[Federal Register Volume 62, Number 25 (Thursday, February 6, 1997)]
[Rules and Regulations]
[Pages 5535-5542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2922]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 43 and 64

[CC Docket No. 90-337, FCC 96-459]


Regulation of International Accounting Rates

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission adopted a Report and Order that will permit 
flexibility in its accounting rate polices. The Commission concluded 
that U.S. carriers should be permitted to negotiate alternative 
settlement payment arrangements that deviate from the International 
Settlements Policy (ISP) with foreign correspondents in

[[Page 5536]]

countries that satisfy the Commission's economic competitive 
opportunity (ECO) test. In addition, the Commission will consider 
alternative settlement arrangements between a U.S. carrier and a 
foreign correspondent in a country that does not satisfy the ECO test 
where the U.S. carrier can demonstrate that deviation from the ISP will 
promote market-oriented pricing and competition, while precluding abuse 
of market power by the foreign correspondent. The Commission also 
adopted safeguards to ensure that its new flexibility policy does not 
have anticompetitive effects in the international market. The 
safeguards that are alternative arrangements between affiliated 
carriers and those involved in non-equity joint ventures must be filed 
with the Commission and made public, and alternative arrangements 
affecting more than twenty-five percent of the inbound or twenty-five 
percent of the outbound traffic on a particular route must be filed 
with the Commission and made public, and not contain unreasonably 
discriminatory terms and conditions. The Commission's action will 
encourage the development of competitive market conditions in other 
countries and lead to more economically efficient contractual 
arrangements for terminating service that ultimately will benefit U.S. 
consumers through lower calling prices.

DATES: The amendments to Secs. 43.51 and 64.1001 will become effective 
March 10, 1997. The amendments to Secs. 43.61 and 64.1002 take effect 
either upon approval by the Office of Management and Budget (OMB) or 
March 10, 1997, whichever occurs later. When approval is received, the 
agency will publish a document announcing the effective date.

FOR FURTHER INFORMATION CONTACT: Kathryn O'Brien, Attorney-Advisor, 
Policy and Facilities Branch, Telecommunications Division, 
International Bureau, (202) 418-1470.

SUPPLEMENTARY INFORMATION This is a summary of the Commission's Fourth 
Report and Order in CC Docket 90-337, Phase II, adopted on November 26, 
1996, and released on December 3, 1996 (FCC 96-459). The full text of 
the decision is available for inspection and copying during normal 
business hours in the FCC's Docket Reference Center, Room 239, 1919 M 
Street, NW., Washington, DC 20554. Copies also may be obtained from the 
Commission's contractor for public service records duplication: ITS, 
Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037, (202) 
857-3800.

Summary of Fourth Report and Order

    1. For years, U.S. carriers have been required to comply with the 
Commission's International Settlements Policy (ISP) in their bilateral 
accounting rate negotiations with monopoly foreign carriers. The ISP 
prevents foreign carriers from discriminating among U.S. carriers and 
requires: (1) The equal division of accounting rates; (2) 
nondiscriminatory treatment of U.S. carriers; and (3) proportionate 
return of inbound traffic. On January 31, 1996, the Commission issued a 
Policy Statement (61 FR 11163, March 19, 1996) that set forth a new 
approach for regulating accounting rates that could, when appropriate, 
rely on competitive forces to determine termination costs and efficient 
resource allocation. This was one of the Commission's initial steps to 
lower international telephone costs by reforming the international 
accounting rate system. In light of the Policy Statement the Commission 
reopened the record in CC Docket No. 90-337, Phase II, In the Matter of 
Regulation of International Accounting Rates (Second Further Notice of 
Proposed Rulemaking) (58 FR 3522, January 11, 1993) for the submission 
of supplemental comments and reply comments. (Public Notices Seeking 
Additional Comments, 61 FR 11172 (March 19, 1996) and 61 FR 11173 
(March 19, 1996).
    2. On December 3, 1996, the Commission released the Fourth Report 
and Order (FCC 96-459) adopting rules to permit flexibility in 
international accounting rate policies. With this additional step to 
reform the accounting rate system, the Commission created a framework 
for competition in the market for U.S. international telecommunications 
services that is more closely patterned on the competitive market for 
domestic long distance services. The Commission concluded that the new 
rules should increase options for U.S. carriers to negotiate 
arrangements to terminate their international traffic and result in 
lower prices and greater choices for U.S. consumers. In its decision, 
the Commission fully describes the differences between the new flexible 
approach and the current accounting rate policies.
    3. The Commission rejected arguments to delay adopting a more 
flexible regulatory framework until effectively competitive markets 
exist. The Commission concluded that creating a more flexible 
regulatory framework at this time will serve its objectives to promote 
competitive behavior, improve economic performance, and rely on 
competitive market forces to determine call termination charges to the 
maximum extent permitted by market conditions. The new framework for 
flexibility permits carriers to deviate from the ISP only with carriers 
in markets where the legal, regulatory, and economic conditions support 
competition and in certain other limited circumstances. The Commission 
adopted competitive safeguards to ensure that where it permits 
flexibility, it does not lead to anticompetitive effects in the U.S. 
market for international services.
    4. The Commission adopted a framework for alternative payment 
arrangements that affords U.S. carriers maximum flexibility to take 
advantage of competitive pressures in foreign markets to negotiate 
alternative arrangements that will enhance competition. At the same 
time, this framework continues to safeguard against anticompetitive 
behavior of foreign carriers that favors one correspondent U.S. carrier 
at the expense of its U.S. competitors.
    5. The Commission concluded U.S. carriers will be allowed to 
negotiate alternative settlement arrangements that deviate from the ISP 
with foreign correspondents in countries that satisfy the ECO test set 
forth in Section 63.18(h)(6) of the Commission's regulations. The 
Commission stated that, where the ECO test has been satisfied, the 
ability of foreign carriers to exercise market power is constrained by 
the existence, or potential for, competitive entry. Where the FCC 
permits flexibility in its ISP, new entrants in foreign markets will 
have both the incentive and the opportunity to compete with the 
incumbent foreign carrier to terminate U.S.-originated traffic. The 
Commission will consider alternative settlement arrangements between a 
U.S. carrier and a foreign correspondent in a country that does not 
satisfy the ECO test where the U.S. carrier can demonstrate that 
deviation from the ISP will promote market-oriented pricing and 
competition, while precluding abuse of market power by the foreign 
correspondent.
    6. The Commission declined to limit its ISP flexibility policy to 
certain categories of carriers, such as non-dominant foreign and U.S. 
carriers or ``small'' carriers. Instead, it concluded that, subject to 
certain safeguards, any U.S. carrier should be allowed to negotiate 
alternative payment arrangements with any carrier in a foreign country 
that satisfies the ECO test. This conclusion is consistent with the 
policy of allowing market forces, where possible, to determine the

