[Federal Register Volume 62, Number 168 (Friday, August 29, 1997)]
[Rules and Regulations]
[Pages 45758-45763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22936]



[[Page 45758]]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 63

[IB Docket No. 96-261, FCC 97-280]


International Settlement Rates

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: On August 7, 1997, the Federal Communications Commission 
adopted a Report and Order that revises the Commission's international 
settlement rate benchmarks. The revisions will move settlement rates 
closer to the underlying costs of providing international termination 
services. The Commission took this action in light of the significant 
changes that have occurred in the global telecommunications market in 
recent years. The decision represents one of the steps in an ongoing 
effort by the Commission, many foreign governments, and multilateral 
organizations such as the International Telecommunication Union 
(``ITU'') and the Organization for Economic Cooperation and Development 
(``OECD'') to lower international telephony costs by reforming the 
international accounting rate system.

DATES: Effective: January 1, 1998. The new information collection 
requirements adopted in this Order will become effective following OMB 
approval. The Commission will publish a document at a later date 
establishing the effective date. Written comments by the public and 
other agencies on the proposed information collections are due October 
28, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, NW., Room 
222, Washington, DC 20554. For filing comments on the proposed 
information collections contained herein, in addition to filing 
comments with the Secretary, a copy of any comments should be submitted 
to Judy Boley, Federal Communications Commission, Room 234, 1919 M 
Street, NW., Washington, DC 20554, or via the Internet to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Kathryn O'Brien, Attorney-Advisor, or 
John Giusti, Attorney-Advisor, Policy and Facilities Branch, 
Telecommunications Division, International Bureau, (202) 418-1470. For 
additional information concerning the information collections contained 
in this Order contact Judy Boley at 202-418-0214, or via the Internet 
at [email protected].

SUPPLEMENTARY INFORMATION:

Summary of Report and Order

    1. On December 19, 1996, the Commission released a Notice of 
Proposed Rulemaking in the Matter of International Settlement Rates, IB 
Docket No. 96-261, FCC 96-484 (61 FR 68702, December 30, 1996). In the 
NPRM, the Commission proposed options for revising international 
settlement rate benchmarks that would move settlement rates closer to 
the underlying costs of providing international termination services. 
The NPRM sought comment on several alternate methods for calculating 
benchmark rates in the absence of reliable data on the costs foreign 
carriers incur to terminate international traffic.
    2. On August 7, 1997, the Commission adopted a Report and Order in 
this proceeding that revised settlement rate benchmarks. The Commission 
concluded that current settlement rates are in most cases substantially 
above the cost that foreign carriers incur to terminate U.S.-originated 
traffic. These inflated settlement rates contribute to high 
international calling prices for U.S. consumers and create the 
potential for distortions in the U.S. market for international 
services.
    3. The Commission adopted revised settlement rate benchmarks to 
assist U.S. international carriers in negotiating settlement rates that 
are more closely related to the costs incurred by foreign carriers. The 
benchmarks are calculated using foreign carriers' tariffed prices and 
information published by the International Telecommunication Union. The 
Commission concluded that basing benchmarks on foreign carriers' 
tariffed prices would more closely reflect the underlying costs of 
providing international termination service than most current 
settlement rates, although they still would result in benchmarks that 
are substantially above cost-based settlement rate levels. The 
Commission believes that basing benchmark settlement rates on the same 
rates that foreign carriers charge their own customers would ensure 
nondiscriminatory treatment for U.S. carriers. In addition, foreign 
carriers will be permitted to recover more than their incremental cost 
of terminating international service because the tariffed rates are for 
retail services and include costs that would not be included in cost-
based settlement rates.
    4. The Commission adopted four settlement rate benchmarks: $0.15 
for upper income countries; $0.19 for upper-middle income countries and 
lower-middle income countries; and $0.23 for lower income countries. 
The Commission concluded that these settlement rate benchmarks will 
continue to exceed, usually substantially, any reasonable estimate of 
the level of foreign carriers' costs. Using the limited data available 
to the FCC for calculating benchmarks, these benchmarks will 
substantially reduce the above-cost excesses in current settlement 
rates in a manner that is reasonable and treats foreign carriers 
fairly. The Commission adopted its proposal in the NPRM to revise and 
update the benchmarks periodically as necessary.
    5. The Commission also adopted a ``best practices'' rate that will 
be enforced as a safeguard when it detects distortion in the U.S. 
market for IMTS. The ``best practices'' rate is closer to a cost-based 
level than the settlement rate benchmarks and can be applied to prevent 
market distorting behavior. This rate will be applied only to the 
extent carriers seek authorization to provide facilities-based service 
from the United States to affiliated markets and to provide private 
line resale service. In those cases, the rate will be enforced only if 
the Commission detects market distortion on the route or routes in 
question. The rate is based on the lowest, commercially viable, 
settlement rate currently paid by U.S. carriers to an overseas carrier 
from a competitive market. The Commission selected a rate of $.08, 
which is the current settlement rate between the United States and 
Sweden. The ``best practice'' rate will apply only in cases of 
competitive distortion, and that if an affected carrier believes such a 
requirement would prove unjustified it may follow established 
procedures to request an individualized settlement rate prescription.
    6. The Commission adopted a transition schedule for compliance with 
the settlement rate benchmarks to balance the competing concerns of 
providing time for carriers to make adjustments and expeditiously 
reduce rates to a more cost-based level. The transition schedule is 
based primarily on the categorization of countries used to calculate 
the settlement rate benchmarks, the World Bank, and ITU's GNP per 
capita classifications. The Commission believes that this 
classification scheme provides a reasonable basis for determining a 
country's ability to transition to a more-cost based system or 
settlement rates without undue disruption to its telecommunications 
network. The Commission also established a separate category for the 
``least telecommunications developed'' countries based on level of 
teledensity,

