*Pages 1--76 from Part 43 NPRM Final.PDF* Federal Communications Commission FCC 04- 70 1 Before the Federal Communications Commission Washington, D. C. 20554 In the matter of Reporting Requirements for U. S. Providers of International Telecommunications Services Amendment of Part 43 of the Commission’s Rules ) ) ) ) ) ) ) IB Docket No. 04- 112 NOTICE OF PROPOSED RULEMAKING Adopted: March 24, 2004 Released: April 12, 2004 Comment Date: 60 days after Federal Register publication Reply Comment Date: 90 days after Federal Register publication By the Commission: TABLE OF CONTENTS Paragraph No. I. INTRODUCTION AND SUMMARY 1 II. BACKGROUND 5 A. The Reporting Requirements 5 B. 2002 Biennial Regulatory Review Proceeding 13 III. DISCUSSION 17 A. Purpose of Reporting Requirements 17 B. Annual Traffic and Revenue Reports 24 1. Purpose of the Traffic and Revenue Reports 24 2. Improvements to the Traffic and Revenue Reports 27 C. Quarterly Reports for Large Carriers 50 D. Quarterly Reports of Foreign- Affiliated Switched Resale Carriers 55 E. Circuit- Status Reports 58 F. Consolidation of Traffic and Revenue and Circuit- Status Reports 62 1. Consolidation of the Reports 62 2. Consolidated Filing Date 64 3. Consolidated Filing Manual 65 G. Reports of Division of Tolls for Telegraph Carriers 67 H. Other Issues 68 1. Confidentiality 68 2. Definitions 72 3. Electronic Filing 76 1 Federal Communications Commission FCC 04- 70 2 4. Transition Period 79 IV. CONCLUSION 80 V. ADMINISTRATIVE MATTERS 81 A. Ex Parte Presentations 81 B. Initial Regulatory Flexibility Analysis 82 C. Initial Paperwork Reduction Act of 1995 Analysis 83 D . Comment Filing Procedures 84 E. Further Information 93 VI. ORDERING CLAUSES 94 Appendix A: Initial Regulatory Flexibility Analysis Appendix B: Proposed Rule Changes Appendix C: Staff Recommendations I. INTRODUCTION AND SUMMARY 1. In this Notice of Proposed Rulemaking (Notice), we undertake a comprehensive review of the reporting requirements to which carriers providing U. S. international services are subject under Part 43 of our rules. 1 We seek comment on several changes to simplify the reporting requirements and to ensure the usefulness of the data collected by the Commission. These proposals seek to further the Commission’s goal of protecting U. S. consumers and U. S. carriers from anti- competitive conduct, ensur ing that consumers enjoy more choice in telecommunications services and decreasing prices for international calls, without imposing unnecessary burdens on carriers. 2. Under Part 43, carriers are currently required to file traffic and revenue reports, 2 circuit- status reports, 3 and reports on the division of tolls for international telegraph service. 4 We seek comment on the continued need for these reports in light of changes in the market for U. S. -international telecommunications services since the Commission last comprehensive ly reviewed the reporting requirements in the mid- 1990s. We also seek comment on staff recommendations prepared by the International Bureau and the Wireline Competition Bureau to simplify and improve the traffic and revenue information the carriers report under section 43.61 5 and the circuit capacity information they report under section 43.82, 6 and to obtain information that is more relevant to the current issues in the international telecommunications market. 3. Specifically, we seek comment on whether to: · retain the annual traffic and revenue reporting requirements and the circuit- 1 47 C. F. R. Part 43 (2003). 2 See 47 C. F. R. § 43.61 (2003). 3 See 47 C. F. R. § 43.82 (2003). 4 See 47 C. F. R. § 43.53 (2003). 5 47 C. F. R. § 43.61. 6 47 C. F. R. § 43.82. 2 Federal Communications Commission FCC 04- 70 3 status reporting requirements; · eliminate the requirement that carriers report the number of messages they carry during the year; · eliminate the requirement to file a traffic and revenue report or circuit- status report for traffic between the continental United States and U. S. off- shore points or between off- shore U. S. points; · establish a $5 million revenue threshold for a carrier to file annual traffic and revenue reports for pure resale services; · establish a $5 million annual revenue threshold for which miscellaneous services a carrier must report; · simplify and improve the reporting requirements as recommended by the staff of the International Bureau and Wireline Competition Bureau in Appendix C; · retain the quarterly traffic and revenue reporting requirements placed on large carriers – section 43.61( b) 7 – and on foreign- affiliated carriers – section 43.61( c); 8 · require that all carriers file annual circuit- status reports; · consolidate sections 43.61 and 43.82 into one rule, and adopt the other proposed rule changes set out in Appendix B; · have a consolidated filing manual for both the traffic and revenue reports and the circuit- status reports; · change the filing date from March 31 st for the circuit- status report and July 31 st for the traffic and revenue report to May 1 st for both reports; and · repeal section 43.53, which requires U. S. carriers to report their contracts with foreign carrier correspondents concerning the division of international tolls for telegraph communications. 4. The changes that we discuss should increase the value of the data colleted and the reports issued to both the Commission and outside parties. At the same time these changes should greatly reduce the number of forms and amount of information that smaller carriers will need to file, and should greatly reduce the complexity and detail of the information required from the largest carriers. 7 47 C. F. R. § 43.61( b). 8 47 C. F. R. § 43.61( c) 3 Federal Communications Commission FCC 04- 70 4 II. BACKGROUND A. The Reporting Requirements 5. Traffic and Revenue Reports. The traffic and revenue reporting requirements for international telecommunications carriers are set out in section 43.61 of our rules. 9 Section 43.61 contains three separate reporting requirements. First, all common carriers providing telecommunications service between the United States (the 50 states, the District of Columbia, and U. S. off- shore points) and any foreign country or point are required to report annually their traffic and revenue for each service they offer (annual traffic and revenue report). 10 Second, carriers that meet certain traffic and revenue thresholds are required to report quarterly their traffic and revenues (Quarterly Large- Carrier Report). 11 Third, certain U. S. common carriers, except for Commercial Mobile Radio Service (CMRS) carriers, 12 that are affiliated with foreign telecommunications carriers 13 that possess market power on the foreign end of a U. S. -international route must file a quarterly report of their traffic and revenues on the affiliated route (Quarterly Foreign- Affiliated Carrier Report). 14 6. The annual traffic and revenue reports derive from the Commission’s 1941 Order No. 85, which required U. S. international telegraph carriers to file statistical reports on their international telegraph traffic. 