67332 Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations

Dated: December 15, 1995.

John E. Veentjer,

Captain U.S. Coast Guard, Captain of the

Port, Philadelphia, PA.

[FR Doc. 95–31374 Filed 12–28–95; 8:45 am]

BILLING CODE 4910–14–M

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 63

[IB Docket No. 95–22, FCC 95–475]

Market Entry and Regulation of

Foreign-affiliated Entities

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This Report and Order

contains information collections subject

to the Paperwork Reduction Act of 1995

(PRA). It has been submitted to the

Office of Management and Budget

(OMB) for review under section 3507(d)

of the PRA, OMB, the general public,

and other Federal agencies are invited to

comment on the information collections

contained in this proceeding

On November 28, 1995, the Federal

Communications Commission adopted a

Report and Order in response to a

Notice of Proposed Rulemaking which

the Commission adopted on February 7,

1995, that establishes a market entry

standard for foreign carriers seeking to

provide basic international

telecommunications services under

section 214 of the Communications Act

of 1934, a amended (‘‘the Act’’). The

Report and Order also establishes a

standard by which the Commission will

review whether it is in the public

interest to permit foreign investment in

licensees of common carrier radio

facilities in excess of the benchmarks

contained in section 310(b)(4) of the

Act. The Report and Order was adopted.

The Report and Order makes additional

changes to the Commission’s regulations

of international common carriers.

In reviewing applicants for

international section 214 authority filed

by a foreign carrier or its U.S. affiliate

(collectively ‘‘foreign carrier’’), the

Commission will examine, as an

important part of its public interest

analysis, whether competitive

opportunities exist for U.S. carriers in

destination markets in which the foreign

carrier has market power. The

Commission will apply a similar

analysis in reviewing indirect foreign

investment in licensees of common

carrier radio facilities under section

310(b)(4), but it will limit its review to

the ‘‘home market’’ of the foreign

investor. In addition to considering

effective competitive opportunities, the

Commission will examine additional

public interest factors that might weigh

in favor of, or against, approving the

foreign carrier’s international section

214 application, or permitting the

indirect foreign investment in a

common carrier radio licensee to exceed

the section 310(b)(4) benchmark.

In taking this action, the

Commission’s primary goal is to

advance the public interest by

promoting effective competition in the

U.S. telecommunications services

market, particularly the market for

international services. The action also

reaffirms the Commission’s goals to

prevent anticompetitive conduct in the

provisions of international services or

facilities, and to encourage foreign

governments to open their

communications markets.

EFFECTIVE DATE: The rules adopted in

this Report and Order will become

effective January 29, 1996. However, if

OMB has not approved the information

collections contained in these rules by

this date, the Commission will publish

a document to delay the effective date

of these rules.

Written comments by the public on

the information collections are due

January 10, 1996.

ADDRESSES: Submit all comments

concerning the Paperwork Reduction

Act to Dorothy Conway, Federal

Communications Commission, Room

234, 1919 M Street, NW., Washington,

DC 20554, or via the Internet to

dconway@fcc. gov, and to Timothy Fain,

OMB Desk Officer, 10236 NEOB, 725–

17th Street, NW., Washington, DC 20503

or via the Internet to fain—t@al.eop.gov.

FOR FURTHER INFORMATION CONTACT: For

additional information concerning the

information collections contained in

this Report and Order contact Dorothy

Conway at 202–418–0217, or via the

Internet as dconway@fcc.gov.

For further information on the Report

and Order contact: Susan O’Connell,

Attorney, International Bureau, (202)

418–1484, Ken Schagrin, Attorney,

International Bureau, (202) 418–1407, or

Robert McDonald, Attorney,

International Bureau, (202) 418–1467.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Report

and Order adopted on November 28,

1995, and released November 30, 1995

(FCC 95–475). The full text of this

Report and Order is available for

inspection and copying during normal

hours in the FCC Reference Center

(Room 239), 1919 M St., NW.,

Washington, DC. The complete text also

may be purchased from the

Commission’s Copy contractor,

International Transcription Service,

Inc., (202) 857–3800, 2100 M Street,

NW., Suite 140, Washington, DC 20037

Paperwork Reduction Act

The Commission, as part of its

continuing effort to reduce paperwork

burdens, invites the general public and

the Office of Management and Budget

(OMB) to comment on the information

collections contained in this Report and

Order. Comments should address: (a)

Whether the collection of information is

necessary for the proper performance of

the functions of the Commission,

including whether the information shall

have practical utility; (b) the accuracy of

the Commission’s burden estimates; (c)

ways to enhance the quality, utility, and

clarity of the information collected; and

(d) ways to minimize the burden of the

collection of information on the

respondents, including the use of

automated collection techniques or

other forms of information technology.

This Report and Order contains

information collection requirements.

Written comments by the public on the

information collections are due January

10, 1996. Written comments must be

submitted by OMB on the information

collections on or before January 15,

1996.

OMB Approval Number: New

Collection.

Title: Market Entry and Regulation of

Foreign-affiliated Carriers.

Type of Review: New collection.

Respondents: Business or other forprofit.

Number of Respondents: 431 per year.

Estimated Time Per Response: 9.5

hours.

Total Annual Burden: 4127 hours.

Needs and Uses: The collections of

information for which approval is here

sought are contained in amendments to

part 63 and in the Report and Order

adopting such amendments. These

information collections are authorized

and necessary for the Commission to

carry out its statutory mandate,

pursuant to sections 4, 214, 219, 303(r)

and 403 of the Communications Act, 47

U.S.C. 154, 214, 219, 303(r) and 403.

The information collections contained

in amendments to §§ 63.01 (r) and (s)

and 63.11 and 63.17(b)(4) of the

Commission’s rules are necessary to

determine whether, and under what

conditions, the public interest,

convenience, and necessity will be

served by authorizing particular foreign

carriers, or their U.S. affiliates, to

provide international common carrier

services between the United States and

countries where these foreign carriers

have market power, i.e., the ability to
Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations 67333

discriminate against unaffiliated U.S.

carriers through control of ‘‘bottleneck

services or facilities’’ on the foreign end

of a U.S. international route.