[[Page 45759]]

or lines per 100 people, rather than GNP per capita. The Commission 
will require that U.S. carriers negotiate settlement rates at or below 
the relevant benchmarks according to the following schedule:

Carriers in upper income countries--1 year from implementation of the 
Order
Carriers in upper-middle income countries--2 years from implementation 
of the Order
Carriers in lower-middle income countries--3 years from implementation 
of the Order
Carriers in lower income countries--4 years from implementation of the 
Order
Carriers in countries with teledensity (lines per 100) less than 1--5 
years from implementation of the Order

    7. The Commission declined to adopt the proposal to permit 
additional flexibility in the application of the benchmarks beyond the 
transition periods for U.S. carriers serving developing countries that 
have committed to introducing competitive reforms. The Commission 
believes that these transition periods adequately balance the 
challenges faced by developing countries in moving to more cost-based 
rates.
    8. The Commission intends to take the appropriate enforcement 
measures that may be necessary to ensure that U.S. international 
carriers satisfy the benchmark requirements. Initially, the Commission 
will identify foreign carriers that are reluctant to engage in 
meaningful progress toward negotiating settlement rates at or below the 
relevant benchmark. The Commission will take steps to work with the 
foreign governments and carriers to achieve the goal of cost-based 
rates. If these efforts are unsuccessful, U.S. international carriers 
may file a petition with the FCC. The Commission can and will ensure 
compliance with its settlement rate benchmarks. Rather than adopt a set 
enforcement mechanism, the Commission will consider individual 
circumstances surrounding each carrier-initiated petition to determine 
the appropriate enforcement action to take. To protect smaller carriers 
from reprisals, the Commission emphasized that it will continue to 
safeguard U.S. carriers against discriminatory treatment by foreign 
carriers by vigorously enforcing its international settlements policy.
    9. The Commission will consider, on a case-by-case basis, 
grandfathering settlement rate agreements that were negotiated prior to 
the effective date of this Order. The agreement, however, must meet the 
Commission's public interest standard of serving the same goals set 
forth in this Order and achieving settlement rates at or below the 
relevant benchmark within a reasonable period of time. The Commission 
will reserve the right to consider alternative approaches to the 
settlement rate benchmarks if, in the future, it finds that meaningful 
progress is made in a multilateral forum to achieve its goals.
    10. In the NPRM, the Commission identified two types of market 
distortions that could be created by above-cost settlement rates--price 
squeeze behavior and one-way bypass. In the Order, the Commission 
describes how it will detect and address these distortions. Price 
squeeze behavior potentially could distort competition in the U.S. 
market for IMTS by affecting the ability of other carriers to compete. 
The Commission will condition authorizations to provide international 
facilities-based switched or private line service from the United 
States to an affiliated market in order to restrain the ability of 
foreign-affiliated carriers to engage in anticompetitive price squeeze 
behavior in the U.S. market. The Commission adopted a rebuttable 
presumption that a carrier's service offering has distorted market 
performance if any of the carrier's tariffed collection rates on the 
affiliated route are less than the carrier's average variable costs on 
