1998 Biennial Regulatory ReviewReform of the International Settlements Policy and Associated Filing Requirements

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 43 and 64

[IB Docket No. 98-148; FCC 98-190]

1998 Biennial Regulatory Review--Reform of the International

Settlements Policy and Associated Filing Requirements

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: On August 6, 1998, the Federal Communications Commission

adopted a Notice of Proposed Rulemaking (NPRM) to adopt significant

changes to the Commission's International Settlements Policy (ISP) and

associated rules. The changes in this policy are intended to promote

greater competition and lower international calling prices. The

Commission proposes to lift regulations under the existing policy that

restricts the kinds of arrangements U.S. carriers may enter into with

foreign telecommunications carriers in World Trade Organization (WTO)

member countries. This action is part of the FCC's biennial review to

eliminate or modify rules where appropriate.

DATES: Comments are due on or before September 16, 1998 and reply

comments are due on or before October 16, 1998.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W., Room

222, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Robert C. McDonald, Attorney-Advisor,

Policy and Facilities Branch, Telecommunications Division,

International Bureau, (202) 418-1470.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice

of Proposed Rulemaking, FCC 98-190, adopted on August 6, 1998. The full

text of this NPRM is available for inspection and copying during normal

business hours in the FCC Reference Center (Room 239) of the Federal

Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554.

The complete text of this NPRM is available over the Internet on the

Commission's World Wide Web page, http://www.fcc.gov

Rulemaking, FCC 98-190, adopted on August 6, 1998. The full

text of this NPRM is available for inspection and copying during normal

business hours in the FCC Reference Center (Room 239) of the Federal

Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554.

The complete text of this NPRM is available over the Internet on the

Commission's World Wide Web page, http://www.fcc.gov. The text of the

NPRM also may be purchased from the Commission's copy contractor,

International Transcription Service, Inc., 1231 20th Street, N.W.,

Washington, D.C. 20036, (202) 857-3800.

Summary of Notice

1. The Commission proposes to scale back significantly on the

Commission's application of the International Settlements Policy (ISP)

and associated filing requirements. The ISP has governed U.S. carriers'

bilateral accounting rate negotiations with foreign carriers for many

years. These policies have largely been a success in safeguarding U.S.

carrier dealings with monopoly foreign carriers. These rules may not,

however, be necessary on routes where there is competition in the

foreign market and they may, in fact, impede the further development of

competition on such routes. In light of the significant number of

countries that recently have introduced competition in their

telecommunications markets, the NPRM proposes significant changes to

the Commission's ISP and associated rules.

2. The Commission initiated this proceeding in response to the

Telecommunications Act of 1996, which requires the Commission to review

all regulations that apply to operations or activities of any provider

of telecommunications service and to repeal or modify any regulation it

determines to be no longer necessary in the public interest.

3. The ISP and related filing requirements were implemented to

prevent whipsawing. These rules currently apply to U.S. carrier

arrangements for IMTS with all foreign carriers, except where a U.S

regulations that apply to operations or activities of any provider

of telecommunications service and to repeal or modify any regulation it

determines to be no longer necessary in the public interest.

3. The ISP and related filing requirements were implemented to

prevent whipsawing. These rules currently apply to U.S. carrier

arrangements for IMTS with all foreign carriers, except where a U.S.

carrier receives authorization to enter into an alternative settlement

arrangement under our flexibility policy or to provide ISR. We believe,

however, that whipsawing is a concern that is largely associated with

foreign carriers with monopoly power. Where U.S. carriers are able to

terminate international traffic by interconnecting with a carrier that

lacks market power, we believe that whipsawing is not a significant

danger. We thus seek comment in this Notice on whether we should

continue to apply the ISP and related filing requirements to U.S.

carrier arrangements with foreign carriers from WTO Member countries

that lack market power in the relevant foreign telecommunications

market.

4. With respect to the ISP, there also appears to be little danger

that a foreign carrier that lacks market power will have the ability to

whipsaw U.S. carriers. Indeed, without market power over facilities and

services essential to terminate international traffic, an attempt at

whipsawing by a foreign carrier that lacks market power should be

countered by a defection by U.S.

ations

market.

4. With respect to the ISP, there also appears to be little danger

that a foreign carrier that lacks market power will have the ability to

whipsaw U.S. carriers. Indeed, without market power over facilities and

services essential to terminate international traffic, an attempt at

whipsawing by a foreign carrier that lacks market power should be

countered by a defection by U.S.

carriers to another operator. We thus tentatively conclude that we

should not apply the ISP to agreements concluded with foreign carriers

from WTO Member countries that lack market power on the relevant route.

