International Settlement Rates

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 63

[IB Docket No. 96-261, FCC 97-280]

International Settlement Rates

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: On August 7, 1997, the Federal Communications Commission

adopted a Report and Order that revises the Commission's international

settlement rate benchmarks. The revisions will move settlement rates

closer to the underlying costs of providing international termination

services. The Commission took this action in light of the significant

changes that have occurred in the global telecommunications market in

recent years. The decision represents one of the steps in an ongoing

effort by the Commission, many foreign governments, and multilateral

organizations such as the International Telecommunication Union

(``ITU'') and the Organization for Economic Cooperation and Development

(``OECD'') to lower international telephony costs by reforming the

international accounting rate system.

DATES: Effective: January 1, 1998. The new information collection

requirements adopted in this Order will become effective following OMB

approval. The Commission will publish a document at a later date

establishing the effective date. Written comments by the public and

other agencies on the proposed information collections are due October

28, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, NW., Room

222, Washington, DC 20554. For filing comments on the proposed

information collections contained herein, in addition to filing

comments with the Secretary, a copy of any comments should be submitted

to Judy Boley, Federal Communications Commission, Room 234, 1919 M

Street, NW., Washington, DC 20554, or via the Internet to

[email protected].

FOR FURTHER INFORMATION CONTACT: Kathryn O'Brien, Attorney-Advisor, or

John Giusti, Attorney-Advisor, Policy and Facilities Branch,

Telecommunications Division, International Bureau, (202) 418-1470. For

additional information concerning the information collections contained

in this Order contact Judy Boley at 202-418-0214, or via the Internet

at [email protected].

SUPPLEMENTARY INFORMATION:

Summary of Report and Order

1. On December 19, 1996, the Commission released a Notice of

Proposed Rulemaking in the Matter of International Settlement Rates, IB

Docket No. 96-261, FCC 96-484 (61 FR 68702, December 30, 1996). In the

NPRM, the Commission proposed options for revising international

settlement rate benchmarks that would move settlement rates closer to

the underlying costs of providing international termination services.

The NPRM sought comment on several alternate methods for calculating

benchmark rates in the absence of reliable data on the costs foreign

carriers incur to terminate international traffic.

2. On August 7, 1997, the Commission adopted a Report and Order in

this proceeding that revised settlement rate benchmarks. The Commission

concluded that current settlement rates are in most cases substantially

above the cost that foreign carriers incur to terminate U.S.-originated

traffic. These inflated settlement rates contribute to high

international calling prices for U.S. consumers and create the

potential for distortions in the U.S. market for international

services.

3. The Commission adopted revised settlement rate benchmarks to

assist U.S. international carriers in negotiating settlement rates that

are more closely related to the costs incurred by foreign carriers. The

benchmarks are calculated using foreign carriers' tariffed prices and

information published by the International Telecommunication Union. The

Commission concluded that basing benchmarks on foreign carriers'

tariffed prices would more closely reflect the underlying costs of

providing international termination service than most current

settlement rates, although they still would result in benchmarks that

are substantially above cost-based settlement rate levels. The

Commission believes that basing benchmark settlement rates on the same

rates that foreign carriers charge their own customers would ensure

nondiscriminatory treatment for U.S. carriers. In addition, foreign

carriers will be permitted to recover more than their incremental cost

of terminating international service because the tariffed rates are for

retail services and include costs that would not be included in cost-

based settlement rates.

4. The Commission adopted four settlement rate benchmarks: $0.15

for upper income countries; $0.19 for upper-middle income countries and

lower-middle income countries; and $0.23 for lower income countries.

The Commission concluded that these settlement rate benchmarks will

continue to exceed, usually substantially, any reasonable estimate of

the level of foreign carriers' costs. Using the limited data available

to the FCC for calculating benchmarks, these benchmarks will

substantially reduce the above-cost excesses in current settlement

rates in a manner that is reasonable and treats foreign carriers

fairly. The Commission adopted its proposal in the NPRM to revise and

update the benchmarks periodically as necessary.