‘‘Bottleneck services or facilities’’ are

those that are necessary to terminate

U.S. international traffic.

Second, the information collections

contained in amendments to § 63.10 of

the Commission’s rules are necessary for

the Commission to maintain effective

oversight of U.S. carriers that are

affiliated with, or involved in certain comarketing or similar arrangements with,

foreign carriers that have market power.

Third, the information collections

contained in amendments to § 63.01(k)

of the Commission’s rules are necessary

to protect the U.S. public interest in

cost-based international

telecommunications services.

Fourth, the information collections

under section 310(b)(4) of the Act are

necessary to determine, under that

section, whether a greater than 25

percent indirect foreign ownership

interest in a U.S. common carrier radio

licensee would be inconsistent with the

public interest.

The Order adopts a requirement that

section 214 applicants amend their

pending applications to the extent they

are inconsistent with the new rules.

Applications pending as of the effective

date of the new rules must be amended

within thirty days of the effective date

of the new rules. This information will

be used to process pending applications

under the Commission’s public interest

standard enunciated in the Order.

The information will be used by the

Commission staff in carrying out its

duties under the Communications Act.

Common carrier applicants providing or

seeking to provide international service

under part 63 of the Commission’s rules

must comply with our rules.

Summary of Report and Order

In response to the Notice of Proposed

Rulemaking (60 FR 11644 (March 2,

1995)), the Commission adopted a

decision to further the goal of promoting

effective competition in the U.S.

telecommunications market,

particularly the market for international

services. In order to promote effective

competition in this market, the

Commission’s new rules are designed to

prevent anticompetitive conduct in the

provision of international services or

facilities, and to encourage foreign

governments to open their

communications markets.

With this Report and Order, the

Commission adopts standards for

regulating the entry of foreign carriers

into the United States market for

international telecommunications

services. This Report and Order

explicitly sets forth the entry criteria

necessary to promote effective

competition in the U.S. market for these

services, including global, seamless

network services. As an important part

of the Commission’s overall public

interest analysis under Section 214 of

the Communications Act, it will

examine whether effective competitive

opportunities exist for U.S. carriers in

the destination markets of foreign

carriers seeking to enter the U.S.

international services market either

directly or through an affiliation with a

new or existing U.S. carrier.

Similarly, in deciding whether it is in

the public interest to permit indirect

foreign investment in licensees of

common carrier wireless facilities in

excess of the benchmarks contained in

section 310(b)(4) of the Act, the

Commission will examine whether

foreign markets offer effective

competitive opportunities to U.S.

entities. This approach is fully

consistent not only with the

Commission’s existing jurisdiction

under section 310, but also with

telecommunications bills currently

pending in Congress which would

specifically incorporate an effective

competitive opportunities analysis as

part of a section 310(b)(4)

determination.

The New Entry Standard

The Commission’s effective

competitive opportunities analysis

under section 214 of the Act will focus

first on whether U.S. carriers have the

legal right to provide international basic

services in the destination markets

where the foreign applicant has market

power. If there are no legal barriers to

entry, the Commission also will

consider the practical ability for U.S.

carriers to compete in those markets.

The Commission considers several

factors essential to viable competition.

These factors include: First, whether

there are reasonable and

nondiscriminatory terms and conditions

for interconnection to a foreign carrier’s

facilities; second, whether there are

competitive safeguards to protect

against anticompetitive conduct; and

third, whether there is an effective

regulatory framework to implement and

enforce these conditions and safeguards.

The Commission will apply the effective

competitive opportunities analysis to

foreign carriers seeking to provide

facilities-based or resale service in the

United States. The public interest

analysis under section 214 also will

continue to consider additional public

interest factors, including the general

significance of the proposed entry to the

promotion of competition in the U.S.

communications services market, the

presence of cost-based accounting rates,

as well as national security, law

enforcement issues, foreign policy, or

trade concerns raised by the Executive

Branch.

The analysis under section 310 is

similar to that under section 214, but

with some important distinctions. Most

notably, the Commission’s

determination will focus on the foreign

investor’s ‘‘home market’’, and will be

applied to the specific service in which

the foreign entity seeks to invest in the

United States, e.g., cellular service. If

the services in the U.S. and home

markets are not precisely matched, the

Commission will use the most closely

substitutable wireless service in the

home market, as determined from the

consumer’s perspective. The

Commission also will examine

additional public interest factors that

might weigh in favor of, or against,

allowing a foreign investor to exceed the

25 percent benchmark contained in

section 310(b)(4). In determining a

foreign investor’s ‘‘home market’’, the

Commission will identify (1) the

country of its incorporation,

organization, or charter; (2) the

nationality of all investment principals,

officers, and directors; (3) the country in

which its world headquarters is located;

(4) the country in which the majority of

its tangible property, including

production, transmission, billing,

information, and control facilities, is

located; and (5) the country from which

it derives the greatest sales and revenues

from its operations. If all five of these

factors indicate that the same country

should be considered to be the entity’s

home market, it will be presumed to be

so, subject only to rebuttal based on

clear and convincing evidence to the

contrary. If these five factors yield

inconsistent results, however, the

Commission will balance them, as well

as any other information that is

particularly relevant to the case, to

determine the appropriate home market

under the totality of the circumstances.

Affiliation

For purposes of implementing this

entry standard, the Commission adopts

a new definition of ‘‘affiliation’’. It now

defines affiliation as an ownership

interest of greater than 25 percent, or a

controlling interest at any level, in a

U.S. carrier by a foreign carrier. The

Commission also will apply its effective

competitive opportunities analysis to

foreign carrier investments of 25 percent

or less if the investment presents a

significant potential impact on

competition in the U.S. market for
67334 Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations

international telecommunications

services. In addition, the Commission

will aggregate investments of two or

more foreign carriers where they are

likely to act in concert and the

combined interests either exceed 25

percent or constitute a controlling

interest.