U.S. carriers would therefore be free to enter unencumbered into

commercial negotiations with foreign carriers in WTO Member countries

that lack market power. We seek comment on whether carriers that lack

market power in the foreign market may retain some ability to whipsaw

where government policies or other foreign market conditions preclude

real competition. We tentatively conclude that the long term benefits

of removing our ISP for arrangements with foreign carriers that lack

market power will outweigh any short-term risks involved. We seek

comment on this tentative conclusion.

5. We also seek comment on whether to exempt U.S. carriers from

filing contracts and accounting rate information under section 43.51

and 64.1001 of our rules for arrangements with foreign carriers that

lack market power. 47 CFR 43.51, 64.1001. We tentatively conclude that

we should amend the Sec. 43.51 contract filing requirement and the

Sec. 64.1001 accounting rate filing requirements so that contracts and

accounting rate information for arrangements with foreign carriers that

lack market power in WTO Member countries would not need to be filed

with the Commission. We seek comment on this tentative conclusion.

6. In the Foreign Participation Order, 62 FR 64741, December 9,

1997, recon

.51 contract filing requirement and the

Sec. 64.1001 accounting rate filing requirements so that contracts and

accounting rate information for arrangements with foreign carriers that

lack market power in WTO Member countries would not need to be filed

with the Commission. We seek comment on this tentative conclusion.

6. In the Foreign Participation Order, 62 FR 64741, December 9,

1997, recon. pending, we adopted a presumption, for the purpose of

applying the No Special Concessions rule, that carriers with less than

50 percent market share in the relevant markets lack sufficient market

power to affect competition adversely in the United States. We propose

to apply this same 50 percent market share presumption for purposes of

determining whether to apply our ISP and related filing requirements.

We seek comment on how, if we adopt our proposal to eliminate the ISP

and filing requirements for arrangements with foreign carriers that

lack market power in WTO Member countries, we should make the

determination that the foreign carrier lacks market power. For example,

should the Commission make an affirmative finding whether a foreign

carrier possesses market power, or should we leave the determination of

whether a foreign carrier falls outside our presumptive 50 percent

market share screen, so that the ISP and our filing requirements apply,

to the carrier that concludes the arrangement? We note that carriers

that accept a special concession from a foreign carrier that lacks

market power are currently required to file publicly contracts with the

Commission along with information that the foreign carrier has a market

share of less than 50 percent in the relevant markets. Opposing parties

thus have the opportunity to rebut this presumption by demonstrating

that the carrier indeed possesses market power

t accept a special concession from a foreign carrier that lacks

market power are currently required to file publicly contracts with the

Commission along with information that the foreign carrier has a market

share of less than 50 percent in the relevant markets. Opposing parties

thus have the opportunity to rebut this presumption by demonstrating

that the carrier indeed possesses market power. If we were to adopt our

tentative conclusion to eliminate the contract filing requirement for

agreements with foreign carriers that lack market power in the foreign

market, we seek comment on whether the Commission and potential

competitors would lack the information needed to determine whether an

agreement qualifies for the exception to our filing requirement and No

Special Concessions rule.

7. We believe that, in most foreign markets, the determination of

whether a carrier has market power is clear cut, because most foreign

markets are divided between a former incumbent with a market share of

well over 50 percent and new entrants with market shares far below 50

percent. Nevertheless, we recognize that there may be some need to

preserve Commission oversight to ensure that carriers do not engage in

exclusive dealings with foreign carriers that possess market power.

This oversight should, however, be balanced with our goal of allowing

carriers the freedom to negotiate agreements freely with carriers that

lack market power. We seek comment on several alternatives for

determining whether to apply our ISP and related filing requirements to

a particular arrangement. First, we could adopt a rule that

arrangements with foreign carriers with less than 50 percent market

share do not have to be filed, and not require any filing to

substantiate the claim that the foreign carrier lacks market power

hat

lack market power. We seek comment on several alternatives for

determining whether to apply our ISP and related filing requirements to

a particular arrangement. First, we could adopt a rule that

arrangements with foreign carriers with less than 50 percent market

share do not have to be filed, and not require any filing to

substantiate the claim that the foreign carrier lacks market power.

