Before the
Federal Communications Commission 
Washington, D.C. 20554
In the Matter of 
AT&T Corp.
Proposed Extension of 
Accounting Rate Agreement for 
Switched Voice Service with 
Argentina
Eft 96-378
ISP-96-W-062
ORDER
Adopted: March 18, 1996 
By the Chief, International Bureau:
Released: March 18, 1996
Introduction
1. This Commission will not allow foreign monopolists to undermine U.S. 
law, injure U.S. carriers or disadvantage U.S. consumers. Telintar,1 of Argentina, is 
attempting to do just that. We must use our regulatory authority to prevent this effort 
from being successful.
2. Telintar has used its market power to discriminate against individual 
U.S. carriers to win concessions hi accounting rate negotiations. It has, for example, 
unilaterally blocked AT&T's circuits to Argentina and USADirect  Service in 
retaliation for AT&T's efforts to negotiate a lower accounting rate. This 
unprecedented discriminatory and retaliatory behavior constitutes classic whipsawing 
and violates our International Settlements Policy (ISP). To enforce our law, and to 
protect U.S. carriers and consumers, we must order U.S. carriers providing direct 
facilities-based service to Argentina hi correspondence with Telintar to suspend 
settlement payments to Telintar. Such payments will remain suspended until AT&T's 
international circuits and USADirect  Service with Telintar have been fully restored.
1 Telintar, a privately-owned company, provides mteraational telecommunications services in Argentina on 
a monopoly basis through November 1997. Telefonica of Argentina and Telecom Argentina, Argentina's 
two regional monopoly providers of local telephone service, each own SO percent of Telintar.
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3. Additionally, we reject AT&T's February 20, 1996,'request for a 
waiver of the Commission's ISP to extend AT&T's previously authorized accounting 
rate between AT&T and Telintar of $1.47 per minute for switched voice service 
between the parties. This accounting rate is discriminatory and therefore a violation 
of our ISP. We do, however, approve the proposed extension at the rate of $1.43 per 
minute, which is the lowest rate currently being paid by other U.S. carriers to Telintar. 
Payments at this rate may commence after Telintar restores full service to AT&T.
Background
4. On September 30, 1995, AT&T's agreement with Telintar to settle 
international calls at the previously-authorized accounting rate of $1.47 per minute 
expired. No new agreement was reached by the termination date. On January 26, 
1996, AT&T and Telintar reached an agreement to extend the $1.47 per minute 
accounting rate for an interim period commencing October 1, 1995, and ending 
January 31, 1996. The extension of the expired agreement was entered into by AT&T 
to ensure the continuation of settlement payments to Telintar while the parties 
continued to negotiate.2
5. A week after execution of the accounting rate extension, and only two 
days after AT&T and Telintar met to negotiate a new rate, Telintar began a series of 
escalating steps to disrupt AT&T's international service with Argentina. On February 
3, 1996, Telintar blocked ninety (90) AT&T circuits, preventing the use of those 
circuits by AT&T for outbound U.S. international calls to Argentina. In addition, 
Telintar disabled AT&T's USADirect  Service from Argentina. Despite AT&T's 
objections, Telintar blocked an additional ninety (90) AT&T circuits on February 14, 
1996.3 Telintar also has rerouted a portion of AT&T's return traffic to other carriers.
6. In response to these actions, on February 16, 1996, the International 
Bureau requested the assistance of the Argentine regulator, the National 
Telecommunications Commission (CNT), to facilitate the prompt restoration of 
AT&T's service and to avoid the need for regulatory measures to protect the interests 
of U.S. carriers and consumers. A copy of the written request was sent to Telintar. 
Although we have reason to believe CNT has tried to intervene, the Bureau has 
received no response from Telintar. The United States Department of State also 
contacted the Argentine government and requested its assistance in resolving this 
matter. But to date, Telintar has not taken any action to restore service.
2 AT&T's International Settlements Policy Waiver for Change in the Accounting Rate for Switched Voice 
Service with Argentina, ISP-96-W-062, (filed February 20, 1996).
3 Technical re-engineering of the trunks affected by Telintar's actions resulted in the blockage of 210 of 
AT&T's 540 circuits with Argentina.
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7. In addition to Telintar's disruption of AT&T's service, Telintar has 
refused to grant WorldComm adequate facilities to terminate all of WorldCom's traffic 
destined for Argentina. As a result, WorldCom has been forced to overflow as much 
as 25% of its traffic to other carriers for termination in Argentina. WorldCom has 
advised the Commission that the additional capacity it requires can be accomplished by 
means of circuit multiplication, and that no additional investment in cable or satellite 
facilities is required.4
Discussion
8. Telintar's actions restricting individual U.S. carriers' ability to serve 
Argentina are contrary to the Commission's ISP. The ISP is designed to prevent 
foreign carriers with market power from using that power to obtain unduly favorable 
terms and conditions in their relations with competing U.S. carriers (i.e.. 