This definition of affiliation will

apply both for purposes of determining

when to apply the effective competitive

opportunities analysis and of

determining the regulatory status of all

affiliated carriers, including U.S.-based

carriers that have a greater than 25

percent investment, or a controlling

interest, in a foreign carrier. The

Commission also is adopting a prior

notification and approval requirement

to determine whether a particular

investment in a U.S. carrier by a foreign

carrier constitutes an affiliation with

that foreign carrier, and to determine

whether the investment serves the

public interest, convenience and

necessity. A U.S. international carrier is

required to notify the Commission 60

days prior to acquisition by a foreign

carrier of a 10 percent or greater interest

in that U.S. carrier.

Amendment of Pending Applications

The Report and Order adopts a

requirement that section 214 applicants

amend their pending applications to the

extent they are inconsistent with the

new rules. The Report and Order

requires that applications pending as of

the effective date of the new rules be

amended within thirty days of the

effective date of the new rules.

Dominant Carrier and Other Operating

Safeguards

This Report and Order also modifies

the safeguards that apply to foreignaffiliated carriers regulated as dominant

under § 63.10 of the Commission’s rules,

47 CFR 63.10, as amended in the Report

and Order. The modified dominant

carrier safeguards also will apply to U.S.

carriers on particular routes where they

are engaged in a co-marketing or other

arrangement with a dominant foreign

carrier, and such arrangement presents

a substantial risk of anticompetitive

effects in the U.S. market for

international telecommunications

services.

The Commission has modified these

safeguards to reduce regulatory burdens

while maintaining effective oversight

over foreign-affiliated or allied carriers.

It allows dominant, foreign-affiliated or

allied carriers to file tariffs on 14 days

notice instead of the previous 45 days

and relieves those carriers of the burden

of filing cost support information. It also

requires that a dominant, foreignaffiliated or allied carrier maintain

complete records of the provisioning

and maintenance of service and

facilities it procures from its foreign

carrier affiliate or ally. The Order

maintains the existing requirement that

a dominant foreign-affiliated carrier

(and, under the new rules, a dominant,

allied carrier) receive specific section

214 authorization before adding or

removing circuits on routes where it is

regulated as dominant, and file

quarterly traffic and revenue reports.

The Order also conforms the

Commission’s ‘‘no special concessions’’

prohibition and ‘‘no exclusive

arrangements’’ condition that have

regularly been placed in section 214

authorizations and applies a ‘‘no special

concessions’’ prohibition to all U.S.

international carriers. This means that

no U.S. carrier is allowed to accept a

special concession directly or indirectly

from any foreign carrier with respect to

traffic or revenue flows between the

United States and any foreign country

for which the U.S. carrier is authorized

to provide service.

Additional Matters

The Order additionally adopts new

rules relating to the provision of

international switched basic service via

facilities-based and resold private lines.

These rules apply to all U.S. carriers,

both those that are affiliated and

unaffiliated with a foreign carrier. And,

it adopts a modified definition of a U.S.

international facilities-based carrier.

Final Regulatory Flexibility Act Analysis

Pursuant to section 603 of Title 5,

United States Code, 5 U.S.C. 603, an

initial Regulatory Flexibility Analysis

was incorporated in the Notice of

Proposed Rulemaking in CC Docket No.

95–22. Written comments on the

proposals in the Notice, including the

Regulatory Flexibility Analysis, were

requested.

A. Need and Purpose of this Action

This rulemaking proceeding

establishes an effective competitive

opportunities analysis as an important

public interest factor in the

Commission’s overall public interest

analysis of applications filed by foreign

carriers to enter the U.S. international

telecommunications market pursuant to

section 214 of the Communications Act.

It also adopts a similar analysis for

determining whether the public interest

would be disserved by permitting

indirect foreign investment in common

carrier licensees in excess of the

benchmarks contained in section

310(b)(4) of the Act. In addition, this

proceeding modifies existing rules and

policies relating to the definition of a

U.S. international facilities-based

carrier, the regulation of certain

dominant carriers in the provision of

international service, and other rules

governing the provision of switched

services over international private lines.

B. Issues Raised by the Public

Comments in Response to the

Regulatory Flexibility Analysis

There were no comments submitted

in response to the Regulatory Flexibility

Analysis. The Notice of Proposed

Rulemaking offered a number of

alternatives for each issue raised. The

Commission responded to commenters’

concerns and significantly altered the

proposed market entry standard. The

new approach under section 214 is

designed to focus on foreign carrier

entry that poses a substantial risk of

anticompetitive effects in the provision

of international services. In addition,

the Commission is adopting a standard

that is clear and administratively

feasible.

C. Significant Alternatives Considered

The Commission has attempted to

balance all the commenters’ concerns

with our public interest mandate under

the Act in order to adopt a clear and

administratively feasible approach to

market entry by foreign carriers. Instead

of examining whether effective

competitive opportunities exist for U.S.

carriers in every primary market where

a foreign carrier operates, regardless of

whether the foreign carrier seeks to

serve such market, the Commission will

focus its analysis under section 214 only

on destination countries where the

foreign carrier holds market power. Our

route-by-route approach reduces the

regulatory burden on all U.S. carriers

seeking an affiliation with a foreign

carrier. The Commission has not

adopted the suggestion of some parties

to exempt small U.S. carriers from the

market entry rules. Whether a dominant

foreign carrier makes a significant

investment in a small U.S. carrier or a

large one, there is a substantial risk of

anticompetitive effects. Therefore, the

Commission declines to exempt small

U.S. carriers from these rules.

The Commission proposed to modify

its standard for determining when a U.S.

carrier is affiliated with a foreign carrier

for purposes of both the market entry

analysis and post-entry regulation. The

Commission considered investment

levels ranging from greater than ten

percent to controlling interests at any

level. It also considered adopting an

affiliation standard based on: The dollar

amount of the investment; the

percentage of the investment; or the
Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations 67335

amount of traffic carried by the U.S.

carrier in correspondence with the

foreign carrier. The Commission

additionally considered adopting a

reciprocal affiliation standard. Based on

the record, the Commission has

modified its definition of affiliation and

will now consider affiliated any U.S.

carrier with either: (1) A greater than 25

percent interest (or a controlling interest

at any level) held by a foreign carrier;

or (2) a greater than 25 percent interest

in, or control of, a foreign carrier.