that route. In order to prevent one-way bypass of the accounting rate 
system, the Commission will condition the Section 214 authorizations of 
carriers to provide switched basic services over international 
facilities-based or resold private lines. The Commission also adopted a 
rebuttable presumption that one-way bypass is occurring if the 
percentage of outbound traffic relative to inbound traffic increases 
more than 10% in two successive quarterly measurement periods and it 
reserves the right to investigate other shifts in the inbound/outbound 
ratio to determine whether one-way bypass is occurring.
    11. To assist in detecting market distortion, the Commission will 
amend Sec. 43.61 of its rules to require certain carriers to file 
quarterly traffic reports pursuant to filing criteria adopted in the 
Order. In addition, the Commission intends to monitor closely U.S. 
carriers' collection rates to ensure that they reflect fully all net 
settlement savings. U.S. carriers with more than five percent of the 
outbound IMTS traffic on a route will be required to file a report 
every six months.
    12. In the Notice, the Commission proposed a condition to carriers' 
applications that would balance its desire to encourage international 
resale services and at the same time limit the potential for one-way 
bypass. In the Order, the Commission modified the proposed condition. 
The first modification to the condition will authorize carriers to 
provide switched services over resold international private lines 
between the United States and foreign destination countries on the 
condition that settlement rates for at least 50 percent of the settled 
U.S.-billed traffic on the route or routes are at or below the 
appropriate benchmark. In the event that competitive distortions result 
on the route in question, i.e., carriers are engaging in one-way 
bypass, the Commission will take enforcement action. Such enforcement 
action may include a requirement prohibiting carriers from using their 
authorizations to provide switched services over private lines on that 
route until settlement rates for at least 50 percent of the settled 
U.S.-billed traffic on the route are at or below the level of the best 
practice rate of $0.08, or revocation of a carrier's authorization.
    13. The second modification the Commission made to the proposed 
condition would apply it to U.S. facilities-based carriers' use of 
their authorized private lines for the provision of switched, basic 
services. Carriers will be permitted to use their authorized 
facilities-based private lines to originate or terminate U.S. switched 
traffic on the condition that settlement rates for at least 50 percent 
of the settled U.S. billed traffic on the route or routes in question 
are at or below the appropriate benchmark. If market distortion occurs 
on the route, i.e., carriers are using their authorized private lines 
to engage in one-way bypass of the accounting rate system, the 
Commission will take enforcement action.
    14. Final Regulatory Flexibility Analysis. Pursuant to the 
Regulatory Flexibility Act of 1990, 5 U.S.C. 601-612, the Commission's 
Final Regulatory Flexibility Analysis with respect to the Order is as 
follows:
    Reason for action: The Commission issues this Report and Order 
adopting changes in the benchmark settlement rates for international 
message telephone service between U.S. facilities-based carriers and 
foreign carriers and related issues. The Commission believes that its 
benchmark rates should be revised to reflect recent technological 
improvements, their associated cost reductions, and the market 
structure changes occurring in the global telecommunications market. We 
also believe these revisions, and

[[Page 45760]]