"whipsawing")5. The Commission has directed us to prevent foreign carrier retaliation 
against U.S. carriers seeking to establish lower, more cost-based accounting rates in 
accordance with the ISP and International Telegraph Telephone Consultative 
Committee (CCITT) Recommendations.6
9. Just last month, the Commission adopted a Policy Statement on 
International Accounting Rate Reform in which it reaffirmed "...the need to ensure 
that foreign carriers do not abuse their market power in negotiations with U.S. 
carriers...."7 The Commission announced that it would act aggressively to enforce the 
ISP to "support U.S. carriers which refuse to continue to pay high accounting rates 
when existing agreements expire" and to protect U.S. carriers from being whipsawed 
by foreign carriers during accounting rate negotiations.8
See Letter dated February 9, 1996 from Robert S. Koppel, WorldCom, to Scott Blake Harris, Chief, 
International Bureau, FCC. .
Id at 9. See Mackay Radio and Telegraph Company, 2 FCC 592 (1936), affd en baric, 4 FCC 150 (1937), 
offd sub nom., Mackay Radio and Telegraph Co. v. FCC, 97 F.2d 641 (D.C. Cir. 1938). "Whipsawing" 
refers to the practice of a foreign correspondent playing competitive U.S. carriers against one another in 
order to gain concessions and benefits for itself to the detriment of U.S. carriers and ratepayers, a result at 
odds with the U.S. public interest. AT&Tv. MCI, 9 FCC Red 2688 (1994) citing Implementation and Scope 
of the Uniform Settlements Policy for Parallel International Communications Routes, 59 RR 2d 982 (1986).
CCITT Recommendation D.140 provides that accounting rates for international telephone services be cost 
oriented and take into account relevant cost trends. That Recommendation was approved by the CCITT on 
October 1, 1992, by greater than an eighty percent margin. Regulation of International Accounting Rates, 
Order on Reconsideration, 7 FCC Red 8049, 8052 (1992).
Policy Statement on International Accounting Rate Reform, Policy Statement, FCC 96-37, rel. Jan. 31,1996, 
U 9 ("Policy Statement"). .
Id.
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10. Telintar's disruption of service between the United Slates and Argentina, 
in retaliation for AT&T's efforts to negotiate a significantly lower accounting rate than 
$1.43 is contrary to the U.S. public interest and a violation of the ISP. Such 
retaliation unfairly discriminates against individual U.S. carriers and is a classic 
example of whipsawing. Unfortunately, our attempts to work with the Argentine 
regulator, CNT, to restore service and avoid the need for regulatory measures have not 
yet been successful. As such, we find that regulatory intervention is necessary.
11. Telintar's actions to disrupt U.S. international service and to continue 
such disruption after Commission communication of its policies warrants our exercise 
of Commission authority to order all U.S. carriers to suspend the payment of all 
settlements to Telintar effective immediately. This suspension will continue until 
AT&T's circuits are no longer blocked and its USADirect  Service is restored. Once 
this occurs payment of settlements to Telintar, including settlements that have been 
withheld, shall resume consistent with the terms of this Order, and without further 
order of the Commission. However, should this situation continue, we will consider 
further action.
12. Further, to eliminate the discriminatory accounting rate levels among 
U.S. carriers with Telintar, we establish $1.43 per minute as the maximum interim 
accounting rate U.S. carriers may pay, effective October 1, 1995. This accounting rate 
level reflects the lowest level agreed to by Telintar with a U.S. carrier (i.e., MCI and 
Sprint). This rate is still higher than the $1.20 maximum benchmark rate we 
established in the Second Report and Order and thus appears generous as an interim 
accounting rate.
13. We also find that Telihtar's refusal to provide WorldCom with adequate 
facilities constitutes whipsawing and, therefore, cannot be allowed to continue. If 
Telintar does not promptly remedy this situation, we will consider further action.
14. We expect AT&T and any other U.S. carriers corresponding with 
Telintar to negotiate toward the benchmarks that we have previously established, as 
well as toward any new benchmarks that we may establish. We further expect that 
there will be no discrimination among U.S. carriers.
Ordering Clauses
15. Accordingly, IT IS ORDERED that all facilities-based carriers subject to 
FCC jurisdiction having a correspondency agreement with Telintar for the direct 
termination of U.S. traffic shall suspend all settlement payments to Telintar for 
switched voice service effective upon release of this Order until such time as Telintar 
has restored AT&T's circuits and AT&T's USA Direct service;
16. IT IS FURTHER ORDERED that AT&T's request to extend its 
accounting rate agreement with Telintar at the rate of $1.47 per minute is REJECTED 
and the proposed extension is APPROVED at the rate of $1.43 per minute.
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17. IT IS FURTHER ORDERED that, upon resumption of payments in 
accordance with this Order, all U.S. carriers, including AT&T and WorldCom, shall be 
authorized to pay Telintar, effective October 1, 1995, at $1.43 per minute for switched 
voice service pending further negotiations between U.S. carriers with Telintar;
18. IT IS FURTHER ORDERED that all U.S. carriers shall continue their 
efforts to achieve further significant reductions in the accounting rate with Telintar; 
and
19. IT IS FURTHER ORDERED that WorldCom shall file a report within 
IS days of the release of this Order stating whether Telintar has provided it with 
suitable facilities to terminate all of its traffic destined for Argentina.
20. This Order is issued under Section 0.261 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 the date of public notice of this Order (see 47 C.F.R. Section
FEDERAL COMMUNICATIONS COMMISSION
Scott Blake Harris
Chief, International Bureau
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