The Commission will apply its

effective competitive opportunities

analysis to the first category of affiliated

U.S. carriers on routes where the

affiliated foreign carrier has market

powers in the destination country. It

will apply its dominant carrier

safeguards to all affiliated U.S. carriers

on routes where the affiliated foreign

carrier has market power. These

safeguards will also now apply to U.S.

carriers on routes for which they have

formed a non-exclusive co-marketing

arrangement or other joint venture with

a dominant foreign carrier, where such

arrangements present a substantial risk

of anticompetitive effects.

The Commission has eliminated the

requirement that dominant, foreignaffiliated carriers file cost support with

their tariffs. This will reduce

burdensome filing requirements. The

Commission also adopts its proposed

14-day notice period (currently 45 days)

for the filing of international service

tariffs by dominant, foreign-affiliated

carriers. The Commission adopts a new

recordkeeping requirement that a

dominant, foreign-affiliated carrier

maintain complete records of the

provisioning and maintenance of

network facilities and services it

procures from its foreign affiliate or ally.

The Commission found that although

this requirement is a minor burden, its

benefit in preventing anticompetitive

conduct outweighs such a burden. The

Commission adopts new rules related to

the provision of switched services using

international private lines. These rules

will enhance opportunities for U.S.

carriers to serve U.S. consumers more

efficiently. The Commission also adopts

a definition of ‘‘U.S. international

facilities-based carrier’’ that may

facilitate the ability of smaller U.S.

carriers to obtain operating agreements.

Ordering clauses

Accordingly, it is ordered that the

policies, rules, and requirements

adopted herein, except those needing

OMB approval, will become effective

January 29, 1996.

Matters subject to OMB approval,

pursuant to the Paperwork Reduction

Act of 1995, Public Law 104–13, will

become effective upon such approval.

This action is taken pursuant to

sections 4, 214, 219, 303(r) and 403 of

the Communications Act of 1934, as

amended, 47 U.S.C. 154, 214, 219,

303(r) and 403.

It is further ordered That this

proceeding is hereby terminated.

List of Subjects in 47 CFR Part 63

Communications common carriers,

Reporting and recordkeeping

requirements, Telegraph, Telephone.

Federal Communications Commission,

LaVera Marshall,

Acting Secretary.

Final Rules

Part 63 of Title 47 of the Code of

Federal Regulations is amended as

follows:

PART 63—EXTENSION OF LINES AND

DISCONTINUANCE, REDUCTION,

OUTAGE AND IMPAIRMENT OF

SERVICE BY COMMON CARRIERS;

AND GRANTS OF RECOGNIZED

PRIVATE OPERATING AGENCY

STATUS

1.The authority citation for part 63

continues to read as follows:

Authority: Secs. 1, 4(i), 4(j), 201–205, 218,

and 403 of the Communications Act of 1934,

as amended, and sec. 613 of the Cable

Communications Policy Act of 1984, 47

U.S.C. secs. 151, 154(i), 15(j), 201–205, 218,

403, and 533 unless otherwise noted.

2. Section 63.01 is amended by

revising paragraphs (k)(5) and (r),

redesignating paragraph (k)(6) as

paragraph (k)(7), and adding new

paragraphs (k)(6), (s) and Notes 1

through 4 to paragraph (r) to read as

follows:

§ 63.01 Contents of applications.

* * * * *

(k) * * *

(5) The procedures set forth in this

section are subject to Commission

policies on resale of international

private lines in CC Docket No. 90–337

as amended in IB Docket No. 95–22. If

proposed facilities are to be acquired

through the resale of private lines for

the purpose of providing international

switched basic services, applicant shall

demonstrate for each country to which

it seeks to provide such services that the

country affords resale opportunities

equivalent to those available under U.S.

law. In this regard, applicant shall:

(i) State whether the Commission has

previously determined that equivalent

resale opportunities exist between the

United States and the subject country;

or

(ii) Include other evidence

demonstrating that equivalent resale

opportunities exist between the United

States and the subject country,

including any relevant bilateral

agreements between the administrations

involved. Parties must demonstrate that

the foreign country at the other end of

the private line provides U.S. carriers

with:

(A) The legal right to resell

international private lines,

interconnected at both ends, for the

provision of switched services;

(B) Nondiscriminatory charges, terms

and conditions for interconnection to

foreign domestic carrier facilities for

termination and origination of

international services, with adequate

means of enforcement;

(C) Competitive safeguards to protect

against anticompetitive and

discriminatory practices affecting

private line resale; and

(D) Fair and transparent regulatory

procedures, including separation

between the regulator and operator of

international facilities-based services.

(6) Except as otherwise provided in

this paragraph, any carrier authorized

under this part to acquire and operate

international private line facilities other

than through resale shall, for each

country for which it seeks to provide

switched basic service over its

authorized private lines facilities,

request such authority by formal

application. Such application shall be

accompanied by a demonstration that

that country affords resale opportunities

equivalent to those available under U.S.

law. In this regard, applicant shall

include the information required by

paragraph (k)(5) of this section.

(i) No formal application is required

under this paragraph in circumstances

where the carrier’s previously

authorized private line facility is

interconnected to the public switched

network only on one end—either the

U.S. or the foreign end—and where the

carrier is not operating the facility in

correspondence with a carrier that

directly or indirectly owns the private

line facility in the foreign country at the

other end of the private line.

* * * * *

(r) A certification as to whether or not

the applicant is, or has an affiliation

with, a foreign carrier.

(1) The certification shall state with

specificity each foreign country in

which the applicant is, or has an

affiliation with, a foreign carrier. For

purposes of this certification:

(i) Affiliation is defined to include;

(A) A greater than 25% ownership of

capital stock, or controlling interest at
67336 Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations

any level, by the applicant, or by any

entity that directly or indirectly controls

or is controlled by it, or that is under

direct or indirect common control with

it, in a foreign carrier or in any entity

that directly or indirectly controls a

foreign carrier; or

(B) A greater than 25% ownership of

capital stock, or controlling interest at

any level, in the applicant by a foreign

carrier, or by any entity that directly or

indirectly controls or is controlled by a

foreign carrier, or that is under direct or

indirect common control with a foreign

carrier; or by two or more foreign

carriers investing in the applicant in the

same manner in circumstances where

the foreign carriers are parties to, or the

beneficiaries of, a contractual relation

(e.g., a joint venture or market alliance)

affecting the provision or marketing of

basic international telecommunications

services in the United States. A U.S.

carrier also will be considered to be

affiliated with a foreign carrier where

the foreign carrier controls, is controlled

by, or is under common control with a

second foreign carrier already found to

be affiliated with that U.S. carrier under

this section.