[[Page 5537]]

allocation of resources. Moreover, allowing flexibility in the ISP is 
the best support for development of more competitive market structures 
and therefore should not be unduly restricted. In addition, the 
Commission rejected MFSI's proposal to preclude U.S. carriers with 
market shares of greater than five percent of U.S.-outbound traffic 
from entering into alternative settlement arrangements because the 
proposal could impede the effectiveness in reducing U.S. carrier costs 
to terminate traffic.
    7. Although it declined to preclude dominant or large carriers from 
negotiating alternative arrangements, the Commission adopted 
competitive safeguards to protect against potential anticompetitive 
actions by foreign and U.S. carriers with a significant share of their 
markets, and to provide a ``safety net'' for possible unanticipated 
consequences of its ISP flexibility policy. In particular, it will 
require that a copy of all alternative settlement arrangements 
affecting more than either twenty-five percent of the outbound traffic 
on a particular route or twenty-five percent of the inbound traffic on 
a particular route be filed with the Commission and made public. Also, 
the Commission will require that any alternative arrangement that 
affects more than twenty-five percent of the outbound traffic or 
twenty-five percent of the inbound traffic on a particular route not 
contain unreasonably discriminatory terms and conditions. This 
safeguard will require carriers that negotiate innovative price and 
return traffic terms in agreements that affect more than twenty-five 
percent of either the inbound or outbound traffic on a given route to 
demonstrate that the terms are not unreasonably discriminatory, or to 
offer such terms on a nondiscriminatory basis to competing carriers. 
This safeguard will apply whether the arrangement is between separate 
carriers on the U.S. and foreign ends, between two affiliates, or when 
a carrier is self-corresponding. The Commission will not permit 
carriers to circumvent this twenty-five percent threshold by 
negotiating two or more agreements with one individual correspondent 
carrier or its affiliate, each of which affects less than twenty-five 
percent of the inbound or outbound traffic on a particular route. 
Carriers will be required to file a summary of the terms and conditions 
of all arrangements that do not trigger the Commission's safeguards and 
a full copy of all alternative arrangements that do trigger these 
safeguards. The Commission reserved the right to request a full copy of 
arrangements that do not trigger its safeguards in order to detect any 
potential circumvention of the safeguards by carriers.
    8. As an additional measure to guard against unintended market 
disruptions as a result of the new policy, the Commission will not 
permit U.S.-inbound traffic that still is subject to the ISP (i.e., 
traffic from a foreign carrier with whom a U.S. carrier does not have 
an alternative payment arrangement) to be routed through a foreign 
carrier that has an alternative payment arrangement with a U.S. 
carrier. The Commission reserved the right to impose additional 
safeguards on a case-by-case basis as a condition of granting approval 
to enter an alternative payment arrangement if it finds that such 
safeguards are necessary to prevent market distortions in the U.S. IMTS 
market or to prevent significant adverse results on net settlements 
payments with a foreign country. If alternative settlement arrangements 
indicate a need, the Commission will consider additional safeguards in 
the future.
    9. Because the new policy has an impact on the ``no special 
concessions'' policy which was established in the Foreign Carrier Entry 
Order, the Commission created an exception to that rule. This exception 
applies only to alternative payment arrangements that between U.S. 
carriers and foreign carriers in countries that satisfy the ECO test, 
or foreign carriers in countries that do not satisfy the ECO test where 
the U.S. carrier can demonstrate that deviation from the ISP will 
promote market-oriented pricing and competition. Where these criteria 
have not been met, the Commission will continue to enforce vigorously 
its no special concessions policy. The Commission amended Section 63.14 
of its rules to reflect this limited exception to the no special 
concessions policy.
    10. The Commission determined that the issue of tailoring 
settlement policies to address the special circumstances presented by 
developing countries, would be better considered in the context of a 
separate proceeding. Thus, the Commission transferred the record on 
this issue to its future benchmarks proceeding.
    11. To ensure that U.S. carriers are not faced with undue delay in 
implementing alternative payment arrangements, the Commission 
established an expedited process whereby U.S. carriers may obtain 
approval to enter an alternative payment arrangement by filing a 
detailed petition for declaratory ruling that the alternative payment 
arrangement is permitted under the criteria for deviating from the ISP. 
Each petition for declaratory ruling will be placed on public notice 
and interested parties will be allowed to file a formal opposition to 
the petition within twenty-one days of the date of public notice. If no 
formal opposition is filed and the Commission's International Bureau 
has not notified the carrier that grant of the petition may not serve 
the public interest and that implementation of the alternative 
arrangement must await formal staff action on the petition, the 
petition will be deemed granted and the alternative settlement 
arrangement may be implemented as of the twenty-eighth day after the 
