[Federal Register Volume 59, Number 213 (Friday, November 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27331]


[[Page Unknown]]

[Federal Register: November 4, 1994]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 94-1098]

 

Direct Telecommunications Services Between United States and Cuba

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In accordance with the provisions of the Cuban Democracy Act 
of 1992, the Commission approved the applications of five U.S. carriers 
to provide direct telecommunications services between the United States 
and Cuba. The services authorized include both switched voice and 
private line services. The companies whose applications were granted 
are WilTel International, Inc., MCI Telecommunications Corp., LDDS 
Communications, Inc., Sprint Communications Company L.P. and IDB 
WorldCom Services, Inc. This will allow these carriers to help meet the 
large demand for direct telecommunications services between the United 
States and Cuba. Under the guidelines established by the Department of 
State, these carriers are required to submit reports indicating the 
numbers of circuits activated by facility, on or before June 30, and 
December 31 of each year, and on the one-year anniversary of this 
notification in the Federal Register.

EFFECTIVE DATE: November 4, 1994.

FOR FURTHER INFORMATION CONTACT: Troy F. Tanner, Attorney, Common 
Carrier Bureau, (202) 418-1470.

SUPPLEMENTARY INFORMATION:

    In the matter of WilTel International, Inc., File No. I-T-C-94-227; 
Application for authority to acquire and operate satellite and cable 
facilities for the provision of direct services between the United 
States and Cuba; MCI Telecommunications Corp., File No. I-T-C-94-228; 
LDDS Communications, Inc., File No. I-T-C-94-229; Sprint Communications 
Company L.P., File No. I-T-C-94-247; IDB WorldCom Services, Inc., File 
No. I-T-C-94-260, Applications for authority to acquire and operate 
satellite facilities for the provision of direct services between the 
United States and Cuba.

Memorandum Opinion, Order, Authorization & Certification

Adopted: October 4, 1994

Released: October 5, 1994

By the Chief, International Facilities Division:
    1. The Commission has under consideration the above-captioned 
applications filed by WilTel International, Inc. (``WilTel''), MCI 
Telecommunications Corporation (``MCI''), LDDS Communications, Inc. 
(``LDDS'') , Sprint Communications Company L.P. (``Sprint''), and IDB 
WorldCom Services, Inc. (``IDB'') requesting authority pursuant to 
Section 214 of the Communications Act of 1934, as amended, to establish 
channels of communication between the United States and Cuba for the 
provision of direct services. The applications were placed on the 
Commission's public notice. AT&T filed petitions to deny against all of 
the applications. For the reasons stated below, we grant the 
applications.