related actions taken here, are necessary to move settlement rates 
closer to the actual costs of providing international termination 
services.
    Objectives: The objective of this proceeding is to attain reform in 
the international accounting rate system and thereby help ensure lower 
international calling prices for consumers and protect competition in 
the U.S. IMTS market. The Commission will achieve this objective by 
revising its benchmark settlement rates so that they more closely 
resemble the underlying costs of providing international termination 
services.
    Legal basis: The Report and Order is adopted pursuant to sections 
1, 2, 4(i), 201, 205, 214 and 303(r) of the Communications Act of 1934, 
as amended, 47 U.S.C. 151, 152, 154(i), 201, 205, 214, 303(r).
    Description, potential impact, and number of small entities 
affected: The Commission has not developed a definition of small 
entities applicable to international common carriers. We therefore have 
used as the applicable definition of small entity the definition under 
the Small Business Administration (SBA) rules applicable to 
Communications Services, Not Elsewhere Classified. This definition 
provides that a small entity is expressed as one with $11.0 million or 
less in annual receipts. Based on preliminary 1995 data, at present 
there are 29 international facilities-based common carriers that 
qualify as small entities pursuant to the SBA's definition. The number 
of small international facilities-based common carriers has been 
growing significantly, and by the end of 1996 that number could 
increase to approximately 50. The revised benchmark rates will apply to 
all international facilities-based common carriers, including small 
entities, that enter into an operating agreement with a foreign carrier 
that provides for the payment of settlement rates. We note that the 
revised benchmark rates should result in lower settlement rates for 
carriers. This Report and Order also requires that a foreign carrier's 
settlement rates be at or below the relevant benchmark as a condition 
of Section 214 authorization for that carrier, or an affiliate, to 
provide U.S. international facilities-based services between the United 
States and the affiliated destination country. This condition will 
apply to all U.S. international facilities-based carriers, including 
small entities, that are affiliated with foreign carriers. The 
Commission has concluded that this condition is necessary to prevent 
potential anticompetitive distortions in the IMTS market.
    The Order also imposes an additional requirement on carriers that 
seek to provide switched services using resold or facilities-based 
private lines. Carriers must demonstrate that settlement rates for 50 
percent of the settled traffic between the United States and the 
country at the foreign end of the private line are at or below the 
relevant benchmark for that country. The Commission believes that at 
most 635 small international carriers, both facilities-based and resale 
carriers, could be affected by this requirement. The Commission has 
concluded this requirement is necessary to prevent potential 
anticompetitive distortions in the IMTS market. We base our estimate of 
the number of small entities potentially affected on the number of toll 
carriers filing Telecommunications Relay Service Fund (TRS) worksheets. 
In 1995, 445 toll carriers filed TRS fund worksheets. We believe that 
between 50 and 200 carriers failed to file TRS fund worksheets. We also 
believe that fewer than 10 toll carriers were not small entities (based 
on the SBA's definition of small entity as one with fewer than 1,500 
employees). Thus, at most 635 international carriers would be 
classified as small entities. The Secretary shall send a copy of this 
Report and Order to the Chief Counsel for Advocacy of the Small 
Business Administration in accordance with section 603(a) of the 
Regulatory Flexibility Act, Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 
601, et seq. (1981).
    Reporting, recordkeeping and other compliance requirements: In its 
Initial Regulatory Flexibility Analysis the Commission did not propose 
any reporting requirements. The Notice, however, raised the issues of 
possible anticompetitive behavior and market distortions, and sought 
comment on how the Commission's reporting system could be modified in 
order to make monitoring and enforcement more effective. To address the 
concerns of commenters, the Report and Order contains certain 
mechanisms to detect potential market distortions. In this regard, the 
Commission amends its rules to impose an additional reporting 
requirement. Section 43.61 of the Commission's rules currently requires 
that carriers file annual reports that include actual traffic and 
revenue data. Common carriers subject to the existing Sec. 43.61 
requirements will be required to file traffic reports for each quarter 
in which their traffic meets any of the following thresholds: (i) Their 
aggregate U.S.-billed minutes of switched telephone traffic exceeds 1% 
of the total of such minutes of international traffic for all U.S. 
carriers (as published in the most recent Sec. 43.61 traffic data 
report); (ii) their aggregate foreign-billed minutes of switched 
telephone traffic exceeds 1% of the total of such minutes of 
international traffic for all U.S. carriers; (iii) their aggregate 
U.S.-billed minutes of switched telephone traffic for any country 
exceeds 2.5% of the total of such minutes for that country for all U.S. 
carriers; or (iv) their aggregate foreign-billed minutes of switched 
telephone traffic for any foreign country exceeds 2.5% of the total of 
such minutes for that country for all U.S. carriers. Limiting the 
quarterly filing requirement to carriers that meet these criteria will 
reduce the burden on small carriers, while enabling us to identify 
distortions in the balance of payments. The Report and Order only 
imposes an increase in the frequency with which the report must be 
filed. It will contain the same data that must be included in the 
current required annual report. Thus, the reporting requirement should 
not impose a significant economic burden, and no additional outside 
professional skills should be required in complying with this 
requirement.
    Federal rules which overlap, duplicate or conflict with the 
Commission's proposal: None.
    Any significant alternatives minimizing impact on small entities 
and consistent with stated objectives: The Notice solicited comments on 
a variety of alternative methodologies for calculating benchmark 
settlement rates, but these have no impact on small entities. The 
Notice also solicited comments on enforcement mechanisms that may be 
necessary to support U.S. carriers, including small entities, in their 
negotiations with foreign carriers and in their provision of 
international service. We did not receive any comments on the impact of 
these alternatives on small entities.
    Comments solicited: Written comments were requested on the Initial 
Regulatory Flexibility Analysis in accordance with the same filing 
deadlines set for comments on the other issues in the Notice, but we 
did not receive any comments.
    15. Paperwork Reduction Act. This Report and Order contains either 
a proposed or modified information collection. 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 order, as required by 
the Paperwork Reduction Act of 1995, Pub. L. 104-13. Public and agency 
comments are due 60