5. The Commission also adopted a ``best practices'' rate that will

be enforced as a safeguard when it detects distortion in the U.S.

market for IMTS. The ``best practices'' rate is closer to a cost-based

level than the settlement rate benchmarks and can be applied to prevent

market distorting behavior. This rate will be applied only to the

extent carriers seek authorization to provide facilities-based service

from the United States to affiliated markets and to provide private

line resale service. In those cases, the rate will be enforced only if

the Commission detects market distortion on the route or routes in

question. The rate is based on the lowest, commercially viable,

settlement rate currently paid by U.S. carriers to an overseas carrier

from a competitive market. The Commission selected a rate of $.08,

which is the current settlement rate between the United States and

Sweden. The ``best practice'' rate will apply only in cases of

competitive distortion, and that if an affected carrier believes such a

requirement would prove unjustified it may follow established

procedures to request an individualized settlement rate prescription.

6. The Commission adopted a transition schedule for compliance with

the settlement rate benchmarks to balance the competing concerns of

providing time for carriers to make adjustments and expeditiously

reduce rates to a more cost-based level. The transition schedule is

based primarily on the categorization of countries used to calculate

the settlement rate benchmarks, the World Bank, and ITU's GNP per

capita classifications. The Commission believes that this

classification scheme provides a reasonable basis for determining a

country's ability to transition to a more-cost based system or

settlement rates without undue disruption to its telecommunications

network. The Commission also established a separate category for the

``least telecommunications developed'' countries based on level of

teledensity,

[[Page 45759]]

or lines per 100 people, rather than GNP per capita. The Commission

will require that U.S. carriers negotiate settlement rates at or below

the relevant benchmarks according to the following schedule:

Carriers in upper income countries--1 year from implementation of the

Order

Carriers in upper-middle income countries--2 years from implementation

of the Order

Carriers in lower-middle income countries--3 years from implementation

of the Order

Carriers in lower income countries--4 years from implementation of the

Order

Carriers in countries with teledensity (lines per 100) less than 1--5

years from implementation of the Order

7. The Commission declined to adopt the proposal to permit

additional flexibility in the application of the benchmarks beyond the

transition periods for U.S. carriers serving developing countries that

have committed to introducing competitive reforms. The Commission

believes that these transition periods adequately balance the

challenges faced by developing countries in moving to more cost-based

rates.

8. The Commission intends to take the appropriate enforcement

measures that may be necessary to ensure that U.S. international

carriers satisfy the benchmark requirements. Initially, the Commission

will identify foreign carriers that are reluctant to engage in

meaningful progress toward negotiating settlement rates at or below the

relevant benchmark. The Commission will take steps to work with the

foreign governments and carriers to achieve the goal of cost-based

rates. If these efforts are unsuccessful, U.S. international carriers

may file a petition with the FCC. The Commission can and will ensure

compliance with its settlement rate benchmarks. Rather than adopt a set

enforcement mechanism, the Commission will consider individual

circumstances surrounding each carrier-initiated petition to determine

the appropriate enforcement action to take. To protect smaller carriers

from reprisals, the Commission emphasized that it will continue to

safeguard U.S. carriers against discriminatory treatment by foreign

carriers by vigorously enforcing its international settlements policy.

9. The Commission will consider, on a case-by-case basis,

grandfathering settlement rate agreements that were negotiated prior to

the effective date of this Order. The agreement, however, must meet the

Commission's public interest standard of serving the same goals set

forth in this Order and achieving settlement rates at or below the

relevant benchmark within a reasonable period of time. The Commission

will reserve the right to consider alternative approaches to the

settlement rate benchmarks if, in the future, it finds that meaningful

progress is made in a multilateral forum to achieve its goals.

10. In the NPRM, the Commission identified two types of market

distortions that could be created by above-cost settlement rates--price

squeeze behavior and one-way bypass. In the Order, the Commission

describes how it will detect and address these distortions. Price

squeeze behavior potentially could distort competition in the U.S.

market for IMTS by affecting the ability of other carriers to compete.

