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 Federal  Communications  Commission  DA  04-  1538 
 1 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of  Americatel  Corporation  and  Telecom  Italia  of 
 North  America,  Inc. 

 Application  to  Modify  Regulatory  Classification 
 From  Dominant  to  Non-  Dominant  on  the  U.  S.-  Brazil  Route 

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 File  Nos.  ITC-  MOD-  20020508-  00243  and  ITC-  MOD-  20020508-  00244 

 MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  May  27,  2004  Released:  May  27,  2004 
 By  the  Chief,  International  Bureau: 
 I.  INTRODUCTION 
 1.  In  this  Order,  we  grant  the  request  of  Americatel  Corporation  (  Americatel)  and  Telecom  Italia  of  North  America,  Inc.  (  TINA)  (together  Applicants)  to  modify  their 

 regulatory  classification  from  dominant  to  non-  dominant  on  the  U.  S.-  Brazil  route.  1  We  find,  however,  that  Applicants  have  failed  to  show  that  Brasil  Telecom  (  Brasil  Telecom)  has  less 
 than  50  percent  market  share  in  the  local  access  market,  or  that  Brasil  Telecom  otherwise  lacks  market  power  in  the  local  access  market.  Accordingly,  we  deny  the  Applicants  request  that 
 Brasil  Telecom  S.  A.  be  removed  from  the  Commissions  List  of  Foreign  Telecommunications  Carriers  that  are  Presumed  to  Possess  Market  Power  in  Foreign  Telecommunications  Markets.  2 

 1  Application  of  Americatel  Corporation  and  Telecom  Italia  of  North  America,  Inc.  to  Modify  Regulatory 
 Classification  from  Dominant  to  Non-  Dominant  on  the  U.  S.-  Brazil  Route,  Application  File  Nos.  ITC-  MOD-20020508-  00243  (Americatel  Corporation)  and  ITC-  MOD-  20020508-  00244  (Telecom  Italia  of  North  America,  Inc.) 

 (filed  May  8,  2003)  (  Application). 
 2  International  Bureau  Revises  and  Reissues  the  Commissions  List  of  Foreign  Telecommunications  Carriers  that  are 
 Presumed  to  Possess  Market  Power  in  Foreign  Telecommunications  Markets,  Public  Notice,  DA  03-  1812  (rel.  June  5,  2003)  (Intl  Bur.  2003)  (  Foreign  Carriers  List).  The  Foreign  Carriers  List  is  available  at  http://  www.  fcc.  gov/  ib 

 as  Resources,  Foreign  Carriers  Presumed  to  Possess  Market  Power.  The  Foreign  Carriers  List  was  originally  released  as  List  of  Foreign  Telecommunications  Carriers  that  are  Presumed  to  Possess  Market  Power  in  Foreign 
 Telecommunications  Markets,  Public  Notice,  DA  99-  809  (rel.  May  6,  1999;  erratum  rel.  June  18,  1999)  (Intl  Bur.  1999). 
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 II.  BACKGROUND 
 2.  In  the  Foreign  Participation  Order,  3  the  Commission  established  a  framework  to  encourage  competitive  entry  into  the  U.  S.  telecommunications  market,  in  fulfillment  of  the 

 United  States  commitments  under  the  WTO  Basic  Telecom  Agreement.  4  The  Commission  expressed  concern,  however,  that  a  foreign  carrier  with  market  power  5  in  an  input  market  6  on  the 
 foreign  end  of  a  U.  S.  international  route  has  the  ability  to  leverage  that  market  power  into  the  U.  S.  market  for  international  telecommunications  services,  i.  e.,  use  market  power  in  its  home 
 market  to  affect  competition  adversely  in  the  U.  S.  market,  thereby  harming  U.  S.  consumers.  7  Firms  with  market  power  in  an  upstream  input  market  can  engage  in  discrimination  in  a 
 downstream  market  by  favoring  one  downstream  entity  at  the  expense  of  its  competitors.  8  Where  the  upstream  firm  possesses  market  power,  downstream  competitors  have  few,  if  any, 
 alternatives  for  the  inputs  that  the  upstream  firm  provides.  9  In  order  to  complete  a  U.  S.  international  call,  a  U.  S.  carrier  must  obtain  as  inputs  various  call  termination  services  from 
 foreign  carriers  in  the  destination  country  of  the  U.  S.  call,  including  international  transport  services,  inter-  city  services  within  the  destination  country,  and  terminating  access  services  within 
 the  local  exchange  of  the  called  party.  10  A  foreign  carrier  with  market  power  in  these  input  markets  could  favor  one  U.  S.  international  carrier  at  the  expense  of  its  rivals  by  denying  rivals 
 access  to  these  crucial  termination  services,  or  by  providing  the  services  at  non-  competitive  prices  or  inferior  service  quality  levels.  11  The  ultimate  effect  of  such  discrimination  would  be  to  affect 
 adversely  competition  in  the  U.  S.  international  services  market  and  harm  U.  S.  consumers.  12 
 3.  The  Commission  found  that  an  ownership  affiliation  between  a  U.  S.  carrier  and  a  foreign  carrier  creates  a  heightened  ability  and  incentive  to  engage  in  anti-  competitive  behavior.  13 

 3  Rules  and  Policies  on  Foreign  Participation  in  the  U.  S.  Telecommunications  Market,  IB  Docket  97-  142,  95-  22, 
 Report  and  Order  and  Order  on  Reconsideration,  FCC  97-  398,  12  FCC  Rcd  23891  (1997)  (  Foreign  Participation  Order);  Order  on  Reconsideration,  FCC  00-  339,  15  FCC  Rcd  18158  (2000)  (  Foreign  Participation 

 Reconsideration  Order).  4 
 The  results  of  the  World  Trade  Organizations  (  WTO)  basic  telecommunications  services  negotiations  are  incorporated  into  the  General  Agreement  on  Trade  in  Services  (  GATS)  by  the  Fourth  Protocol  to  the  GATS,  April 

 30,  1996,  36  I.  L.  M.  366  (1997).  These  results,  as  well  as  the  basic  obligations  contained  in  the  GATS,  are  referred  to  herein  as  the  WTO  Basic  Telecom  Agreement. 
 5  The  Commission  has  defined  market  power  as  a  carriers  ability  to  raise  prices  by  restricting  its  output  of  services. 
 See  Foreign  Participation  Order,  12  FCC  Rcd  at  23951-  52,  para.  144.  6 
 In  producing  goods  or  services,  firms  must  obtain  labor,  capital,  raw  materials,  and  intermediate  goods  and  services  as  inputs  to  the  production  process.  The  markets  in  which  these  inputs  are  obtained  are  termed  input  markets. 

 Id.  at  23952-  53,  para.  145.  7 
 Id.  at  23952-  53,  para.  145,  and  23958,  para.  157.  8 
 Id.  at  23952-  53,  para.  145.  Markets  in  which  a  firm  buys  inputs  to  its  production  process  are  termed  upstream  relative  to  the  market  in  which  the  firm  sells  its  product,  and  a  market  in  which  a  firm  sells  its  product  is  termed 

 downstream  relative  to  the  input  markets.  9 
 Id.  10 
 Id.  11 
 Id.  at  23952-  53,  para.  145,  and  23958,  para.  157.  12 
 Id.  at  23958,  para.  157.  13 
 Id.  at  23954,  para.  147  and  23992,  para.  223. 
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 Accordingly,  the  Commission  adopted  certain  safeguards  to  ensure  that  U.  S.  affiliates  of  foreign  carriers  with  market  power  on  the  foreign  end  of  the  route  do  not  harm  competition  in  the  United 
 States.  Under  the  Commissions  rules,  a  U.  S.  carrier  that  is  affiliated  with  a  foreign  carrier  that  has  market  power  on  the  foreign  end  of  a  route  is  presumptively  classified  as  dominant  for  the 
 provision  of  international  telecommunications  services  on  that  route  (with  limited  exceptions).  14  U.  S.  international  carriers  classified  as  dominant  on  a  particular  route  are  subject  to  certain 
 requirements  to  safeguard  competition.  15  These  requirements  include  separation  requirements,  16  reporting  requirements,  17  and  certain  conditions  related  to  benchmark  settlement  rates.  18 
 Reclassification  as  non-  dominant  relieves  a  U.  S.  carrier  of  these  requirements. 
 4.  The  Commission  also  found  that  a  foreign  carrier  with  market  power  can  act  anti-competitively  with  respect  to  the  U.  S.  market  even  in  the  absence  of  a  U.  S.  affiliate  (e.  g.,  through 

 a  contractual  agreement  with  a  U.  S.  carrier).  19  Accordingly,  the  Commission  established  several  competitive  safeguards  with  which  all  U.  S.  international  carriers  must  comply  when  providing 
 international  telecommunications  services  that  terminate  on  the  network  of  a  foreign  carrier  with  market  power  on  the  foreign  end  of  a  U.  S.  international  route.  These  safeguards  include  the  No 
 Special  Concessions  rule,  20  contract  filing  requirements,  21  the  international  settlements  policy 
 14  47  C.  F.  R.    63.10(  a)(  3)    (a)(  4)  (2003). 
 15  47  C.  F.  R.    63.10(  c),  (e)  (2003).  See  also  Foreign  Participation  Order,  12  FCC  Rcd  at  23897-  24022,  paras.  215- 
 292.  16 
 The  U.  S.-  authorized  carrier  must  provide  service  as  an  entity  that  is  separate  from  its  foreign  affiliate.  47  C.  F.  R.    63.  10(  c)(  1)  (2003).  The  U.  S.  carrier  must  have  separate  books  of  account  and  not  jointly  own  transmission  or 