(ii) Foreign carrier is defined as any

entity that is authorized within a foreign

country to engage in the provision of

international telecommunications

services offered to the public in that

country within the meaning of the

International Telecommunication

Regulations, see Final Acts of the World

Administrative Telegraph and

Telephone Conference, Melbourne, 1988

(WATTC–88), Art 1.

(2) In support of the required

certification, each applicant shall also

provide the name, address, citizenship

and principal businesses of its 10

percent or greater direct and indirect

shareholders or other equity holders and

identify any interlocking directorates.

(3) Each applicant that proposes to

acquire facilities through the resale of

the international switched or private

line services of another U.S. carrier shall

additionally certify as to whether or not

the applicant has an affiliation with the

U.S. carrier(s) whose facilities-based

service(s) the applicant proposes to

resell (either directly or indirectly

through the resale of another reseller’s

service). For purposes of this paragraph,

affiliation is defined as in paragraph

(r)(1)(i) of this section, except that the

phrase ‘‘U.S. facilities-based

international carrier’’ shall be

substituted for the phrase ‘‘foreign

carrier.’’

(4) Each applicant that certifies under

this section that it has an affiliation with

a foreign carrier and that proposes to

acquire facilities through the resale of

the international private line services of

another U.S. carrier shall additionally

certify as to whether or not the affiliated

foreign carrier owns or controls

telecommunications facilities in the

particular country(ies) to which the

applicant proposes to provide service

(i.e., the destination country(ies)). For

purposes of this paragraph,

telecommunication facilities are defined

as the underlying telecommunications

transport means, including intercity and

local access facilities, used by a foreign

carrier to provide international

telecommunications services offered to

the public.

(5) Each applicant and carrier

authorized to provide international

communications service under this part

is responsible for the continuing

accuracy of the certifications required

by paragraphs (r)(3) and (4) of this

section. Whenever the substance of any

such certification is no longer accurate,

the applicant/carrier shall as promptly

as possible and in any event within 30

days file with the Secretary in duplicate

a corrected certification referencing the

FCC File No. under which the original

certification was provided. This

information may be used by the

Commission to determine whether a

change in regulatory status may be

warranted under § 63.10.

(6) Each applicant that certifies that it

is, or that it has an affiliation, a foreign

carrier, as defined in paragraphs

(r)(1)(i)(B) and (r)(1)(ii) of this section,

in a named foreign country and that

desires to operate as a U.S. facilitiesbased international carrier to that

country from the United States shall

provide information in its application

filed under this part to demonstrate that

either:

(i) The named foreign country (i.e.,

the destination foreign country)

provides effective competitive

opportunities to U.S. carriers to compete

in that country’s international facilitiesbased market; or

(ii) Its affiliated foreign carrier does

not have the ability to discriminate

against unaffiliated U.S. international

carriers through control of bottleneck

services or facilities in the destination

country.

(A) The demonstration specified by

paragraph (r)(6)(i) of this section should

address the following factors:

(1) The legal, or de jure, ability of U.S.

carriers to enter the foreign market and

provide facilities-based international

services, in particular, international

message telephone service (IMTS);

(2) Whether there exist reasonable and

nondiscriminatory charges, terms and

conditions for interconnection to a

foreign carrier’s domestic facilities for

termination and origination of

international services;

(3) Whether competitive safeguards

exist in the foreign country to protect

against anticompetitive practices,

including safeguards such as:

(i) Existence of cost-allocation rules in

the foreign country to prevent crosssubsidization;

(ii) Timely and nondiscriminatory

disclosure of technical information

needed to use, or interconnect with,

carriers’ facilities;

(iii) Protection of carrier and customer

proprietary information; and

(4) Whether there is an effective

regulatory framework in the foreign

country to develop, implement and

enforce legal requirements,

interconnection arrangements and other

safeguards; and

(5) Any other factors the applicant

deems relevant to its demonstration.

(B) The demonstration specified in

paragraph (r)(6)(ii) of this section should

include the same information requested

by paragraph (r)(8) of this section.

(7) Each applicant that certifies that it

is, or that it has an affiliation with, a

foreign carrier, as defined in paragraphs

(r)(1)(i)(B) and (r)(1)(ii) of this section,

in a named foreign country and that

desires to resell the international

switched or non-interconnected private

line services, respectively, of another

U.S. carrier for the purpose of providing

international communications services

to the name foreign country from the

United States shall provide information

in its application filed under this part to

demonstrate that either.

(i) The named foreign country (i.e.,

the destination foreign country)

provides effective competitive

opportunities to U.S. carriers to resell

international switched or

noninterconnect private line services,

respectively; or

(ii) Its affiliated foreign carrier does

not have the ability to discriminate

against unaffiliated U.S. international

carriers through control of bottleneck

services or facilities in the destination

country.

(A) The demonstration specified by

paragraph (r)(7)(i) of this section should

address the following factors:

(1) The legal, or de jure, ability of U.S.

carriers to enter the foreign market and

provide resold international switched

services (for switched resale

applications) or non-interconnected

private line services (for noninterconnected private line resale

applications;

(2) Whether there exist reasonable and

nondiscriminatory charges, terms and

conditions for the provision of the

relevant resale service;
Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations 67337

(3) Whether competitive safeguards

exist in the foreign country to protect

against anticompetitive practices,

including safeguards such as:

(i) Existence of cost-allocation rules in

the foreign country to prevent crosssubsidization;

(ii) Timely and nondiscriminatory

disclosure of technical information

needed to use, or interconnect with,

carriers’ facilities;

(iii) Protection of carrier and customer

proprietary information; and

(4) Whether there is an effective

regulatory framework in the foreign

country to develop, implement and

enforce legal requirements,

interconnection arrangements and other

safeguards; and

(5) Any other factors the applicant

deems relevant to its demonstration.