[[Page 45761]]

days from the date of publication of this decision in the Federal 
Register. Comments should address: (a) whether the proposed 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.
    OMB Approval Number: 3060-0106.
    Title: Section 43.61--Reports of Overseas Telecommunications 
Traffic.
    Form No.: None.
    Type of Review: Revision of existing collection.
    Respondents: U.S. common carriers providing international 
telecommunications services.
    Number of Respondents: We estimate the number of respondents to be 
5. Although the number of respondents is less than 10, the Commission 
is unable to identify specific respondents because the respondents will 
vary depending on whether they carry specified levels of U.S. 
international traffic during any quarterly reporting period. Only those 
carriers that meet the reporting criteria established in the Order will 
be subject to the proposed information collection.
    Estimated Time Per Response: 160 hours.
    Total Annual Burden: 800 hours.
    Estimated costs per respondent: None. Respondents already maintain 
this data as part of their normal business practices.
    Needs and Uses: Section 43.61 requires each common carrier that 
provides international facilities-based switched service between the 
United States and any foreign country to file an annual traffic and 
revenue report. The annual report includes actual traffic and revenue 
data for each service provided by a common carrier, divided among 
service billed in the United States, service billed outside the United 
States, and service transiting the United States. In this Order we are 
increasing the filing frequency in order to detect market distortion 
that may occur from the routing of U.S. international switched, basic 
traffic over private lines. Common carriers subject to the existing 
Sec. 43.51 requirement will be required to file the quarterly reports, 
in addition to annual reports for each quarter reporting period in 
which their minutes of switched telephone traffic meet certain 
thresholds established by the Commission. However, we will require that 
carriers file their traffic and revenue data only for switched 
facilities-based telephone services and switched facilities resale 
telephone services--not for their other international services.
    We note that this decision imposes an additional requirement on 
carriers that seek to provide switched services using resold or 
facilities-based private lines. Carriers must demonstrate that 
settlement rates for at least 50 percent of the settled traffic between 
the United States and the country at the foreign end of the private 
line are at or below the relevant benchmark for that country. We do not 
anticipate that this requirement will impose any additional burden on 
carriers as any paperwork burden associated with this requirement is 
sufficiently covered under the currently approved information 
collection (OMB Control No. 3060-0686).

Ordering Clauses

    16. Accordingly, it is ordered that, pursuant to sections 1, 2, 
4(i), 201, 205, 214 and 303(r) of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 152, 154(i), 201, 205, 214, 303(r), the rules, 
requirements and policies discussed in this Order are adopted and parts 
43 and 63 of the Commission's rules, 47 CFR parts 43 and 63, are 
amended.
    17. It is further ordered that the rules, requirements and policies 
established in this decision shall take effect on January 1, 1998. The 
new information collection requirements adopted in this Order will 
become effective following OMB approval. The Commission will publish a 
document at a later date establishing the effective date.

List of Subjects in 47 CFR Parts 43 and 63

    Communications common carriers, Reporting and recordkeeping 
requirements.