Background

    2. WilTel requests authority to acquire by lease from Comsat and 
operate 120 64-kbps digital satellite voice-grade circuits, and up to 
two satellite video transmission circuits on an occasional use basis, 
provided via the INTELSAT Atlantic Ocean Region (AOR) satellite at 
335 deg. E.L., for the provision of international message telephone 
service (``IMTS'') and other switched services\1\ and for international 
private line service between the United States and Cuba. In an 
amendment to its application, WilTel also requests the flexibility to 
use either the INTELSAT and/or an Intersputnik satellite. WilTel states 
the proposed satellite facilities will be located between an 
appropriately authorized U.S. international fixed-satellite earth 
station and the appropriate satellite.\2\
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    \1\These services include facsimile, data and video transmission 
services.
    \2\WilTel also requests authority to provide service to Cuba via 
the fiber optic undersea cable, CUBUS-1, that has been proposed in 
the application for a cable landing license of WilTel Undersea 
Cable, Inc., FCC File No. SCL-94-002. Because this cable landing 
license has yet to be granted, we will defer acting on WilTel's 
request to use these facilities until such time that we are assured 
the cable facilities will be available for WilTel's use.
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    3. MCI requests authority to acquire by lease from Comsat and 
operate 150 64-kbps satellite circuits\3\ between the Mount Jackson, 
Virginia earth station and an appropriate INTELSAT-AOR satellite, 
together with the necessary connecting facilities between the Mt. 
Jackson earth station and MCI's operating centers at Pottstown, 
Pennsylvania and San Antonio, Texas, for the provision of all of MCI's 
authorized services, including IMTS, between the United States and 
Cuba.
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    \3\MCI states these circuits are bearer circuits with a 
compression ratio ability of 5:1, thereby allowing MCI to 
potentially derive as many as 750 circuits.
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    4. LDDS requests authority to acquire by lease from Comsat and 
operate 150 64-kbps satellite circuits between an appropriately 
authorized east coast earth station and an appropriate INTELSAT-AOR 
satellite for the provision of IMTS and private line services between 
the United States and Cuba. In an amendment to its application, LDDS 
also requests authority to use interchangeably the 150 circuits with 
the Intersputnik, or Columbia Communication Corporation (``Columbia'') 
satellites in addition to the INTELSAT satellites.
    5. Sprint requests authority to acquire by lease from Comsat and 
operate 120 voice-grade satellite circuits\4\ between the Orion 
international Standard A earth station located at Shenandoah, Virginia 
and the INTELSAT-AOR satellite at 335 deg. E.L., connecting with its 
operating center in New York, New York, by using its own facilities. 
Sprint proposes to use these facilities to furnish all of Sprint's 
authorized services, including IMTS, between the United States and 
Cuba.
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    \4\Sprint initially requested 30 digital satellite circuits, but 
clarified its request in a letter to the Commission on October 3, 
1994, stating that the circuits are equivalent to one E-1 circuit 
which, in turn, can derive 120 virtual voice-grade circuits.
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    6. IDB requests authority to acquire by lease from Comsat and 
operate 120 voice-grade satellite circuits\5\ between an appropriately 
authorized international earth station in the United States and either 
an INTELSAT-AOR satellite or the Intersputnik satellite located at 
14 deg. W.L. (``Statsionar 4''), together with the necessary connecting 
facilities between the earth station and an operating center in New 
York, New York, for the provision of IMTS between the United States and 
Cuba.
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    \5\IDB states these are the number of circuits derived from one 
2 Mbps channel (an E-1 circuit) operating at a compression ratio of 
4:1.
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    7. All of the applicants state that they have reached an agreement 
with EMTELCUBA of Cuba, to provide the matching facilities from the 
satellite's mid-point to an earth station in Cuba. Initially, under the 
terms of the agreements, EMTELCUBA agreed with each applicant to a 50/
50 split of a $1.20 per minute accounting rate for switched traffic, 
and a $4.85 surcharge per call for collect calls to be paid to the 
originating carrier. All of the applicants state that this rate is 
consistent with the U.S. Department of State's policy guidelines 
(``Policy Guidelines'').\6\ They also state that they will initiate 
service within one year.
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    \6\See Infra 10.
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    8. The applicants state that that public interest would be served 
by a grant of their applications because it will result in the rapid 
introduction of new lines of telecommunications between the United 
States and Cuba. They state that an immediate and large demand exists 
for direct telecommunications services between the United States and 
Cuba, and their proposed services will help meet that demand within the 
regulatory framework established by the Cuban Democracy Act of 1992 (22 
U.S.C. Sec. 6002 et seq.).
    9. AT&T filed a petition to deny against each of these applications 
stating that because of the $4.85 surcharge per call for collect calls, 
the applicants' accounting rate agreements with EMTELCUBA conflict with 
the International Settlements Policy (``ISP'') and with the directive 
of the Commission that U.S. carriers negotiate to achieve cost-based 
accounting rates with foreign administrations.\7\ All of the applicants 
individually filed oppositions to AT&T's petition. They unanimously 
agreed that an ISP waiver under Sec. 64.1001 of the Commission's Rules 
is not required because AT&T's operating agreement with the Cuban 
administration expired nearly four years ago. Therefore, the applicants 
argue that because AT&T's operating agreement is no longer in force, 
their proposed arrangements do not depart from any current 
arrangements, and no ISP waiver is required. In addition, WilTel, MCI, 
and LDDS argue that the Policy Guidelines do not prohibit collect 
surcharges, and that the $4.85 surcharge per call is appropriate and 
not excessive for collect calls.
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    \7\See Regulation of International Accounting Rates, 6 FCC Rcd 
3552 (1991) (expansion of traditional focus of the ISP of preventing 
whipsawing to include the adverse effect of above-cost levels of 
accounting rates on U.S. carriers and consumers).
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Discussion