Second, we could require that a carrier that seeks to enter an

arrangement with a foreign carrier that lacks market power identify the

route and file a certification that the carrier on the foreign end of

the international route lacks market power, without revealing the

identity of the foreign correspondent. Third, we could require a

carrier to identify the foreign carrier and publicly file data

indicating that the foreign carrier possesses less than 50 percent

market share in each of the relevant markets or file a petition for

declaratory ruling that a foreign carrier with greater than 50 percent

market share nevertheless lacks market power. We also seek comment on

whether, if we adopt this third proposal, we should allow confidential

treatment for such filings.

8. We seek to simplify our regulatory requirements to the greatest

extent possible, consistent with our commitment to preventing abuse of

market power by foreign carriers in their dealings with U.S. carriers.

We seek comment on whether our proposal to eliminate the ISP and

related filing requirements for arrangements with foreign carriers that

lack market power in WTO Member countries achieves this goal. We

tentatively conclude that this approach is warranted because carriers

without market power have a substantially diminished ability to whipsaw

U.S. carriers. We further tentatively conclude that this approach is

consistent with the regulatory framework we adopted in our Foreign

Participation Order, 62 FR 64741, December 9, 1997, recon. pending. We

seek comment on our proposed approach for regulating arrangements

between U.S

pproach is warranted because carriers

without market power have a substantially diminished ability to whipsaw

U.S. carriers. We further tentatively conclude that this approach is

consistent with the regulatory framework we adopted in our Foreign

Participation Order, 62 FR 64741, December 9, 1997, recon. pending. We

seek comment on our proposed approach for regulating arrangements

between U.S. carriers and foreign carriers that lack market power in

WTO Member countries, and on any other approaches that would further

our goals.

9. We also seek comment on whether, under certain circumstances, we

should decline to apply the ISP and related filing requirements to U.S.

carrier arrangements with all foreign carriers in selected WTO Member

country markets, including arrangements with those carriers that

possess market power. We seek comment on what standard we should employ

for identifying routes on which we should not apply the ISP. We propose

to decline to apply the ISP on routes where the Commission has already

authorized ISR.

10. Alternatively, we seek comment on whether a settlement rate

threshold lower than a benchmark rate is appropriate. For example, we

could apply the current best practices rate of $.08 per minute,

established in our Benchmarks Order, as the threshold. Under this

proposal, we would decline to apply our ISP on routes where at least 50

percent of the traffic is settled at a rate of $.08 per minute or less.

Commenters suggesting an alternative settlement rate threshold should

provide a documented basis for any threshold suggested.

11. We also seek comment on whether any other standard is

appropriate. For instance, we could decline to apply the ISP only in

cases where 50 percent of traffic on the route is settled at or below

benchmark rates and the foreign market permits U.S. carriers to provide

service via ISR. We seek comment on these alternatives, and on any

other alternative standard we could adopt to

ld suggested.

11. We also seek comment on whether any other standard is

appropriate. For instance, we could decline to apply the ISP only in

cases where 50 percent of traffic on the route is settled at or below

benchmark rates and the foreign market permits U.S. carriers to provide

service via ISR. We seek comment on these alternatives, and on any

other alternative standard we could adopt to

identify routes on which we need not apply our ISP.

12. We also seek comment on whether we should decline to apply our

Sec. 43.51 contract filing and Sec. 64.1001 accounting rate filing

requirements to the extent we decline to apply the ISP on certain

routes. See 47 CFR 43.51, 64.1001. We seek comment on whether we should

require public filing, require confidential filing or remove the filing

requirements altogether for arrangements on certain routes where we

decline to apply the ISP. For instance, if we remove these filing

requirements generally, should we maintain them for arrangements

entered into with foreign carriers with market power, or only for

affiliated foreign carriers with market power?

13. Our proposal to eliminate the ISP and related filing

requirements on routes where we permit ISR would greatly reduce

regulatory oversight for arrangements between U.S. carriers and foreign

carriers on those routes. We believe that our proposal will further our

goal of eliminating unnecessary regulatory burdens, while continuing to

prevent abuse of market power by foreign carriers in their dealings

with U.S. carriers. We seek comment on our proposed approach for

eliminating regulatory requirements on routes where we believe they are

not necessary, and on any other approaches that would further our

goals.

14. We further seek comment on what modifications we can make to

our flexibility policy to encourage more carriers to negotiate

alternative settlement arrangements

s in their dealings

with U.S. carriers. We seek comment on our proposed approach for

eliminating regulatory requirements on routes where we believe they are

not necessary, and on any other approaches that would further our

goals.