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

Rule Changes

    Parts 43 and 63 of Title 47 of the Code of Federal Regulations are 
amended as follows:

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

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

    Authority: Sec. 4 of the Communications Act of 1934, as amended, 
47 U.S.C. 154.

    2. In Sec. 43.61, paragraphs (b) through (d) are redesignated as 
paragraphs (a)(1) through (a)(3) and new paragraph (b) is added to read 
as follows:


Sec. 43.61  Reports of international telecommunications traffic.

* * * * *
    (b) Quarterly Traffic Reports. (1) Each common carrier engaged in 
providing international telecommunications service between the area 
comprising the continental United States, Alaska, Hawaii, and off-shore 
U.S. points and any country or point outside that area shall file with 
the Commission, in addition to the report required by paragraph (a) of 
this section, actual traffic and revenue data for each calendar quarter 
in which the carrier's quarterly minutes exceed the corresponding 
minutes for all carriers by one or more of the following tests:
    (i) The carrier's aggregate minutes of facilities-based or 
facilities resale switched telephone traffic for service billed in the 
United States are greater than 1.0 percent of the total of such minutes 
of international traffic for all U.S. carriers published in the 
Commission's most recent Sec. 43.61 annual report of international 
telecommunications traffic;
    (ii) The carrier's aggregate minutes of facilities-based or 
facilities resale switched telephone traffic for service billed outside 
the United States are greater than 1.0 percent of the total of such 
minutes of international traffic for all U.S. carriers published in the 
Commission's most recent Sec. 43.61 annual report of international 
telecommunications traffic;
    (iii) The carrier's aggregate minutes of facilities-based or 
facilities resale switched telephone traffic for service billed in the 
United States for any foreign country are greater than 2.5 percent of 
the total of such minutes of international traffic for that country for 
all U.S. carriers published in the Commission's most recent Sec. 43.61 
annual report of international telecommunications traffic; or
    (iv) The carrier's aggregate minutes of facilities-based or 
facilities resale switched telephone traffic for service billed outside 
the United States for any foreign country are greater than 2.5 percent 
of the total of such minutes of international traffic for that country 
for all U.S. carriers published in the Commission's most recent 
Sec. 43.61 annual report of international telecommunications traffic.
    (2) Except as provided in this paragraph, the quarterly reports 
required by paragraph (b)(1) of this section shall be filed in the same 
format as, and in conformance with, the filing

[[Page 45762]]

procedures for the annual reports required by paragraph (a) of this 
section.
    (i) Carriers filing quarterly reports shall include in those 
reports only their provision of switched, facilities-based telephone 
service and switched, facilities resale telephone service.
    (ii) The quarterly reports required by paragraph (b)(1) of this 
section shall be filed with the Commission no later than April 30 for 
the prior January through March quarter; no later than July 31 for the 
prior April through June quarter; no later than October 31 for the 
prior July through September quarter; and no later than January 31 for 
the prior October through December period.

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: Sections 1, 4(i), 4(j), 201-205, 218 and 403 of the 
Communications Act of 1934, as amended, and Section 613 of the Cable 
Communications Policy Act of 1984, 47 U.S.C. secs. 151, 154(i), 
154(j), 201-205, 218, 403 and 533 unless otherwise noted.

    2. Section 63.18 is amended by revising paragraphs (e)(2)(ii)(B) 
through (e)(2)(ii)(C), (e)(3) introductory text, and (e)(4) to read as 
follows:


Sec. 63.18  Contents of applications for international common carriers.