date of public notice without any formal staff action being taken. If a 
formal opposition is filed, the requesting carrier may file a response 
pursuant to Sec. 1.45 of the Commission's rules, and implementation of 
the alternative payment arrangement must await formal action by the 
FCC's International Bureau.
    12. A U.S. carrier may seek approval to enter an alternative 
payment arrangement with a foreign carrier in a country that has 
already been found to satisfy the ECO test in the context of a prior 
Section 214 facilities application to serve that country. When a U.S. 
carrier seeks approval to enter an alternative payment arrangement with 
a carrier in a foreign country where the Commission has not yet made an 
ECO determination, the carrier must submit sufficient evidence to 
support a finding that either the ECO test has been satisfied, or that 
deviation from the ISP will promote market-oriented pricing and 
competition, while precluding abuse of market power by the foreign 
correspondent. In all cases, a petitioning carrier must state whether 
the alternative arrangement triggers our safeguards, either because the 
arrangement affects more than twenty-five percent of the inbound or 
twenty-five percent of the outbound traffic on the affected route, or 
because the U.S. carrier and its foreign correspondent are affiliated 
or involved in a non-equity joint venture affecting the provision of 
basic services on the affected route.
    13. The Commission required that a full copy of all negotiated 
alternative arrangements that trigger its safeguards be filed with each 
petition. Where an alternative arrangement does not trigger the 
safeguards, a summary of the terms and conditions must be filed with 
each petition, and the Commission reserved the right to request a copy 
of the arrangement. Where an alternative arrangement does not trigger 
the safeguards, the Commission's review generally will focus on whether 
the criteria for allowing flexibility have

[[Page 5538]]

been met, rather than on the specific terms of the alternative 
arrangement. The Commission reserved the right to review and, if need 
be, reject the terms and conditions of all alternative arrangements, 
regardless of whether they trigger the safeguards, to ensure that they 
meet the FCC's policy objectives and will not have a significant 
adverse impact on U.S. net settlement payments and resulting traffic 
volumes.
    14. The Commission will conduct periodic reviews of alternative 
settlement arrangements to ensure that the arrangements meet the 
objectives of creating a competitive market for IMTS and achieving 
cost-based accounting rates. The Commission will monitor the operating 
results of alternative arrangements along with foreign market 
conditions to ensure that the arrangements fulfill its objective of 
achieving market-determined terms and conditions of payment that 
approximate competitive levels. As part of the evaluation of 
alternative arrangements, the Commission will compare the results of 
each individual arrangement with other alternative arrangements and 
with its benchmark accounting rates.
    15. The Commission will monitor the operating results of approved 
alternative arrangements to ensure that they do not have significant 
adverse impacts on traffic volumes and U.S. net settlement payments. In 
their annual report of international telecommunications traffic filed 
pursuant to Section 43.61, U.S. carriers will be required to include 
the number of minutes of outbound and inbound traffic settled pursuant 
to each alternative arrangement. In the event an alternative 
arrangement causes significant increases in net settlement payments 
with a foreign country, the Commission will consider appropriate 
action, including unilaterally ordering an end to the arrangement and 
reinstituting traditional settlement practices. The Commission 
emphasized its concern about increases in net settlement outpayments 
that result from distortions in market competition that harm consumer 
interests.
    16. The Commission amended Secs. 43.51 and 64.1001 of its rules to 
refer to ``waiver requests'' submitted under Sec. 64.1001 as 
``modification requests''. This change conforms its rules to the 
historic practice of treating waiver requests filed under Sec. 64.1001 
as non-restricted proceedings, in the same manner as Section 214(a) 
proceedings are treated under the Commission's ex parte rules. Because 
this rule change involves agency practice and procedure, the notice and 
comment provisions of the Administrative Procedure Act are 
inapplicable.
    17. The Commission codified its proportionate return policy as a 
rule. The issue of whether to codify the policy was initially raised in 
the Foreign Carrier Entry proceeding, but the record was transferred to 
this proceeding. The proportionate return requirement has long been a 
cornerstone of the Commission's ISP, and the Commission contends that 
by codifying this requirement, it is sending a strong signal to foreign 
carriers that the FCC does not allow U.S. carriers to be whipsawed.
    18. The Commission decided not to apply the ISP to the global MSS 
industry. Based on the record, the Commission found no clear evidence 
that the global MSS market necessarily shares the anticompetitive 
characteristics addressed by the ISP. The Commission encouraged the MSS 
industry to adopt an approach to terminating international traffic that 
leads to more cost-based results than the current accounting rate 
regime. The Commission reserved the authority to apply the ISP or other 
safeguards to the MSS industry in the future if it finds that market 
conditions merit such actions.