14. We further seek comment on what modifications we can make to

our flexibility policy to encourage more carriers to negotiate

alternative settlement arrangements. Specifically, we propose to modify

our flexibility policy to limit the filing of commercial information on

routes that qualify for flexibility. Our current flexibility rules

require a carrier seeking to implement a flexible arrangement to obtain

approval by filing a petition for declaratory ruling with the

Commission. Under our rules, carriers must include a summary of the

terms and conditions of the alternative settlement arrangement in their

petition. In addition, carriers are required under Sec. 43.51 of our

rules to file a copy of all settlement arrangements, including

alternative settlement arrangements.

15. We seek comment on whether these filing requirements inhibit

carriers from negotiating alternative settlement arrangements. Would a

foreign carrier be less willing to negotiate a favorable arrangement

with one U.S. carrier if the terms of the agreement must be disclosed

to all competing carriers in the U.S. market? We seek comment on

whether we should modify our flexibility policy for alternative

settlement arrangements which do not trigger our safeguards. Thus, for

alternative settlement arrangements affecting less than 25 percent of

the inbound or outbound traffic on a particular route, and for

arrangements that are not between affiliated carriers or carriers

involved in a joint venture, we propose to allow carriers to file a

petition for authorization to enter into a flexible settlement

arrangement without including a summary of the terms and conditions of

the agreement or identifying the foreign correspondent in their

petition

nd or outbound traffic on a particular route, and for

arrangements that are not between affiliated carriers or carriers

involved in a joint venture, we propose to allow carriers to file a

petition for authorization to enter into a flexible settlement

arrangement without including a summary of the terms and conditions of

the agreement or identifying the foreign correspondent in their

petition. We also seek comment on whether we should decline to apply

our Sec. 43.51 contract filing requirement for alternative settlement

arrangements in these circumstances. We note that under this proposal,

carriers could only seek approval without filing agreements with the

Commission to the extent the presumption in favor of flexible treatment

is not rebutted (i.e. there are not multiple facilities-based

competitors capable of terminating international traffic operating in

the foreign market).

16. We also seek comment on the two safeguards we adopted in our

Flexibility Order, 62 FR 5535, February 6, 1997, recon. pending. The

first of these safeguards requires that any alternative arrangement

affecting more than 25 percent of the outbound or inbound traffic on a

particular route may not contain unreasonably discriminatory terms and

conditions and must be publicly filed. The other safeguard requires

that all alternative arrangements between affiliated carriers and

carriers involved in non-equity joint ventures be publicly filed. We

adopted these 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 our flexibility policy. We tentatively conclude that we

should maintain these safeguards. We seek comment on this tentative

conclusion and on our tentative conclusion to modify our filing

requirements for alternative settlement arrangements that do not

trigger our safeguards

with a significant share of their

markets, and to provide a ``safety net'' for possible unanticipated

consequences of our flexibility policy. We tentatively conclude that we

should maintain these safeguards. We seek comment on this tentative

conclusion and on our tentative conclusion to modify our filing

requirements for alternative settlement arrangements that do not

trigger our safeguards. We also seek comment, however, on whether we

should modify the safeguard that currently requires all flexible

arrangements entered into with affiliated carriers and joint-venture

partners to be publicly filed with the Commission. Where the U.S.

carrier's foreign affiliate does not possess market power in the

foreign market, there is little danger that a flexible arrangement

would have anticompetitive effects. The current safeguard, however,

requires a U.S. carrier to make public flexible arrangements entered

into with its foreign affiliate even if it lacks market power. We

therefore seek comment on whether we should only require public

availability of flexible arrangements entered into by U.S. carriers

with affiliated carriers or with joint-venture partners that possess

market power in the foreign market.

17. If we adopt these proposals, we propose to modify the

flexibility policy to require only that a carrier file a certification

that the arrangement does not trigger our flexibility safeguards (i.e.,

that it affects less than 25 percent of traffic on the route and is not

with an affiliate or joint venture partner) and to identify the

destination market. We propose to permit other parties to file comments

to rebut the presumption in favor of flexibility (demonstrating that

the foreign market lacks multiple facilities-based competitors), but

not comment on the nature of the flexible arrangement itself. We

believe that this approach would enable U.S. carriers to enter into

innovative arrangements that would otherwise not be viable if the full

contents of the agreement were disclosed.