    10. In a letter dated July 22, 1993, the U.S. Department of State 
informed us of the Executive Branch's general policy guidelines for 
implementation of the telecommunications provisions of the Cuban 
Democracy Act, which provides that ``telecommunication services between 
the United States and Cuba shall be permitted.''\8\ Among the policy 
guidelines are the following requirements: (1) the proposals must have 
the potential to be operational within a year; (2) settlements must not 
be more favorable to Cuba than the current 50/50 split of the $1.20 per 
minute accounting rate; (3) proposals must be limited to equipment and 
services necessary to deliver a signal to Cuba; (4) proposals must 
utilize modes of communications already in place between the United 
States and Cuba; and (5) carriers shall report the number of circuits 
activated by facility on June 30 and December 31 of each year and on 
the one-year anniversary of the notification by the Commission in the 
Federal Register.
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    \8\Letter dated July 22, 1993, from Richard C. Beaird, Acting 
U.S. Coordinator and Director, Bureau of International 
Communications and Information Policy, U.S. Department of State to 
FCC Chairman James H. Quello.
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    11. In accordance with the Policy Guidelines, we forwarded copies 
of the above-captioned applications to the Department of State and 
requested that it advise us as to its views. Pursuant to our request, 
the Department of State issued a follow-up letter dated May 23, 
1994.\9\ The Department of State found the IMTS portions of the 
applications to be fully consistent with the Policy Guidelines except 
for the $4.85 surcharge per call for collect calls. The Department 
found that the proposed surcharge was unreasonable and unjustified. It 
observed that the proposed surcharge far exceeded the approximately 
$.60 average rate for all countries in the region and the prevalent 
$1.00 rate for those countries having a surcharge. Therefore, the 
Department of State had no objection to our approval of the IMTS 
applications without the $4.85 surcharge provision. The Department of 
State, however, did state that it would favorably consider a surcharge 
provision that is determined by us to be based on costs, other 
international norms and practices, relevant ITU Recommendations, and 
our ISP.
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    \9\Letter dated May 23, 1994, from Richard C. Beaird, Senior 
Deputy U.S. Coordinator, Bureau of International Communications and 
Information Policy, U.S. Department of State to FCC Chairman Reed 
Hundt.
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    12. In light of the Department of State's letter, and our own 
review of the applications, we concluded that we would not process the 
applications as filed because of the agreements with EMTELCUBA for the 
$4.85 surcharge. Rather than dismiss the applications, we gave the 
applicants the opportunity to amend their applications to reflect a new 
agreement renegotiated with EMTELCUBA that provides for either no 
surcharge for collect calls, or a surcharge that was reasonable and 
justified.\10\
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    \10\See Letter dated July 29, 1994 from Wendell Harris, 
Assistant Bureau Chief/International, Common Carrier Bureau, to all 
five applicants.
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    13. On September 6, 1994, LDDS amended its application to include a 
new operating agreement with EMTELCUBA that reflected a reduction in 
the proposed surcharge of $4.85 per call for collect calls to $1.00 per 
call. A week later, the other four applicants similarly amended their 
applications to reflect a $1.00 per call surcharge. We sent copies of 
these amendments to the Department of State, and requested their advice 
as to whether these new surcharges were in compliance with the Policy 
Guidelines.\11\ On October 3, 1994, we received a letter from the 
Department of State expressing its view that the new $1.00 per call 
surcharge was in compliance with the Policy Guidelines.\12\ The 
Department of State stated that the new proposed surcharge of $1.00 per 
call appears consistent with international norms and practices, 
relevant ITU Recommendations, and current surcharge rates in the 
region. The Department of State notes, however, that it hopes that this 
and other surcharge rates will generally be reduced or eliminated in 
the future.
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    \11\See Letters dated September 9 and 16, 1994 from Wendell 
Harris, Assistant Bureau Chief/International, Common Carrier Bureau, 
to Richard C. Beaird, Senior Deputy U.S. Coordinator, Bureau of 
International Communications and Information Policy, U.S. Department 
of State.
    \12\Letter dated October 3, 1994, from Richard C. Beaird, Senior 
Deputy U.S. Coordinator, Bureau of International Communications and 
Information Policy, U.S. Department of State to FCC Chairman Reed 
Hundt.
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    14. Upon our own review of the applications, we agree with the 
Department of State that the five applicants' amended operating 
agreements with EMTELCUBA are in compliance with the Policy Guidelines. 
The $1.00 per call surcharge for collect calls is within the range of 