The Commission will condition authorizations to provide international

facilities-based switched or private line service from the United

States to an affiliated market in order to restrain the ability of

foreign-affiliated carriers to engage in anticompetitive price squeeze

behavior in the U.S. market. The Commission adopted a rebuttable

presumption that a carrier's service offering has distorted market

performance if any of the carrier's tariffed collection rates on the

affiliated route are less than the carrier's average variable costs on

that route. In order to prevent one-way bypass of the accounting rate

system, the Commission will condition the Section 214 authorizations of

carriers to provide switched basic services over international

facilities-based or resold private lines. The Commission also adopted a

rebuttable presumption that one-way bypass is occurring if the

percentage of outbound traffic relative to inbound traffic increases

more than 10% in two successive quarterly measurement periods and it

reserves the right to investigate other shifts in the inbound/outbound

ratio to determine whether one-way bypass is occurring.

11. To assist in detecting market distortion, the Commission will

amend Sec. 43.61 of its rules to require certain carriers to file

quarterly traffic reports pursuant to filing criteria adopted in the

Order. In addition, the Commission intends to monitor closely U.S.

carriers' collection rates to ensure that they reflect fully all net

settlement savings. U.S. carriers with more than five percent of the

outbound IMTS traffic on a route will be required to file a report

every six months.

12. In the Notice, the Commission proposed a condition to carriers'

applications that would balance its desire to encourage international

resale services and at the same time limit the potential for one-way

bypass. In the Order, the Commission modified the proposed condition.

The first modification to the condition will authorize carriers to

provide switched services over resold international private lines

between the United States and foreign destination countries on the

condition that settlement rates for at least 50 percent of the settled

U.S.-billed traffic on the route or routes are at or below the

appropriate benchmark. In the event that competitive distortions result

on the route in question, i.e., carriers are engaging in one-way

bypass, the Commission will take enforcement action. Such enforcement

action may include a requirement prohibiting carriers from using their

authorizations to provide switched services over private lines on that

route until settlement rates for at least 50 percent of the settled

U.S.-billed traffic on the route are at or below the level of the best

practice rate of $0.08, or revocation of a carrier's authorization.

13. The second modification the Commission made to the proposed

condition would apply it to U.S. facilities-based carriers' use of

their authorized private lines for the provision of switched, basic

services. Carriers will be permitted to use their authorized

facilities-based private lines to originate or terminate U.S. switched

traffic on the condition that settlement rates for at least 50 percent

of the settled U.S. billed traffic on the route or routes in question

are at or below the appropriate benchmark. If market distortion occurs

on the route, i.e., carriers are using their authorized private lines

to engage in one-way bypass of the accounting rate system, the

Commission will take enforcement action.

14. Final Regulatory Flexibility Analysis. Pursuant to the

Regulatory Flexibility Act of 1990, 5 U.S.C. 601-612, the Commission's

Final Regulatory Flexibility Analysis with respect to the Order is as

follows:

Reason for action: The Commission issues this Report and Order

adopting changes in the benchmark settlement rates for international

message telephone service between U.S. facilities-based carriers and

foreign carriers and related issues. The Commission believes that its

benchmark rates should be revised to reflect recent technological

improvements, their associated cost reductions, and the market

structure changes occurring in the global telecommunications market. We

also believe these revisions, and

[[Page 45760]]

related actions taken here, are necessary to move settlement rates

closer to the actual costs of providing international termination

services.

Objectives: The objective of this proceeding is to attain reform in

the international accounting rate system and thereby help ensure lower

international calling prices for consumers and protect competition in

the U.S. IMTS market. The Commission will achieve this objective by

revising its benchmark settlement rates so that they more closely

resemble the underlying costs of providing international termination

services.

Legal basis: The Report and Order is adopted pursuant to sections

1, 2, 4(i), 201, 205, 214 and 303(r) of the Communications Act of 1934,

as amended, 47 U.S.C. 151, 152, 154(i), 201, 205, 214, 303(r).