 switching  facilities  with  its  affiliate.  47  C.  F.  R.    63.  10(  c)(  1)(  i)-(  ii)  (2003).  17 
 The  U.  S.-  authorized  carrier  must  file  quarterly  traffic  and  revenue  reports  as  well  as  quarterly  provisioning  and  maintenance  reports.  47  C.  F.  R.    63.  10(  c)(  2)-(  3)  (2003).  The  U.  S.-  authorized  carrier  also  must  file  quarterly  circuit 

 status  reports.  47  C.  F.  R.    63.  10(  c)(  4)  (2003).  18 
 The  U.  S.  carrier  may  not  provide  facilities-  based  switched  services  on  the  route  on  which  it  is  classified  as  dominant,  unless  its  foreign  affiliate  on  that  route  charges  U.  S.  international  carriers  termination  rates  at  or  below 

 benchmark  settlement  rates.  47  C.  F.  R.    63.  10(  e)  (2003).  See  also  International  Settlement  Rates,  IB  Docket  No.  96-  261,  Report  and  Order,  FCC  97-  280,  12  FCC  19806  (1997)  (  Benchmarks  Order);  Report  and  Order  on 
 Reconsideration  and  Order  Lifting  Stay,  FCC  99-  124,  14  FCC  Rcd  9256  (1999)  (  Benchmarks  Reconsideration  Order),  affd  sub  nom.  Cable  &  Wireless  P.  L.  C.  v.  FCC,  166  F.  3d  1224  (D.  C.  Cir.  1999). 
 19  See  Foreign  Participation  Order,  12  FCC  Rcd  at  23954,  para.  147;  23958,  para.  157. 
 20  Under  the  Commissions  No  Special  Concessions  rule,  a  U.  S.-  authorized  international  carrier  is  prohibited  from 
 accepting  special  concessions  from  a  foreign  carrier  with  respect  to  a  route  on  the  foreign  end  of  which  the  foreign  carrier  possesses  market  power.  47  C.  F.  R.    63.  14(  a)  (2003).  For  U.  S.  international  carriers,  special  concessions  are 

 defined  as  exclusive  arrangements  involving  services,  facilities,  or  functions  on  the  foreign  end  of  a  U.  S.  international  route  that  are  necessary  for  the  provision  of  basic  telecommunications  services  where  the  arrangements 
 are  not  offered  to  similarly  situated  U.  S.-  licensed  carriers.  47  C.  F.  R.    63.  14(  b)  (2003).  Such  arrangements  include  operating  agreements  for  the  provision  of  basic  services;  distribution  arrangements  or  interconnection  arrangements, 
 including  pricing,  technical  specifications,  functional  capabilities,  or  other  quality  and  operating  characteristics  such  as  provisioning  and  maintenance  times;  and  any  information,  prior  to  public  disclosure,  about  a  foreign  carriers 
 basic  network  services  that  affects  either  the  provision  of  basic  or  enhanced  services  or  interconnection  to  the  foreign  countrys  domestic  network  by  U.  S.  carriers  or  their  U.  S.  customers.  47  C.  F.  R.    63.  14(  b)(  1)-(  3)  (2003).  If  the 
 international  route  is  exempt  from  the  international  settlements  policy  (  ISP)  under  47  C.  F.  R.    43.  51(  e)(  3)  (2003),  the  No  Special  Concessions  rule  does  not  apply  to  the  rates,  terms,  and  conditions  in  an  agreement  between  a  U.  S. 
 carrier  and  a  foreign  carrier  that  govern  the  settlement  of  international  traffic,  including  the  method  for  allocating  return  traffic.  47  C.  F.  R.    63.14(  c)  (2003).  We  note  that  the  Commission  recently  adopted  a  more  limited 
 application  of  the  ISP  and  related  rules  in  the  International  Settlements  Policy  Reform,  International  Settlement  (continued....) 
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 (  ISP),  22  and  requirements  regarding  the  provision  of  switched  services  over  private  lines.  23  Similarly,  the  Commission  also  has  established  competitive  safeguards  that  apply  to  U.  S.  cable 
 landing  licensees  when  connecting  with  the  network  of  a  foreign  carrier  with  market  power  on  the  foreign  end  of  the  U.  S.  international  route.  24  The  Commissions  Foreign  Carriers  List  identifies 
 those  foreign  carriers  with  which  exchange  of  traffic  is  subject  to  the  requirements  described  above.  25  Removal  of  a  foreign  carrier  from  the  Foreign  Carriers  List  relieves  U.  S.-  authorized 

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 Rates,  IB  Docket  No.  02-  324,  IB  Docket  No.  96-  261,  First  Report  and  Order,  FCC  04-  53  (2004)  (  2004  ISP  Reform  Order).  The  rule  changes  adopted  in  the  2004  ISP  Reform  Order,  most  of  which  take  effect  on  May  28,  2004,  are 
 not  relevant  to  our  consideration  of  the  issues  raised  in  this  proceeding.  21 
 A  U.  S.-  authorized  carrier  that  enters  into  a  contract  regarding  the  exchange  of  services,  routing  of  traffic,  or  accounting  rates  with  a  foreign  carrier  with  respect  to  a  route  on  the  foreign  end  of  which  the  foreign  carrier 

 possesses  market  power  is  required  to  file  a  copy  of  the  contract  within  30  days.  47  C.  F.  R.    43.  51(  a)(  1),  (b)(  2),  and  Note  3  to    43.  51  (2003). 
 22  Under  the  ISP,  if  a  U.  S.-  authorized  carrier  files  an  operating  agreement  with  a  foreign  carrier  regarding  the 
 exchange  of  switched  traffic  with  respect  to  a  non-  exempt  route  on  the  foreign  end  of  which  the  foreign  carrier  possesses  market  power,  the  operating  agreement  must  comport  with  certain  requirements;  otherwise,  the  U.  S.  carrier 

 must  file  a  modification  request  with  the  International  Bureau.  47  C.  F.  R.    43.  51(  e)  (2003).  The  operating  agreement  is  required  to  have  terms  and  conditions  pertaining  to  the  exchange  of  services,  routing  of  traffic, 
 accounting  rates,  and  the  proportionate  share  of  return  traffic  that  are  identical  to  that  of  other  carriers  providing  the  same  or  similar  service.  47  C.  F.  R.    43.  51(  e)(  1)-(  2)  (2003).  The  restriction  of  the  ISP  to  operating  agreements 
 between  U.  S.  carriers  and  foreign  carriers  that  possess  market  power  is  described  in  47  C.  F.  R.    43.  51(  e)(  1)  (2003),  with  reference  to    43.  51(  a)(  1),  (b)(  2),  and  Note  3  to    43.  51  (2003).  The  exempt  routes  are  described  in  the  Note  to 
   43.  51(  e)(  3).  23 
 The  Commissions  ISR  policy  allowed  U.  S.-  authorized  carriers  to  provide  switched  basic  services  over  its  authorized  private  lines  if  the  foreign  carrier  with  which  traffic  is  exchanged  is  in  a  destination  country  that  appears 

 on  the  Commissions  list  of  authorized  destinations.  47  C.  F.  R.    63.  22  (e)(  1)  (2003);  47  C.  F.  R.    63.  23(  d)(  1)  (2003);  with  reference  to  47  C.  F.  R.    63.  16(  a)  (2003).  See  Resources,  ISR-  Approved  Routes  at  www.@  fcc.  gov/  ib 
 (  International  Simple  Resale  or  ISR).  Also,  a  U.  S.  carrier  may  provide  switched  basic  services  over  its  authorized  private  lines  if  the  foreign  carrier  with  which  traffic  is  exchanged  lacks  market  power  on  the  foreign  end 
 of  the  route.  47  C.  F.  R.    63.  22(  e)(  2)-(  3)  (2003);  47  C.  F.  R.    63.  23(  d)(  2)-(  3)  (2003).  Because  Brazil  has  been  on  the  list  of  ISR-  approved  routes,  U.  S.  carriers  have  been  allowed  to  provide  switched  basic  services  over  authorized 
 private  lines  to  any  carrier  in  Brazil.  Therefore,  a  finding  by  the  International  Bureau  that  Brasil  Telecom  lacks  market  power  on  the  foreign-  end  of  the  U.  S.-  Brazil  route  would  not  confer  any  privileges  upon  Brasil  Telecom  or 
 U.  S.  carriers  regarding  the  exchange  of  switched  basic  services  over  authorized  private  lines  on  the  U.  S.-  Brazil  route  that  they  do  not  already  possess.  This  is  not  changed  by  the  recent  2004  ISP  Reform  Order  that  eliminated  the  ISR 
 policy  and  removed  the  ISP  from  certain  routes,  including  Brazil.  See  2004  ISP  Reform  Order  at  paras.  26-  38,  and  Appendix  D. 
 24  U.  S.  cable  landing  licensees  are  prohibited  from  accepting  special  concessions  from  any  foreign  carrier,  including 
 any  entity  that  owns  or  controls  a  foreign  cable  landing  station,  with  respect  to  a  route  on  the  foreign  end  of  which  the  foreign  carrier  possesses  sufficient  market  power  to  affect  competition  adversely  in  the  U.  S.  market.  47  C.  F.  R.   