(B) The demonstration specified in

paragraph (r)(7)(ii) of this section should

include the same information requested

by paragraph (r)(8) of this section.

(8) Each applicant that certifies that it

has an affiliation with a foreign carrier

in a named foreign country and that

desires to be regulated as non-dominant

for the provision of international

communications service to that country

may provide information in its

application filed under this part to

demonstrate that its affiliated foreign

carrier does not have the ability to

discriminate against unaffiliated U.S.

international carriers through control of

bottleneck services or facilities in the

named foreign country. See § 63.10,

Regulatory Classification of U.S.

International Carriers.

(i) Such a demonstration should

address the factors that relate to the

scope or degree of the foreign affiliate’s

bottleneck control, such as:

(A) The monopoly, oligopoly or

duopoly status of the destination

country; and

(B) Whether the foreign affiliate has

the potential to discriminate against

unaffiliated U.S. international carriers

through such means as preferential

operating agreements, preferential

routing of traffic, exclusive or more

favorable transiting agreements, or

preferential domestic access and

interconnection arrangements.

(ii) Such a demonstration may also

address other factors the applicant

deems relevant to its demonstration,

such as the effectiveness of public

regulation in the destination country.

(s) Each applicant shall certify that

the applicant has not agreed to accept

special concessions directly or

indirectly from any foreign carrier or

administration with respect to traffic or

revenue flows between the U.S. and any

foreign country which the applicant

may serve under the authority granted

under this part and will not enter into

such agreements in the future.

(1) For purposes of this paragraph,

and of §§ 63.11(c)(2)(iii), 63.13(a)(4),

and 63.14, special concession is defined

as any arrangement that affects traffic or

revenue flows to or from the U.S. that

is offered exclusively by a foreign

carrier or administration to a particular

U.S. international carrier and not also to

similarly situated U.S. international

carriers authorized to serve a particular

route.

(2) The special concessions

certification required by this paragraph

and by §§ 63.11(c)(2)(iii) and 63.13(a)(4)

shall be viewed as an ongoing

representation to the Commission, and

applicants/carriers shall immediately

inform the Commission if at any time

the representations in their

certifications are no longer true. Failure

to so inform the Commission will be

deemed a material misrepresentation to

the Commission.

Note 1 to paragraph (r): The word

‘‘control’’ as used herein is not limited to

majority stock ownership, but includes actual

working control in whatever manner

exercised.

Note 2 to paragraph (r): The term ‘‘U.S.

facilities-based international carrier’’ means

one that holds an ownership, indefeasibleright-of-user, or leasehold interest in bare

capacity in an international facility,

regardless of whether the underlying facility

is a common or noncommon carrier

submarine cable, or an INTELSAT or separate

satellite system.

Note 3 to paragraph (r): The assessment of

‘‘capital stock’’ ownership will be made

under the standards developed in

Commission case law for determining such

ownership. See, e.g., Fox Television Stations,

Inc., 10 FCC Rcd 8452 (1995). ‘‘Capital stock’’

includes all forms of equity ownership,

including partnership interests.

Note 4 to paragraph (r): In applying the

provisions of this section, ownership and

other interests in U.S. and foreign carriers

will be attributed to their holders and

deemed cognizable pursuant to the following

criteria: Attribution of ownership interests in

a carrier that are held indirectly by any party

through one or more intervening corporations

will be determined by successive

multiplication of the ownership percentages

for each link in the vertical ownership chain

and application of the relevant attribution

benchmark to the resulting product, except

that wherever the ownership percentage for

any link in the chain exceeds 50%, it shall

not be included for purposes of this

multiplication. (For example, if A owns 30%

of company X, which owns 60% of company

Y, which owns 26% of ‘‘carrier,’’ then X’s

interest in ‘‘carrier’’ would be 26% (the same

as Y’s interest because X’s interest in Y

exceeds 50%), and A’s interest in ‘‘carrier’’

would be 7.8% (0.30×0.26). Under the 25%

attribution benchmark, X’s interest in

‘‘carrier’’ would be cognizable, while A’s

interest would not be cognizable.)

3. Section 63.10 is amended by

revising paragraphs (a)(1) through (a)(3),

and adding paragraph (c) to read as

follows:

§ 63.10 Regulatory classification of U.S.

international carriers.

(a) * * *

(1) 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) will presumptively

be considered non-dominant for the

provision of international

communications services on that route;

(2) A U.S. carrier that is, or that has

or acquires an affiliation with a foreign

carrier that is a monopoly in a

destination country will presumptively

be classified as dominant for the

provision of international

communications services on that route;

and

(3) A U.S. carrier that is, or that has

or acquires an affiliation with a foreign

carrier that is not a monopoly in a

destination country and that seeks to be

regulated as non-dominant on that route

bears the burden of submitting

information to the Commission

sufficient to demonstrate that its foreign

affiliate lacks the ability to discriminate

against unaffiliated U.S. carriers through

control of bottleneck services or

facilities in the destination country.

Such a demonstration should address

the factors that relate to the scope or

degree of the foreign affiliate’s

bottleneck control, including those

listed in § 63.01(r)(8).

* * * * *

(c) Any carrier classified as dominant

for the provision of particular services

on particular routes under this section

shall comply with the following

requirements in its provision of such

services on each such route:

(1) File international service tariffs on

14-days notice without cost support;

(2) Maintain complete records of the

provisioning and maintenance of basic

network facilities and services procured

from its foreign carrier affiliate or from

an allied foreign carrier, including, but

not limited to, those it procures on

behalf of customers of any joint venture

for the provision of U.S. basic or

enhanced services in which the U.S.

and foreign carrier participate, which

information shall be made available to

the Commission upon request;

(3) Obtain Commission approval

pursuant to § 63.01 before adding or

discontinuing circuits; and

(4) File quarterly reports of revenue,

number of messages, and number of
67338 Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations

minutes of both originating and

terminating traffic within 90 days from

the end of each calendar quarter.

4. Section 63.11 is revised to read as

follows:

§ 63.11 Notification by and prior approval

for U.S. international carriers that have or

propose to acquire ten percent investments

by, and/or an affiliation with, a foreign

carrier.

