Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| **In the Matter of**             | * | **IB Docket No. 96-261**     |
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| **International Settlement       | ) |                              |
| Rates;**                         | * |                              |
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| Atlantic Tele-Network, Inc.      |   |                              |
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| **Request for a Waiver of the    | * |                              |
| Benchmark Settlement Rate on the | ) |                              |
| U.S.-Guyana Route**              | * |                              |
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ORDER

**Adopted: November 15, 2001 Released: November 16, 2001**

By the Chief, Telecommunications Division**:**

# I. introduction and background {#i.-introduction-and-background .unnumbered}

1.  On July 6, 2001, Atlantic Tele-Network, Inc. (ATN) filed a petition
    for waiver, pursuant to Section 1.3 of the Commission's rules, of
    the transition deadline for the benchmark settlement rate on the
    U.S.-Guyana route.[^1] ATN is a U.S. corporation that holds a
    majority interest in several telecommunications providers in the
    Carribean, including the incumbent provider in Guyana, Guyana
    Telephone & Telegraph Ltd. (GT&T).[^2] In this Order, we deny ATN's
    waiver request.

2.  In the Commission's 1997 *Benchmarks Order*,[^3] the Commission
    adopted benchmark settlement rates and a schedule of effective dates
    for these rates governing U.S. carriers in their settlement
    arrangements with foreign carriers.[^4] The Commission adopted the
    benchmark settlement rates because, in most cases, settlement rates
    that U.S. carriers pay foreign carriers are substantially above the
    costs foreign carriers incur to terminate U.S. international
    traffic.[^5] These high settlement rates discourage effective
    competition and cost-based pricing in foreign markets, create
    competitive distortions in the U.S. international market, and harm
    U.S. consumers who must indirectly pay these increased costs to U.S.
    carriers through artificially high international calling prices. In
    establishing the benchmark rates and effective dates, the Commission
    took into consideration the possible, unique difficulties of
    settlement rate reduction on low income countries. In particular,
    the Commission set forth transition periods for the settlement rates
    and their scheduled effective dates, based primarily on country
    income levels using World Bank and ITU GNP per capita
    classifications.[^6] For the low income category, which includes
    Guyana, the benchmark rate is 23 cents per minute.[^7] Thus, the
    Commission's *Benchmarks Order* requires U.S. facilities-based
    carriers to negotiate a settlement rate with GT&T that does not
    exceed 23 cents per minute. The rate applies to service provided
    from January 1, 2002. Currently, the settlement rate on the
    U.S.-Guyana route is 85 cents.

3.  In its petition, ATN requests a five-year extension of the
    transition deadline of January 1, 2002 for the U.S.-Guyana route or
    until Guyana reaches a teledensity of 23,[^8] whichever occurs
    first.[^9] ATN contends that a waiver of the benchmark transition
    deadline is necessary because the loss of revenue resulting from
    negotiating a 23 cent settlement rate with U.S. carriers as of
    January 1, 2002 will harm the infrastructure development and
    provision of universal service in Guyana. ATN asserts that Guyana
    has "no other choice" than to rely upon settlement payments for
    funding investment in its telecommunications network and further
    claims that settlement revenues have been re-invested in
    infrastructure development of the telecommunications network of
    Guyana during the past decade.[^10] Moreover, ATN argues that a
    waiver would be in the public interest by creating job opportunities
    for U.S. industry through increased sales of information technology
    equipment and Internet-related services and creating opportunities
    for U.S. consumers who call Guyana to communicate with a higher
    percentage of people abroad as a result of increased expansion of
    the telecommunications networks in Guyana, as well as creating
    goodwill for U.S. foreign policy objectives in Guyana.[^11]

4.  The International Bureau (Bureau) placed the *ATN Petition* on
    public notice July 17, 2001.[^12] Considering the need for parties
    to build a detailed record in this proceeding, the Bureau
    subsequently extended deadlines in the comment cycle.[^13] The
    Bureau has received a number of comments, replies, and *ex parte*
    filings.[^14]

