**Federal Communications Commission DA 00-1586**

#  CORRECTED COPY

# 

# Before the

# Federal Communications Commission

# Washington, D.C. 20554

In the Matter of )

)

AT&T Corporation ) ARC-MOD-20000323-00052

AT&T Alascom )

AT&T Puerto Rico )

AT&T of the U.S. Virgin Islands )

)

Petition for Modification of the )

Accounting Rates for Switched )

Voice Service with Oman )

)

# ORDER

**Adopted: July 19, 2000 Released: July 20, 2000**

By the Chief, Telecommunications Division:

# I. Introduction

1.  In this Order we approve AT&T Corporation's ("AT&T") petition to
    introduce a new, lower accounting rate for international switched
    voice service with Oman but limit the period when the rate is in
    effect. The International Bureau suspended AT&T's modification
    request because the accounting rate has no expiration date. As a
    result, the rate would exceed the benchmark rate for Oman adopted by
    the Commission in the *Benchmarks Order*[^1] if it is allowed to
    remain in effect after December 31, 1999.

2.  In the *Benchmarks Order*, the Commission adopted a schedule of
    settlement rates and effective dates for U.S. carriers that is based
    primarily on gross national product ("GNP") per capita levels. For
    countries like Oman, which the World Bank designates as an
    upper-middle income country, the benchmark settlement rate is 19¢
    per minute for service provided on and after January 1, 2000. Thus,
    beginning on January 1, 2000, the *Benchmarks Order* requires U.S.
    carriers to use a settlement rate that does not exceed 19¢ to
    determine settlement payments on service between the United States
    and Oman. AT&T seeks approval of a settlement rate that is higher
    than the benchmark rate. The rate is scheduled to go into effect on
    July 1, 1999, but it has no expiration date. If AT&T's petition is
    approved and the rate is used to determine the settlements on
    service provided after December 31, 1999, the agreement would
    violate the *Benchmarks Order*. Accordingly, we approve AT&T's
    modification request for a lower accounting rate but limit the use
    of this rate to service provided before January 1, 2000. We reject
    the rate for service provided after 1999 and direct U.S. carriers to
    negotiate agreements with the carrier in Oman that are in compliance
    with the *Benchmarks Order.*

# II. Background

3.  AT&T, on behalf of itself, AT&T Alascom, AT&T Puerto Rico, and AT&T
    of the U.S. Virgin Islands, filed a petition seeking to reduce its
    accounting rate from \$1.50 per minute to \$1.20 per minute for
    service with the Oman Telecommunications Organization ("GTO").[^2]
    The new rate, which has no expiration date, is scheduled to take
    effect on July 1, 1999. AT&T's modification matches a filing
    previously submitted by MCI that was allowed to take effect.[^3]
    Sprint also submitted a modification request for service with GTO
    but it subsequently withdrew the request.[^4]

4.  The International Bureau suspended AT&T's modification request
    because the proposed rate does not have an expiration date and the
    rate exceeds the benchmark rate required for service with Oman
    provided on and after January 1, 2000. [^5] As a result, the
    agreement would violate the Commission's *Benchmarks Order* if the
    rate were used for settlements on service provided after December
    31, 1999.

# III. Discussion

5.  The Commission's policy is that accounting rates should be reduced
    to more cost-based levels, and be generally nondiscriminatory and
    transparent.[^6] Lower, more cost-based rates are in the U.S. public
    interest because they encourage lower calling prices, promote
    economic efficiency, and reduce entry barriers. To further this
    goal, the Commission adopted the *Benchmarks Order*, which requires
    U.S. carriers to negotiate settlement rates with foreign carriers at
    or below benchmark levels that will be used to determine settlement
    payments for service provided after specific dates. Briefly, the
    *Benchmarks Order* requires a rate of 15¢ for service with high
    income countries beginning January 1, 1999; 19¢ for service with
    upper-middle income countries beginning January 1, 2000; 19¢ for
    service with lower-middle income countries beginning January 1,
    2001; 23¢ for service with low income countries beginning January 1,
    2002; and 23¢ for service with countries with a teledensity less
    than one beginning January 1, 2003.

6.  AT&T's modification with GTO, which takes effect before the required
    date for the benchmark rate, has a settlement rate that exceeds the
    benchmark rate and there is no expiration date associated with the
    agreement. While the reduction moves the settlement rate toward the
    benchmark level for Oman, the rate is still significantly higher
    than the benchmark level. Initially, the agreement does not violate
    the *Benchmarks Order* because the new rate takes effect on July 1,
    1999, before the deadline of January 1, 2000. However, a subsequent,
    more substantial rate reduction will be required to bring the
    settlement rate with Oman into line with the benchmark level by
    January 1, 2000.