Final Regulatory Flexibility Act Analysis

    As required by Section 603 of the Regulatory Flexibility Act, 5 
U.S.C. 603 (``RFA''), an Initial Regulatory Flexibility Analysis 
(``IRFA'') was incorporated into the Second Report and Order and Second 
Further Notice of Proposed Rulemaking (``Second Further NPRM'') in CC 
Docket No. 90-337, Phase II. The Commission sought written public 
comments on the proposals in the Second Further NPRM, including the 
IRFA. The Commission's Final Regulatory Flexibility Analysis (``FRFA'') 
in this Report and Order conforms to the RFA, as amended by the 
Contract With America Advancement Act of 1996 (CWAAA), Public Law 104-
121, 110 Stat. 847 (1996).

A. Need For and Objective of the Rules

    This Report and Order: (1) Permits U.S. carriers to deviate from 
the requirements of the Commission's International Settlements Policy 
(ISP) where appropriate market conditions exist; and (2) codifies the 
Commission's preexisting proportionate return policy, which is one of 
the requirements of the ISP, as a rule of general applicability to all 
facilities-based carriers.
    With respect to our action permitting U.S. carriers to deviate from 
the requirements of the Commission's ISP where appropriate market 
conditions exist, our objective is to create a more flexible framework 
for regulating international accounting rates that permits U.S. 
carriers to take advantage of competitive market conditions in foreign 
countries to negotiate more economically efficient settlement rates. 
This action is an important step toward a transition from the 
traditional accounting rate system to competitive markets for 
originating and terminating international traffic. A more flexible 
approach to the accounting rate system will enable U.S. carriers to 
respond more rapidly to changing conditions in the global 
telecommunications market, reduce their call termination costs and the 
U.S. net settlement payments, and provide for lower calling prices for 
U.S. consumers.
    With respect to our action codifying the Commission's preexisting 
proportionate return policy, our objective is to restrict the ability 
of foreign carriers to manipulate the allocation of return traffic and 
whipsaw U.S. carriers. This policy has long been a cornerstone of our 
ISP, and codifying it will send a strong signal to foreign carriers 
that we will not allow U.S. carriers to be whipsawed. We note, however, 
the flexible regulatory framework we adopt in this Report and Order 
permits carriers to deviate from this requirement where appropriate 
market conditions exist.

B. Summary of Issues Raised by the Public Comments in Response to the 
IRFA

    No comments were submitted in direct response to the IRFA. We also 
reviewed the general comments for potential impact on small business. 
Some commenters raised the concern that allowing flexibility for large 
and/or dominant carriers would put smaller carriers at a disadvantage. 
These commenters contend that larger carriers will be able to negotiate 
more favorable terms and conditions than smaller carriers due to their 
greater traffic volumes. We believe that these concerns are addressed 
by the safeguards we adopt in this Report and Order.

C. Description and Estimate of Small Entities Subject to Which Rules 
Will Apply

    The Commission has not developed a definition of small entities 
applicable to international facilities-based common carriers. 
Therefore, the applicable definition of small entity is the definition 
under the Small Business Administration (SBA) rules applicable to 
Communications Services, Not Elsewhere Classified. This definition 
provides that a small entity is expressed

[[Page 5539]]

as one with $11.0 million or less in annual receipts. Based on 
preliminary 1995 data, at present there are 29 international 
facilities-based common carriers that qualify as small entities 
pursuant to the SBA's definition. The number of small international 
facilities-based common carriers has been growing significantly, and by 
the end of 1996 that number could increase to approximately 50. The 
flexibility rules adopted in this decision will apply to these carriers 
only if they enter an alternative accounting rate arrangement with a 
foreign carrier, and the proportionate return rules codified in this 
Report and Order apply to all these carriers that enter into an 
operating agreement that provides for return traffic with a foreign 
carrier.
    The IRFA and a Public Notice seeking supplemental comments were 
issued in November 1992 and January 1996, respectively. Therefore, the 
record in this proceeding was closed prior to the effective date of 
SBREFA. The Commission was thus unable to request information regarding 
the number of international facilities-based common carriers that 
qualify as small entities.