18

imited amount of

traffic on routes where we would otherwise not authorize the provision

of ISR? We believe that a limited offering of ISR could put significant

pressure on settlement rates, while limiting the potential damage from

one-way bypass. Another approach might be to decide in advance to lift

our ISP requirement at some future point when international markets

have become sufficiently

competitive overall, e.g. when 50 percent of routes have been approved

for ISR. We note that regulators in other markets that allow ISR, such

as the United Kingdom, Sweden, Germany, and others, do not impose

restrictions on ISR similar to those we have in place in the United

States. We seek comment on whether it is possible to deter foreign

carriers from engaging in one-way bypass that distorts the U.S. market

through an approach other than prohibiting ISR altogether. For example,

in the Benchmarks Order, 62 FR 45758, August 29, 1997, recon. pending,

appeal filed, Cable & Wireless et al. v. FCC, No. 97-1612 (D.C. Cir.

filed Sept. 26, 1997), we adopted a safeguard that would impose

sanctions on a carrier whose provision of ISR results in a market

distortion, i.e., one-way bypass. We adopted a presumption that a

market distortion would occur if the ratio of inbound/outbound traffic

increases by ten or more percent over two successive reporting periods.

We seek comment on whether this or a different competitive safeguard

would be an effective means of preventing one-way bypass in lieu of our

existing safeguards, either now or as competitive conditions evolve.

20. We seek comment on the effect of adopting the above proposals

on our No Special Concessions rule as well as on the existing ISR and

flexibility policies. We also seek comment on whether additional

safeguards are necessary to address any possible competitive distortion

that may result from limiting the scope of our ISP

r

existing safeguards, either now or as competitive conditions evolve.

20. We seek comment on the effect of adopting the above proposals

on our No Special Concessions rule as well as on the existing ISR and

flexibility policies. We also seek comment on whether additional

safeguards are necessary to address any possible competitive distortion

that may result from limiting the scope of our ISP. We note that if we

adopt our proposals to scale back our application of the ISP, our

flexibility and ISR policies will apply only to arrangements with

foreign carriers with market power in foreign markets to which the

Commission does not allow ISR and to arrangements with carriers in non-

WTO Member countries.

21. Our No Special Concessions rule prohibits U.S. international

carriers 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 * * *.'' 47 CFR 63.14(a). We seek comment

on whether to maintain the No Special Concessions rule for U.S. carrier

arrangements with foreign carriers with market power if we adopt the

proposal in this Notice not to apply the ISP and related filing

requirements on ISR routes. It may be necessary to maintain the No

Special Concessions rule because it applies more broadly than the ISP.

For example, the No Special Concessions rule prohibits U.S. carriers

from agreeing to accept from a foreign carrier that possesses market

power exclusive arrangements with respect to operating agreements,

interconnection of international facilities, private line provisioning

and maintenance, as well as quality of service. The ISP, however,

applies only to the settlement of international traffic and allocation

of return traffic

ons rule prohibits U.S. carriers

from agreeing to accept from a foreign carrier that possesses market

power exclusive arrangements with respect to operating agreements,

interconnection of international facilities, private line provisioning

and maintenance, as well as quality of service. The ISP, however,

applies only to the settlement of international traffic and allocation

of return traffic. We seek comment on whether such exclusive

arrangements with a foreign carrier that possesses market power could

adversely affect competition in the U.S. market on routes where we

permit ISR, such that we should continue to apply the No Special

Concessions rule.

22. We also seek comment on the extent to which the No Special

Concessions rule applies within the context of our ISR and flexibility

policies in light of the changes to our rules proposed in this Notice.

In the Flexibility Order, 62 FR 5535, February 6, 1997, recon. pending,

the Commission stated that arrangements approved under the flexibility

rules are permitted as an exception to the No Special Concessions rule.

By contrast however, we have not made clear how the No Special

Concessions rule applies to the settlement of traffic under an ISR

arrangement. An ISR arrangement between a foreign carrier and a U.S.

carrier, for example, could be viewed as a prohibited special

concession if the foreign carrier also exchanges traffic in a

traditional correspondent relationship with other U.S. carriers under

financial terms and conditions that differ from those governing the ISR

arrangement. We believe that such an interpretation of our No Special

Concessions rule was not contemplated when we adopted our ISR policy.

We therefore tentatively conclude that our No Special Concessions rule

does not apply to the terms and conditions under which traffic is

settled, including allocation of return traffic, by a U.S. carrier on

an ISR route

iffer from those governing the ISR

arrangement. We believe that such an interpretation of our No Special

Concessions rule was not contemplated when we adopted our ISR policy.