15 In 1964, the Commission added the requirement for carriers to report traffic and revenues for international message telephone service (IMTS). 16 The Commission last conducted a comprehensive review of the annual traffic and revenue reporting requirements in 1992. 17 At that time, the Commission eliminated obsolete requirements, 9 47 C. F. R. § 43.61. 10 47 C. F. R. § 43.61( a). 11 47 C. F. R. § 43.61( b). Section 43.61( b) sets forth four tests to determine which carriers must file the quarterly report. A U. S. carrier must file the report if its aggregate minutes of (1) U. S.- billed or (2) foreign- billed facilities- based or facilities- resale switched traffic exceeds one percent of total international traffic reported by all U. S. carriers. A carrier also must file the report if its aggregate minutes of (3) U. S.- billed or (4) foreign- billed facilities- based or facilities- resale switched traffic for any particular foreign route exceeds 2.5 percent of the total of such traffic reported by all U. S. carriers on that route. 12 47 C. F. R. § 20.3 (2003) defines a “commercial mobile radio service” as a “mobile service that is . . . interconnected [to the public switched telephone network] and [a] vailable to the public.” 47 C. F. R. § 20.9 (2003) states that provision of commercial mobile radio service is “common carriage.” 13 As used in this NPRM, the term “foreign telecommunications carrier” or “foreign carrier” refers to an entity, whether government or privately owned, that provides domestic telecommunications services within the territory of a foreign country, or provides international telecommunications services between that country and other countries. 14 47 C. F. R. § 43.61( c). A U. S. carrier (other than a CMRS carrier) must file a quarterly traffic and revenue report for its pure resale IMTS service for each route on which it is affiliated with a foreign carrier when that foreign carrier meets two conditions. First, the affiliated foreign carrier must have market power in the foreign market and, second, the affiliated foreign carrier must collect settlement payments from U. S. IMTS carriers. Section 63.09 defines when a carrier is affiliated with another carrier. 47 C. F. R. § 63.09( e)( 2003). 15 See 29 F. R. 13816 (Oct. 7, 1964). 16 Id. 17 Amendment of Section 43.61, CC Docket No. 91- 22, Report and Order, 7 FCC Rcd 1379 (1992) (1992 Section 43.61 Amendment Order). 4 Federal Communications Commission FCC 04- 70 5 streamlined the reporting requirements for pure resellers, and changed the format of section 43.61 to require carriers to file a traffic and revenue report for every service that they provide. 18 In revising section 43.61, the Commission delegated authority to the Chief of the Common Carrier Bureau (now the Wireline Competition Bureau) to create a filing manual that would set out the details of the information to be reported and the format in which to file it. 19 The Commission adopted the Quarterly Large Carrier Report in the 1997 Benchmark Order. 20 In tha t same year, the Commission adopted the Quarterly Foreign- Affiliated Carrier Report in the Foreign Participation Order. 21 7. Section 43.61( a) currently requires all common carriers providing telecommunications services between the continental United States, Alaska, Hawaii, and overseas points, including offshore U. S. points, to file annual traffic and revenue reports for their international services. 22 The current rule requires carriers to file their traffic and revenue information by July 31 st , covering the preceding calendar year, and to correct any inaccuracies in their submissions that exceed 5 percent of their total reported traffic and revenues by October 31 st . After the carriers file their data, the Commission staff reviews the submissions and prepares a consolidated report, the International Telecommunications Data Report, which it releases to the public. 23 The carriers’ section 43.61( a) traffic and revenue data are generally filed on a non-confidential basis and are available to the public. 24 The report includes carrier- specific information as well as industry totals. 8. In the 2000 IB Biennial Review Order, the Commission amended section 43.61( c) to exempt CMRS carriers from filing the Quarterly Foreign- Affiliated Carrier Report because they have a de minimis amount of the switched- resale traffic and thus are unlikely to be able to distort traffic on affiliated routes. 25 The Commission declined to make other changes to the 18 Prior to 1992, section 43.61 had specified the individual services for which the carriers were required to report. 19 Federal Communications Commission, Common Carrier Bureau, Manual for Filing Section 43.61 Data In Accordance with the FCC’s Rules and Regulations (rel. June 1995) (Section 43.61 Filing Manual). See 1992 Section 43.61 Amendment Order, 7 FCC Rcd at 1380, ¶ 9. 20 International Settlement Rates, IB Docket No. 96- 261, Report and Order, 12 FCC Rcd 19806 (1997) (Benchmarks Order). 21 Rules and Policies on Foreign Participation in the U. S. Telecommunications Market, IB Docket Nos. 97-142 and 95- 22, Report and Order and Order on Reconsideration, 12 FCC Rcd 23891 (1997) (Foreign Participation Order), recon. 15 FCC Rcd 18158 (2000) (Foreign Participation Reconsideration Order). 22 47 C. F. R. § 43.61( a). 23 Federal Communications Commission, Wireline Competition Bureau, International Telecommunications Data. The Commission releases a consolidated International Telecommunications Data report for each calendar year. In this NPRM, we cite the report by reference to the calendar year of traffic and revenue data the report covers. For example, the International Telecommunications Data report that covers traffic and revenue information for the year 2002 is cited as 2002 International Telecommunications Data. The reports are available on the FCC website at http:// www. fcc. gov/ wcb/ iatd/ intl. html. 24 As discussed more fully below in Section III. H. 1, a few carriers have requested confidential treatment of their traffic and revenue data. 25 2000 Biennial Regulatory Review Order: Amendment of Parts 43 and 63 of the Commission’s Rules, IB Docket 00- 231, Report and Order, 17 FCC Rcd 11416, 11428- 30, ¶¶ 28- 31 (2002) (2000 International Biennial Review Order), aff’d sub nom. Cellco Partnership d/ b/ a Verizon Wireless v. FCC & USA, 357 F. 3d 88 (D. C. Cir. 2004). 5 Federal Communications Commission FCC 04- 70 6 section 43.61 reporting requirements requested by some commenters in that proceeding. Specifically, it declined to eliminate the section 43.61( b) Quarterly Large- Carrier Report on the grounds that that report allows the Commission to detect deviations of traffic flows that could indicate anti- competitive behavior by foreign incumbents on a timely basis. The Commission also declined to exempt CMRS carriers from filing annual traffic and revenue reports, because it found that IMTS traffic and revenue information for CMRS carriers is important for monitoring trends in the IMTS industry. 