# discussion

5.  The Commission may grant a waiver of its rules for good cause
    shown.[^15] Waiver of the Commission's rules is appropriate only if
    special circumstances warrant a deviation from the general rule.
    Such deviation must serve the public interest and be consistent with
    the policies underlying the rule.[^16]

6.  We find that ATN has not persuasively demonstrated that a waiver of
    the transition deadline would be in the public interest.[^17] As the
    Commission explained in the *Benchmarks Order,* any carrier may
    request that the Commission reconsider, in a specific case, the
    applicable benchmark settlement rate on the ground that it does not
    permit the carrier to recover the incremental costs of providing
    international termination service.[^18] Accordingly, in such a
    request, the petitioner must demonstrate that its relevant
    incremental costs are higher than the established benchmark.
    Additionally, the Commission specifically considered the impact of
    benchmark rates on developing countries and stated that it would
    consider granting additional transition time for negotiations with
    foreign carriers in countries for which annual percentage reductions
    in the settlement rate would result in a loss of greater than
    twenty-percent of the country's annual telecommunications
    revenue.[^19] ATN has not demonstrated in its petition that it
    cannot recover incremental costs at the benchmark rate of 23 cents
    or that it meets the criteria for grant of additional transition
    time.

7.  ATN further argues that a waiver would not undermine the
    Commission's benchmark policies because such a waiver would not
    affect the current downward trend in settlement rates paid by U.S.
    carriers or the calling rates paid by U.S. consumers.[^20] We
    disagree and reiterate that timely enforcement of the benchmark
    rates continues to be necessary to achieve the Commission's goal of
    ensuring lower international calling prices. The Commission adopted
    its benchmark policy because, despite repeated efforts,[^21] as well
    as efforts by multilateral organizations such as the International
    Telecommunication Union, accounting rates on most routes exceeded
    foreign carriers' costs to terminate international message telephone
    service from the United States. This continues to be the case today
    on many routes, including the U.S.-Guyana route. The Commission
    remains committed to achieving more cost-based accounting rates
    because high accounting rates inflate U.S. carriers' costs and, as a
    result, put upward pressure on the prices charged to U.S. consumers.
    As the Commission stated in the *Benchmarks Order*, the goal of the
    benchmark policy is to reduce settlement rates in situations where
    lack of exposure to market forces and competition has produced
    settlement rates that are not more cost-based.[^22] Since the
    implementation of the Commission's *Benchmarks Order*, the average
    U.S-international accounting rate has fallen from 81 cents in 1995
    to 38 cents in 2000.[^23] In addition, U.S. consumer calling prices
    for international services, particularly discount calling program
    rates, have fallen dramatically. Based upon Commission information,
    the average price of residential direct-dial calling for all
    U.S.-international routes combined has fallen from 74 cents per
    minute in 1997 to 52 cents per minute in 2000. This drop in U.S.
    consumer calling prices on U.S.-international routes can stimulate
    demand for calling to foreign countries and possibly lead to
    increased revenues for foreign carriers on those routes that may
    potentially offset the revenue loss associated with lowering
    settlement rates.

8.  Moreover, the Commission thoroughly addressed and dismissed in the
    *Benchmarks Order* the universal service policy arguments ATN sets
    forth in its petition, and it subsequently affirmed these positions
    in the *Benchmarks Reconsideration Order*.[^24] As the Commission
    stated in the *Benchmarks Order*, to the extent countries have used
    settlement payments from U.S. carriers for telecommunications
    infrastructure development, alternative capital funding mechanisms,
    from both public and private sources, must be identified.[^25] The
    Commission previously rejected the argument ATN raises that hidden
    subsidies in settlement rates are comparable to domestic universal
    service policies in the United States.[^26] Universal service in the
    United States is dependent upon end user telecommunications revenues
    in the United States, not on international settlement revenues paid
    by foreign carriers, and such universal service contributions rely
    upon explicit and transparent funding mechanisms.[^27]