D. Projected Reporting, Recordkeeping and Other Compliance Requirements 
of the Rules

    International facilities-based common carriers must file a petition 
for declaratory ruling and obtain Commission approval before 
implementing an alternative settlement rate arrangement with a foreign 
carrier that deviates from the regulatory requirements of the 
Commission's ISP. In addition, carriers that implement such alternative 
arrangements must include in their annual report of international 
telecommunications traffic filed pursuant to Section 43.61 of the 
Commission's rules the number of minutes of outbound and inbound 
traffic settled pursuant to each alternative arrangement. Carriers 
already are required to file this annual traffic report; this Report 
and Order requires only that carriers that enter alternative 
arrangements include in their annual traffic report a description of 
the minutes settled pursuant to those arrangements. This reporting 
requirement and the requirement that carriers obtain approval of 
alternative arrangements are necessary to enable the Commission to 
review and monitor alternative arrangements for possible adverse 
effects on the U.S. market for international telecommunications 
services. These rules apply only to those small entities that take 
advantage of the opportunity to negotiate alternative settlement 
arrangements that deviate from the regulatory requirements of the 
Commission's ISP. Compliance with these rules may require the use of 
accounting and legal skills.
    A U.S. international facilities-based common carrier that enters 
into an operating agreement with a foreign correspondent may not 
receive an allocation of return traffic from the foreign correspondent 
to the U.S. carrier that is not proportionate to the amount of traffic 
that the U.S. carrier sends outbound to the foreign correspondent. This 
requirement previously has applied to all carriers, including small 
entities, as part of the Commission's ISP. This Report and Order also 
adopts a flexible regulatory framework that permits carriers to deviate 
from this requirement where appropriate market conditions exist. 
Compliance with this rule may require the use of accounting and legal 
skills.

E. Steps Taken to Minimize Significant Economic Impact on Small 
Entities Consistent With Stated Objectives

    We have not identified, and commenters have not provided, any 
significant alternatives that may minimize the economic impact on small 
entities consistent with the stated objectives. We recognize that all 
carriers, including small entities, may have an increased paperwork 
burden; however, this Report and Order will reduce regulatory 
requirements on small entities that enter into operating agreements 
with foreign correspondents that include a negotiated accounting rate. 
Small entities entering alternative settlement arrangements pursuant to 
this Report and Order will not have to comply with the requirements of 
the Commission's ISP, including the proportionate return requirement 
that is codified in this Report and Order.
    Several parties raised concerns that allowing flexibility in our 
ISP may harm smaller carriers because larger carriers may be able to 
obtain more favorable alternative arrangements due to their large 
market share. This Report and Order recognizes that there exists the 
potential for anticompetitive behavior by large carriers. However, 
rather than preclude large carriers from entering into alternative 
arrangements or postpone our flexibility policy, this Report and Order 
adopts competitive safeguards to help prevent potential anticompetitive 
behavior. These safeguards address the concerns raised by commenters, 
but at the same time enable the Commission to meet its objectives of 
allowing U.S. carriers, including small entities, to respond more 
rapidly to changing conditions in the global telecommunications market, 
reduce their call termination costs and the U.S. net settlement 
payments, and provide for lower calling prices for U.S. consumers.
    The Commission shall send a copy of this Final Regulatory 
Flexibility Analysis, along with this Report and Order, in a report to 
Congress pursuant to the Small Business Regulatory Enforcement Fairness 
Act of 1996, 5 U.S.C. 801(a)(1)(A). A copy of this FRFA will also be 
published in the Federal Register.

Paperwork Reduction Act

    The Report and Order revises an existing information collection and 
imposes a new information collection. We recognize that the 
implementation of these requirements will be subject to review and 
approval of the Office of Management and Budget. Both the new and 
revised information collections contained in these rules will be 
submitted to the Office of Management and Budget for review under the 
Paperwork Reduction Act of 1995. To obtain copies of the information 
collections contact Dorothy Conway at (202) 418-0217 or via internet at 
<a href="/cdn-cgi/l/email-protection#284c4b47465f4951684e4b4b064f475e"><span class="__cf_email__" data-cfemail="cca8afa3a2bbadb58caaafafe2aba3ba">[email protected]</span></a>. Persons wishing to comment on this collection of 
information should direct their comments to Dorothy Conway, Federal 
Communications Commission, Records Management Division, Room 234, 
Paperwork Reduction Project (3060-0572), Washington, D. C. 20554. For 
Further information Contact Dorothy Conway, (202) 418-0217.
    Comments are invited on (a) whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's estimate of burden of the 
proposed collection of information; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected and (d) ways to 
minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology.
    OMB Number: 3060-0106.
    Title: Common Carrier International Telecommunications Services.
    Type of Review: Revision of existing collection.
    Respondents: U.S. common carriers providing international 
telecommunications services.
    Number of Respondents: 248 (based on number of international 
carriers filing traffic reports in 1995).
    Estimated Annual Burden: 8 hours including the time for reviewing 
instructions, searching existing data