We therefore tentatively conclude that our No Special Concessions rule

does not apply to the terms and conditions under which traffic is

settled, including allocation of return traffic, by a U.S. carrier on

an ISR route. Notwithstanding an ISR arrangement, however, the No

Special Concessions rule would prohibit exclusive arrangements with a

foreign carrier with market power with respect to interconnection of

international facilities, private line provisioning and maintenance, as

well as quality of service. We seek comment on this tentative

conclusion. We also seek comment on whether we should apply the No

Special Concessions rule in this manner if we decide to retain the No

Special Concessions rule for U.S. carrier arrangements that deviate

from the ISP on ISR routes, as discussed above.

23. Finally, although we seek to remove regulatory impediments to

competition, we recognize that carriers that possess market power in

the foreign market may have the potential to leverage that market power

into the U.S. market. By removing the ISP and transparency

requirements, we may be removing measures which limit the ability of

such carriers to distort competition in the U.S. market. We therefore

seek comment on whether we should adopt additional safeguards to

prevent a competitive distortion, such as one-way inbound bypass, and

on measures we should take in the event a competitive distortion

occurs. For instance, we seek comment on whether we should modify our

reporting requirements in order to more easily detect such a

competitive distortion. We also seek comment on what measures we can

take to ensure that the Commission is able to take swift action in the

event of a competitive distortion

-way inbound bypass, and

on measures we should take in the event a competitive distortion

occurs. For instance, we seek comment on whether we should modify our

reporting requirements in order to more easily detect such a

competitive distortion. We also seek comment on what measures we can

take to ensure that the Commission is able to take swift action in the

event of a competitive distortion. We recognize, however, that any

safeguards we adopt may, to the extent they are not absolutely

necessary, preclude carriers from responding to market influences and

concluding agreements that may bring settlement rates closer to cost.

24. We note in particular that removing our ISP and filing

requirements may, in certain cases, allow carriers to conclude some

types of arrangements upon which the Commission has not yet ruled. For

example, commenting parties in other proceedings have expressed concern

regarding whether carriers may negotiate arrangements to accept

``groomed'' traffic, i.e. traffic that terminates in particular

geographic regions. If we adopt our above proposal to remove the ISP

and our filing requirements with respect to arrangements with carriers

with market power in selected markets, we would no longer require pre-

approval or public filing of such arrangements. We seek comment on

whether these types of grooming arrangements present a potential for

anticompetitive effects, particularly with respect to arrangements

between foreign carriers with market power and incumbent local exchange

carriers. We also seek comment on whether the potential for such

anticompetitive effects would justify an exception to our proposals to

relax our application of the ISP or whether it would justify

application of other safeguards.

25. Currently, the Commission requires that carriers seek approval

for changes in their accounting rate arrangements with foreign

correspondents. Under the procedures set out in the Commission's rules,

carriers seeking such approval must file

ve effects would justify an exception to our proposals to

relax our application of the ISP or whether it would justify

application of other safeguards.

25. Currently, the Commission requires that carriers seek approval

for changes in their accounting rate arrangements with foreign

correspondents. Under the procedures set out in the Commission's rules,

carriers seeking such approval must file

either a modification request or a notification. The notification

requirement applies to simple reductions in the applicable accounting

rate. Such notifications must be filed prior to the effective date of

the change in the accounting rate. Grant of these filings is automatic

the day after filing. The accounting rate modification filing

procedures apply to all other changes in accounting rates (except

flexibility filings), including retroactive changes in the applicable

accounting rate. Modification filings are automatically granted 21 days

after filing if the filing is unopposed and the International Bureau

has not notified the applicant that approval of the modification may

not serve the public interest. Where a filing is not automatically

granted, approval is only granted by formal action of the Bureau. The

Bureau's experience indicates that there is confusion regarding the

filing procedures applicable to a given agreement. For instance, in

many cases carriers seek to use notification filing procedures for

accounting rate arrangements that should be filed under modification

procedures, causing increased staff workload and additional paperwork

for filing parties.

26. In light of the confusion caused by the existence of two

standards for accounting rate filings, along with the fact that few

filings are made under the notification procedure, we find that

adopting the notification filing procedure has not had its intended

effect of removing regulatory barriers to simple reductions in

accounting rates

orkload and additional paperwork

for filing parties.