9.  In addition, GT&T has had ample time to make reasonable adjustments
    in the settlement rate it negotiates with U.S. international
    carriers. The Commission specifically stated in the *Benchmarks
    Order* that meaningful progress in negotiating settlement rates
    toward the benchmark rate is necessary, and it suggested annual
    percentage reductions during the transition period.[^28] The
    Commission adopted the *Benchmarks Order* on August 7, 1997. Because
    the benchmark rate for low income countries such as GT&T does not
    take effect until January 1, 2002, GT&T has had more than four years
    to make the transition from its consistently high settlement rate
    with U.S. carriers to the benchmark rate of 23 cents. The last
    reduction GT&T made in the settlement rate with U.S. carriers for
    the U.S.-Guyana route was in 1987. We note that many foreign
    carriers in the low income category have already made the transition
    to the benchmark rate. Currently, U.S. carriers have negotiated a 23
    cent benchmark rate as of January 1, 2002 with approximately
    forty-percent of carriers in low income countries.[^29]

10. For the foregoing reasons, we do not find ATN's contentions
    persuasive that there is good cause to waive the transition deadline
    for the U.S.-Guyana route. Grant of ATN's request would not be in
    the public interest or consistent with Commission policies.
    Therefore, we reject ATN's arguments and deny the petition for
    waiver.

#  {#section .unnumbered}

# iii. ordering clauses {#iii.-ordering-clauses .unnumbered}

11. Accordingly, IT IS ORDERED, pursuant to Sections 1, 2, 4(i), 4(j),
    5(c), 201, 214, and 303(r) of the Communication Act of 1934, as
    amended, 47 U.S.C. §§ 151, 152, 154(i), 154(j), 155(c), 201, 214,
    and 303(r), and Sections 0.51, 0.261, 1.3 of the Commission's Rules,
    47 C.F.R. §§ 0.51, 0.261, 1.3, that ATN's petition for waiver of the
    benchmark settlement rate transition deadline for the U.S.-Guyana
    route IS DENIED.

12. IT IS FURTHER ORDERED that this order is effective upon release.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Kathryn O'Brien
>
> Acting Chief
>
> Telecommunications Division
>
> International Bureau

[^1]: Atlantic Tele-Network, Inc., Petition for Waiver of the Benchmark
    Settlement Rate for Guyana (filed July 6, 2001) (*ATN Petition*). 47
    C.F.R. § 1.3.

[^2]: *See ATN Petition* at 1.

[^3]: *International Settlement Rates*, IB Docket No. 96-261, Report and
    Order, 12 FCC Rcd 19,806 (1997) (*Benchmarks Order*); Report and
    Order on Reconsideration and Order Lifting Stay, 14 FCC Rcd 9256
    (1999) (*Benchmarks Reconsideration Order*); *aff'd sub nom. Cable &
    Wireless P.L.C. v. FCC*, 166 F.3d 1224 (D.C. Cir. 1999).

[^4]: The current international accounting rate system was developed as
    part of a regulatory tradition in which international
    telecommunications services were supplied through a bilateral
    correspondent relationship between national monopoly carriers. An
    accounting rate is the price a U.S. facilities-based carrier
    negotiates with a foreign carrier for handling one minute of
    international telephone service. Each carrier's portion of the
    accounting rate is referred to as the settlement rate. In most
    cases, the settlement rate is equal to one-half of the negotiated
    accounting rate.

[^5]: *Benchmarks Order*, 12 FCC Rcd at 19,807-08, para. 2.

[^6]: *Id.* at 19,883-90, paras. 161-176.

[^7]: *Id.* at 19,860-61, para. 111.