[[Page 5540]]

sources, segregating the data needed, and completing and reviewing the 
collection of information.
    Total Annual Burden: 1,984 hours.
    Estimated costs per respondent: None.
    Needs and Uses: The collection of information for which approval is 
here sought is contained in amendments to Part 43 in the Order adopting 
such amendments. The information collections are authorized and 
necessary for the Commission to carry out its statutory mandate, 
pursuant to Sections 1, 4, 201-205, 211, 214, 218-220, and 303 of the 
Communications Act of 1934, as amended, 47 U.S.C. Sections 151, 154, 
201-205, 211, 214, 218-220, and 303, and Part 43 of the Commission's 
Rules.
    The information collections contained in amendments to Part 43 are 
necessary to assist us in reviewing the impact, if any, that 
alternative settlement agreements have on our international accounting 
rate policies. The information collections will also enhance the 
ability of the Commission and interested parties to monitor this policy 
for anticompetitive effects in the U.S. market for international 
service, thus increasing competitive options for U.S. carriers and 
resulting in lower prices and greater choices for U.S. consumers. The 
information collection will enable the Commission to promote 
competitive behavior, improve economic performance, and preserve the 
integrity of our accounting rate policies. The information collections 
also will enable the Commission and interested parties to determine 
whether or not the competitive safeguards are sufficient to protect 
U.S. carriers and consumers against harmful discriminatory practices by 
foreign carriers.
    The information will be used by the Commission staff in carrying 
out its duties under the Communications Act. Common carriers engaged in 
providing international telecommunications service are required to file 
annual reports of international telecommunications traffic. The new 
rules require that the report shall include the number of minutes of 
outbound and inbound traffic settled pursuant to each alternative 
arrangement entered into pursuant to the new Section 64.1002.

    OMB Number: 3060-0000.
    Title: Common Carrier International Telecommunications Services.
    Type of Review: New Collection.
    Respondents: U.S. common carriers providing international 
telecommunications services.
    Frequency of Response: As needed basis.
    Number of Respondents: 30. It is difficult to estimate the number 
of respondents filing this information because the information will be 
filed only by those carriers seeking permission to enter agreements 
that do not comply with the Secs. 43.41(e)(1), 63.14, and 64.1001 of 
our rules. Such agreements will only be permitted under certain 
circumstances. Given the limitations on negotiating such agreements, we 
estimate that no more than 30 such agreements will be negotiated, and 
very likely, significantly fewer than that number.
    Estimated Annual Burden: 16 hours including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. It is difficult to estimate the estimated 
annual burden for filing the information because it will depend on how 
many agreements the carriers wish to enter.
    Total Annual Burden: 480 hours.
    Cost per respondent: $1,600. This amount is an estimate depending 
on whether the respondents use in-house legal staff or professional law 
firms to prepare the filing.
    Needs and Uses: The collection of information for which approval is 
here sought is contained in amendments to Part 64 in the Order adopting 
such amendments. This information collection is authorized and 
necessary for the Commission to carry out its statutory mandate, 
pursuant to Sections 1, 4, 201-205, 211, 214, 218-220, and 303 of the 
Communications Act of 1934, as amended, 47 U.S.C. Sections 151, 154, 
201-205, 211, 214, 218-220, and 303, and Part 43 of the Commission's 
Rules.
    The information collection contained in amendments to Part 64 is 
necessary to allow U.S. carriers to enter into alternative settlement 
agreements that do not comply with Secs. 43.41(e)(1), 63.14, and 
64.1001 of our rules. The information collected pursuant to this 
section will enable the Commission to consider alternative agreements 
that are outside the scope of its current rules. The information 
collected will be used to monitor the alternative agreements to ensure 
that competitive opportunities are available. The information collected 
will also enable interested parties to monitor the alternative 
agreements and determine potentially anticompetitive arrangements. In 
addition, the information collected will be the only information 
available to the Commission and interested parties on alternative 
accounting settlement arrangements. This information collection will 
provide the agency with sufficient data to review the impact, if any, 
that the alternative settlement agreement will have on our 
international accounting rate policies. The information collection will 
also enhance the ability of the Commission and interested parties to 
monitor for anticompetitive effects in the U.S. market for 
international service, thus increasing competitive options for U.S. 
carriers and resulting in lower prices and greater choices for U.S. 
consumers. The information collection will enable the Commission to 
promote competitive behavior, improve economic performance, and 
preserve the integrity of our accounting rate policies. The information 
collections also will enable the Commission and interested parties to 
determine whether or not the competitive safeguards are sufficient to 
protect U.S. carriers and consumers against harmful discriminatory 
practices by foreign carriers.
    The information will be used by the Commission staff in carrying 
out its duties under the Communications Act.