26 9. In the 2002 ISP Reform NPRM, we sought comment on whether current annual and quarterly traffic and revenue reporting requirements, along with other filing requirements, provide sufficient information to enable carriers to demonstrate possible anti- competitive behavior and permit Commission enforcement or whether additional reporting requirements are necessary. 27 In that proceeding, AT& T has argued that the section 43.61( b) reports are still required to monitor compliance with the International Settlements Policy (ISP). 28 Worldcom stated that the quarterly reports provide important information, but that information is often outdated by the time it is used. 29 In the 2004 ISP Reform Order, we decided to defer decisions on possible changes to the section 43.61( b) reports to this proceeding. 30 10. Circuit- Status Reports. Section 43.82 requires all U. S. facilities- based international common carriers to file an annual report on the status of their circuits (Circuit- Status Report). 31 Carriers are required to report, by March 31 st of each year, the status of their international circuits on December 31 st of the previous year. 32 The rule requires carriers to identify the satellite, submarine cable, and terrestrial links they own (or lease) on December 31 st of any given year and list the overseas geographical points that they serve using those circuits. The rule requires carriers to report the total number of active circuits and the total number of idle circuits. For the active circuits, carriers must identify the services for which they used each circuit. Section 43.82 delegates authority to the Chief of the International Bureau to issue a manual containing instructions for filing the report and the details of the information to be provided. Under the current Section 43.82 Filing Manual, the carriers must report circuit- use 26 Id. at 11429- 30, ¶ 31. 27 International Settlements Policy Reform: International Settlement Rates, IB Docket Nos. 02- 324 and 96-21, Notice of Proposed Rulemaking, 17 FCC Rcd 19954, 19975, ¶ 37 (2002) (2002 ISP Reform NPRM). The International Settlements Policy (ISP) provides a framework under which U. S. carriers negotiate with foreign carriers to provide bilateral U. S.- international telecommunications services. There are three elements of the ISP that serve as conditions on U. S. carriers’ entering operating agreements with a foreign carrier: (1) the foreign carrier must offer all U. S. carriers the same accounting rate and the same effective date for the offered rate (“ non-discrimination”); (2) U. S. carriers are entitled to a share of the “return” traffic (traffic inbound to the United States) that is proportionate to the share of outbound traffic they carried to the foreign country (“ proportionate return”); and (3) the foreign carrier and the U. S. carrier must divide the accounting rate evenly 50- 50 for U. S.- inbound and outbound traffic (“ symmetrical settlement rates”). See 47 C. F. R. § 43.51( e). 28 AT& T Corp. comments in IB Docket No. 02- 324 at 16, 19, 24, and 29 (filed Jan. 14, 2003); AT& T Corp. reply comments in IB Docket No. 02- 324 at 5 and 15 (filed Feb. 19, 2003). 29 Worldcom, Inc. comments IB Docket No. 02- 324 at 7- 8 (filed Jan. 14, 2003). 30 International Settlements Policy Reform: International Settlement Rates, IB Docket Nos. 02- 324 and 96-21, First Report and Order, FCC 04- 53 at ¶ 60 (rel. March 30, 2004) (2004 ISP Reform Order). 31 47 C. F. R. § 43.82. 32 Id. 6 Federal Communications Commission FCC 04- 70 7 information for the same list of overseas points and for most services that they report in their section 43.61( a) reports. 33 Section 43.82 reports, however, do not require carriers to report any traffic volumes or revenues. 34 The Commission staff reviews the carrier filings and issues an annual consolidated circuit- status report for the industry as a whole. 35 11. The Commission adopted the annual section 43.82 circuit- status reporting requirement in 1995. 36 The rule codified circuit- status reports the Commission had originally imposed as a condition on section 214 authorizations for international submarine cable systems dating back to the early 1970’s. 37 The rule required all facilities- based international carriers to file circuit- status reports, reduced the frequency of the reports from monthly to annually, and reduced the amount of information to be submitted. 38 The Commission also reduced the frequency of the circuit- addition reports for private- line resale carriers from semi- annually to annually, 39 and exempted non- dominant facilities- based carriers from the requirement to file circuit- addition reports. 40 The Commission declined to grant a request for confidential treatment for carrier section 43.82 circuit- status reports, but provided that carriers could file a properly supported request for confidential treatment under the Freedom of Information Act. 41 12. Toll Division Reports. Section 43.53 requires carriers that provide international telegraph service “to file a report with the Commission within thirty (30) days of the date of any arrangement concerning the division of total telegraph charges on such communication other than transiting. ” 42 Section 43.53 also requires international telegraph carriers to file any subsequent changes to those arrangements within 30 days. 43 The Commission last reviewed the rule in 1986 and 1987. At that time, the Commission amended the rule to substitute the word “toll” for “telegraph,” to require carriers to file division of tolls agreements for voice and data services as well as telegraph services, and to add language to specify which toll information the 33 Federal Communications Commission, International Bureau, Manual for filing Section 43.82 Circuit Status Data in Accordance with the FCC’s Rules and Regulations (Section 43.82 Filing Manual) (available on the FCC website at www. fcc. gov/ ib/ pd/ pf/ csmanual. html ). 34 47 C. F. R § 43.82( a). See also Section 43.82 Filing Manual at 6, Section 1 (A). 35 The annual circuit status reports are available on the FCC website at http:// www. fcc. gov/ ib/ pd/ pf/ csmanual. html. 36 Rules for the Filing of International Circuit Status Reports, Report and Order, CC Docket No. 93- 157, 10 FCC Rcd 8605 (1995) (1995 Circuit Status Report Order). 37 Id. 38 Id. at 8606, ¶ 6. 39 Id. at 8606- 7, ¶ 11. See also 47 C. F. R. § 63.23( e). 40 1995 Circuit Status Report Order, 10 FCC Rcd at 8607, ¶ 16. In 2003, 79 carriers filed Section 43.82 circuit -use data. International Bureau Releases 2002 Year- End Circuit Status Report for U. S. Facilities- Based International Carriers; Capacity Use Shows Modest Growth, at 2, rel. Dec. 24, 2003 (2002 Circuit Status Report). The report is available on the FCC website at http:// www. fcc. gov/ ib/ pd/ pf/ csmanual. html. 41 1995 Circuit Status Report Order, 10 FCC Rcd at 8607, ¶ 16. 42 47 C. F. R. § 43.53( a). 43 47 C. F. R. § 43.53( b). 