7.  AT&T's agreement with GTO is similar to agreements between U.S.
    carriers and carriers in Brunei, Singapore, and Taiwan, which the
    Commission addressed in a previous order.[^7] Each agreement
    provided for a settlement rate that was significantly higher than
    the relevant benchmark rate. The rates were scheduled to take effect
    within a month of the benchmark deadline and there was no expiration
    date associated with them. As a result, we were concerned that U.S.
    carriers would be unable to negotiate a benchmark-compliant rate
    within the short time remaining before January 1, 1999. In an Order
    dealing with the modifications, the Commission approved the new,
    lower rates for the period before the benchmark deadline, which was
    January 1, 1999 for the three countries. The rates were not approved
    for service provided from January 1, 1999. As was the case with that
    order, we are concerned here that AT&T's agreement with GTO would
    violate the *Benchmarks Order* if the rate in its agreement remains
    in effect after the benchmark deadline of January 1, 2000 for Oman.
    This concern is heightened by the fact that AT&T filed its
    modification request after the January 1, 2000 deadline.

8.  We note that the rate and effective date in AT&T's modification
    request are the same as those in MCI's modification request
    involving GTO. The two filings differ, however, in one significant
    respect. MCI filed its original modification on July 1, 1999, well
    before the deadline for the benchmark rate. As a result, there was
    adequate time for MCI to negotiate a rate that complies with the
    benchmark requirement before the deadline of January 1, 2000 passed.
    Because AT&T's modification was filed on March 23, 2000, after the
    benchmark deadline for Oman, the likelihood of AT&T negotiating
    another agreement with GTO that complies with the *Benchmark Order*
    is reduced substantially. This problem could have been avoided if
    the modification before us had included either an expiration date of
    December 31, 1999 for the rate or a benchmark rate with an effective
    date of January 1, 2000.

9.  In the *Benchmarks Order*, the Commission stated clearly that it
    "will ensure compliance with our settlement rate benchmarks."[^8] We
    concluded in the order involving Brunei, Singapore, and Taiwan that
    rates above the benchmark level would violate the *Benchmarks Order*
    if the rates were allowed to remain in effect beyond the date when
    the benchmark rate is in effect.[^9] To eliminate the possibility of
    a violation of the *Benchmarks Order* that would result from using
    the accounting rate requested by AT&T for settlements on service
    provided in 2000, we approve AT&T's request to reduce the accounting
    rate for service with GTO but limit its applicability to service
    provided between July 1, 1999 and December 31, 1999. Thus, the rate
    requested by AT&T for its service with Oman can be used to determine
    the settlements on service provided through December 31, 1999, but
    it cannot be used to determine settlements for service that is
    provided after December 31, 1999. We expect AT&T and other U.S.
    carriers to negotiate a benchmark rate of 19¢ that will apply to
    service between the United States and Oman beginning on January 1,
    2000.

**IV. Ordering Clauses**

10\. Accordingly, IT IS ORDERED that AT&T's modification request, which
includes AT&T Corp., AT&T Alascom, AT&T Puerto Rico, and AT&T of the
U.S. Virgin Islands, for an accounting rate with GTO of \$1.20 per
minute is approved for the period of July 1, 1999 through December 31,
1999.

11\. IT IS FURTHER ORDERED that U.S. carriers negotiate settlement rates
with GTO that comply with the *Benchmarks Order.*

12. This order is issued under Section 0.261 of the Commission's Rules
    and is effective on adoption. Petitions for reconsideration under
    Section 1.106 or applications for review under Section 1.115 of the
    Commission's Rules may be filed within 30 days of the date of public
    notice of this Order. (see C.F.R. Section 1.4(b)(2)).

> FEDERAL COMMUNICATIONS COMMISSION
>
> Rebecca Arbogast
>
> Chief, Telecommunications Division
>
> International Bureau

[^1]: *Report and Order on Regulation of International Settlement
    Rates*, 12 FCC Rcd 19806 (1997) *aff'd. sub nom., Cable and Wireless
    P.L.C. v. FCC*, 166 F.3d 1224 (D.C. Cir., 1999).

[^2]: AT&T's Petition for International Settlements Policy Modification
    for a Change in the Accounting Rate for International Switched Voice
    Service with Oman, ARC-MOD 20000323-00052 (filed March 23, 2000).

[^3]: MCI's Petition for International Settlements Policy Modification
    for a Change in the Accounting Rate for International Switched Voice
    Service with Oman, ARC-MOD 19991028-00346 (filed October 28, 1999)
    superceding ARC-MOD 19990701-00231 (filed July 1, 1999).

[^4]: Sprint's Petition for International Settlements Policy
    Modification for a Change in the Accounting Rate for International
    Switched Voice Service with Oman, ARC-MOD-20000111-00001 (filed
    January 11, 2000), withdrawn January 28, 2000. See letter from
    Marybeth M. Banks, Sprint, January 28, 2000.

[^5]: See letter from Kathryn O'Brien, FCC, to James J.R. Talbot, AT&T,
    April 13, 2000.

[^6]: We note that the International Telecommunication Union adopted a
    recommendation calling for cost-oriented, nondiscriminatory,
    transparent accounting rates to be introduced over the course of
    five years. *See, e.g. ITU-T Recommendation D.140*, "Accounting Rate
    Principles for International Telephone Services," Geneva (1992).

[^7]: *See AT&T and MCI Petitions for Modification of the Accounting
    Rates for Switched Voice Service with Singapore, Switched Voice and
    Switched Digital Service with Taiwan, and Switched Voice Service
    with Brunei*, DA 99-431 (released March 3, 1999).

[^8]: *Benchmarks Order* at ¶187.

[^9]: *See Singapore, Taiwan, and Brunei Order* at ¶5.