Description, potential impact, and number of small entities

affected: The Commission has not developed a definition of small

entities applicable to international common carriers. We therefore have

used as the applicable definition of small entity 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 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 revised benchmark rates will apply to

all international facilities-based common carriers, including small

entities, that enter into an operating agreement with a foreign carrier

that provides for the payment of settlement rates. We note that the

revised benchmark rates should result in lower settlement rates for

carriers. This Report and Order also requires that a foreign carrier's

settlement rates be at or below the relevant benchmark as a condition

of Section 214 authorization for that carrier, or an affiliate, to

provide U.S. international facilities-based services between the United

States and the affiliated destination country. This condition will

apply to all U.S. international facilities-based carriers, including

small entities, that are affiliated with foreign carriers. The

Commission has concluded that this condition is necessary to prevent

potential anticompetitive distortions in the IMTS market.

The Order also imposes an additional requirement on carriers that

seek to provide switched services using resold or facilities-based

private lines. Carriers must demonstrate that settlement rates for 50

percent of the settled traffic between the United States and the

country at the foreign end of the private line are at or below the

relevant benchmark for that country. The Commission believes that at

most 635 small international carriers, both facilities-based and resale

carriers, could be affected by this requirement. The Commission has

concluded this requirement is necessary to prevent potential

anticompetitive distortions in the IMTS market. We base our estimate of

the number of small entities potentially affected on the number of toll

carriers filing Telecommunications Relay Service Fund (TRS) worksheets.

In 1995, 445 toll carriers filed TRS fund worksheets. We believe that

between 50 and 200 carriers failed to file TRS fund worksheets. We also

believe that fewer than 10 toll carriers were not small entities (based

on the SBA's definition of small entity as one with fewer than 1,500

employees). Thus, at most 635 international carriers would be

classified as small entities. The Secretary shall send a copy of this

Report and Order to the Chief Counsel for Advocacy of the Small

Business Administration in accordance with section 603(a) of the

Regulatory Flexibility Act, Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C.

601, et seq. (1981).

Reporting, recordkeeping and other compliance requirements: In its

Initial Regulatory Flexibility Analysis the Commission did not propose

any reporting requirements. The Notice, however, raised the issues of

possible anticompetitive behavior and market distortions, and sought

comment on how the Commission's reporting system could be modified in

order to make monitoring and enforcement more effective. To address the

concerns of commenters, the Report and Order contains certain

mechanisms to detect potential market distortions. In this regard, the

Commission amends its rules to impose an additional reporting

requirement. Section 43.61 of the Commission's rules currently requires

that carriers file annual reports that include actual traffic and

revenue data. Common carriers subject to the existing Sec. 43.61

requirements will be required to file traffic reports for each quarter

in which their traffic meets any of the following thresholds: (i) Their

aggregate U.S.-billed minutes of switched telephone traffic exceeds 1%

of the total of such minutes of international traffic for all U.S.

carriers (as published in the most recent Sec. 43.61 traffic data

report); (ii) their aggregate foreign-billed minutes of switched

telephone traffic exceeds 1% of the total of such minutes of

international traffic for all U.S. carriers; (iii) their aggregate

U.S.-billed minutes of switched telephone traffic for any country

exceeds 2.5% of the total of such minutes for that country for all U.S.

carriers; or (iv) their aggregate foreign-billed minutes of switched

telephone traffic for any foreign country exceeds 2.5% of the total of

such minutes for that country for all U.S. carriers. Limiting the

quarterly filing requirement to carriers that meet these criteria will

reduce the burden on small carriers, while enabling us to identify

distortions in the balance of payments. The Report and Order only

imposes an increase in the frequency with which the report must be

filed. It will contain the same data that must be included in the

current required annual report. Thus, the reporting requirement should

not impose a significant economic burden, and no additional outside

professional skills should be required in complying with this

requirement.

Federal rules which overlap, duplicate or conflict with the

Commission's proposal: None.

Any significant alternatives minimizing impact on small entities

and consistent with stated objectives: The Notice solicited comments on

a variety of alternative methodologies for calculating benchmark

settlement rates, but these have no impact on small entities. The

Notice also solicited comments on enforcement mechanisms that may be

necessary to support U.S. carriers, including small entities, in their

negotiations with foreign carriers and in their provision of

international service. We did not receive any comments on the impact of

these alternatives on small entities.