 1.767(  g)(  5)(  i)  (2003)  and  Note  to  paragraph  (g)(  5).  In  the  case  of  cable  landing  licenses,  special  concessions  are  defined  as  exclusive  arrangements  involving  services,  facilities,  or  functions  on  the  foreign  end  of  a  U.  S. 
 international  route  that  are  necessary  to  land,  connect,  or  operate  submarine  cables,  where  the  arrangement  is  not  offered  to  similarly  situated  U.  S.  submarine  cable  owners.  47  C.  F.  R.    1.767(  g)(  5)(  ii)  (2003). 
 25  See  Foreign  Carriers  List.  See  also  47  C.  F.  R.    1.  767(  g)(  5)  (2003)  and  Note  to  Paragraph  (g)(  5);  47  C.  F.  R.   
 43.  51(  b)(  2)  (2003)  and  Note  3  to    43.  51;  and  47  C.  F.  R.    63.  14(  a)  (2003)  and  Note  to  Paragraph  (a);  47  C.  F.  R.    63.  22  (e)(  2-  3)  (2003);  and  47  C.  F.  R.    63.  23(  d)(  2-  3)  (2003).  In  the  ISP  Reform  Order,  the  Commission  modified  its 

 rules  to  remove  its  requirement  that  agreements  between  U.  S.  telecommunications  carriers  and  foreign  carriers  that  lack  market  power  in  foreign  telecommunications  markets  conform  to  the  ISP  and  stated  that  it  would  issue  a  list  of 
 foreign  carriers  that  do  not  qualify  for  the  presumption  that  they  lack  market  power  on  the  foreign  end  of  U.  S.  (continued....) 
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 carriers  with  which  it  corresponds  of  these  requirements. 
 III.  THE  APPLICATIONS 
 5.  Americatel  and  TINA  are  authorized  to  provide  U.  S.  international  telecommunications  services  pursuant  to  Section  214  of  the  Communications  Act  of  1934,  as 

 amended.  26  Telecom  Italia,  S.  p.  A  controls  Americatel  and  TINA  (through  majority  ownership  of  intervening  subsidiaries)  and  has  an  ownership  share  of  Brasil  Telecom.  Americatel  and  TINA 
 are  each  classified  as  dominant  on  the  U.  S.-  Brazil  route  pursuant  to  Section  63.10(  a)  of  the  rules.  27  As  an  incumbent  local  exchange  carrier  in  Brazil,  Brasil  Telecom  is  included  in  the  List 
 of  Foreign  Telecommunications  Carriers  that  are  Presumed  to  Possess  Market  Power  in  Foreign  Telecommunications  Markets.  28 

 6.  On  May  8,  2002,  the  Applicants  filed  a  request  29  to  modify  their  regulatory  classification  from  dominant  to  non-  dominant  on  the  U.  S.-  Brazil  route  and  to  have  Brasil 
 Telecom  removed  from  the  Commissions  Foreign  Carriers  List.  The  Applicants  explain  that  in  1998,  the  state-  owned  telephone  monopoly,  Telecomunicaoes  Brasilieras  S.  A.  (  Telebras)  was 
 successfully  privatized.  The  privatization  resulted  in  the  break-  up  of  Telebras  into  twelve  companies,  which  consisted  of:  (1)  three  local  fixed-  line  operators  (currently,  Telemar,  Brasil 
 Telecom,  and  Telefnica),  each  providing  local  and  intra-  regional  long  distance  services  in  one  of  three  regions  into  which  Brazil  had  been  divided  for  purposes  of  fixed-  line  telecommunications; 
 (2)  a  long  distance  operator  (Empresa  Brasiliera  de  Telecomunicaoes  S.  A.  (  Embratel)),  providing,  throughout  the  entire  territory  of  Brazil  (known  as  Region  IV),  domestic  intra-  regional 
 and  inter-  regional  long  distance  telecommunications  service  and  international  long  distance  telecommunications  service;  and  (3)  eight  cellular  operators,  each  operating  in  one  of  the  eight 
 regions  into  which  Brazil  has  been  divided  for  purposes  of  cellular  telecommunications  services.  30 

 7.  According  to  the  Applicants,  the  three  local  fixed  line  operators  (together,  the  Concessionaires)  were  sold  to  private  consortia,  most  of  which  are  controlled  by  local 

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 international  routes.  See  1998  Biennial  Regulatory  Review  Reform  of  the  International  Settlements  Policy  and  Associated  Filing  Requirements,  Regulation  of  International  Accounting  Rates,  Market  Entry  and  Regulation  of 
 Foreign    affiliated  Entities,  IB  Docket  No.  98-  148,  Report  and  Order  and  Order  on  Recon.,  FCC  99-  73,  14  FCC  Rcd  7963,  7971,  para.  20,  7978-  79,  para.  43,  7980-  81,  paras.  47-  49,  and  7988,  para.  65  (1999)  (  1999  ISP  Reform 
 Order).  Subsequently,  the  Commission  issued  the  Foreign  Carriers  List.  26 
 47  U.  S.  C.    214.  See  Application  at  1,  n.  1.  27 
 47  C.  F.  R.    63.10(  a)  (2003).  The  Commission  conditioned  grants  of  Americatels  Transfer  of  Control  Application  and  TINAs  Section  214  Application  on  the  commitment  of  Americatel  and  TINA  respectively  to  accept  dominant 

 carrier  classification  on  the  U.  S.-  Brazil  route  without  prejudice  to  the  right  to  petition  for  reclassification  at  a  later  date.  See  International  Authorizations  Granted,  Public  Notice,  DA  01-  476,  rel.  Feb.  22,  2001  (granting  the 
 Americatel  Transfer  of  Control  Application)  and  International  Authorizations  Granted,  Public  Notice,  DA  00-  1408,  rel.  June.  23,  2000  (granting  the  TINA  Transfer  of  Control  Application). 
 28  Foreign  Carriers  List  at  3. 
 29  See  Application. 
 30  Id.  at  3  4. 
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 investment  banks,  pension  funds  and  foreign  telecommunications  carriers.  31  Under  Brazils  General  Plan  of  Concessions  and  Licenses,  Brasil  Telecom  was  the  privatized  local  and  intra-regional 
 long  distance  carrier  for  Region  II,  and  was  sold  to  a  consortium  consisting  of  the  Brazilian  investment  bank  Opportunity,  Telecom  Italia  S.  p.  A.  and  a  Brazilian  pension  fund.  32 
 Following  privatization,  the  Brazilian  government  authorized  the  entrance  of  an  additional  carrier  into  each  fixed-  line  region  (together,  the  mirror  companies)  to  compete  directly  with  each 
 Concessionaire.  In  Region  II,  Brasil  Telecoms  mirror  company  is  Global  Village  Telecom  Ltda.  (  Global  Village  Telecom),  which  began  its  operations  in  December  2000.  33  Additionally, 
 Applicants  state  that  now  an  unlimited  number  of  operators  have  the  opportunity  (i.  e.,  are  eligible  to  apply  for  licenses)  to  compete  directly  against  Brasil  Telecom  in  Region  II.  34  The  Applicants, 
 however,  assert  that  Brasil  Telecom  is  prohibited  from  offering  inter-  regional  and  international  long  distance  service  within  Region  II  and  from  offering  any  type  of  fixed  service  outside  Region 
 II  until  December  31,  2003,  unless  it  complies  with  certain  coverage  requirements  35  prior  to  that  date.  36 

 8.  The  Applicants  argue  that  they  should  be  re-  classified  as  non-  dominant  on  the  U.  S.-  Brazil  route  because  they  are  no  longer  affiliated  with  Brasil  Telecom  within  the  meaning  of 
 Section  63.09  of  our  rules.  In  support,  on  November  18,  2002,  Applicants  filed  an  amendment  stating  that  Telecom  Italia  S.  p.  A.,  which  previously  held  an  indirect  37.29  percent  interest  in 
 Solpart  Participaes  S.  A.  (  Solpart),  the  indirect  parent  of  Brasil  Telecom,  37  reduced  its  stake  in  the  ordinary  share  capital  of  Solpart  from  37.29  percent  to  19  percent.  The  Applicants  assert 
 that  Telecom  Italia  now  holds  less  than  25  percent  of  the  ordinary  share  capital  of  Solpart,  and  that  Telecom  Italia  does  not  control  Brasil  Telecom.  Hence,  according  to  the  Applicants, 
 Telecom  Italia,  and  thus  Americatel  and  TINA,  are  no  longer  affiliated  with  Brasil  Telecom  under  Section  63.09  of  the  Commissions  rules.  Accordingly,  the  Applicants  request  that  the 
 Commission  modify  their  regulatory  status  from  dominant  to  non-  dominant  for  the  provision  of  international  services  on  the  U.  S.  Brazil  route  pursuant  to  Section  63.10(  a)(  1)  of  the 

 31  Id.  at  4. 
 32  Id. 
 33  Id. 
 34  Id.  at  5. 
 35  The  Application  states  that  Brazils  public  telecommunications  regime  provides  that  incumbent  regional  and 
 international  long  distance  providers  (e.  g.  the  Concessionaires)  are  subject  to  a  special  set  of  restrictions  regarding  the  services  they  may  offer,  as  well  as  to  special  obligations  regarding  network  expansion,  modernization  and  service 

 quality.  The  Concessionaires  in  particular  are  generally  not  permitted  to  offer  any  fixed  services  outside  of  their  respective  regions,  or  any  inter-  regional  or  international  long  distance  services  within  their  respective  regions  until 
 December  31,  2003.  However,  if  a  Concessionaire  met  its  network  expansion  and  universal  service  targets  (  coverage  requirements)  within  its  home  region  on  an  accelerated  basis,  then  beginning  December  31,  2001,  it 
 became  eligible  to  apply  for  a  license  to  offer  any  type  of  telecommunications  services,  including  domestic  and  international  long  distance  services,  in  its  home  region  or  elsewhere,  beginning  in  2002.  Id.  at  6. 
 36  Id.  The  Applicants  have  updated  the  record  to  state  that  Brasil  Telecom  met  its  year  2003  universal  service 
 objectives,  and  therefore  has  obtained  authorization  to  provide  inter-  regional  or  international  long  distance  services  throughout  Brazil.  See  Letter  from  Troy  F.  Tanner,  Counsel  for  Telecom  Italia  of  North  America  and  Americatel 

