[Federal Register Volume 60, Number 41 (Thursday, March 2, 1995)]
[Proposed Rules]
[Pages 11644-11646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5127]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 63

[IB Docket No. 95-22, FCC 95-53]


Foreign-Affiliated Entities: In the Matter of Market Entry and 
Regulation

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Federal Communications Commission is proposing to modify 
its approach to determining the public interest in cases where a 
foreign carrier [[Page 11645]] or its affiliate applies for authority 
under Section 214 of the Communications Act to enter the U.S. market to 
provide international facilities-based services. In reviewing such 
applications, the Commission proposes to examine whether effective 
market access is available, or will soon be available, to U.S. carriers 
in the primary markets of the foreign carrier seeking entry. This would 
be an important element of the Commission's public interest 
determination. In addition, the Commission requests comment on whether 
it should modify certain aspects of its regulation of U.S. 
international carriers. It also clarifies and requests comment on its 
definition of an international facilities-based carrier. Finally, the 
Commission asks whether it should incorporate the proposed effective 
market access test as an important element of the Section 310(b)(4) 
public interest analysis it applies to foreign entities seeking to 
acquire an indirect ownership interest in U.S. radio licenses. The 
proposals contained in the Notice are intended to establish standard 
rules to regulate foreign carrier entry into the U.S. marketplace in 
order to promote effective global competition, prevent anti-competitive 
conduct and encourage foreign governments to open their communications 
markets.

DATES: Comments must be submitted on or before March 28, 1995. Reply 
comments must be submitted on or before April 28, 1995.

ADDRESSES: All comments and reply comments concerning these proposals 
should be addressed to: Office of the Secretary, Federal Communications 
Commission, Washington, DC 20554. Comments and reply comments will be 
available for public inspection during regular business hours in the 
FCC Reference Center (Room 239) of the Federal Communications 
Commission, 1919 M St., NW., Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:
Troy F. Tanner or Susan Lee O'Connell, Attorney-Advisors, Policy and 
Facilities Branch, Telecommunications Division, International Bureau, 
(202) 418-1470.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking adopted on February 7, 1995 and released 
February 17, 1995. The full text of this Notice is available for 
inspection and copying during normal business hours in the FCC 
Reference Center (Room 239), 1919 M St., NW., Washington, DC. The 
complete text of this Notice 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.

Regulatory Flexibility Act

A. Reason for Action

    This rulemaking proceeding is initiated to obtain comment regarding 
proposed changes to the Commission's entry standard for foreign 
carriers desiring to enter the U.S. international telecommunications 
market, as well as changes to the Commission's public interest standard 
for foreign entities that seek to acquire an indirect interest in a 
U.S. common carrier, aeronautical, or broadcast radio license. Comment 
is also requested on proposed modifications to the Commission's 
dominant carrier safeguards as well as to other non-discrimination 
safeguards. Comment is also sought on the Commission's definition of an 
international facilities-based carrier.

B. Objectives

    The Commission seeks to establish standard rules and procedures to 
regulate foreign entry into the U.S. marketplace in order to promote 
effective competition and prevent anti-competitive conduct in the 
market for international communications services, as well as to 
encourage foreign governments to open their communications markets.

C. Legal Basis

    The proposed action is authorized under Sections 4 and 303(r) of 
the Communications Act of 1934, as amended, 47 U.S.C. Secs. 154, 
303(r).

D. Reporting, Recordkeeping and Other Compliance Requirements

    The actions contained in this Notice of Proposed Rulemaking may 
affect large and small carriers. We propose to require that dominant, 
foreign-affiliated carriers maintain or provide certain records 
regarding their foreign carrier affiliates. These U.S. carriers may be 
required to comply with proposed requirements to file certain reports, 
but this is not estimated to be a significant economic burden for these 
entities.

E. Federal Rules That Overlap, Duplicate or Conflict With These Rules

    None.

F. Description, Potential Impact, and Number of Small Entities Involved

    To the extent that the proposals discussed in this Notice of 
Proposed Rulemaking propose to make equity investment by foreign 
carriers in U.S. carriers more difficult, carriers seeking foreign 
investment greater than the proposed threshold will be adversely 
affected. These proposals are intended to ensure that U.S. carriers can 
compete effectively in international markets and to open closed foreign 
markets. Copies of this Notice will be sent to the Chief Counsel for 
Advocacy of the Small Business Administration.