Comments solicited: Written comments were requested on the Initial

Regulatory Flexibility Analysis in accordance with the same filing

deadlines set for comments on the other issues in the Notice, but we

did not receive any comments.

15. Paperwork Reduction Act. This Report and Order contains either

a proposed or 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. 104-13. Public and agency

comments are due 60

[[Page 45761]]

days from the date of publication of this decision in the Federal

Register. Comments should address: (a) whether the proposed collection

of information is necessary for the proper performance of the functions

of the Commission, including whether the information shall have

practical utility; (b) the accuracy of the Commission's burden

estimates; (c) ways to enhance the quality, utility, and clarity of the

information collected; and (d) ways to minimize the burden of the

collection of information on the respondents, including the use of

automated collection techniques or other forms of information

technology.

OMB Approval Number: 3060-0106.

Title: Section 43.61--Reports of Overseas Telecommunications

Traffic.

Form No.: None.

Type of Review: Revision of existing collection.

Respondents: U.S. common carriers providing international

telecommunications services.

Number of Respondents: We estimate the number of respondents to be

5. Although the number of respondents is less than 10, the Commission

is unable to identify specific respondents because the respondents will

vary depending on whether they carry specified levels of U.S.

international traffic during any quarterly reporting period. Only those

carriers that meet the reporting criteria established in the Order will

be subject to the proposed information collection.

Estimated Time Per Response: 160 hours.

Total Annual Burden: 800 hours.

Estimated costs per respondent: None. Respondents already maintain

this data as part of their normal business practices.

Needs and Uses: Section 43.61 requires each common carrier that

provides international facilities-based switched service between the

United States and any foreign country to file an annual traffic and

revenue report. The annual report includes actual traffic and revenue

data for each 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 this Order we are

increasing the filing frequency in order to detect market distortion

that may occur from the routing of U.S. international switched, basic

traffic over private lines. Common carriers subject to the existing

Sec. 43.51 requirement will be required to file the quarterly reports,

in addition to annual reports for each quarter reporting period in

which their minutes of switched telephone traffic meet certain

thresholds established by the Commission. However, we will require that

carriers file their traffic and revenue data only for switched

facilities-based telephone services and switched facilities resale

telephone services--not for their other international services.

We note that this decision imposes an additional requirement on

carriers that seek to provide switched services using resold or

facilities-based private lines. Carriers must demonstrate that

settlement rates for at least 50 percent of the settled traffic between

the United States and the country at the foreign end of the private

line are at or below the relevant benchmark for that country. We do not

anticipate that this requirement will impose any additional burden on

carriers as any paperwork burden associated with this requirement is

sufficiently covered under the currently approved information

collection (OMB Control No. 3060-0686).

Ordering Clauses

16. Accordingly, it is ordered that, pursuant to sections 1, 2,

4(i), 201, 205, 214 and 303(r) of the Communications Act of 1934, as

amended, 47 U.S.C. 151, 152, 154(i), 201, 205, 214, 303(r), the rules,

requirements and policies discussed in this Order are adopted and parts

43 and 63 of the Commission's rules, 47 CFR parts 43 and 63, are

amended.

17. It is further ordered that the rules, requirements and policies

established in this decision shall take effect on January 1, 1998. The

new information collection requirements adopted in this Order will

become effective following OMB approval. The Commission will publish a

document at a later date establishing the effective date.

List of Subjects in 47 CFR Parts 43 and 63

Communications common carriers, Reporting and recordkeeping

requirements.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Parts 43 and 63 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: Sec. 4 of the Communications Act of 1934, as amended,

47 U.S.C. 154.

2. In Sec. 43.61, paragraphs (b) through (d) are redesignated as

paragraphs (a)(1) through (a)(3) and new paragraph (b) is added to read

as follows:

Sec. 43.61 Reports of international telecommunications traffic.

