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 NEWS  News  media  Information:  202  /  418-  0500  Fax-  On-  Demand:  202  /  418-  2830 
 Internet:  http://  www.  fcc.  gov 
 ftp.  fcc.  gov 
 Federal  Communications  Commission 
 1919  M  Street,  N.  W. 
 Washington,  D.  C.  20554 


 This  is  an  unofficial  announcement  of  Commission  action.  Release  of  the  full  text  of  a  Commission  order 
 constitutes  official  action.  See  MCI  v.  FCC,  515  F.  2d  385  (D.  C.  Cir.  1974). 


 FOR  IMMEDIATE  RELEASE:  News  Media  Contact:  April  15,  1999  Rosemary  Kimball  at  (202)  418-  0500 


 Report  No.  IN  99-  16  INTERNATIONAL  ACTION  April  15,  1999 
 FCC  LIFTS  REGULATIONS  ON  INTER-  CARRIER  AGREEMENTS  IN  BROAD  REFORM  OF  INTERNATIONAL  SETTLEMENTS  POLICY 
 (IB  DOCKET  98-  148) 
 The  Commission  today  approved  sweeping  reform  of  the  longstanding  international  settlements  policy,  deregulating  inter-  carrier  settlement  arrangements  between  U.  S.  carriers  and 
 foreign  non-  dominant  carriers  on  competitive  routes. 
 The  FCC's  international  settlements  policy  was  originally  designed  to  prevent  monopoly  foreign  carriers  from  taking  advantage  of  the  competitive  marketplace  in  the  United  States  by  playing 
 one  carrier  off  against  another  -  a  practice  known  as  "whipsawing"  -  in  order  to  extract  higher  rates  for  the  completion  of  international  calls  originating  in  the  United  States.  The  international  settlements 
 policy  attempts  to  prevent  whipsawing  by  prohibiting  U.  S.  carriers  from  accepting  discriminatory  terms  and  conditions  for  the  termination  of  traffic  in  overseas  markets. 


 The  reforms  to  the  international  settlements  policy  adopted  by  the  Commission  today  reflect  the  new  realities  that  exist  in  the  international  telecommunications  market.  Under  the  1997  World 
 Trade  Organization  Agreement  on  Basic  Telecommunications,  72  countries  made  commitments  to  open  their  markets  to  competition  for  telecommunications  services.  In  many  of  those  countries,  new 
 entrants  are  already  providing  service  to  customers  at  lower  rates  and  higher  standards  of  service  than  the  former  monopoly  provider. 


 U.  S.  consumers  have  benefitted  from  these  changes  in  the  international  telecommunications  market.  Settlement  rates,  the  rates  U.  S.  carriers  pay  to  complete  international  calls,  have  declined  by 
 an  average  of  22  percent  since  1998  and  consumer  prices  have  dropped  precipitously  on  competitive  routes.  For  example,  discount  rates  for  international  calls  to  the  United  Kingdom  have  declined  by 
 about  80  percent,  and  rates  to  Germany  and  the  Netherlands  have  decreased  by  about  50  percent  since  1996. 


 While  the  international  settlements  policy  has  been  a  successful  tool  in  preventing  harmful  discrimination  against  U.  S.  carriers  by  foreign  monopoly  carriers,  the  Commission's  action  today 
 recognizes  that  the  policy  is  not  necessary  on  routes  where  there  is  competition  on  the  foreign  end  of  a  call.  In  fact,  continued  application  of  the  international  settlements  policy  in  such  circumstances  could 
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 impede  the  further  development  of  competition  by  restricting  the  ability  of  U.  S.  carriers  to  seek  lower  cost,  innovative  arrangements  for  the  termination  of  U.  S.  calls  overseas. 
 Specifically,  the  Commission: 
 •Eliminated  the  international  settlements  policy  and  contract  filing  requirements  for  arrangements  with  foreign  carriers  that  lack  market  power; 


 •Eliminated  the  international  settlements  policy  for  arrangements  with  all  carriers  on  routes  where  rates  to  terminate  U.  S.  calls  are  at  least  25  percent  lower  than  the  relevant  settlement  rate 
 benchmark  previously  adopted  by  the  FCC  in  its  Settlement  Rate  Benchmark  Order  (the  text  of  the  Settlement  Rate  Benchmark  Order  is  available  on  the  Commission's  website  at 
 www.  fcc.  gov/  ib); 
 •Adopted  changes  to  contract  filing  requirements  to  permit  U.  S.  carriers  to  file  arrangements  on  a  confidential  basis  with  foreign  carriers  with  market  power  on  routes  where  the  international 
 settlements  policy  is  removed; 
 •Adopted  procedural  changes  to  simplify  accounting  rate  filing  requirements; 
 •Eliminated  the  flexibility  policy  in  recognition  that  the  reforms  to  the  international  settlements  policy  render  the  flexibility  policy  largely  superfluous. 


 The  Commission  noted  that  the  revisions  to  its  rules  will  give  greater  opportunities  to  smaller  carriers  and  will  allow  the  market,  rather  than  government  regulation,  to  govern  settlement 
 arrangements  between  carriers  in  competitive  markets.  This  reform  was  undertaken  pursuant  to  the  FCC's  statutory  mandate  to  modify  or  repeal  rules  no  longer  in  the  public  interest  as  a  result  of 
 meaningful  economic  competition. 
 Action  by  the  Commission  April  15,  1999,  by  Report  and  Order  (FCC  99-  73).  Chairman  Kennard,  Commissioners  Ness,  Furchtgott-  Roth,  Powell  and  Tristani. 


 -  FCC  - 
 International  Bureau  contact:  Robert  McDonald  at  (202)  262-  1198  (until  April  19)  (202)  418-  418-  1476  (beginning  April  19);  Kathryn  O'Brien  at  (202)  441-  5164  (until  April  19) 
 (202)  418-  0439  (beginning  April  19) 
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