G. Any Significant Alternatives Minimizing the Impact on Small Entities 
Consistent With the Stated Objectives

    The Notice solicits comment on a variety of alternatives to achieve 
Commission objectives.

Summary of Notice of Proposed Rulemaking

    This Notice of Proposed Rulemaking proposes new policies governing 
the participation of foreign carriers in the U.S. international 
telecommunications market. The Commission proposes three goals of its 
regulation of the U.S. international telecommunications market: (1) To 
promote effective competition in the global market for communications 
services; (2) to prevent anticompetitive conduct in the provision of 
international services or facilities; and (3) to encourage foreign 
governments to open their communications markets. The Commission 
considers how to achieve these goals through implementation of Sections 
214 and 310 of the Communications Act. The Commission finds that 
allowing foreign carrier entry into the U.S. international services 
market will further the public interest by providing additional 
competition that will benefit consumers. The Commission tentatively 
concludes, however, that unrestricted foreign carrier facilities-based 
entry is not in the public interest when U.S. carriers do not have 
effective opportunities to compete in the provision of services and 
facilities in the foreign carrier's primary markets.
    The Commission proposes to modify its public interest standard for 
considering foreign carrier applications under Section 214 of the Act 
to enter the U.S. market to provide international facilities-based 
services. The Commission seeks comment on requiring as an important 
element of its public interest standard a demonstration that effective 
market access is, or will soon be, available to U.S. carriers seeking 
to provide basic, international telecommuncations facilities-based 
services in the primary markets served by the carrier desiring entry. 
The Commission also would continue to consider other factors as part of 
its public interest analysis, such as national security, the openness 
of other telecommunications segments of the [[Page 11646]] foreign 
carrier's primary markets, and the ability and incentives of the 
foreign carrier to discriminate against unaffiliated U.S. carriers.
    In addition, the Notice proposes a specified level of foreign 
carrier ownership in a U.S. carrier at which the proposed entry 
standard would apply. The Commission asks whether it is desirable to 
consider an applicant to be ``affiliated'' with a foreign carrier for 
purposes of the new rules when the foreign carrier acquires an 
ownership interest of a certain minimum level or a controlling interest 
at any level. The Notice requests comment on whether the minimum level 
of ownership should be set at greater than ten percent, twenty-five 
percent, or some other level of the capital stock of the applicant.
    The Commission also seeks comment on whether the affiliation 
standard it adopts should replace the current affiliation standard it 
uses for purposes of classifying an affiliated U.S. carrier as dominant 
or nondominant on a particular U.S. international route, based on the 
market power of its foreign carrier affiliate on the foreign end of the 
route. In addition, the Commission requests comment on whether certain 
safeguards applied to dominant carriers should be modified to improve 
their effectiveness. It additionally asks for comment on other proposed 
nondiscrimination safeguards, including safeguards that would apply to 
all U.S. international carriers. The Commission also clarifies the 
definition of a facilities-based carrier and requests comment on its 
proposal to codify that definition in this proceeding.
    Finally, the Notice asks whether the goals of the proceeding would 
be served by incorporating the proposed effective market access test as 
an element of the Section 310(b)(4) public interest analysis applicable 
to foreign entities seeking to acquire an indirect ownership interest 
of more than 25 percent in U.S. radio licensees. Thus, the Notice asks 
whether the Commission's evaluation of the public interest should 
consider whether the primary markets of the foreign entity offer 
effective market access to U.S. licensees to provide the same type of 
radio-based services as requested in the United States. The Notice also 
seeks comment on other public interest factors the Commission should 
consider.
    The Notice seeks public comment on whether these proposals are 
administratively feasible and whether these approaches or other 
alternatives will best serve the Commission's goals.

List of Subjects in 47 CFR Part 63

    Communications common carriers.

    Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 95-5127 Filed 3-1-95; 8:45 am]
BILLING CODE 6712-01-M