26. In light of the confusion caused by the existence of two

standards for accounting rate filings, along with the fact that few

filings are made under the notification procedure, we find that

adopting the notification filing procedure has not had its intended

effect of removing regulatory barriers to simple reductions in

accounting rates. On the contrary, it is our experience that having two

procedures for accounting rate filings has made procedures more

complicated than they need to be. We therefore tentatively conclude

that we should remove the option of filing a notification and require

that all accounting rate filings be governed under the existing

procedures for accounting rate modifications. We seek comment on this

tentative conclusion.

27. Our international settlements policy requires that U.S.

carriers not accept exclusive settlement arrangements with foreign

carriers and prohibits U.S. carriers from entering into any arrangement

not made available to all U.S. carriers providing service on the route.

For this reason, carriers making modification or notification filings

are required under our rules to serve a copy of their filings on all

facilities-based carriers providing services on the same route.

28. The Commission is implementing an electronic filing system that

will replace the current paper filing system for accounting rate

modifications. This system will automatically generate reports of all

accounting rate filings and will be available over the Internet on the

Commission's web page. We seek comment on whether, in light of detailed

information regarding accounting rate filings that will be available on

the Internet, we can eliminate the increasingly cumbersome requirement

that copies of accounting rate filings be served on all carriers

providing service on a given route

s of all

accounting rate filings and will be available over the Internet on the

Commission's web page. We seek comment on whether, in light of detailed

information regarding accounting rate filings that will be available on

the Internet, we can eliminate the increasingly cumbersome requirement

that copies of accounting rate filings be served on all carriers

providing service on a given route. We seek comment, alternatively, on

whether the Commission should issue a public notice when it receives

accounting rate filings instead of maintaining the service requirement.

Due to the significant volume of such filings, we tentatively conclude

that the information contained in public notices for accounting rate

filings would be far less helpful than the information that will be

available on the Commission's web page.

29. We seek comment on these proposed changes to our accounting

rate modification and notification filing requirements. We also seek

comment on any other modifications that would simplify our regulations

but also enable the Commission and interested parties to obtain the

information necessary to monitor accounting rate agreements

effectively, where necessary.

30. Following adoption of the Flexibility Order, 62 FR 5535,

February 6, 1997, recon. pending, the Commission received petitions for

reconsideration from several parties, requesting that the Commission

alter its competitive safeguards to differing degrees. In light of the

above proposals to modify our ISP, we seek further comment on the

issues raised by parties that filed petitions for reconsideration in

the Flexibility proceeding. We invite interested parties to comment on

the issues raised in the petitions for reconsideration of the

Flexibility Order in light of the recent changes in our rules and the

proposals detailed above.

Initial Regulatory Flexibility Certification

s to modify our ISP, we seek further comment on the

issues raised by parties that filed petitions for reconsideration in

the Flexibility proceeding. We invite interested parties to comment on

the issues raised in the petitions for reconsideration of the

Flexibility Order in light of the recent changes in our rules and the

proposals detailed above.

Initial Regulatory Flexibility Certification

31. The Regulatory Flexibility Act (RFA) requires that an initial

regulatory flexibility analysis be prepared for notice-and-comment

rulemaking proceedings, unless the agency certifies that ``the rule

will not, if promulgated, have a significant economic impact on a

substantial number of small entities.'' The RFA generally defines

``small entity'' as having the same meaning as the terms ``small

business,'' ``small organization,'' and ``small governmental

jurisdiction.'' In addition, the term ``small business'' has the same

meaning as the term ``small business concern'' under the Small Business

Act. A small business concern is one which: (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). The rule changes proposed in this Notice may

directly affect approximately 10 facilities-based international

telecommunications carriers. Neither the Commission nor SBA has

developed a definition of ``small entity'' specifically applicable to

these international carriers. Therefore, the definition to be used is

the most appropriate definition under the SBA rules, which here is the

definition of Communications Services, Not Elsewhere Classified (NEC).

Under this definition, a small entity is one with $11.0 million or less

in annual receipts

ommission nor SBA has

developed a definition of ``small entity'' specifically applicable to

these international carriers. Therefore, the definition to be used is

the most appropriate definition under the SBA rules, which here is the

definition of Communications Services, Not Elsewhere Classified (NEC).

Under this definition, a small entity is one with $11.0 million or less

in annual receipts. Based on information filed with the Commission, the

subject facilities-based international telecommunications carriers do

not fall within the above definition of ``small entity'' because they

each have more than $11.0 million in annual receipts. We therefore

certify that this document will not have a significant economic impact

on a substantial number of small entities. The Commission will send a

copy of this document, including this certification, to the Chief

Counsel for Advocacy of the Small Business Administration.