7 Federal Communications Commission FCC 04- 70 8 carriers are required to file. 44 B. 2002 Biennial Regulatory Review Proceeding 13. Section 11 of the Communications Act of 1934 (Act) 45 directs the Commission to undertake, in every even- numbered year beginning in 1998, a review of all regulations issued under that Act that apply to operations or activities of any provider of telecommunications service and to repeal or modify any regulation it determines to be “no longer necessary in the public interest.” 46 In particular, the Act directs the Commission to determine whether any such regulation is no longer necessary "as the result of meaningful economic competition between providers of such service." 47 14. As part of our 2002 biennial regulatory review, 48 we released a staff report prepared by the International Bureau that set forth various recommendations for reviewing our rules regarding the provision of international telecommunications. 49 The Bureau reviewed rules that fall within and outside the scope of section 11 and made recommendations based not only on changes in the competitive level of the marketplace, but also based on public interest reasons other than the development of competition in the U. S.- international services market. 50 In the 2002 IB Biennial Review Staff Report, the Bureau recommended that we undertake a proceeding to review those portions of Part 43 of the Commission’s rules relating to the reporting requirements of carriers providing U. S. international services. 51 15. Several parties commented in the biennial review proceeding on the continued need for sections 43.53, 43.61, and 43.82. 52 Three commenters, the Cellular Telephone and 44 See Amendment of Sections 43.51, 43.52, 43.53, 43.54 and 43.74 of the Commission’s Rules to Eliminate Certain Reporting Requirements, CC Docket 85- 346, Notice of Proposed Rule Making, 102 FCC 2d 531, n. 3 (1985); Report and Order, 1 FCC Rcd 933, 935- 36 (1986). In 1987, the rule was amended to reinsert the word “continental” before United States and to exclude transiting traffic. Implementation and Scope of the International Settlements Policy for Parallel International Communications Routes, CC Docket 85- 204, Order on Reconsideration, 2 FCC Rcd 1118, 1120, 1121- 22, 1124 (1987). 45 47 U. S. C. § 161 (2000). 46 47 U. S. C. § 161( a)( 1). 47 47 U. S. C. § 161( a)( 2). 48 See 2002 Biennial Regulatory Review, GC Docket No. 02- 390, Report, 18 FCC Rcd 4726 (2003), aff’d sub nom. Cellco Partnership d/ b/ a Verizon Wireless v. FCC & USA, 357 F. 3d 88 (D. C. Cir. 2004). 49 International Bureau, Federal Communications Commission, Biennial Regulatory Review 2002, IB Docket No. 02- 309, GC Docket 02- 390, 18 FCC Rcd 4196 (2003) (2002 International Bureau Biennial Review Staff Report). 50 Id. at 4197 and in passim. 51 Id. at 4210, 4232. We will consider the other recommendations in the 2002 International Bureau Biennial Review Staff Report regarding international section 214 authorizations in a separate proceeding. See id. at 4211, 4236- 39. 52 See Commission Seeks Public Comments in 2002 Biennial Regulatory Review of Telecommunications Regulations within the Purview of the International Bureau, Public Notice, IB Docket No. 02- 309, 17 FCC Rcd 18929 (2002). Parties also commented on the continued need for other regulations within the purview of the International Bureau in response to the Public Notice. See 2002 International Bureau Biennial Review Staff Report, 18 FCC Rcd 4196. 8 Federal Communications Commission FCC 04- 70 9 Internet Association (CTIA), Verizon 214 Licensees (Verizon), and the Rural Cellular Association (RCA), filed comments seeking elimination of the section 43.61 annual traffic and revenue report and the section 43.82 circuit- status report. 53 Cingular Wireless LLC (Cingular) filed comments requesting that the Commission exempt CMRS carriers from filing the annual report under section 43.61( a). 54 AT& T Telecommunications (AT& T), on the other hand, opposed the CTIA, RCA and Verizon proposal to repeal section 43.61. 55 CTIA and RCA also urged the Commission to eliminate section 43.53, which requires carriers to file reports on the division of international toll communications. 16. Based on its review of the rules and various comments, the International Bureau recommended that the Commission undertake a proceeding to review the sections 43.61 and 43.82 reporting requirements and to repeal section 43.53. 56 The Bureau recommended that, although the traffic and revenue reports required by section 43.61 and the circuit- status report required by section 43.82 continue to be useful to the Commission and the industry, we should consider modifying the reporting requirements to lessen the burdens placed on U. S. international carriers, and the administrative burdens on the Commission, while maintaining and enhancing the benefits that the reports provide. 57 The Bureau also recommended that, in light of market changes and the decreasing use of telegraph services, we should repeal section 43.53, which requires the reporting of the division of international toll and telegraph communication charges. 58 III. DISCUSSION A. Purpose of Reporting Requirements 17. The Commission has a responsibility under the Communications Act to make available, among other things, world- wide communications with adequate facilities at reasonable charges. 59 Our primary goal underlying the reporting requirements for international carriers has been and continues to be the protection of U. S. consumers and carriers from potential harm caused by instances of insufficient competition caused by the exercise of market power by foreign incumbent carriers. The Commission’s goals in regulating the U. S.- international marketplace have been (1) to promote effective competition in the global market for communications services; (2) to prevent anticompetitive conduct in the provision of international services or facilities; and, (3) to encourage foreign governments to open their communications markets. 60 Our ability to respond to failures in the U. S.- international market depends upon our having adequate information about the market. 53 Cellular Telephone and Internet Association, Petition for Rulemaking at 23- 24 (filed July 25, 2002); Verizon Telephone Companies comments in IB Docket 02- 309 at 9- 10 (filed Oct. 18, 2002); RCA Reply in WT Docket 02- 310 at 6 (filed Nov. 4, 2002). 54 Cingular Wireless LLC comments in IB Docket 02- 309 at 12- 13 (filed Oct. 18, 2002). 55 AT& T Corp. reply comments in IB Docket 02- 309 at 24 (filed Nov. 4, 2002) (AT& T Reply). 56 2002 International Bureau Biennial Review Staff Report, 18 FCC Rcd at 4211, 4232. 57 Id. 58 Id. 59 47 U. S. C. § 151. 60 Market Entry and Regulation of Foreign- Affiliated Entities, IB Docket No. 95- 22, Report and Order, 11 FCC Rcd 3873 (1995) (Foreign Carrier Entry Order) at 3877, ¶ 6. 