 Corp.,  to  Marlene  H.  Dortch,  Secretary,  FCC  (dated  May  17,  2004).  37 
 Amendment  to  the  Application  to  Modify  Regulatory  Classification  from  Dominant  to  Non-  Dominant  on  the  U.  S.  -Brazil  Route,  filed  November  18,  2002,  at  2. 
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 Commissions  rules.  38 
 9.  The  Applicants  also  argue  that  Brasil  Telecom  lacks  sufficient  market  power  on  the  foreign  end  of  the  U.  S.-  Brazil  route  to  affect  competition  adversely  in  the  U.  S.  market  and 

 that,  consequently,  the  Applicants  should  be  re-  classified  as  non-  dominant  on  the  U.  S.-  Brazil  route,  and  Brasil  Telecom  should  be  removed  from  the  Commission's  Foreign  Carriers  List.  39  In 
 support  of  their  argument,  the  Applicants  claim  that  Brasil  Telecom  has  less  than  50  percent  market  share  of  the  local  access  and  international  transport  markets  on  the  foreign  end  of  the 
 route  and,  therefore,  under  the  Commissions  rules,  presumptively  lacks  sufficient  market  power  on  the  foreign  end  of  the  route  to  affect  competition  adversely  in  the  U.  S.  market.  40  The 
 Applicants  also  argue  that  under  a  full  economic  analysis  of  market  power,  in  which  market  share  is  just  one  factor,  Brasil  Telecom  does  not  have  market  power  on  the  foreign  end  of  the  route.  41 

 10.  The  International  Bureau  placed  the  Application  on  public  notice.  42  AT&  T  Corp.  (AT&  T)  and  WorldCom,  Inc.  (now  MCI)  filed  oppositions  to  the  Application.  43  AT&  T  and  MCI 
 argue  that  Brasil  Telecoms  monopoly  control  of  its  franchise  region  remains  intact  and,  therefore,  the  Application  should  be  denied.  44  AT&  T  and  MCI  contend  that  the  Applicants  have 
 provided  no  evidence  that  Brasil  Telecom  has  less  than  50  percent  market  share  in  the  relevant  international  transport  and  local  access  markets  on  the  foreign  end  of  the  U.  S.-  Brazil  route.  45 
 According  to  AT&  T  and  MCI,  the  Applicants  assertion  that  Brasil  Telecom  has  less  than  50  percent  market  share  in  the  local  access  market  is  based  on  an  erroneous  assumption  that  the 
 relevant  geographic  market  for  measuring  Brasil  Telecoms  local  access  market  share  is  the  entire  country  of  Brazil  rather  than  Brasil  Telecoms  local  franchise  area.  46  AT&  T  and  MCI  also  assert 
 that  the  Applicants  have  not  shown  any  other  basis  for  finding  that  Brasil  Telecom  lacks  market  power  on  the  foreign  end  of  the  U.  S.-  Brazil  route.  47 

 11.  The  Applicants  filed  a  reply  to  the  oppositions  of  AT&  T  and  MCI,  48  and  the 
 38  47  C.  F.  R.    63.10(  a)(  1). 
 39  Application  at  1-  2,  and  10-  11. 
 40  Application  at  2-  3;  5-  6  (citing  47  C.  F.  R.    63.  10(  a)(  3)  (2003)  and    43.  51(  2003)  and  47  C.  F.  R.    43.  51,  Note  3  to   
 43.  51  (2003)).  See  also  Foreign  Participation  Order,  12  FCC  Rcd  at  23959-  62,  paras.  161-  163  and  23996,  paras.  232-  233. 

 41  Application  at  9  (citing  Foreign  Participation  Order,  12  FCC  Rcd  at  23959-  60,  para.  161). 
 42  Application  of  Americatel  Corporation  and  Telecom  Italia  of  North  America,  Inc.  to  Modify  Regulatory 
 Classification  from  Dominant  to  Non-  Dominant  on  the  U.  S.  -  Brazil  Route,  Public  Notice,  DA  02  1259  (rel.  May  28,  2002)  (Intl  Bur.  2002). 

 43  Opposition  of  AT&  T  Corp.,  to  Application,  File  Nos.  ITC-  MOD-  20020508-  00243,  ITC-  MOD-  20020502-  00244 
 (filed  June  28,  2002)  (  AT&  T  Opposition);  Opposition  of  MCI,  Inc.,  to  Application,  File  Nos.  ITC-  MOD-20020508-  00243,  ITC-  MOD-  20020502-  00244  (filed  June  28,  2002)  (  MCI  Opposition).  MCI  formerly  was  known 

 as  WorldCom,  Inc.,  to  which  we  hereinafter  refer  to  as  MCI  44 
 AT&  T  Opposition  at  1-  2,  4-  5,  and  7;  MCI  Opposition  at  2-  4.  45 
 AT&  T  Opposition  at  1-  5;  MCI  Opposition  at  2-  4.  46 
 AT&  T  Opposition  at  4;  MCI  Opposition  at  3  (citing  Foreign  Participation  Order,  12  FCC  Rcd  at  23952-  53,  145).  47 
 AT&  T  Opposition  at  2  (citing  47  C.  F.  R.    43.51  Note  3  (2003));  MCI  Opposition  at  4-  6.  48 
 See  Applicants  Reply.  The  Applicants  filed  for  and  were  granted  an  extension  of  time  to  reply  to  AT&  Ts  Opposition.  Americatel  Corporation  and  Telecom  Italia  of  North  America.  Inc.,  Application  to  Modify  Regulatory 

 (continued....) 
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 parties  made  ex  parte  presentations.  49  In  their  reply,  the  Applicants  argue  that  they  have  correctly  identified  the  relevant  geographic  market  for  local  access  services  as  the  entire  country  of 
 Brazil.  50  The  Applicants  further  argue  that  they  have  provided  information  sufficient  to  show  that  Brasil  Telecom  controls  less  than  50  percent  of  the  relevant  markets  in  Brazil.  51  The  Applicants 
 also  argue  that  Brasil  Telecom  lacks  sufficient  market  power  to  be  able  to  affect  competition  adversely  on  the  U.  S.-  Brazil  route  because  of  pro-  competitive  conditions  in  Brazils 
 telecommunications  sector.  52 
 IV.  DISCUSSION 
 12.  We  find  that  the  Applicants  have  demonstrated  that  they  should  be  reclassified  as  non-  dominant  carriers  on  the  U.  S.-  Brazil  route  because  Brasil  Telecom  is  no  longer  affiliated 

 with  the  Applicants,  as  the  term  is  defined  by  Section  63.09(  e)  of  the  Commissions  rules.  53  The  Commissions  rules  provide  that  a  U.  S.  carrier  that  has  no  affiliation  with,  and  that  itself  is  not,  a 
 foreign  carrier  in  a  particular  country  to  which  it  provides  service  (i.  e.,  a  destination  country)  shall  presumptively  be  considered  non-  dominant  for  the  provision  of  international 
 communications  services  on  that  route.  54  The  rules  also  provide  that  [  t]  wo  entities  are  affiliated  with  each  other  if  one  of  them,  or  an  entity  that  controls  one  of  them,  directly  or  indirectly  owns 
 more  that  25  percent  of  the  capital  stock  of,  or  controls,  the  other  one.  55 
 13.  The  Applicants  have  stated  that  Telecom  Italia,  through  its  subsidiary  STET  Netherlands  N.  V.,  has  recently  reduced  its  stake  in  the  ordinary  share  capital  of  Solpart,  the 

 indirect  parent  of  Brasil  Telecom,  from  37.29  percent  to  19  percent.  56  Telecom  Italia  now  holds  less  than  25  percent  of  the  ordinary  share  capital  of  Solpart,  and  there  is  no  information  in  the 
 record  that  Telecom  Italia  controls  Brasil  Telecom.  Accordingly,  we  find  that  Americatel  and  TINA  are  no  longer  affiliated,  within  the  meaning  of  Section  63.09(  e)  of  the  Commissions 
 rules,  with  Brasil  Telecom  and  that  Applicants  should  be  reclassified  as  non-  dominant  on  the 

 (...  continued  from  previous  page) 
 Classification  from  Dominant  to  Non-  Dominant  on  the  U.  S.-  Brazil  Route,  Order,  DA  02-  1259,  ITC-  MOD-  20020508-00243  and  ITC-  MOD-  20020508-  00244,  DA  02-  1259  (IB/  PD,  2002). 
 49  Letter  from  James  R.  Talbot,  Senior  Attorney,  AT&  T,  to  Marlene  H.  Dortch,  Secretary,  FCC  (dated  Aug.  2,  2002); 
 Letter  from  James  R.  Talbot,  Senior  Attorney,  AT&  T,  to  Marlene  H.  Dortch,  Secretary,  FCC  (dated  Aug.  5,  2002);  Letter  from  Troy  F.  Tanner,  Counsel  for  Telecom  Italia  of  North  America  and  Americatel  Corp.,  to  Marlene  H. 

