foreign carriers.
The information will be used by the Commission staff in carrying
out its duties under the Communications Act. Common carriers engaged in
providing international telecommunications service are required to file
annual reports of international telecommunications traffic. The new
rules require that the report shall include the number of minutes of
outbound and inbound traffic settled pursuant to each alternative
arrangement entered into pursuant to the new Section 64.1002.
OMB Number: 3060-0000.
Title: Common Carrier International Telecommunications Services.
Type of Review: New Collection.
Respondents: U.S. common carriers providing international
telecommunications services.
Frequency of Response: As needed basis.
Number of Respondents: 30. It is difficult to estimate the number
of respondents filing this information because the information will be
filed only by those carriers seeking permission to enter agreements
that do not comply with the Secs. 43.41(e)(1), 63.14, and 64.1001 of
our rules. Such agreements will only be permitted under certain
circumstances. Given the limitations on negotiating such agreements, we
estimate that no more than 30 such agreements will be negotiated, and
very likely, significantly fewer than that number.
Estimated Annual Burden: 16 hours including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. It is difficult to estimate the estimated
annual burden for filing the information because it will depend on how
many agreements the carriers wish to enter.
Total Annual Burden: 480 hours.
Cost per respondent: $1,600. This amount is an estimate depending
on whether the respondents use in-house legal staff or professional law
firms to prepare the filing.
Needs and Uses: The collection of information for which approval is
here sought is contained in amendments to Part 64 in the Order adopting
such amendments. This information collection is authorized and
necessary for the Commission to carry out its statutory mandate,
pursuant to Sections 1, 4, 201-205, 211, 214, 218-220, and 303 of the
Communications Act of 1934, as amended, 47 U.S.C. Sections 151, 154,
201-205, 211, 214, 218-220, and 303, and Part 43 of the Commission's
Rules.
The information collection contained in amendments to Part 64 is
necessary to allow U.S. carriers to enter into alternative settlement
agreements that do not comply with Secs. 43.41(e)(1), 63.14, and
64.1001 of our rules. The information collected pursuant to this
section will enable the Commission to consider alternative agreements
that are outside the scope of its current rules. The information
collected will be used to monitor the alternative agreements to ensure
that competitive opportunities are available. The information collected
will also enable interested parties to monitor the alternative
agreements and determine potentially anticompetitive arrangements. In
addition, the information collected will be the only information
available to the Commission and interested parties on alternative
accounting settlement arrangements. This information collection will
provide the agency with sufficient data to review the impact, if any,
that the alternative settlement agreement will have on our
international accounting rate policies. The information collection will
also enhance the ability of the Commission and interested parties to
monitor for anticompetitive effects in the U.S. market for
international service, thus increasing competitive options for U.S.
carriers and resulting in lower prices and greater choices for U.S.
consumers. The information collection will enable the Commission to
promote competitive behavior, improve economic performance, and
preserve the integrity of our accounting rate policies. The information
collections also will enable the Commission and interested parties to
determine whether or not the competitive safeguards are sufficient to
protect U.S. carriers and consumers against harmful discriminatory
practices by foreign carriers.
The information will be used by the Commission staff in carrying
out its duties under the Communications Act.
Ordering Clauses
19. Accordingly, Secs. 43.51 and 64.1001 will become effective
March 10, 1997. Sections 43.61 and 64.1002 take effect either upon
approval by the Office of Management and Budget (OMB) or March 10, 1997
whichever occurs later. When approval is received, the agency will
publish a document announcing the effective date.
20. This action is taken pursuant to Sections 4(i), 4(j), 303(r),
and 201-205 of the Communications Act of 1934, as amended, 47 U.S.C.
154(i), 154(j), 303(r) and sections 201-205, Constitution of the
International Telecommunications Union, Special Arrangements Article,
and International Telecommunications Regulations, Article 9. Special
Arrangements.
List of Subjects in 47 CFR Parts 43 and 64
Communications common carriers, Reporting and recordkeeping
requirements.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Parts 43 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:
[[Page 5541]]
Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154,
unless otherwise noted. Interpret or apply secs. 211, 219, 220, 48
Stat. 1073, 1077, as amended; 47 U.S.C. 211, 219, 220.
2. Section 43.51 is amended by revising paragraph (d) to read as
follows:
Sec. 43.51 Contracts and concessions.
* * * * *
(d) International settlements policy. (1) If a carrier files an
operating agreement (whether in the form of a contract, concession,
license, etc.) referred to in paragraph (a) of this section to begin
providing switched voice, telex, telegraph, or packet-switched service
between the United States and a foreign point and the terms and
conditions of such agreement relating to the exchange of services,
interchange or routing of traffic and matters concerning rates,
accounting rates, division of tolls, the allocation of return traffic,
or the basis of settlement of traffic balances, are not identical to
the equivalent terms and conditions in the operating agreement of
another carrier providing the same or similar service between the
United States and the same foreign point, the carrier must also file
with the International Bureau a notification letter or modification
request, as appropriate, under Sec. 64.1001 of this chapter. No carrier
providing switched voice, telex, telegraph, or packet-switched service
between the United States and a foreign point shall bargain for or
agree to accept more than its proportionate share of return traffic.