9 Federal Communications Commission FCC 04- 70 10 18. The Commission uses the information provided by the traffic and revenue reports and the circuit- status report to ensure compliance with our international rules and policies. We understand that carriers and other entities outside the Commission, such as other government agencies, international organizations, and academia, also use the information. Other government agencies use the information in merger analyses and negotiations with foreign countries. 61 19. The international telecommunications industry has changed greatly in the years since the Commission last reviewed these reporting requirements. One catalyst for this change was the implementation of the World Trade Organization (WTO) Basic Telecom Agreement in 1997. 62 The Commission has undertaken a number of actions to liberalize and streamline its market access policies in response to the U. S. commitments made pursuant to the WTO Basic Telecommunications Agreement. In addition, competition has increased in many foreign markets. 63 20. There have been significant changes in the U. S.- international market. For example, minutes of use have grown significantly while revenues have been stable or declined. End- user billed revenues for IMTS decreased from $14.4 billion in 1995 to $9. 3 billion in 2002, while minutes increased from 15.9 billion in 1995 to 35. 1 billion in 2002. 64 Private line revenues have continued to climb, from $514 million in 1995 to $988 million in 2002, 65 and now represent about 11 percent of U. S.- international revenue. 66 Other services, however, have declined 61 Both the Commission and the Department of Justice (DOJ) use the annual traffic and revenue information in our respective analyses of proposed mergers. We use the information to determine the effect of specific transactions between carriers on competition. DOJ uses the information to determine whether a specific merger proposal will likely benefit consumers or cause anti- competitive harm. In these analyses, the Commission and DOJ have used the levels of traffic on certain routes reported by each facilities- based carrier as an indication of each carrier’s approximate market share on those routes. 62 See Foreign Participation Order, 12 FCC Rcd 23,891; Foreign Participation Recon Order, 15 FCC Rcd 18,158. 63 According to TeleGeography, the number of international carriers worldwide has grown from approximately 587 in 1997 to 4,030 in 2001, representing almost a 600 percent increase. TeleGeography 2002: Global Traffic Statistics and Commentary, TeleGeography, Inc. (October 2001) (Telegeography). Id. at 17. (We note, however, that the number of competitors does not necessarily indicate the level of competition in a market.) Moreover, of 50 countries providing market information, competition has developed in more than 20 countries that previously had closed international markets. These countries had reported only one authorized international carrier in 1997, and subsequently reported additional carriers in 2001. Telegeography at 19. 64 2002 International Telecommunications Data at 1; Trends in Telephone Service, August 2003, Table 6.3. Both reports are available on the FCC website at http:// www. fcc. gov/ wcb/ iatd/ stats. html . 65 2002 International Telecommunications Data at 1; Trends in Telephone Service, August 2003, Table 6- 3. 66 See 2002 International Telecommunications Data, Figure 1. 10 Federal Communications Commission FCC 04- 70 11 substantially: for example, revenues for telegraph service fell from $6 million in 1995 to less than $500,000 in 2001. 67 21. While IMTS continues to be the dominant international telecommunications service, it increasingly is being affected by other telecommunications services. For example, international private leased circuits are accounting for a growing number of total overseas circuits. This is due both to the use of such circuits for private, internal communications and for the provision of other services, most notably the backbone transmission for the provision of Internet services. IMTS is also being provided in new ways other than the traditional pattern in which carriers in the originating and terminating countries cooperate in the handling of calls and divide the tolls for such traffic, in accordance with our International Settlements Policy. Increasingly, carriers are relying on non- traditional arrangements such as hubbing, where the originating carrier enters into an agreement with the carrier in a third country that “reoriginates” the traffic and settles with the destination country at a lower rate. Another non- traditional way that carriers can terminate IMTS traffic in the destination country at a rate lower than the ISP settlement rate is the resale of private lines, where a carrier can act as its own overseas correspondent to terminate traffic at a rate lower than the traditional ISP settlement rate. Further, many carriers now rely on what is known as the “spot market,” where they choose the carrier that charges the lowest rate for terminating traffic in the destination country. 22. Technological changes since the mid- 1990s have also affected the U. S. -international service market. For example, in recent years, a growing number of carriers have begun to provide an international switched voice service, voice over internet protocol (VoIP), that provides essentially the same function to end users as IMTS, but that uses the Internet rather than traditional voice- grade IMTS circuits to carry the calls. 68 Improvements in the packet-switched transmission technology underlying the internet now allow providers of VoIP to offer international voice transmission of reasonable quality at a price lower than current IMTS rates. The number of IMTS customers using VoIP for international calling appears to be growing rapidly. 69 For example, one provider of VoIP has stated that VoIP now accounts for more than 10 percent of international switched voice calls and predicts that, by 2010, it will account for 100 percent of such calls. 70 Also, newer technologies have allowed for greatly increased capacity for international services. For example, the reported capacity in submarine cables built since 1995 exceeds the total previously existing capacity by one hundred and ten fold. 71 Further, almost all of these new submarine cables are now being built on a non- common carrier basis. 67 Trends in Telephone Service, August 2003, Table 6. 1. 68 U. S. international common carriers also use IP technology to transmit some of their IMTS traffic after it crosses their switch. These carriers include such traffic in their section 43.61 traffic and revenue reports. 69 See Telegeography 2003 at 76, 78. 70 Thomas Evslin, Chairman, ITXC Corp., Speech before the SuperComm Convention, Atlanta Georgia, June 2, 2003, reported in Communications Daily, at page 9, June 3, 2003. ITXC is a provider of international switched VoIP calls. 71 In 1995, there were 285,390 64 Kbps- equivalent circuits on submarine cables. By 2002, the available capacity had grown to 31 million 64 Kbps- equivalent circuits. 2002 Circuit Status Report at 34, Table 7. 11 Federal Communications Commission FCC 04- 70 12 23. Below, we seek comment on the effect of the changes in the U. S.