 Dortch,  Secretary,  FCC  (dated  Sept.  5,  2002).  50 
 Applicants  Reply  at  1-  6.  51 
 Id.  at  4-  6.  52 
 Id.  at  7-  9.  53 
 47  C.  F.  R.    63.09(  e)  (2003).  54 
 47  C.  F.  R.    63.10(  a)(  1)  (2003).  55 
 47  C.  F.  R.    63.09(  e).  See  also  Foreign  Participation  Order,  12  FCC  Rcd  at  23992,  para.  223,  in  which  the  Commission  stated  that  a  greater  than  25  percent  affiliation  standard  represents  a  level  of  investment  that  allows  a 

 carrier  to  provide  substantial  influence  with  regard  to,  and  to  reap  substantial  rewards  from,  anticompetitive  conduct.  56 
 Amendment  to  the  Application  to  Modify  Regulatory  Classification  from  Dominant  to  Non-  Dominant  on  the  U.  S.  -Brazil  Route,  filed  November  18,  2002,  at  2. 
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 U.  S.-  Brazil  route.  57 
 14.  We  find,  however,  that  the  Applicants  have  not  demonstrated  that  Brasil  Telecom  should  be  removed  from  the  Foreign  Carriers  List.  As  discussed  below,  the  Applicants  fail  to 

 show  that  Brasil  Telecom  has  less  than  50  percent  market  share  in  the  local  access  market  on  the  foreign  end  of  the  U.  S-  Brazil  route  or  that  Brasil  Telecom  nevertheless  lacks  sufficient  market 
 power  in  the  local  access  market  to  affect  competition  adversely  in  the  U.  S.  market  for  telecommunications  services  to  Brazil.  Such  a  demonstration  is  required  by  the  Commissions 
 rules  for  removal  of  a  foreign  carrier  from  the  Foreign  Carriers  List  (and  reclassification  of  its  U.  S.  affiliates  as  non-  dominant  on  the  route  for  which  the  foreign  carrier  was  listed).  58  Because 
 the  Applicants  failure  to  make  such  a  demonstration  is  by  itself  fatal  to  their  petition,  we  need  not  evaluate  whether  Brasil  Telecom  lacks  market  power  in  any  of  the  other  markets  necessary 
 for  the  termination  of  U.  S.  international  services  (e.  g.,  the  international  transport  market). 
 15.  Under  section  43.51  of  the  Commissions  rules  59  a  party  seeking  to  remove  a  foreign  carrier  from  the  Commissions  Foreign  Carriers  List  bears  the  burden  of  submitting 

 information  to  the  Commission  sufficient  to  demonstrate  either  that  the  foreign  carrier  on  the  Foreign  Carriers  List  lacks  50  percent  market  share  in  the  international  transport  and  local  access 
 markets  on  the  foreign  end  of  the  route  served  by  the  foreign  carrier  or  that  the  foreign  carrier  nevertheless  lacks  sufficient  market  power  on  the  foreign  end  of  the  route  to  affect  competition 
 adversely  in  the  U.  S.  market.  60  The  Commission  reviews  the  latter  showing  under  an  appropriate  economic  analysis  of  market  power,  discussed  in  detail  below.  61  The  input 
 markets  that  are  relevant  to  examining  market  power  on  the  foreign  end  of  a  U.  S.  international  route  are  the  markets  that  involve  services  or  facilities  on  the  foreign  end  that  are  necessary  for 
 the  provision  of  U.  S.  international  services  and  include:  (1)  international  transport  facilities  or  services;  (2)  inter-  city  facilities  or  services;  and  (3)  local  access  facilities  or  services.  62 

 16.  In  the  Foreign  Participation  Order,  the  Commission  recognized  that  for  purposes  of  identifying  the  relevant  geographic  market  for  inter-  city  services  and  local  access  facilities,  it 
 may  be  appropriate  in  some  instances  to  examine  a  discrete  geographic  region  rather  than  the  national  market  of  a  foreign  country."  63  Although  the  Foreign  Participation  Order  does  not 
 identify  the  circumstances  in  which  examination  of  a  discrete  geographic  region  would  be  appropriate,  the  International  Bureau  has  held  that  if  a  local  franchise  area  64  generates  a 

 57  47  C.  F.  R.    63.09(  e)  (2003). 
 58  See  47  C.  F.  R.    43.  51  Note  3  (2003).  See  also,  id.    63.  10(  a)(  3). 
 59  47  C.  F.  R.    43.51  Note  3  (2003).  See  Foreign  Participation  Order,  12  FCC  Rcd  at  23952,  para.  145,  23959-  62 
 paras.  161-  63,  and  n.  317  and  n.  318.  See  also  Foreign  Participation  Order,  12  FCC  Rcd  at  23995-  96,  paras.  231-  233.  60 
 Id.  61 
 See  infra  paras.  20-  28.  See  also  Foreign  Participation  Order,  12  FCC  Rcd  at  23960-  61,  para.  162,  n.  317.  62 
 See  Foreign  Participation  Order,  12  FCC  Rcd  23952-  53,  para.  145.  63 
 Id.  64 
 For  the  purposes  of  this  Order,  the  International  Bureau  defines  "local  franchise  area"  to  include  any  geographic  area  in  which  a  carrier  is  incumbent,  regardless  of  whether  it  has  exclusive  operating  authority  in  that  area  or  whether 

 its  operating  authority  has  been  extended  beyond  the  area  in  which  it  is  incumbent. 
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 significant  share  of  international  traffic,  65  then  the  local  franchise  area  is  the  relevant  geographic  market  for  purposes  of  determining  whether  a  carrier  possesses  sufficient  market  power  to  affect 
 competition  adversely  in  the  United  States.  66  For  example,  in  Telecom  Argentina,  the  International  Bureau  determined  that  Telecom  Argentinas  local  franchise  area  was  the  relevant 
 geographic  market  for  purposes  of  determining  whether  it  possessed  sufficient  market  power  in  the  provision  of  local  access  services  and  facilities  in  Argentina  to  affect  competition  adversely  in 
 the  United  States.  67  Having  defined  the  relevant  geographic  market  as  Telecom  Argentinas  local  franchise  area,  the  Bureau  found  that  Telecom  Argentina  had  sufficient  market  power  on  the 
 foreign  end  of  the  U.  S.-  Argentina  route  to  affect  competition  adversely  in  the  U.  S.  market.  68  In  Bell  Canada,  the  International  Bureau  determined  that  Bell  Canada's  local  franchise  area,  which 
 included  Canada's  two  largest  provinces  and  generated  more  than  60  percent  of  Canada's  international  traffic,  was  the  relevant  geographic  market  for  purposes  of  determining  whether  Bell 
 Canada  possessed  sufficient  market  power  in  Canada  to  affect  competition  adversely  in  the  United  States.  69  We  found  that  Bell  Canada  had  the  ability  to  discriminate  against  and  among 
 U.  S.  carriers  seeking  to  terminate  traffic  in  Canada  as  a  result  of  its  near  ubiquitous  control  of  access  to  end-  users  in  its  franchise  area.  70  In  Cable  &  Wireless  -  China,  the  Telecommunications 
 Division  of  the  International  Bureau  examined  the  market  power  of  Cable  and  Wireless  Inc.  's  affiliate,  Shenda  Telephone  Company,  in  a  single  region  that  generated  a  significant  portion  of 
 China's  international  traffic,  in  determining  whether  Cable  and  Wireless,  Inc.  should  be  subject  to  dominant  carrier  safeguards  on  the  U.  S.-  China  route.  71  The  Telecommunications  Division  found 
 that  Shendas  dominant  position  in  a  market  that  generates  a  significant  portion  of  Chinas  international  traffic  was  one  of  several  factors  indicating  a  substantial  risk  to  competition.  72 

 17.  The  Applicants  contend  that  the  relevant  local  access  market  is  the  "entire  country  of  Brazil,  not  Brasil  Telecoms  former  service  area."  73  According  to  the  Applicants,  the 
 identification  of  the  local  access  market  as  a  discrete  geographic  region  rather  than  the  entire  foreign  country  is  an  exception  applied  only  under  unique  circumstances  rather  than  the  general 

 65  If  a  large  percentage  of  a  foreign  countrys  international  traffic  originates  in  a  discrete  geographic  area,  it  is 
 reasonable  to  assume  that  a  similarly  large  percentage  of  international  traffic  bound  for  the  foreign  country  terminates  in  the  same  geographic  area. 