(a) Any carrier authorized to provide

international communications service

under this part that, as of the effective

date of this rule as amended in IB

Docket No. 95–22, is, or has an

affiliation with, a foreign carrier within

the meaning of § 63.01(r)(1)(i)(A) or

(r)(1)(i)(B), or that as of such date knows

of an existing ten percent or greater

interest, whether direct or indirect, in

the capital stock of the authorized

carrier by a foreign carrier, or that after

the effective date of this rule becomes

affiliated with a foreign carrier within

the meaning of § 63.01(r)(1)(i)(A), shall

notify the Commission within thirty

days of the effective date of this rule or

within thirty days of the acquisition of

the affiliation, whichever occurs later.

For purposes of this section, ‘‘foreign

carrier’’ is defined as set forth in

§ 63.01(r)(1)(ii).

(1) The notification shall certify to the

information specified in paragraph (c) of

this section.

(2) Any carrier that has previously

notified the Commission of an affiliation

with a foreign carrier, as defined by

§ 63.01(r)(1) immediately prior to the

rule’s amendment in IB Docket No. 95–

22, need not notify the Commission

again of the same affiliation.

(b) Any carrier authorized to provide

international communications service

under this part that knows of a planned

investment by a foreign carrier of a ten

percent or greater interest, whether

direct or indirect, in the capital stock of

the authorized carrier shall notify the

Commission within sixty days prior to

the acquisition of such interest. The

notification shall certify to the

information specified in paragraph (c) of

this section.

(c) The notification required under

paragraphs (a) and (b) of this section

shall contain a list of all affiliated

foreign carriers and shall state

individually the country or countries in

which the foreign carriers named in

paragraphs (a) and (b) of this section are

authorized to provide

telecommunications services offered to

the public. It shall additionally specify

which, if any, of these countries the U.S.

carrier is authorized to serve under this

part; what services it is authorized to

provide to each such country; and the

FCC File No. under which each such

authorization was granted.

(1) The carrier should also specify,

where applicable, those countries

named in paragraph (c) for which it

provides a specified international

communications service solely through

the resale of the international switched

or private line services of U.S. facilitiesbased carriers with which the resale

carrier does not have an affiliation. Such

an affiliation is defined as in

§ 63.01(r)(1)(i), except that the phrase

‘‘U.S. facilities-based international

carrier’’ shall be substituted for the

phrase ‘‘foreign carrier.’’

(2) The carrier shall also submit with

its notification:

(i) The ownership information as

required to be submitted pursuant to

§ 63.01(r)(2);

(ii) Where the carrier is authorized as

a private line reseller on a particular

route for which it has an affiliation with

a foreign carrier, as defined in

§ 63.01(r)(1)(i), a certification as

required to be submitted pursuant to

§ 63.01(r)(4); and

(iii) A ‘‘special concessions’’

certification as required to be submitted

pursuant to § 63.01(s).

(3) The carrier is responsible for the

continuing accuracy of the certifications

provided under this section. Whenever

the substance of any certification

provided under this section is no longer

accurate, the carrier shall as promptly as

possible, and in any event within 30

days, file with the Secretary in duplicate

a corrected certification referencing the

FCC File No. under which the original

certification was provided, except that

the carrier shall immediately inform the

Commission if at any time the

representations in the ‘‘special

concessions’’ certification provided

under paragraph (c)(2)(iii) of this section

are no longer true. See § 63.01(s)(2).

This information may be used by the

Commission to determine whether a

change in regulatory status may be

warranted under § 63.10.

(d) Unless the carrier notifying the

Commission of a foreign carrier

affiliation under paragraph (a) of this

section qualifies for the presumption of

non-dominant regulation pursuant to

§ 63.10(a)(4), it should submit the

information specified in § 63.01(r)(8) to

retain its non-dominant status on any

affiliated route.

(e) The Commission will issue public

notice of the submissions made under

this section for 14 days.

(1) In the case of a notification filed

under paragraph (a) of this section, the

Commission, if it deems it necessary,

will by written order at any time before

or after the submission of public

comments impose dominant carrier

regulation on the carrier for the

affiliated routes based on the provisions

of § 63.10.

(2) In the case of a planned

investment by a foreign carrier of a ten

percent or greater interest, whether

direct or indirect, in the capital stock of

the authorized carrier, the Commission

will, unless it notifies the carrier in

writing within 30 days of issuance of

the public notice that the investment

raises a substantial and material

question of fact as to whether the

investment serves the public interest,

convenience and necessity, presume the

investment to be in the public interest.

If notified that the acquisition raises a

substantial and material question, then

the carrier shall not consummate the

planned investment until it has filed an

application under § 63.01 and submitted

the information specified under

paragraphs (r) (6) or (7), as applicable,

and (8) of that section, and the

Commission has approved the

application by formal written order.

5. Section 63.12 is amended by

revising paragraph (c)(1) to read as

follows:

§ 63.12 Streamlined processing of certain

international resale applications.

* * * * *

(c) * * *

(1) The applicant has an affiliation

within the meaning of § 63.01(r)(3), with

the U.S. facilities-based carrier whose

international switched or private line

services the applicant seeks authority to

resell (either directly or indirectly

through the resale of another reseller’s

services); or

* * * * *

6. Section 63.13 is amended by

revising the last sentences of paragraphs

(a)(3) and (a)(5), and by revising

paragraph (a)(4) to read as follows:

§ 63.13 Streamlined procedures for

modifying regulatory classification of U.S.

international carriers from dominant to

nondominant.

(a) * * *

(3) * * * For purposes of paragraph

(a)(3), ‘‘telecommunications facilities’’

are defined as in § 63.01(r)(4).

(4) Any carrier filing a certified list

pursuant to paragraph (a)(2) of this

section must also provide the ‘‘special

concessions’’ certification as required to

be submitted pursuant to § 63.01(r)(3).

(5) * * * See § 63.01(s)(2).

7. Section 63.14 is revised to read as

follows:

§ 63.14 Prohibition on agreeing to accept

special concessions.