- international telecommunications market on the need for the Commission to collect data on the market and the manner in which we collect data. We request comments on whether and to what extent there is a continuing need to collect information and what information we should continue to collect. B. Annual Traffic and Revenue Reports 1. Purpose of the Reports 24. The information in the annual traffic and revenue reports has enabled the Commission to analyze the U. S. international telecommunications market. The Commission uses the information to track market development s, to determine the competitiveness of each service and geographical market (e. g., an international route), to formulate rules and policies consistent with the public interest, to monitor compliance with those rules and policies, and to gauge the competitive effect of Commission decisions on the international market. The country-by- country information we collect under section 43.61 allows us to tailor our policies to respond to the market developments on a particular route. 25. The annual traffic and revenue reports also provide a means by which to determine whether a U. S. carrier’s foreign- carrier correspondents are engaging in anti-competitive conduct. Many of the U. S.- international carriers’ overseas correspondents continue to have market power in their home markets. 72 That is, they control bottleneck facilities or otherwise have market power and the ability to distort competition in that market. The Commission uses the section 43.61( b) quarterly traffic and revenue reports to monitor traffic flows to detect the existence of anti- competitive behavior that would harm U. S. customers. 26. We also use the traffic and revenue information to measure the progress of our accounting- rate benchmark policy and the ISP. For many years, the Commission has sought to bring the prices that U. S.- international carriers pay to their foreign- carrier correspondents for settling U. S.- international telecommunications traffic closer to cost. For example, in the 1997 Benchmarks Order, the Commission set “benchmark rates” that represent the maximum accounting settlements rates for terminating outbound U. S.- international traffic that could presumptively be considered just and reasonable. We use the section 43.61 annual traffic revenue reports to monitor whether U. S. carriers’ settlement rates are in fact declining. 2. Improvements to the Traffic and Revenue Reports 27. We believe, however, that the annual traffic and reve nue reporting requirements, as well as the procedures under which the reports are filed, can be modified to improve the value of the data reported. The growth and increasingly competitive nature of the international telecommunications market since we last reviewed the section 43.61( a) reports has rendered some information currently reported less important and, in some cases, has rendered information 72 See Public Notice, The International Bureau Revises and Reissues the Commission’s List of Foreign Telecommunications Carriers That Are Presumed to Possess Market Power in Foreign Telecommunications Markets, 18 FCC Rcd 11073 (IB 2003). 12 Federal Communications Commission FCC 04- 70 13 not currently reported more important. We discuss below a number of ways that we believe the annual traffic and revenue report can be improved. We seek comment on these possible changes as well as alternative means to improve and simplify the reporting requirements. 28. Number of Messages. We propose to eliminate the requirement that carriers report the number of IMTS messages they handle. At present, carriers are required to report each year the number of messages (i. e., calls) they handle to each overseas country, the number of minutes of calls, and the revenues associated with those minutes. International carriers charge their customers by the number of minutes (or fractions of minutes) the customer uses. Similarly, U. S. carriers settle with their foreign correspondents on the basis of the number of minutes of traffic each handles for the other. We believe that reporting the number of minutes of telephone traffic should provide the information necessary to achieve the purposes of the traffic and revenue reports, and thus propose to eliminate the requirement to report the number of messages. We seek comment on this proposal. 29. Reports for Off- Shore U. S. Points. We propose to eliminate the requirement that carriers report as international traffic any traffic between a U. S. domestic point and an off-shore U. S. point or between off- shore U. S. points as those terms are defined in the Section 43.61 Filing Manual. The filing manual requires carriers to report traffic they carry between any domestic U. S. point and any off- shore U. S. point. The filing manual defines “off- shore U. S. points” to include “U. S. possessions” that include a number of diverse islands. 73 Historically, off- shore U. S. points were treated as international rather than domestic, because carriers served those points by using the same international cable, terrestrial, and satellite facilities they used to serve foreign countries in the same ocean region. 74 For this reason, carriers charged customers rates for service to such off- shore U. S. points based on the traditional pricing structure that they used for pricing service to international points. 30. Over the years, the Commission has gradually integrated off- shore U. S. points into the domestic U. S. pricing structure. Because service between domestic U. S. points and off-shore U. S. points and service between two off- shore U. S. points are settled under domestic U. S. settlements mechanisms, the international settlements process does not apply. Furthermore, the Commission has jurisdiction under section 3( 51) of the Communications Act in the points that fall within the definition of “off- shore U. S. points.” 75 As a result, the Commission has direct jurisdiction over both ends of all communications between and among domestic U. S. points and off- shore U. S. points. Customers of carriers that live within the off- shore U. S. points that have a complaint about the price or service offered by a carrier can file a complaint under the Communications Act. Accordingly, we propose that carriers no longer report as international 73 Section 43.61 Filing Manual at 7. Included in the definition of U. S. possessions are points such as American Samoa, Guam, Baker Island, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, and Midway Atoll, Navassa Island, the Northern Mariana Islands, Palmyra Atoll, the U. S. Virgin Islands, and Wake Island. 74 Amendments to the Communications Act that Congress adopted in 1943 (since repealed), and codified as Section 222 of the Act, provided that communications within the Continental United States, Alaska, Canada and the islands of St. Pierre and Miquelon (two territories within North America owned by France) should be considered as “domestic.” All other off- shore U. S. points were considered to be international. 