 66  See  Americatel  Corporation  and  Telecom  Italia  of  North  America,  Inc.,  Application  to  Modify  Regulatory 
 Classification  from  Dominant  to  Non-  Dominant  on  the  U.  S.-  Argentina  Route,  DA  03-  4115,  paras.  14-  15  (2003)  (  Telecom  Argentina).  See  also  1998  Biennial  Regulatory  Review  -  Reform  of  the  International  Settlements  Policy 

 and  Associated  Filing  Requirements;  Bell  Canada  Petition  for  Declaratory  Ruling,  IB  Docket  No.  98-  148,  Order,  DA  01-  1421,  16  FCC  Rcd  12465  (2001)  (  Bell  Canada)  and  Cable  and  Wireless,  Inc.,  Application  for  Authority 
 Pursuant  to  Section  214  of  the  Communications  Act  of  1934,  as  Amended,  to  Provide  Resold  and  Facilities-  Based  Switched  and  Private  Line  Service  between  the  United  States  and  China,  File  No.  ITC-  214-  19980515-  00326 
 (previous  File  No.  ITC-  98-  380),  Order,  Authorization,  and  Certificate,  DA  98-  2498,  14  FCC  Rcd  1863  (1998)  (  Cable  &  Wireless    China). 
 67  See  Telecom  Argentina,  supra  note  66,  at  paras.  14-  15. 
 68  Id.  at  14. 
 69  See  Bell  Canada,  16  FCC  Rcd  at  12468-  69,  paras.  8-  9. 
 70  Id.  at  12469,  para.  10. 
 71  See  Cable  &  Wireless    China,  14  FCC  Rcd  at  1868-  69,  paras.  14-  18. 
 72  Id.  at  1869,  para.  18. 
 73  Applicants'  Reply  at  2-  5.  See  also  Application  at  4-  5. 
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 rule.  74  Contrary  to  the  Applicants  assertions,  the  decisions  in  these  cases  are  not  exceptional.  In  all  cases  subsequent  to  the  adoption  of  the  Foreign  Participation  Order  (in  which  relevant 
 markets  are  defined)  in  which  the  foreign  operators  local  franchise  area  has  comprised  a  discrete  geographic  region  rather  than  the  entire  foreign  country,  the  International  Bureau  and  the 
 Telecommunications  Division  have  found  that  the  local  franchise  area  is  the  relevant  geographic  market  for  local  access  services.  75 

 18.  Telecom  Argentina,  Bell  Canada  and  Cable  &  Wireless    China  establish  the  proposition  that  a  foreign  carrier  operating  in  a  discrete  geographic  region,  i.  e.,  a  local  franchise 
 area,  may  possess  sufficient  market  power  to  affect  competition  adversely  in  the  United  States  if  a  significant  amount  of  U.  S.  international  traffic  is  terminated  in  the  region.  Accordingly,  in  cases 
 where  a  significant  amount  of  the  U.  S.  international  traffic  is  terminated  in  an  incumbents  local  franchise  area,  it  is  appropriate  to  identify  the  local  franchise  area  as  the  relevant  geographic 
 market  and  to  examine  the  foreign  carrier's  market  power  within  the  franchise  area  rather  than  throughout  the  entire  country.  76  In  the  case  before  us,  Brasil  Telecom  is  the  incumbent  provider 
 of  local  service  in  Region  II  of  Brazil,  which  includes  Brasilia,  the  capital  of  Brazil,  and  three  other  metropolitan  areas  with  populations  of  over  one  million,  77  covers  one  third  of  the  total  land 
 area  of  Brazil,  and  has  a  total  population  of  approximately  40  million.  78  The  Applicants  state  that  market  share  data  for  the  international  long-  distance  market  is  not  publicly  available  for  Brazil 
 due  to  its  commercially  sensitive  nature.  79  In  the  absence  of  specific  data  proving  otherwise,  it  is  reasonable  to  assume  that  a  substantial  amount  of  international  traffic  on  the  U.  S.-  Brazil  route  is 
 terminated  in  Brasil  Telecoms  franchise  area  because  the  franchise  area  comprises  approximately  one-  third  of  Brazil  and  because  the  area  includes  the  countrys  capital  and  three  other  large  cities. 
 Therefore,  we  find  that  it  is  appropriate  in  this  instance  to  consider  Brasil  Telecoms  local  franchise  area  as  the  relevant  geographic  market  for  the  purpose  of  determining  whether  it 
 possesses  sufficient  market  power  in  the  provision  of  local  access  services  and  facilities  to  affect  competition  adversely  in  the  United  States. 

 19.  Having  determined  that  the  relevant  geographic  market  for  local  access  services  and  facilities  is  Brasil  Telecoms  franchise  area,  we  next  examine  whether  Brasil  Telecom  has 
 market  power  in  that  market.  The  first  step  in  such  an  analysis  is  to  determine  whether  Brasil  Telecom  satisfies  the  presumption  that  it  lacks  market  power  based  on  having  less  than  50  percent 

 74  Applicants'  Reply  at  2-  3. 
 75  See  Telecom  Argentina,  supra  note  66,  paras.  14-  15,  and  Bell  Canada,  16  FCC  Rcd  12468-  9,  paras.  8-  9.  See  also 
 Cable  and  Wireless    China,  14  FCC  Rcd  at  1868-  69,  para.  14-  18.  See  also  Cable  &  Wireless,  Inc.,  Application  for  Authority  Pursuant  to  Section  214  of  the  Communications  Act  of  1934,  As  Amended,  to  Provide  Resold  and 

 Facilities-  based  Switched  and  Private  Line  Services  between  the  United  States  and  Russia  and  to  be  Held  Non-Dominant  for  All  Services  on  This  Route,  File  No.  ITC-  97-  290,  Order,  Authorization  and  Certificate,  13  FCC  Rcd 
 6671,  6672-  3,  paras.  6-  8  (1998)  (  Cable  &  Wireless    Russia).  In  Cable  &  Wireless  -  Russia,  the  International  Bureau  examined  the  market  power  of  Cable  &  Wireless's  affiliates  in  the  Sakhalin  Island  region  and  determined  that 
 the  competitive  characteristics  in  the  Sakhalin  Island  region  were  sufficiently  distinct  from  the  Russian  national  market  to  warrant  treating  the  region  as  a  distinct  geographic  market  for  purposes  of  our  market  power  analysis. 
 76  See  Foreign  Participation  Order,  12  FCC  Rcd  at  23952-  53,  para.  145. 
 77  The  cities  with  over  1  million  inhabitants  in  the  region  covered  by  Brasil  Telecom  are:  Brasilia,  Curitiba  (State  of 
 Parana),  Goias  (State  of  Goiania)  and  Porto  Alegre  (State  of  Rio  Grande  do  Sul).  78 
 Corrected  Ex  parte  of  AT&  T  Corp.,  filed  Aug.  5,  2002.  79 
 Applicants  Reply  at  5. 
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 market  share  of  the  local  access  market.  The  Applicants  have  not  provided  Brasil  Telecoms  market  share  in  the  local  access  market,  i.  e.,  the  share  of  subscriber  lines  in  Brasil  Telecoms 
 local  franchise  area  that  is  served  by  Brasil  Telecom.  80  Instead,  the  Applicants  have  provided  estimated  data  suggesting  that  Brasil  Telecom  has  23.7  percent  of  subscriber  lines  in  service  in 
 the  whole  of  Brazil.  81  It  is  not  possible  to  extrapolate  reliably  from  the  23.7  percent  figure  to  find  Brasil  Telecoms  market  share  in  its  local  franchise  area.  82  The  Commission  has  made  it  clear 
 that  the  burden  is  upon  the  Applicants  to  provide  information  sufficient  to  make  the  findings  necessary  to  grant  the  requested  relief.  83  Therefore,  we  find  that  the  Applicants  have  not  made 
 the  required  showing  that  Brasil  Telecom  has  less  than  50  percent  market  share  in  the  local  access  market. 

 20.  The  next  step  is  to  determine  whether  Brasil  Telecom  lacks  sufficient  market  power  on  the  foreign  end  of  the  U.  S.-  Brazil  route  to  affect  competition  adversely  in  the  U.  S. 
 market  by  evaluating  information  provided  by  the  Applicants  under  the  "appropriate  economic  analysis  of  market  power  standard  established  by  the  Commission  in  the  Foreign  Participation 
 Order.  84  We  focus  on  whether  Brasil  Telecom  lacks  market  power  in  the  local  access  market  in  its  franchise  area  or  lacks  the  ability  to  leverage  such  power  in  the  U.  S.  market  for 
 telecommunications  services  to  Brazil.  The  Commission's  market  power  analysis  includes  consideration  of  several  factors,  85  including:  (1)  the  foreign  incumbent's  market  share  in  the 
 relevant  terminating  market  on  the  foreign  end  of  the  particular  route;  86  (2)  the  supply  elasticity  of  the  market;  87  (3)  the  demand  elasticity  of  the  markets  customers;  88  and  (4)  the  foreign 

 80  See  Foreign  Participation  Order,  12  FCC  Rcd  at  23961-  62,  para.  163  and  n.  318. 
 81  Applicants'  Reply  at  6  and  Exhibit  B,  Brazil  and  Region  II  General  Universalization  Plan  (executed  May  2002) 
 (  Exhibit  B).  This  figure  represents  a  correction  of  the  original  Application,  where  the  Applicants  estimated  that  Brasil  Telecom  served  approximately  23.  5  percent  of  the  total  lines  in  service  in  Brazil.  Application  at  8. 