[^8]: "Teledensity" is the number of lines per 100 inhabitants. *See
    Benchmarks Order*, 12 FCC Rcd at 19,884-85, para. 164. ATN states
    that the current teledensity of Guyana is slightly greater than ten.

[^9]: *ATN Petition* at 1.

[^10]: *Id.* at 2, 4-7.

[^11]: *Id.* at 7-23.

[^12]: Public Notice, DA 01-1714 (July 17, 2001).

[^13]: Public Notice, DA 01-1933 (August 13, 2001); Public Notice, DA
    01-2104 (September 6, 2001).

[^14]: Because of the broad applicability of our ruling in this matter,
    the Bureau reclassified this proceeding for *ex parte* purposes as
    "permit-but-disclose." Public Notice, DA 01-2546 (October 31, 2001).

[^15]: 47 C.F.R. § 1.3.

[^16]: *WAIT Radio v. FCC,* 418 F.2d 1153 (D.C. Cir. 1969), *cert.
    denied* 409 U.S. 1027 (1972).

[^17]: We note that a number of parties agree that ATN has either not
    produced the necessary evidence to meet the standard for waiver or
    that ATN's arguments otherwise lack merit. *See, e.g.,* Comments of
    Carribean Wireless Telecom, LLC, Reply Comments of Carribean
    Telecommunications Limited, *Ex Parte* filing of Joseph Tyndall,
    Comments of WorldCom, Inc., Comments of Sprint Communications
    Company L.P., Comments of AT&T Corp. and its affiliates Concert
    Global Networks USA L.L.C. and Concert Global Network Services Ltd.
    *But see* Comments of Carribean Association of National
    Telecommunication Organizations (supporting *ATN Petition*).

[^18]: *Benchmarks Order*, 12 FCC Rcd at 19,842-43, para. 74 & at
    19,849, para. 88.

[^19]: *Id.* at 19,888, para. 173.

[^20]: *ATN Petition* at 23-29.

[^21]: *See, e.g., Regulation of International Accounting Rates*, CC
    Docket No. 90-337 (Phase II), Second Further Notice of Proposed
    Rulemaking, 7 FCC Rcd 8040 (1992); Public Notice, DA 96-105, 11 FCC
    Rcd 3152 (1996); *Policy Statement on International Accounting Rate
    Reform*, 11 FCC Rcd 3146 (1996); *Regulation of International
    Accounting Rates*, CC Docket No. 90-337 (Phase III), Fourth Report
    and Order, 11 FCC Rcd 20,063 (1996); and *International Settlement
    Rates*, IB Docket No. 96-261, Notice of Proposed Rulemaking, 12 FCC
    Rcd 6184 (1996) (*Benchmarks Notice*).

[^22]: *Benchmarks Order*, 12 FCC Rcd at 19,863, para. 116 & at 19,868,
    para. 128.

[^23]: *See In the Matter of 2000 Biennial Regulatory Review; Policy and
    Rules Concerning the International, Interexchange Marketplace*, IB
    Docket No. 00-202, Report and Order, 16 FCC Rcd 10,647 (2001) at
    10,657, para. 15.

[^24]: In addition, the U.S. Court of Appeals for the D.C. Circuit
    upheld the *Benchmarks Order*. *Cable & Wireless P.L.C. v. FCC*, 166
    F.3d 1224 (D.C. Cir. 1999).

[^25]: *Benchmarks Order*, 12 FCC Rcd at 19,875, para. 143.

[^26]: *ATN Petition* at Part I.C.

[^27]: *Id.* at 19,877-78, para. 148.

[^28]: *Id.* at 19,888, para. 172.

[^29]: Moreover, we note that as of January 1, 2002, U.S. carriers have
    negotiated a 23 cent benchmark rate as of January 1, 2002 with
    twenty-five percent of the low income countries that fall within the
    last transition category, or countries with teledensity less than
    one -- a year earlier than the required deadline of January 1, 2003.