*Pages 1--3 from Microsoft Word - 23693.doc* [ text version ] NEWS Federal Communications Commission 1919 - M Street, N. W. Washington, D. C. 20554 News media info Fax- On- D Internet: This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes MCI v. FCC. 515 F 2d 385 (D. C. Circ 1974). Report No. IN 97- 36 INTERNATIONAL ACTION COMMISSION LIBERALIZES FOREIGN PARTICIPATION IN THE U. TELECOMMUNICATIONS MARKET (IB Docket Nos. 97- 142 and 95- 22) The Commission today adopted an Order that will significantly increase competition in the U. S. t market by facilitating entry by foreign service providers and investors. This action will yield subs U. S. consumers by reducing prices, providing greater service options, and spurring technological The Commission's action underscores the U. S. leadership position in opening the global telecomm to competition. On February 15, 1997, the United States and 68 other countries reached a market-will fundamentally change the structure of the global telecommunications market. The World Tra (WTO) Basic Telecom Agreement is guided by a worldwide commitment to opening markets, pro competition, and preventing anticompetitive conduct -- principles that are also at the heart of the l Telecommunications Act of 1996. Under the terms of the Agreement, scheduled to take effect Jan of the world's major trading nations made binding commitments to open their telecommunications markets. In fact, the 69 nations that made commitments account for more than 90 percent of globa telecommunications service revenues. Most of these countries will replace traditional regimes of r providers with procompetitive and deregulatory policies. As a result, U. S. companies will be able closed foreign markets and develop competing networks for local, long distance, and international This Order, along with a companion Order governing access to non- U. S. licensed satellite system necessary to open the U. S. market to increased competition. In light of the WTO Basic Telecom A market- opening commitments of other WTO Members, and the Commission's improved competit governing U. S. international services, the Commission determined that it could replace its previou foreign entry with an open entry policy for carriers from WTO Members. With these Orders, the C taken important steps to carry out the letter and spirit of the market- opening commitments made b States. As a result, more foreign carriers will soon begin to enter and compete in the U. S. market. likewise be able to enter and compete in previously closed foreign markets. In this context, the Co emphasized that the United States will carefully review the market- opening steps taken by the rest 1 Open Entry Policies In 1995, the Commission adopted the effective competitive opportunities (ECO) test to govern for U. S. telecommunications market. The ECO test allowed foreign applicants to enter the U. S. mark markets offered effective competitive opportunities for U. S. companies. Today's Order replaces the ECO test with an open entry standard for applicants from WTO Memb applicants will no longer be required to demonstrate that their markets offer effective competitive order to: (1) obtain Section 214 authority to provide international facilities- based, resold switched interconnected private line services; (2) receive authorization to exceed the 25 percent indirect for benchmark in Section 310( b)( 4) of the Communications Act for wireless licenses; or (3) receive s landing licenses. The Commission also removed the equivalency test, a standard similar to the EC seeking to provide switched services over private lines between the United States and WTO Mem ECO test, the Order presumes that entry is procompetitive and therefore adopts streamlined proce most applications. The Commission recognized, however, that in some cases safeguards may not constrain the potential for anticompetitive harm. In such instances, the Commission reserved the r additional conditions to an authorization and, in the exceptional case in which an application pose to competition that cannot be addressed by safeguards, it reserved the right to deny the authorizati With regard to carriers from non- WTO Members, the Commission found that circumstances have sufficiently in these countries to allow the Commission to remove the ECO and equivalency tests applicants. Regulatory Safeguards The Commission also revised the competitive safeguards that apply to the provision of internation telecommunications services in the U. S. market. The Order adopts more narrowly tailored safegu the Commission's ability to monitor and detect anticompetitive behavior in the U. S. market and m eliminates some existing rules that could hamper competition. The Commission narrowed the existing "No Special Concessions" rule so that it only prohibits U. entering into exclusive arrangements with foreign carriers that have sufficient market power to aff adversely in the U. S. market. To provide more certainty in the market as U. S. carriers negotiate de foreign counterparts, the Order adopts a rebuttable presumption that carriers with less than 50 per in the foreign market lack such market power. U. S. carriers, therefore, may enter into exclusive de carriers involving, for example, operating agreements and interconnection arrangements. Parties m the Commission that a carrier with more than 50 percent market share on the foreign end of a rout market power to harm competition and consumers in the U. S. market, and therefore may engage i dealings. The Order also protects the confidentiality of U. S. carriers and consumers by prohibiting carriers confidential carrier or U. S. customer information from a foreign carrier without appropriate U. S. c customer approval. In the August 1997 Benchmarks Order, the Commission conditioned foreign- affiliated carrier auth 2 provide facilities- based switched or private line services to an affiliated market on compliance wit settlement rates adopted in that order. In this Order, the Commission declined to apply a similar c affiliated carriers providing resold switched services to affiliated markets because the potential for harm is less in the switched resale context than for facilities- based service. In order to facilitate de anticompetitive conduct, however, the Commission required carriers providing switched resale se which they have an affiliate with market power to file quarterly traffic and revenue reports. The Commission also revised the competitive safeguards that apply to U. S. carriers classified as d affiliation with a foreign carrier that has market power on the foreign end of an international route a single- tier dominant carrier regulatory approach and relies in large part on reporting requiremen restrictions on carriers' provision of service, to prevent affiliated carriers from causing harm to com consumers in the U. S. market. In particular, the Order replaces the fourteen- day advance notice ta requirement with a one- day advance notice requirement and accords these tariff filings a presump It also removes the prior approval requirement for circuit additions or discontinuances on the dom monitor and detect anticompetitive behavior, the Order requires quarterly reports on traffic and re provisioning and maintenance, and circuit status for the dominant route. The Order also requires a structural separation between U. S. carriers and their foreign affiliates. As with its No Special Con Commission adopted a rebuttable presumption that a foreign carrier with less than 50 percent mar foreign market lacks market power and, therefore, its U. S. affiliate should be presumptively treate The Commission emphasized that, in the event of anticompetitive conduct, it may issue fines, requ conditions on a grant of authority, and, if necessary, revoke an authorization. Finally, the Commission adopted a presumption in favor of alternative settlement arrangements on Members. This presumption may be rebutted with a showing that there are not multiple internatio competitors operating in the foreign market. Action by the Commission November 25, 1997, Rep Order on Reconsideration, (FCC 97- 398). Chairman Kennard, Commissioners Ness, Furchtgott- R Tristani with Chairman Kennard issuing a separate statement. - FCC - News Media contacts: Meribeth McCarrick at (202) 418- 0256 or Rosemary Kimball at (202) 418-Bureau contacts: Diane Cornell at (202) 418- 1470, Robert McDonald at (202) 418- 1476, Adam K 418- 1099, Doug Klein at (202) 418- 0424, Laurie Sherman at (202) 418- 0429 or Robert Calaff (20 3