 82  If  we  assume  that  Brasil  Telecoms  local  franchise  area  includes  one-  third  of  the  subscriber  lines  in  Brazil,  then  the 
 estimate  of  23.  7  percent  for  Brasil  Telecoms  share  of  total  subscriber  lines  for  the  nation  as  a  whole  translates  into  a  market  share  of  71.1  percent  for  its  local  franchise  area.  A  market  share  of  71.1  percent  exceeds  the  50  percent  limit 

 below  which  a  carrier  is  presumed  to  lack  market  power.  83 
 47  C.  F.  R.    43.51  Note  3  (2003).  A  U.  S.  carrier  that  seeks  to  use  the  under-  50  percent  market  share  presumption  must  file  data  with  the  Commission  to  substantiate  that  claim  for  the  relevant  input  markets  on  the  foreign  end  of  the 

 international  route.  See  Foreign  Participation  Order,  12  FCC  Rcd  at  23961,  para.  163,  n.  318.  84 
 Id.  at  23960-  61,  para.  162  and  n.  317,  and  23996,  para.  233.  85 
 See  Foreign  Participation  Order,  12  FCC  Rcd  23891,  23960-  61,  para.  162,  n.  317.  See  also  IDC  America  Inc.,  Application  Pursuant  to  Section  214  of  the  Communications  Act  of  1934,  as  Amended,  to  Provide  Non-interconnected 

 International  Private  Line  Service  between  the  United  States  and  Japan,  Order,  Authorization  and  Certificate,  File  No.  ITC-  96-  685,  Order,  Authorization  and  Certificate,  DA  97-  571,  13  FCC  Rcd  4085-  86,  para.  4 
 (1997).  The  preceding  document  cites  the  Motion  of  AT&  T  Corp.  to  be  Declared  Non-  dominant  for  International  Service,  Order,  FCC  96-  311,  11  FCC  Rcd  17963,  17977-  93,  paras.  37-  79  (1996)  (  AT&  T  International 
 Reclassification  Order)  and  the  Motion  of  AT&  T  Corp.  to  be  Reclassified  as  a  Non-  dominant  Carrier,  Order,  FCC  95-  427,  11  FCC  Rcd  3271,  3293-  94  (1995).  See  also  1992  Department  of  Justice/  Federal  Trade  Commission 
 Merger  Guidelines,  4  Trade  Reg.  Rep.  (CCH)  20,  569,  20,  570  (  1992  DOJ/  FTC  Merger  Guidelines).  See  also  AT&  T  International  Reclassification  Order,  11  FCC  Rcd  at  17977,  para.  36;  Bell  Canada,  16  FCC  Rcd  at  12467-  68, 
 para.  7.  86 
 Brasil  Telecoms  market  share  is  discussed  supra,  para.  15.  87 
 Supply  elasticity  is  a  measure  of  the  propensity  of  an  industry  to  expand  output  for  a  given  change  in  price.  Two  factors  determine  supply  elasticity.  The  first  is  the  supply  capacity  of  existing  competitors,  and  the  second  is  low 

 barriers  to  entry.  See  AT&  T  International  Reclassification  Order,  11  FCC  Rcd  at  17980-  81,  para.  48.  See  also  (continued....) 
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 incumbent's  cost  structure,  size,  and  resources.  In  evaluating  market  power,  the  Commission  has  recognized  that  neither  market  share,  by  itself,  nor  lower  costs,  sheer  size,  superior  resources, 
 financial  strength,  and  technical  capability,  by  themselves,  confer  market  power.  89  Indeed,  the  Commission  has  stated  that,  consistent  with  well-  accepted  economic  principles,  market 
 conditions  related  to  demand  and  supply  elasticities  are  the  more  crucial  determinants  of  a  firm's  market  power.  90  These  conditions  include  the  availability  of  close  demand  substitutes  and  ease  of 
 entry  and  expansion.  91 
 21.  The  Applicants  argue  that  Brasil  Telecom  lacks  sufficient  market  power  on  the  foreign  end  of  the  U.  S.-  Brazil  route  to  affect  competition  adversely  in  the  U.  S.  market,  based  on 

 the  following  claims:  (1)  Brasil  Telecom  does  not  maintain  bottleneck  control  of  international  termination  facilities  (i.  e.,  there  are  multiple  options  for  termination);  (2)  there  are  no  significant 
 barriers  to  entry  and  expansion  due  to  Brazils  liberal  licensing  regime;  (3)  Brasil  Telecom  cannot  yet  expand  its  telecommunications  service  offerings  to  include  international  services  or  direct 
 correspondence  with  foreign  international  service  providers  such  as  U.  S.  international  carriers;  and  (4)  Brazil  is  in  compliance  with  benchmarks.  92  As  we  explain  in  detail  below,  we  are  not 
 persuaded  by  the  Applicants  arguments  and  find  that  the  Applicants  have  failed  to  make  the  required  economic  showing  that  Brasil  Telecom  lacks  sufficient  market  power  on  the  foreign  end 
 of  the  U.  S.-  Brazil  route  to  affect  competition  adversely  in  the  U.  S.  market. 
 22.  We  do  not  find  persuasive  the  Applicants  assertion  that  Brasil  Telecom  lacks  market  power  due  to  the  availability  of  multiple  options  for  international  termination  in  Brazil.  93 

 Because  the  local  access  market  is  an  essential  input  for  terminating  international  traffic,  we  focus  our  analysis  on  Brasil  Telecoms  control  of  the  local  access  market  to  determine  whether  there  are 
 realistic  competitive  alternatives  to  Brasil  Telecom  for  terminating  international  traffic  in  Brasil  Telecoms  local  franchise  area.  According  to  the  Applicants,  three  competitive  operators, 

 (...  continued  from  previous  page) 
 Petition  of  GTE  Hawaiian  Telephone  Company,  Inc.  for  Reclassification  as  a  Non-  dominant  IMTS  Carrier,  Order,  DA  98-  1748,  11  FCC  Rcd  20354,  20363,  para.  19  (1996)  (  GTE  Hawaiian  Telephone  Company).  In  a  market 
 characterized  by  many  competitors  and  low  barriers  to  entry,  an  attempt  by  a  market  incumbent  to  exercise  market  power  by  restricting  output  or  raising  prices  would  fail  due  to  expanded  supply  by  existing  competitors  or  new 
 entrants.  In  order  to  demonstrate  an  absence  of  market  power  in  the  local  access  market  of  Brasil  Telecoms  local  franchise  area,  the  Applicants  could  show  that  there  are  multiple  competitors  that  are  in  a  position  to  supply  a 
 substantial  portion  of  the  local  access  market  or  that  there  are  low  barriers  to  entry  in  the  local  access  market.  88 
 As  used  by  the  Commission  in  analyzing  market  power,  demand  elasticity  is  a  measure  of  the  propensity  of  an  incumbent's  customers  to  switch  carriers  or  otherwise  change  the  amount  of  service  that  they  purchase  from  the 

 incumbent  in  response  to  relative  given  changes  in  price  and  quality.  See  AT&  T  International  Reclassification  Order,  11  FCC  Rcd  at  17979,  para.  42.  See  also  GTE  Hawaiian  Telephone  Company,  11  FCC  Rcd  at  20365,  para. 
 22.  To  demonstrate  an  absence  of  market  power  in  the  local  access  market,  the  Applicants  are  required  to  show  that  Brasil  Telecoms  customers  are  willing  to  switch  to  other  suppliers  of  local  access  services  or  to  substitute  services, 
 e.  g.,  mobile  telephony.  89 
 See  Foreign  Participation  Order,  12  FCC  Rcd  23960-  61,  para.  162  and  n.  317.  90 
 Id.  91 
 Id.  92 
 Application  at  3-  5,  6-  10;  Applicants'  Reply  at  7-  9,  and  Exhibits  C  and  D.  93 
 See  Application  at  5. 
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 Embratel,  Intelig  and  Global  Village  Telecom,  entered  the  intra-  regional  long  distance  market  following  the  1998  privatization  in  Brazil.  94  Applicants,  however,  only  identify  one  competitive 
 carrier  in  the  local  services  market  in  Brasil  Telecoms  local  access  franchise  area,  Global  Village  Telecom,  which  has  provided  service  only  since  December  2000.  95  The  Applicants  have  not 
 shown  that  Global  Village  Telecom,  or  any  other  new  entrant,  is  a  significant  competitor  to  Brasil  Telecom  in  its  local  franchise  area.  In  fact,  the  Applicants  have  not  provided  any  market  share 
 data  for  Global  Village.  While  it  may  be  possible  to  terminate  traffic  bound  for  Brasil  Telecoms  franchise  area  with  Global  Village  Telecom,  the  Applicants  have  not  shown  how  Global  Village 
 Telecom  could  reach  a  significant  number  of  customers  in  Brasil  Telecoms  franchise  area  without  using  Brasil  Telecoms  access  facilities  or  undertaking  an  extensive  network  build-  out 
 program  in  Brasil  Telecoms  franchise  area,  which  would  be  likely  to  constrain  its  market  power  in  the  near-  term. 

 23.  The  Applicants  also  assert  that  under  Brazils  regulatory  regime,  U.  S.  carriers  themselves  can  enter  the  Brazilian  market  and  provide  service  in  Brasil  Telecoms  local  franchise 
 area.  96  While  it  may  be  lawful  under  Brazils  regulatory  regime  for  U.  S.  carriers  to  enter  the  Brazilian  market  for  the  purpose  of  providing  end-  to-  end  services  on  the  U.  S.-  Brazil  route,  97  the 
 Applicants  have  not  shown  that  such  entry  constitutes  a  realistic  competitive  alternative  for  reaching  the  majority  of  customers  in  Brasil  Telecoms  franchise  area,  e.  g.,  residential  customers 
 and  small  and  medium-  sized  businesses. 
 24.  The  Applicants  argue  that  mobile  termination  is  an  option  for  U.  S.  carriers  that  wish  to  terminate  U.  S.  international  services  in  Brazil.  98  Wireless  services  constitute  a  realistic 

 competitive  alternative  to  wireline  services  only  if  customers  consider  wireless  and  wireline  services  to  be  close  substitutes,  as  evidenced  by  studies  of  customer  choice.  99  The  Applicants 
 have  provided  no  evidence  that  customers  in  Brazil  consider  wireless  and  wireline  services  to  be  close  substitutes.  Moreover,  wireless  carriers  would  be  in  a  position  to  prevent  Brasil  Telecom 
 from  exercising  market  power  only  if  they  were  independently  owned.  The  Applicants  have  not  shown  that  Brasil  Telecom  lacks  ownership  interests  in  wireless  companies  providing  service  in 
 its  franchise  area. 
 25.  The  Applicants  also  argue  that  there  are  no  significant  barriers  to  entry  and  expansion  due  to  Brazils  liberal  licensing  framework.  We  do  not  find  this  argument  persuasive. 