Ordering Clauses

    19. Accordingly, Secs. 43.51 and 64.1001 will become effective 
March 10, 1997. Sections 43.61 and 64.1002 take effect either upon 
approval by the Office of Management and Budget (OMB) or March 10, 1997 
whichever occurs later. When approval is received, the agency will 
publish a document announcing the effective date.
    20. This action is taken pursuant to Sections 4(i), 4(j), 303(r), 
and 201-205 of the Communications Act of 1934, as amended, 47 U.S.C. 
154(i), 154(j), 303(r) and sections 201-205, Constitution of the 
International Telecommunications Union, Special Arrangements Article, 
and International Telecommunications Regulations, Article 9. Special 
Arrangements.

List of Subjects in 47 CFR Parts 43 and 64

    Communications common carriers, Reporting and recordkeeping 
requirements.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Parts 43 and 64 of Title 47 of the Code of Federal Regulations are 
amended as follows:

PART 43--REPORTS OF COMMUNICATION COMMON CARRIERS AND CERTAIN 
AFFILIATES

    1. The authority citation for Part 43 continues to read as follows:


[[Page 5541]]


    Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154, 
unless otherwise noted. Interpret or apply secs. 211, 219, 220, 48 
Stat. 1073, 1077, as amended; 47 U.S.C. 211, 219, 220.

    2. Section 43.51 is amended by revising paragraph (d) to read as 
follows:


Sec. 43.51  Contracts and concessions.

* * * * *
    (d) International settlements policy. (1) If a carrier files an 
operating agreement (whether in the form of a contract, concession, 
license, etc.) referred to in paragraph (a) of this section to begin 
providing switched voice, telex, telegraph, or packet-switched service 
between the United States and a foreign point and the terms and 
conditions of such agreement relating to the exchange of services, 
interchange or routing of traffic and matters concerning rates, 
accounting rates, division of tolls, the allocation of return traffic, 
or the basis of settlement of traffic balances, are not identical to 
the equivalent terms and conditions in the operating agreement of 
another carrier providing the same or similar service between the 
United States and the same foreign point, the carrier must also file 
with the International Bureau a notification letter or modification 
request, as appropriate, under Sec. 64.1001 of this chapter. No carrier 
providing switched voice, telex, telegraph, or packet-switched service 
between the United States and a foreign point shall bargain for or 
agree to accept more than its proportionate share of return traffic.
    (2) If a carrier files an amendment to the operating agreement 
referred to in paragraph (a) of this section under which it already 
provides switched voice, telex, telegraph, or packet-switched service 
between the United States and a foreign point, and other carriers 
provide the same or similar service to the same foreign point, and the 
amendment relates to the exchange of services, interchange or routing 
of traffic and matters concerning rates, accounting rates, division of 
tolls, the allocation of return traffic, or the basis of settlement of 
traffic balances, the carrier must also file with the International 
Bureau a notification letter or modification request, as appropriate, 
under Sec. 64.1001 of this chapter.
    3. Section 43.61 is amended by revising paragraph (b) to read as 
follows:


Sec. 43.61   Reports of international telecommunications traffic.

* * * * *
    (b) The information contained in the reports shall include actual 
traffic and revenue data for each and every service provided by a 
common carrier, divided among service billed in the United States, 
service billed outside the United States, and service transiting the 
United States. In addition, it shall include the number of minutes of 
outbound and inbound traffic settled pursuant to each alternative 
arrangement entered into pursuant to Sec. 64.1002 of this chapter.
* * * * *

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

    1. The authority citation for Part 64 continues to read as follows:

    Authority: Secs. 4, 201-205, 211, 218-220, 303, 48 Stat. 1066, 
1070, 1072-73, 1077-78, as amended; 47 U.S.C. 154, 201-205, 211, 
218-220, 303.

    2. Section 64.1001 is amended by revising the heading for Subpart 
J, the section heading, paragraph (d), (e)(7), (f) introductory text, 
(g) introductory text, and paragraphs (i), (j), (k), and (l) to read as 
follows:

Subpart J--International Settlements Policy and Modification 
Requests


Sec. 64.1001  International settlements policy and modification 
requests.