* * * * *

(b) Quarterly Traffic Reports. (1) Each common carrier engaged in

providing international telecommunications service between the area

comprising the continental United States, Alaska, Hawaii, and off-shore

U.S. points and any country or point outside that area shall file with

the Commission, in addition to the report required by paragraph (a) of

this section, actual traffic and revenue data for each calendar quarter

in which the carrier's quarterly minutes exceed the corresponding

minutes for all carriers by one or more of the following tests:

(i) The carrier's aggregate minutes of facilities-based or

facilities resale switched telephone traffic for service billed in the

United States are greater than 1.0 percent of the total of such minutes

of international traffic for all U.S. carriers published in the

Commission's most recent Sec. 43.61 annual report of international

telecommunications traffic;

(ii) The carrier's aggregate minutes of facilities-based or

facilities resale switched telephone traffic for service billed outside

the United States are greater than 1.0 percent of the total of such

minutes of international traffic for all U.S. carriers published in the

Commission's most recent Sec. 43.61 annual report of international

telecommunications traffic;

(iii) The carrier's aggregate minutes of facilities-based or

facilities resale switched telephone traffic for service billed in the

United States for any foreign country are greater than 2.5 percent of

the total of such minutes of international traffic for that country for

all U.S. carriers published in the Commission's most recent Sec. 43.61

annual report of international telecommunications traffic; or

(iv) The carrier's aggregate minutes of facilities-based or

facilities resale switched telephone traffic for service billed outside

the United States for any foreign country are greater than 2.5 percent

of the total of such minutes of international traffic for that country

for all U.S. carriers published in the Commission's most recent

Sec. 43.61 annual report of international telecommunications traffic.

(2) Except as provided in this paragraph, the quarterly reports

required by paragraph (b)(1) of this section shall be filed in the same

format as, and in conformance with, the filing

[[Page 45762]]

procedures for the annual reports required by paragraph (a) of this

section.

(i) Carriers filing quarterly reports shall include in those

reports only their provision of switched, facilities-based telephone

service and switched, facilities resale telephone service.

(ii) The quarterly reports required by paragraph (b)(1) of this

section shall be filed with the Commission no later than April 30 for

the prior January through March quarter; no later than July 31 for the

prior April through June quarter; no later than October 31 for the

prior July through September quarter; and no later than January 31 for

the prior October through December period.

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: Sections 1, 4(i), 4(j), 201-205, 218 and 403 of the

Communications Act of 1934, as amended, and Section 613 of the Cable

Communications Policy Act of 1984, 47 U.S.C. secs. 151, 154(i),

154(j), 201-205, 218, 403 and 533 unless otherwise noted.

2. Section 63.18 is amended by revising paragraphs (e)(2)(ii)(B)

through (e)(2)(ii)(C), (e)(3) introductory text, and (e)(4) to read as

follows:

Sec. 63.18 Contents of applications for international common carriers.

* * * * *

(e) * * *

(2) * * *

(ii) * * *

(B) The applicant may resell private line services for the

provision of international switched basic services only in

circumstances where the Commission has found 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. The Commission will provide public notice of

its equivalency and settlement rate determinations. The applicant,

however, 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 facilities-based

carrier in the country at the foreign end of the private line and the

Commission has not determined that the foreign carrier does not possess

market power in that country.

(C) 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

Sections 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 country for which the Commission has not made the settlement rate and

equivalency determinations specified in paragraph (e)(2)(ii)(B) of this

section, 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. In this regard, applicants shall:

* * * * *

(ii) The procedures set forth in paragraph (e)(3) of this section

are subject to Commission policies on resale of international private

lines in CC Docket No. 90-337 as amended in IB Docket Nos. 95-22 and

96-261.

(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 found 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. The Commission will provide public notice of

its equivalency and settlement rate determinations. 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

facilities-based carrier in the country at the foreign end of the

private line and the Commission has not determined that the foreign

carrier does not possess market power in that country.

(ii) The applicant is subject to all applicable 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.

(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 country for which the Commission has not made the settlement rate

and equivalency determinations specified in paragraph (e)(2)(ii)(B) of

this section 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. In this regard, 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.

3. Section 63.21(a) is revised 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 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 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) through (e)(4). If at

any time the Commission finds, after an initial determination of

compliance for a particular country, that the country no longer

provides

[[Page 45763]]

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).

[FR Doc. 97-22936 Filed 8-28-97; 8:45 am]

BILLING CODE 6712-01-P