* * * * *
    (e) * * *
    (2) * * *
    (ii) * * *
    (B) The applicant may resell private line services for the 
provision of international switched basic services only in 
circumstances where the Commission has found that the country at the 
foreign end of the private line provides equivalent resale 
opportunities and that settlement rates for at least 50 percent of the 
settled U.S.-billed traffic between the United States and that country 
are at or below the benchmark settlement rate adopted for that country 
in IB Docket No. 96-261. The Commission will provide public notice of 
its equivalency and settlement rate determinations. The applicant, 
however, shall not initiate such service on a particular route absent a 
grant of specific authority under paragraph (e)(6) of this section in 
circumstances where the applicant is affiliated with a facilities-based 
carrier in the country at the foreign end of the private line and the 
Commission has not determined that the foreign carrier does not possess 
market power in that country.
    (C) The authority granted under this paragraph shall be subject to 
all Commission rules and regulations, including the limitation in 
Sec. 63.21 on the use of private lines for the provision of switched 
services, and any conditions stated in the Commission's public notice 
or order that serves as the applicant's Section 214 certificate. See 
Sections 63.12, 63.21.
    (3) If applying for authority to provide international switched 
basic services over resold private lines between the United States and 
a country for which the Commission has not made the settlement rate and 
equivalency determinations specified in paragraph (e)(2)(ii)(B) of this 
section, applicant shall demonstrate that settlement rates for at least 
50 percent of the settled U.S.-billed traffic between the United States 
and the country at the foreign end of the private line are at or below 
the benchmark settlement rate adopted for that country in IB Docket No. 
96-261 and that the country affords resale opportunities equivalent to 
those available under U.S. law. In this regard, applicants shall:
* * * * *
    (ii) The procedures set forth in paragraph (e)(3) of this section 
are subject to Commission policies on resale of international private 
lines in CC Docket No. 90-337 as amended in IB Docket Nos. 95-22 and 
96-261.
    (4) Any carrier authorized under this section to acquire and 
operate international private line facilities other than through resale 
may use those private lines to provide switched basic services only in 
circumstances where the Commission has found that the country at the 
foreign end of the private line provides equivalent resale 
opportunities and that settlement rates for at least 50 percent of the 
settled U.S.-billed traffic between the United States and that country 
are at or below the benchmark settlement rate adopted for that country 
in IB Docket No. 96-261. The Commission will provide public notice of 
its equivalency and settlement rate determinations. This provision is 
subject to the following exceptions and conditions:
    (i) The applicant shall not initiate such service on a particular 
route absent a grant of specific authority under paragraph (e)(6) of 
this section in circumstances where the applicant is affiliated with a 
facilities-based carrier in the country at the foreign end of the 
private line and the Commission has not determined that the foreign 
carrier does not possess market power in that country.
    (ii) The applicant is subject to all applicable Commission rules 
and regulations, including the limitation in Sec. 63.21 on the use of 
private lines for the provision of switched services, and any 
conditions stated in the Commission's public notice or order that 
serves as the applicant's Section 214 certificate. See Secs. 63.12, 
63.21.
    (A) Except as provided in paragraph (e)(4)(ii)(B) of this section, 
any carrier that seeks to provide international switched basic services 
over its authorized private line facilities between the United States 
and a country for which the Commission has not made the settlement rate 
and equivalency determinations specified in paragraph (e)(2)(ii)(B) of 
this section shall demonstrate that settlement rates for at least 50 
percent of the settled U.S.-billed traffic between the United States 
and the country at the foreign end of the private line are at or below 
the benchmark settlement rate adopted for that country in IB Docket No. 
96-261 and that the country affords resale opportunities equivalent to 
those available under U.S. law. In this regard, applicant shall include 
the information required by paragraph (e)(3) of this section.
    (B) No formal application is required under paragraph (e)(4) of 
this section 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.
    3. Section 63.21(a) is revised to read as follows:


Sec. 63.21  Conditions applicable to international Section 214 
authorizations.

* * * * *
    (a) Carriers may not use their authorized facilities-based or 
resold international private lines for the provision of switched basic 
services unless and until the Commission has determined that the 
country at the foreign end of the private line provides equivalent 
resale opportunities and that settlement rates for 50 percent of the 
settled U.S.-billed traffic between the United States and that country 
are at or below the benchmark settlement rate adopted for that country 
in IB Docket No. 96-261. See Sec. 63.18 (e)(3) through (e)(4). If at 
any time the Commission finds, after an initial determination of 
compliance for a particular country, that the country no longer 
provides

[[Page 45763]]

equivalent resale opportunities or that market distortion has occurred 
in the routing of traffic between the United States and that country, 
carriers shall comply with enforcement actions taken by the Commission. 
This condition shall not apply to a carrier's use of its authorized 
facilities-based private lines to provide service as described in 
Sec. 63.18 (e)(4)(ii)(B).

[FR Doc. 97-22936 Filed 8-28-97; 8:45 am]
BILLING CODE 6712-01-P