* * * * *
    (d) If the operating agreement or amendment referred to in 
Secs. 43.51(d)(1) and (d)(2) of this chapter is not subject to 
notification under paragraphs (b) and (c) of this section, the carrier 
must file a modification request under paragraph (f) of this section.
    (e) * * *
    (7) A statement that there has been no other modification in the 
operating agreement with the foreign correspondent regarding the 
exchange of services, interchange or routing of traffic and matters 
concerning rates, accounting rates, division of tolls, allocation of 
return traffic, or the basis of settlement of traffic balances.
    (f) A modification request must contain the following information:
* * * * *
    (g) Notification letters and modification requests must contain 
notarized statements that the filing carrier:
* * * * *
    (i) If a carrier files a notification letter for an operating 
agreement or amendment that should have been filed as a modification 
request, the Bureau will return the notification letter to the filing 
carrier and the Bureau will notify the carrier that, before it can 
implement the proposed modification, it must file a modification 
request under paragraph (f) of this section.
    (j) An operating agreement or amendment filed under a modification 
request cannot become effective until the modification request has been 
granted under paragraph (l) of this section.
    (k) On the same day the notification letter or modification request 
is filed, carriers must serve a copy of the notification letter or 
modification request on all carriers providing the same or similar 
service to the foreign administration identified in the filing.
    (l) All modification requests will be subject to a twenty-one (21) 
day pleading period for objections or comments, commencing the date 
after the request is filed. If the modification request is not complete 
when filed, the carrier will be notified that additional information is 
to be submitted, and a new 21 day pleading period will begin when the 
additional information is filed. The modification request will be 
deemed granted as of the twenty-second (22nd) day without any formal 
staff action being taken: provided
    (1) No objections have been filed, and
    (2) The International Bureau has not notified the carrier that 
grant of the modification request may not serve the public interest and 
that implementation of the proposed modification must await formal 
staff action on the modification request. If objections or comments are 
filed, the carrier requesting the modification request may file a 
response pursuant to Sec. 1.45 of this chapter. Modification requests 
that are formally opposed must await formal action by the International 
Bureau before the proposed modification can be implemented.
    3. New Sec. 64.1002 is added to Subpart J to read as follows:


Sec. 64.1002  Alternative settlement arrangements.

    (a) A communications common carrier engaged in providing switched 
voice, telex, telegraph, or packet switched service between the United 
States and a foreign point may seek approval to enter into an operating 
agreement with a foreign telecommunications administration containing 
an alternative settlement arrangement that does not comply with the 
requirements of Sec. 43.51(e)(1) and Sec. 63.14 of this chapter and 
Sec. 64.1001 by filing a petition for declaratory ruling in compliance 
with the requirements of this section.
    (b) A petition for declaratory ruling must contain the following:
    (1) Information to demonstrate that either:
    (i) The Commission has made a previous determination that the

[[Page 5542]]

effective competitive opportunities test in Sec. 63.18(h)(6)(i) of this 
chapter has been satisfied on the route covered by the alternative 
settlement arrangement; or
    (ii) The effective competitive opportunities test in 
Sec. 63.18(h)(6)(i) of this chapter is satisfied on the route covered 
by the alternative settlement arrangement; or
    (iii) The alternative settlement arrangement is otherwise in the 
public interest.
    (2) A certification as to whether the alternative settlement 
arrangement affects more than 25 percent of the outbound traffic or 25 
percent of the inbound traffic on the route to which the alternative 
settlement arrangement applies.
    (3) A certification as to whether the parties to the alternative 
settlement arrangement are affiliated, as defined in 
Sec. 63.18(h)(1)(i) of this chapter, or involved in a non-equity joint 
venture affecting the provision of basic services on the route to which 
the alternative settlement arrangement applies.
    (4) A copy of the alternative settlement arrangement if it affects 
more than 25 percent of the outbound traffic or 25 percent of the 
inbound traffic on the route to which the alternative settlement 
arrangement applies, or if it is between parties that are affiliated, 
as defined in Sec. 63.18(h)(1)(i) of this chapter, or that are involved 
in a non-equity joint venture affecting the provision of basic services 
on the route to which the alternative settlement arrangement applies.
    (5) A summary of the terms and conditions of the alternative 
settlement arrangement if it does not come within the scope of 
paragraph (b)(4) of this section. However, upon request by the 
International Bureau, a full copy of such alternative settlement 
arrangement must be forwarded promptly to the International Bureau.
    (c) An alternative settlement arrangement filed for approval under 
this section cannot become effective until the petition for declaratory 
ruling required by paragraph (a) of this section has been granted under 
paragraph (e) of this section.
    (d) On the same day the petition for declaratory ruling has been 
filed, the filing carrier must serve a copy of the petition on all 
carriers providing the same or similar service with the foreign 
administration identified in the petition.
    (e) All petitions for declaratory ruling shall be subject to a 21 
day pleading period for objections or comments, commencing the day 
after the date of public notice listing the petition as accepted for 
filing. The petition will be deemed granted as of the 28th day without 
any formal staff action being taken: provided
    (1) The petition is not formally opposed within the meaning of 
Sec. 1.1202(e) of this chapter; and
    (2) The International Bureau has not notified the filing carrier 
that grant of the petition may not serve the public interest and that 
implementation of the proposed alternative settlement arrangement must 
await formal staff action on the petition. If objections or comments 
are filed, the petitioning carrier may file a response pursuant to 
Sec. 1.45 of this chapter. Petitions that are formally opposed must 
await formal action by the International Bureau before the proposed 
alternative settlement arrangement may be implemented.

[FR Doc. 97-2922 Filed 2-5-97; 8:45 am]
BILLING CODE 6712-01-P


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