surcharges that other countries in the Caribbean region have for these 
types of calls, and reflects the cost to the originating country of 
providing the service. Accordingly, we find that this new surcharge is 
reasonable and justified. It is our desire, however, as it is the 
Department of States's, that this surcharge eventually be reduced or 
eliminated in the future.
    15. In addition, we find AT&T's arguments that the $4.85 per call 
surcharge is in violation of the ISP to be inapposite. AT&T's arguments 
were based on the original $4.85 per call surcharge, not the amended 
$1.00 per call surcharge. Further, we note that AT&T's petition stated 
that a $1.00 surcharge would be consistent with industry practices. 
Finally, we have not received any additional pleadings from AT&T 
arguing that the amended operating agreements are in violation of our 
ISP.
    16. We find that a grant of the above-captioned five applications 
will serve the public interest subject to the conditions set forth 
below. These applications are consistent with the Executive Branch's 
Policy Guidelines. The applicants state that they will initiate service 
within one year, and expect to initiate service shortly after all 
requisite regulatory approvals have been obtained. To the extent the 
applicants propose to use the INTELSAT, Intersputnick, and Columbia 
satellite facilities and appropriately authorized existing earth 
station facilities, we find these proposals satisfy the requirement 
that facilities already be in existence and be limited to equipment and 
services necessary to deliver a signal to Cuba.
    17. Accordingly, it is ordered that application File No. I-T-C-94-
227 is granted and WilTel is authorized to:
    a. Lease from Comsat and operate up to 120 64-kbps satellite 
circuits, and up to two satellite video transmission circuits on an 
occasional use basis, between an appropriately authorized U.S. 
international fixed-satellite earth station and the INTELSAT-AOR 
satellite at 335 deg. E.L., together with the necessary domestic 
connecting facilities between the earth station and WilTel's operating 
center, connecting with similar circuits between the satellite and an 
earth station in Cuba, furnished by EMTELCUBA; or
    b. In lieu of the INTELSAT circuits, establish up to 120 64-kbps 
satellite circuits between an appropriately authorized U.S. 
international fixed-satellite earth station and an appropriate 
Intersputnik satellite, together with the necessary domestic connecting 
facilities between the earth station and WilTel's operating center, 
connecting with similar circuits between the satellite and an earth 
station in Cuba, furnished by EMTELCUBA; and
    c. Use the facilities in either (a) or (b) above to provide IMTS 
and other switched services (including facsimile, data and video 
transmission services), and international private line services, 
between the United States and Cuba.
    18. It is further ordered that application File No. I-T-C-94-228 is 
granted and MCI is authorized to:
    a. Lease from Comsat and operate 150 64-kbps satellite circuits 
between the Mount Jackson, Virginia earth station and an appropriate 
INTELSAT-AOR satellite, together with the necessary connecting 
facilities between the Mt. Jackson earth station and MCI's operating 
centers at Pottstown, Pennsylvania and San Antonio, Texas, connecting 
with similar circuits between the satellite and an earth station in 
Cuba, furnished by EMTELCUBA; and
    b. Use the above facilities to provide all of MCI's authorized 
services, including IMTS, between the United States and Cuba.
    19. It is further ordered that application File No. I-T-C-94-299 is 
granted and LDDS is authorized to:
    a. Lease from Comsat and operate 150 64-kbps satellite circuits 
between an appropriately authorized U.S. international fixed-satellite 
earth station and an appropriate INTELSAT-AOR satellite, together with 
the necessary domestic connecting facilities between the earth station 
and LDDS's operating center, connecting with similar circuits between 
the satellite and an earth station in Cuba, furnished by EMTELCUBA; or
    b. In lieu of the INTELSAT circuits, establish up to 150 64-kbps 
satellite circuits, between an appropriately authorized U.S. 
international fixed-satellite earth station and an appropriate 
Intersputnik or Columbia satellite, together with the necessary 
domestic connecting facilities between the earth station and LDDS's 
operating center, connecting with similar circuits between the 
satellite and an earth station in Cuba, furnished by EMTELCUBA; and
    c. Use the facilities in either (a) or (b) above to provide IMTS 
and private line services between the United States and Cuba.
    20. It is further ordered that application File No. I-T-C-94-247 is 
granted and Sprint is authorized to:
    a. Lease from Comsat and operate one E-1 circuit (30 64-kbps 
circuits), which can derive 120 virtual voice-grade circuits, between 
the Orion international Standard A earth station located at Shenandoah, 
Virginia and the INTELSAT-AOR satellite at 335 deg. E.L., together with 
the necessary connecting facilities between its operating center in New 
York, New York, and the Orion earth station, connecting with similar 
circuits between the satellite and an earth station in Cuba, furnished 
by EMTELCUBA; and
    b. Use the above facilities to provide all of Sprint's authorized 