Any carrier authorized to provide

international communications service
Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Rules and Regulations 67339

under this part shall be prohibited from

agreeing to accept special concessions

directly or indirectly from any foreign

carrier or administration with respect to

traffic or revenue flows between the

United States and any foreign country

served under the authority of this part

and from agreeing to enter into such

agreements in the future. For purpose of

this section, foreign carrier is defined as

in § 63.01(r)(1)(ii); and special

concession is defined as in § 63.01(s).

8. A new § 63.17 is added to read as

follows:

§ 63.17 Special Provisions For U.S.

International Common Carriers.

(a) Unless otherwise prohibited by the

terms of its Section 214 certificate, a

U.S. common carrier authorized under

this part to provide international private

line service, whether as a reseller or

facilities-based carrier, may

interconnect its authorized private lines

to the public switched network on

behalf of an end user customer for the

end user customer’s own use.

(b) Except as provided in paragraph

(b)(5) of this section, a U.S. common

carrier, whether a reseller or facilitiesbased, may engage in ‘‘switched

hubbing’’ to countries not found to offer

equivalent resale opportunities under

§ 63.01(k) (5) and (6) under the

following conditions:

(1) U.S.-outbound switched traffic

shall be routed over the carrier’s

authorized U.S. international private

lines to an equivalent country, and then

forwarded to a third, nonequivalent

country only by taking at published

rates and reselling the International

Message Telephone Service (IMTS) of a

carrier in the equivalent country;

(2) U.S.-inbound switched traffic shall

be carried to an equivalent country as

part of the IMTS traffic flow from a nonequivalent third country and then

terminated in the United States over

U.S. international private lines from the

equivalent hub country;

(3) U.S. common carriers that route

U.S.-outbound traffic via switched

hubbing through an equivalent country

shall tariff their service on a ‘‘through’’

basis from the United States to the

ultimate foreign destination.

(4) No U.S. common carrier may

engage in switched hubbing under this

section to a country for which it has an

affiliation with a foreign carrier unless

and until it receives specific authority to

do so under § 63.01. For purposes of this

paragraph, ‘‘affiliation’’ and ‘‘foreign

carrier’’ are defined as set forth in

§ 63.01(r)(1) (i)(B) and (ii), respectively.

[FR Doc. 95–31099 Filed 12–28–95; 8:45 am]

BILLING CODE 6712–01–M

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 625

[I.D. 122695B]

Summer Flounder Fishery

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration, (NOAA),

Commerce.

ACTION: Notification of commercial

quota transfer.

SUMMARY: NMFS announces that the

State of New Jersey is transferring

20,000 lb (9,072 kg) of commercial

summer flounder quota to the State of

New York. NMFS adjusted the quotas

and announces the revised commercial

quota for each state involved.

EFFECTIVE DATE: December 26, 1995.

FOR FURTHER INFORMATION CONTACT:

Lucy Helvenston, 508–281–9347.

SUPPLEMENTARY INFORMATION:

Regulations implementing Amendment

2 to the Fishery Management Plan for

the Summer Flounder Fishery (FMP) are

found at 50 CFR part 625. The

regulations require annual specification

of a commercial quota that is

apportioned among the coastal states

from North Carolina through Maine. The

process to set the annual commercial

quota and the percent allocated to each

state is described in § 625.20.

The commercial quota for summer

flounder for the 1995 calendar year was

set equal to 14,690,407 lb (6,663,569 kg),

and the allocations to each state were

published February 16, 1995 (60 FR

8958). At that time, New Jersey was

allocated a quota of 2,456,969

(1,114,462 kg) and New York was

allocated a quota of 1,123,374 lb

(509,554 kg). On August 30, 1995, the

State of North Carolina transferred 7,229

lb (3,279 kg) to the State of New Jersey,

and the revised quota for New Jersey

was set equal to 2,464,198 lb (1,117,741

kg) (60 FR 45107). On November 17,

1995, the State of Maryland transferred

50,000 lb of its commercial quota to the

State of New York, and the revised

quota for New York was set equal to

1,173,374 lb (532,233 kg) (60 FR 57685).

On December 15, 1995, the State of

Maryland made two further transfers to

the State of New York that were

published as one notification (60 FR

64349). The first transfer was for 20,000

lb (9,072 kg), and the second was for

30,000 lb (13,608 kg), and the revised

quota for New York was set equal to

1,223,374 lb (554,913 kg).

The final rule implementing

Amendment 5 to the FMP was

published December 17, 1993 (58 FR

65936), and allows two or more states,

under mutual agreement and with the

concurrence of the Director, Northeast

Region, NMFS (Regional Director) to

transfer or combine summer flounder

commercial quota. The Regional

Director is required to consider the

criteria set forth in § 625.20(f)(1), in the

evaluation of requests for quota transfers

or combinations.

New Jersey has agreed to transfer

20,000 lb (9,072 kg) of commercial quota

to New York. The Regional Director has

determined that the criteria set forth in

§ 625.20(f)(1) have been met, and

publishes this notification of quota

transfers. The revised quotas for the

calendar year 1995 are: New Jersey,

2,444,198 lb (1,108,670 kg); and New

York, 1,243,374 lb (563,985 kg).

This action does not alter any of the

conclusions reached in the

environmental impact statement

prepared for Amendment 2 to the FMP

regarding the effects of summer flounder

fishing activity on the human

environment. Amendment 2 established

procedures for setting an annual

coastwide commercial quota for summer

flounder and a formula for determining

commercial quotas for each state. The

quota transfer provision was established

by Amendment 5 to the FMP and the

environmental assessment prepared for

Amendment 5 found that the action had

no significant impact on the

environment. Under section

6.02b.3(b)(I)(aa) of NOAA

Administrative Order 216–6, this action

is categorically excluded from the

requirement to prepare additional

environmental analyses. This is a

routine administrative action that

reallocates commercial quota within the

scope of previously published

environmental analyses.

Classification

This action is taken under 50 CFR

part 625 and is exempt from review

under E.O. 12866.

Authority: 16 U.S.C. 1801 et seq.

Dated: December 26, 1995.

Gary Matlock,

Program Management Officer, National

Marine Fisheries Service.

[FR Doc. 95–31516 Filed 12–26–95; 4:12 pm]

BILLING CODE 3510–22–P