Initial Paperwork Reduction Act of 1995 Analysis

32. This Notice of Proposed Rulemaking contains a proposed

information collection and will be submitted to the Office of

Management and Budget (OMB).

Comment Filing Procedures

33. Pursuant to Secs. 1.415 and 1.419 of the Commission's rules, 47

CFR 1.415, 1.419, interested parties may file comments on or before

September 16, and reply comments on or before October 16. Comments may

be filed using the Commission's Electronic Comment Filing System (ECFS)

or by filing paper copies. See Electronic Filing of Documents in

Rulemaking Proceedings, 63 FR 24121 (May 1, 1998).

34. Comments filed through the ECFS can be sent as an electronic

file via the Internet to http://www.fcc.gov/e-file/

ecfs.html. Generally, only one copy of an electronic

submission must be filed. If multiple docket or rulemaking numbers

appear in the caption of this proceeding, however, commenters must

transmit one electronic copy of the comments to each docket or

rulemaking number referenced in the caption. In completing the

transmittal screen,

lectronic

file via the Internet to http://www.fcc.gov/e-file/

ecfs.html. Generally, only one copy of an electronic

submission must be filed. If multiple docket or rulemaking numbers

appear in the caption of this proceeding, however, commenters must

transmit one electronic copy of the comments to each docket or

rulemaking number referenced in the caption. In completing the

transmittal screen,

commenters should include their full name, Postal Service mailing

address, and the applicable docket or rulemaking number. Parties may

also submit an electronic comment by Internet e-mail. To get filing

instructions for e-mail comments, commenters should send an e-mail to

[email protected], and should include the following words in the body of the

message, ``get form .'' A sample form and

directions will be sent in reply.

35. Parties who choose to file by paper must file an original and

four copies of each filing. If more than one docket or rulemaking

number appear in the caption of this proceeding, commenters must submit

two additional copies for each additional docket or rulemaking number.

All filings must be sent to the Commission's Secretary, Magalie Roman

Salas, Office of the Secretary, Federal Communications Commission, 1919

M St. N.W., Room 222, Washington, D.C. 20554.

36. Parties who choose to file by paper should also submit their

comments on diskette. These diskettes should be submitted to: Donna

Christianson, International Bureau, Federal Communications Commission,

2000 M Street, N.W., Room 836, Washington, D.C. 20554. Such a

submission should be on a 3.5 inch diskette formatted in an IBM

compatible format using WordPerfect 5.1 for Windows or compatible

software. The diskette should be accompanied by a cover letter and

should be submitted in ``read only'' mode. The diskette should be

clearly labelled with the commenter's name, proceeding (Docket No. 98-

148), type of pleading (comment or reply comment), date of submission,

and the name of the electronic file on the diskette

BM

compatible format using WordPerfect 5.1 for Windows or compatible

software. The diskette should be accompanied by a cover letter and

should be submitted in ``read only'' mode. The diskette should be

clearly labelled with the commenter's name, proceeding (Docket No. 98-

148), type of pleading (comment or reply comment), date of submission,

and the name of the electronic file on the diskette. The label should

also include the following phrase ``Disk Copy--Not an Original.'' Each

diskette should contain only one party's pleadings, preferably in a

single electronic file. In addition, commenters must send diskette

copies to the Commission's copy contractor, International Transcription

Service, Inc., 1231 20th Street, N.W., Washington, D.C. 20037.

Ordering Clauses

37. Accordingly, it is ordered that, pursuant to Secs. 1, 4(i)-(j),

201(b), 214, 303(r) and 403 of the Communications Act of 1934, as

amended, 47 U.S.C. 151, 154(i)-(j), 214, 303(r), and 403, this Notice

of Proposed Rulemaking is hereby adopted.

38. It is further ordered that the commission's office of public

affairs, reference operations division, shall send a copy of this

Notice of Proposed Rule Making, including the Initial Regulatory

Flexibility Certification, to the Chief Counsel for Advocacy of the

Small Business Administration.

List of Subjects in 47 CFR Parts 43, and 64

Communications common carriers, Reporting and recordkeeping

requirements.

Federal Communications Commission

Magalie Roman Salas,

Secretary.

[FR Doc. 98-22292 Filed 8-17-98; 8:45 am]

BILLING CODE 6712-01-P