services, including IMTS, between the United States and Cuba.
    21. It is further ordered that application File No. I-T-C-94-260 is 
granted and IDB is authorized to:
    a. Lease from Comsat and operate one 2 Mbps channel (an E-1 circuit 
or 30 64-kbps circuits), which can derive 120 virtual voice-grade 
circuits, between an appropriately authorized U.S. international fixed-
satellite earth station and an appropriate INTELSAT-AOR satellite, 
together with the necessary connecting facilities between the earth 
station and an operating center in New York, New York, connecting with 
similar circuits between the satellite and an earth station in Cuba, 
furnished by EMTELCUBA; or
    b. In lieu of the INTELSAT circuits, establish up to one 2 Mbps 
channel (an E-1 circuit or 30 64-kbps circuits), which can derive 120 
virtual voice-grade circuits, between an appropriately authorized U.S. 
international fixed-satellite earth station and the Intersputnik 
satellite located at 14 deg. W.L. (``Statsionar 4''), together with the 
necessary connecting facilities between the earth station and an 
operating center in New York, New York, connecting with similar 
circuits between the satellite and an earth station in Cuba, furnished 
by EMTELCUBA; and
    c. Use the facilities in either (a) or (b) above to provide IMTS 
services between the United States and Cuba.
    22. It is further ordered that the service authorized herein must 
be implemented within one year from the date of release of this order.
    23. It is further ordered that WilTel, MCI, LDDS, Sprint and IDB 
shall split 50/50 with EMTELCUBA the $1.20 per minute accounting rate 
for the IMTS services.
    24. It is further ordered that the surcharge agreed to between the 
applicants and EMTELCUBA for received collect calls shall be no greater 
than $1.00 per call.
    25. It is further ordered that the applicants shall submit reports 
on or before June 30, and December 31 of each year, and on the one-year 
anniversary of the notification of the grant of these applications in 
the Federal Register indicating the numbers of circuits activated by 
facility.
    26. It is further ordered that this authorization is subject to the 
applicants' obtaining all necessary licenses and authorizations from 
the Departments of Treasury and Commerce.
    27. It is further ordered that this order is subject to revocation 
without a hearing in the event the Department of State or the Federal 
Communications Commission determines that the continuation of 
communications between the United States and Cuba is no longer in the 
national interest.
    28. It is further ordered that our authorization for the applicants 
to provide private lines is limited to the provision of such private 
lines only between the United States and Cuba--that is, private lines 
which originate in the United States and terminate in Cuba or which 
originate in Cuba and terminate in the United States. In addition, the 
applicants may not--and applicants' tariffs must state that their 
customers may not--connect private lines provided over these facilities 
to the public switched network at either the U.S. or foreign end, or 
both, for the provision of international basic telecommunications 
services, including switched voice services, unless authorized to do so 
by the Commission upon a finding that its correspondents afford resale 
opportunities equivalent to those available under U.S. law, in 
accordance with Regulation of International Accounting Rates, Phase II, 
First Report and Order, 57 FR 646, January 8, 1992 7 FCC Rcd 559 
(1991), Order on Reconsideration and Third Further NPRM, 57 FR 57455, 
December 4, 1992 7 FCC Rcd 7927 (1992), petition for reconsideration 
pending.
    29. It is further ordered that, pursuant to Section 203 of the 
Communications Act, 47 U.S.C. 203, and Part 61 of the Commission's 
Rules, 47 CFR Part 61, the applicants shall file and have in effect a 
tariff for the services authorized in this order before offering 
services to the public.
    30. It is further ordered that the applicants shall file copies of 
any operating agreements entered into by themselves or their parent/
affiliates with their correspondents within 30 days of their execution, 
and shall otherwise comply with the filing requirements contained in 
Section 43.51 of the Commission's Rules, 47 CFR 43.51.
    31. It is further ordered that the applicants shall file annual 
reports of overseas telecommunications traffic required by Section 
43.61 of the Commission's Rules 47 CFR 43.61.
    32. It is further ordered that the applicants shall file a Section 
214 application for any additional circuits they propose to establish 
between the United States and Cuba.
    33. Acceptance of this authorization shall be deemed acceptance of 
the conditions set forth herein.
    34. It is further ordered that the Petitions to Deny against each 
applicant filed by AT&T are denied.
    35. This authorization is issued pursuant to Section 0.291 of the 
Commission's Rules and is effective upon adoption. Petitions for 
reconsideration under Section 1.106 or applications for review under 
Section 1.115 of the Commission's Rules may be filed within 30 days of 
public notice of this order (see Section 1.4(b)(2)).

Federal Communications Commission.

George S. Li,
Chief, International Facilities Division, Common Carrier Bureau.
[FR Doc. 94-27331 Filed 11-3-94; 8:45 am]
BILLING CODE 6712-01-M