75 Section 2 of the Act states that the Act applies to all “interstate or foreign communication by wire or radio . . . which originates and/ or is received within the United States. . . .” 47 U. S. C. § 152. Section 3( 50) of the Act defines “United States” as “the several States and Territories, the District of Columbia, and the possessions of the United States, but does not include the Canal Zone.” 47 U. S. C. § 153( 50). 13 Federal Communications Commission FCC 04- 70 14 traffic any traffic between the continental United States and an off- shore U. S. point or between two off- shore U. S. points as those terms are defined in the Section 43.61 Filing Manual. 76 31. Elimination of reporting on off- shore U. S. points should simplify the information that the carriers must submit in their traffic and revenue reports. We note that service between any of these off- shore U. S. points and a foreign point remains international in character and propose to require carriers to continue to report such traffic. We seek comment on this proposal. 32. Pure Resale Service. We seek comment on whether to establish a $5 million revenue threshold for a carrier to file annual traffic and revenue reports for pure resale services. 77 Under this proposal, a carrier with less than $5 million in revenue from pure resale international service for the preceding year would not have to file its international pure resale traffic and revenues with the Commission. 33. Although there are many pure resellers of IMTS that generate few revenues, pure resellers as a class represent a significant and growing portion of the total IMTS market. In 1992, 86 carriers were engaged in pure resale of IMTS, reporting 565 million minutes of traffic and $511 million in revenues. 78 By 2002, the number of carriers reporting revenues for pure resale IMTS service increased to 706, reporting traffic of 27. 4 billion minutes and revenues of $4. 9 billion. 79 IMTS pure resellers also represent a significant portion of the business of the facilities- based carriers from which they buy wholesale minutes of international telephone calls. In the early 1990’s, pure resellers accounted for approximately 5 percent of the IMTS minutes provided by facilities- based carriers. In 2002, pure resellers accounted for approximately 70 percent of the IMTS minutes billed by facilities- based and facilities- resale carriers. 80 Given the significance of pure resale in the IMTS market, we tentatively conclude that the Commission should continue to monitor the traffic and revenues of pure resale carriers. We seek comment on this tentative conclusion. 34. We find, however, that we can obtain an accurate picture of the international resale market such that we can identify the likelihood of anti- competitive conduct, while providing regulatory relief to small carriers. Many pure resale carriers have very low IMTS traffic volumes and revenues. For example, 706 carriers reported traffic and revenue from pure resale IMTS service in 2002. 81 Of those, 316 carriers reported pure resale IMTS revenues of less than $10,000; 560 reported pure resale IMTS revenues of less than $500,000; and 584 reported 76 We also tentatively conclude that carriers need no longer include in their circuit- status reports circuits between the continental United States and a U. S. off- shore point. See ¶ 59 infra. 77 “Pure resale services are switched services that are provided by reselling the international switched services of other carriers. Pure resale services are not provided to the public over the reseller's international channels of communications. Pure resale carriers may own domestic switches and circuits, but rely on other carriers to carry switched traffic between the United States and foreign points.” Section 43.61 Filing Manual at 16. 78 Federal Communications Commission, Common Carrier Bureau, Industry Analysis Division, Trends in the International Telecommunications Industry, Table 28 (rel. Apr. 3, 2001). 79 2002 International Telecommunications Data, Table D. 80 Id., Tables A- 1 and D. The percentage was derived by dividing the 24.7 billion minutes of resale IMTS by the 35.1 billion minutes of IMTS from facilities- based and facilities- resale carriers. 81 Id., Table D at 13 (Pure Resale Services). 14 Federal Communications Commission FCC 04- 70 15 pure resale IMTS revenues of less than $1 million. 82 Based on the 2002 data, the 584 carriers that reported less than $1 million in revenues collectively accounted for less than 1 percent of total reported U. S. IMTS resale revenues for 2002. Stated another way, the revenue information provided by the remaining 122 larger pure resale IMTS carriers accounts for more than 99 percent of the pure resale IMTS market. Using a $2 million thresho ld would remove an additional 32 carriers, so that 90 carriers would file revenue information that would comprise 98 percent of the IMTS resale revenues. With a $5 million threshold, 54 carriers would file revenue information that would comprise 96 percent of the IMTS resale revenues. 35. We propose to establish a $5 million revenue threshold to determine which carriers must file traffic and revenue information for their pure resale services. We seek comment on this proposal. As discussed above, in 2002 use of such a revenue threshold would have alleviated 652 carriers from having to file traffic and revenue information for pure resale services, but would still have provided the Commission with information on 96 percent of the pure resale revenues. Commenters are requested to address whether a $5 million threshold will provide the level of statistical significance needed to have an accurate picture of the market for regulatory purposes, and, if not, what would be an appropriate revenue threshold level and why. 36. We also seek comment on whether all carriers that hold a section 214 authorization should file a one- page summary report stating whether they provided international service the preceding year and providing up- to- date contact information. We seek comment on how often such a report should be filed; for example would filings every two years (in even numbered years) be sufficient. Currently, we do not know if a carrier is providing international service unless it files traffic and revenue reports. If we adopt a revenue threshold for filing traffic and revenue reports, there will be a number of carriers that are providing international service that will not be filing traffic and revenue reports. Consequently we will not know which authorized carriers are actually providing service. The use of a summary report would assist us in keeping track of who is offering service and how to contact them, and would be a significant reduction in the data that the majority of international section 214 authorized carriers are required to file with the Commission. The summary report could also assist us in the administration of the scarce international telephone signaling point codes used with Signaling System 7 telephone switches. 