(2) If a carrier files an amendment to the operating agreement
referred to in paragraph (a) of this section under which it already
provides switched voice, telex, telegraph, or packet-switched service
between the United States and a foreign point, and other carriers
provide the same or similar service to the same foreign point, and the
amendment relates to the exchange of services, interchange or routing
of traffic and matters concerning rates, accounting rates, division of
tolls, the allocation of return traffic, or the basis of settlement of
traffic balances, the carrier must also file with the International
Bureau a notification letter or modification request, as appropriate,
under Sec. 64.1001 of this chapter.
3. Section 43.61 is amended by revising paragraph (b) to read as
follows:
Sec. 43.61 Reports of international telecommunications traffic.
* * * * *
(b) The information contained in the reports shall include actual
traffic and revenue data for each and every service provided by a
common carrier, divided among service billed in the United States,
service billed outside the United States, and service transiting the
United States. In addition, it shall include the number of minutes of
outbound and inbound traffic settled pursuant to each alternative
arrangement entered into pursuant to Sec. 64.1002 of this chapter.
* * * * *
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
1. The authority citation for Part 64 continues to read as follows:
Authority: Secs. 4, 201-205, 211, 218-220, 303, 48 Stat. 1066,
1070, 1072-73, 1077-78, as amended; 47 U.S.C. 154, 201-205, 211,
218-220, 303.
2. Section 64.1001 is amended by revising the heading for Subpart
J, the section heading, paragraph (d), (e)(7), (f) introductory text,
(g) introductory text, and paragraphs (i), (j), (k), and (l) to read as
follows:
Subpart J--International Settlements Policy and Modification
Requests
Sec. 64.1001 International settlements policy and modification
requests.
* * * * *
(d) If the operating agreement or amendment referred to in
Secs. 43.51(d)(1) and (d)(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.
(e) * * *
(7) A statement that there has been no other modification in the
operating agreement with the foreign correspondent regarding the
exchange of services, interchange or routing of traffic and matters
concerning rates, accounting rates, division of tolls, allocation of
return traffic, or the basis of settlement of traffic balances.
(f) A modification request must contain the following information:
* * * * *
(g) Notification letters and modification requests must contain
notarized statements that the filing carrier:
* * * * *
(i) If a carrier files a notification letter for an operating
agreement or amendment that should have been filed as a modification
request, the Bureau will return the notification letter to the filing
carrier and the Bureau will notify the carrier that, before it can
implement the proposed modification, it must file a modification
request under paragraph (f) of this section.
(j) An operating agreement or amendment filed under a modification
request cannot become effective until the modification request has been
granted under paragraph (l) of this section.
(k) On the same day the notification letter or modification request
is filed, carriers must serve a copy of the notification letter or
modification request on all carriers providing the same or similar
service to the foreign administration identified in the filing.
(l) All modification requests will be subject to a twenty-one (21)
day pleading period for objections or comments, commencing the date
after the request is filed. If the modification request is not complete
when filed, the carrier will be notified that additional information is
to be submitted, and a new 21 day pleading period will begin when the
additional information is filed. The modification request will be
deemed granted as of the twenty-second (22nd) day without any formal
staff action being taken: provided
(1) No objections have been filed, and
(2) The International Bureau has not notified the carrier that
grant of the modification request may not serve the public interest and
that implementation of the proposed modification must await formal
staff action on the modification request. If objections or comments are
filed, the carrier requesting the modification request may file a
response pursuant to Sec. 1.45 of this chapter. Modification requests
that are formally opposed must await formal action by the International
Bureau before the proposed modification can be implemented.
3. New Sec. 64.1002 is added to Subpart J 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 either:
(i) The Commission has made a previous determination that the
[[Page 5542]]
effective competitive opportunities test in Sec. 63.18(h)(6)(i) of this
chapter has been satisfied on the route covered by the alternative
settlement arrangement; or
(ii) The effective competitive opportunities test in
Sec. 63.18(h)(6)(i) 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 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) 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 (e) of this section.
(d) 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
administration identified in the petition.
(e) 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. The petition will be deemed granted as of the 28th day without
any formal staff action being taken: provided
(1) The petition is not formally opposed within the meaning of
Sec. 1.1202(e) of this chapter; and
(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. 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. 97-2922 Filed 2-5-97; 8:45 am]
BILLING CODE 6712-01-P