 The  Applicants  state  that  the  Brazilian  regulator  is  independent  and  that  local  and  long-  distance  telecommunications  markets  are  open  to  an  unlimited  number  of  licensees,  with  streamlined 
 licensing  procedures,  no  foreign  ownership  restrictions,  and  no  build-  out  requirements.  100  A 
 94  Id.  at  5. 
 95  Id.  at  9. 
 96  Id.  at  12-  13. 
 97  See  Application  at  10  (citing  AT&  T  as  an  example  of  a  U.  S.  carrier  that  has  applied  to  provide  local  services  in 
 Brazil).  98 
 Id.  at  8.  99 
 See,  e.  g.,  Application  of  BellSouth  Corporation,  BellSouth  Telecommunications,  Inc.,  and  BellSouth  Long  Distance,  Inc.  for  Provision  of  In-  Region,  InterLATA  Services  in  Louisiana,  CC  Docket  No.  98-  121,  Memorandum 

 Opinion  and  Order,  13  FCC  Rcd  20599,  para.  31-  33  (1998).  100 
 Application  at  9-  10. 
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 country's  regulatory  regime  is,  however,  only  one  factor  that  may  impede  entry  and  expansion  in  the  local  access  market.  101  There  are  also  important  economic  factors.  Entry  into  the  local  access 
 market  must  be  likely,  timely,  and  sufficient  in  order  to  constrain  an  incumbent's  market  power.  102  Entry  into  the  local  access  market  poses  substantial  risks  and  is  very  costly.  It  may  be 
 difficult  for  a  new  entrant  to  earn  a  satisfactory  return  on  investment  after  incurring  substantial  sunk  costs.  103  The  Applicants  have  not  made  a  showing  that  a  significant  amount  of  competitive 
 entry  into  the  local  access  market  is  likely  despite  these  factors.  In  particular,  the  Applicants  have  not  provided  evidence  that  potential  entry  into  Brasil  Telecoms  local  franchise  area  would  be 
 sufficient  to  constrain  the  exercise  of  market  power  by  Brasil  Telecom  in  the  provision  of  local  access  services  within  the  two-  year  time  frame  contemplated  in  the  DOJ/  FTC  Merger 
 Guidelines.  104  Nor  have  the  Applicants  demonstrated  that  a  significant  amount  of  actual  entry  has  taken  place  by  showing,  for  example,  a  diminution  of  Brasil  Telecoms  market  share  in  the  local 
 access  market. 
 26.  The  Applicants  initially  argued  that  Brasil  Telecom  cannot  engage  in  misconduct  because  it  cannot  yet  expand  its  service  offerings  to  include  international  services  or  direct 

 correspondence  with  foreign  international  service  providers  such  as  U.  S.  international  carriers.  We  do  not  find  this  argument  persuasive.  First,  the  service  limitation  has  expired.  Brasil 
 Telecom  was  prevented  from  providing  international  services  only  until  December  31,  2003.  105  Moreover,  Brasil  Telecom  met  its  year  2003  universal  service  objectives,  and  therefore  has 
 obtained  authorization  to  provide  inter-  regional  or  international  long  distance  services  throughout  Brazil.  106  Moreover,  even  if  Brasil  Telecom  does  not  provide  international  service  and  U.  S. 
 carriers  do  not  deal  directly  with  Brasil  Telecom,  Brasil  Telecoms  market  power  is  not  constrained.  Such  correspondence  is  not  essential  for  Brasil  Telecom  to  control  international 
 termination  services  destined  for  its  franchise  area.  Control  of  the  local  exchange  is  sufficient.  Applicants  make  no  showing  that  local  termination  arrangements  with  direct  correspondents  in 
 Brazil  would  not  permit  ready  identification,  and  discriminatory  treatment,  of  U.  S.  carriers  inbound  calls  by  Brasil  Telecom.  107 

 27.  Finally,  the  Applicants  claim  that  Brasil  Telecom  lacks  market  power  due  to  Brazil's  compliance  with  the  Commission's  benchmark  settlement  rates.  108  We  do  not  find  the 
 argument  persuasive.  Compliance  with  benchmarks  limits,  but  does  not  eliminate,  Brasil  Telecoms  ability  to  engage  in  price  discrimination  (e.  g.,  a  predatory  price  squeeze).  109 

 101  See  Foreign  Participation  Order,  12  FCC  Rcd  at  23995,  para.  230. 
 102  See  1992  DOJ/  FTC  Merger  Guidelines  at  Section  3. 
 103  Id.  at  Section  3.3.  Sunk  costs  are  costs  that  cannot  be  recovered  when  a  firm  leaves  an  industry.  See  MIT 
 Dictionary  of  Modern  Economics,  4th  ed.,  David  W.  Pearce,  ed.,  MIT  Press,  Cambridge,  Massachusetts,  1997.  In  the  case  of  entry  into  the  local  access  market,  sunk  costs  include  one-  time  start-  up  expenses,  and  large  capital  outlays  for 

 network  infrastructure  that  are  unlikely  to  be  recoverable  in  the  event  that  the  firm  exits  the  marketplace.  104 
 See  1992  DOJ/  FTC  Merger  Guidelines  at  Section  3.2.  105 
 See  supra  para.  7,  note  36.  106 
 Id.  107 
 AT&  T  Opposition  at  5;  August  2,  2002  Ex  parte  of  AT&  T  at  5.  108 
 Application  at  8-  9;  Applicants  Reply  at  8-  9.  109 
 See  Foreign  Participation  Order,  12  FCC  Rcd  at  23976-  77,  para.  192. 
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 Moreover,  compliance  with  benchmarks  does  not  affect  Brasil  Telecoms  incentive  or  ability  to  engage  in  non-  price  discrimination,  e.  g.,  discrimination  in  the  provisioning  or  maintenance  of 
 basic  network  facilities  and  services  needed  to  terminate  traffic  with  Brasil  Telecom.  110 
 28.  Based  on  the  economic  analysis  above,  we  find  that  the  Applicants  have  failed  to  make  an  adequate  showing  that  Brasil  Telecom  lacks  market  power  in  the  local  access  market  in 

 its  franchise  area  or  cannot  leverage  such  power  into  the  U.  S.  market  for  telecommunications  services  between  the  United  States  and  Brazil.  We  therefore  find  that  the  Applicants  have  failed 
 to  show  that  Brasil  Telecom  lacks  sufficient  market  power  on  the  foreign  end  of  the  U.  S.-  Brazil  route  to  affect  competition  adversely  in  the  U.  S.  market,  as  required  by  the  Commissions  rules  in 
 lieu  of  a  below-  50  percent  market  share  showing.  111 
 V.  CONCLUSION 
 29.  We  find  that  the  Applicants  have  demonstrated  that  they  should  be  reclassified  as  non-  dominant  carriers  on  the  U.  S.-  Brazil  route  because  Telecom  Italia  S.  A.  s  indirect  ownership 

 interest  in  Brasil  Telecom  is  currently  below  25  percent,  and  thus  Brasil  Telecom  and  the  Applicants  are  no  longer  affiliated  within  the  meaning  of  section  63.09(  e)  of  our  rules.  On  the 
 other  hand,  we  find  that  the  Applicants  have  not  demonstrated  that  Brasil  Telecom  should  be  removed  from  the  Foreign  Carriers  List.  The  Applicants  have  failed  to  show  that  Brasil  Telecom 
 has  less  than  50  percent  market  share  in  both  the  international  transport  and  the  local  access  markets  on  the  foreign  end  of  the  U.  S.-  Brazil  route  or  that  Brasil  Telecom  nevertheless  lacks 
 sufficient  market  power  on  the  foreign  end  of  the  U.  S.-  Brazil  route  to  affect  competition  adversely  in  the  U.  S.  market,  as  required  by  the  Commissions  rules  for  purposes  of  removing 
 Brasil  Telecom  from  the  Foreign  Carriers  List.  112 
 VI.  ORDERING  CLAUSES 
 30.  Accordingly,  it  is  ORDERED  that  the  request  of  Americatel  Corporation  and  Telecom  Italia  of  North  America,  Inc.  to  modify  their  regulatory  classification  from  dominant  to 

 non-  dominant  on  the  U.  S.  -  Brazil  route  is  GRANTED. 
 31.  IT  IS  FURTHER  ORDERED  that  the  request  of  Americatel  Corporation  and  Telecom  Italia  of  North  America,  Inc.  to  remove  Brasil  Telecom  from  the  Commissions  List  of 

 Foreign  Telecommunications  Carriers  that  are  Presumed  to  Possess  Market  Power  in  Foreign  Telecommunications  Markets  IS  DENIED. 

 110  Id.  at  23993,  para.  225  and  24007,  para.  259. 
 111  47  C.  F.  R.    43.51,  Note  3  to    43.  51(  c)(  3)  (2003). 
 112  Id. 
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 32.  This  order  is  issued  under  Section  0.261  of  the  Commissions  rules  and  is  effective  upon  adoption.  Petitions  for  reconsideration  under  Section  1.106  or  applications  for  review  under 
 Section  1.115  of  the  Commissions  rules  may  be  filed  within  30  days  of  the  date  of  public  notice  of  this  Order  (see  Section  1.4  (b)(  2)). 

 FEDERAL  COMMUNICATIONS  COMMISSION 
 Donald  Abelson  Chief,  International  Bureau 
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