83 82 Id., Table D at 1- 13 (Pure Resale Services). 83 Some of the carriers that apply for authorization under section 214 also request assignment of an international signaling point code. See International Telecommunication Union, Telecommunications Sector (ITU-T), Recommendation Q. 708, Assignment Procedures for International Signalling Point Code, Series Q, Switching and Signalling Specifications of Signalling System No. 7 – Message Transfer Part (MTP) (revised March 15, 1999). Recommendation Q. 708 defines a signaling point code as a code that defines a point where switching occurs or where switching signals are transmitted or received. Such signaling points are within a Signaling System 7 switch. For this reason, only carriers that operate their own switch would need a signaling point code. The supply of signaling point codes available for use in the United States under Recommendation Q. 708, however, is limited to less than 500. As a result, code assignments are conditional upon their being used within one year lead time, so that the Commission can reassign unused codes to another carrier. Currently, to determine whether a carrier has actually implemented a code assignment, the staff must contact each carrier that does not file a traffic and revenue report. The summary report would elicit that information in a simple, non- burdensome way. 15 Federal Communications Commission FCC 04- 70 16 37. This report, which filers could submit via the Commission website, would require the carrier to identify itself and to state whether it has provided international service during the preceding year. The form would also ask the carrier to update the contact information it supplied with its section 214 application, and to certify that the information provided is correct. To the extent that the proposed summary report is placed on the Commission’s website, it could be made interactive so that a carrier could enter its information directly into the Commission’s computer without having to download it or obtain a paper copy. The attached Appendix C includes a staff recommendation for a new schedule to implement a summary report. Proposed Schedule 1 shows the staff’s recommendation as to the kind of information a carrier would submit. We seek comment on whether to implement a summary report and on the staff’s proposed Schedule 1. We also seek comment on alternative approaches that would serve the purposes discussed above. 38. Miscellaneous Services. We seek comment on whether to establish a $5 million revenue threshold to determine which miscellaneous services a carrier must report in its annual traffic and revenue reports. Under this proposal, carriers would not report miscellaneous services with less than $5 million in revenue. 39. Section 43.61( a) requires all carriers to report their traffic and revenues “for each and every” international service they provide, regardless of their traffic volumes or revenues. 84 The reporting of miscellaneous services allows us to get a more complete picture of the types of services being offered in the market and their relative size. The reporting of miscellaneous services shows us when new services are being offered as well as when services are declining. It also helps to ensure the integrity of the data that is filed by requiring carriers to account for all of their traffic and revenue. 40. In 2002, nine carriers filed revenue information for four miscellaneous services: frame relay/ ATM, virtual private line, packet switching, and occasional television. 85 Sprint reported two miscellaneous services and the other carriers each reported only one miscellaneous service. The retained revenues for the services for all U. S. carriers ranged from over $93.6 million for frame relay/ ATM to $5.8 million for virtual private line. 86 For individual carriers, the largest revenue was reported by Sprint for frame relay/ ATM ($ 93.6 million), and lowest was International Telnet, Inc. with $8,500 for packet switching. 87 41. We propose to establish a $5 million revenue threshold for which miscellaneous services a carrier must report. We find that such a revenue threshold would allow us to obtain information on miscellaneous services that may have a significant impact on the international telecommunications market, but relieve carriers from filing on smaller services. In 2002, the use of a $5 million revenue threshold would have resulted in two carriers filing information on two 84 47 C. F. R. § 43.61( a)( 1). 85 2002 International Telecommunications Data, Table C. 86 Id., Table C1. 87 Id., Tables C5, C8. 16 Federal Communications Commission FCC 04- 70 17 different services. 88 A revenue threshold would, therefore, effectively eliminate the requirement to report many miscellaneous services. We seek comment on this proposal. 42. As an alternative, should the Commission exempt certain miscellaneous services from the reporting requirement regardless of the revenue generated by that service? If so, which miscellaneous services should be reported and which ones should be exempted, and why? Should the Commission exempt certain services in addition to establishing a threshold for miscellaneous services that it requires to be continued to be reported? 43. Staff Recommendations to Improve the Reporting Requirements. Attached to this Notice as Appendix C is an International Bureau and Wireline Competition Bureau staff recommendation that contains specific proposals for simplifying the traffic and revenue information the carriers report and a proposal to gather information that is more relevant to current international market conditions. The staff recommendations concern the detailed procedures used by carriers in filing their traffic and revenue data and circuit- status information that are contained in the filing manuals for the reports. The comments received on these recommendations will assist the staff in preparing an updated filing manual. 89 44. The staff proposes to eliminate the use of the twelve separate billing codes as set out in the Section 43.61 Filing Manual, as amended by Public Notices. 90 The staff also proposes a set of schedules for simplifying reporting of the traffic and revenue and circuit- status information. Proposed Schedule 1 is a summary report that all carriers would complete. Schedules 2 though 7 would replace the reporting requirements under existing section 43.61 and the filing manual and set out the annual traffic and revenue data that carriers would submit. Schedule 8 replaces the reporting requirements under section 43.82 and the Section 43.82 Filing Manual and sets out the capacity data that carriers would submit. As explained in Appendix C, the proposed schedules would make a number of changes in the reporting requirements. The staff also proposes to change the format in which the reports are filed. 45. We seek comment on the proposed schedules developed by the staff and other changes to the reporting requirements discussed in Appendix C. Additionally, we seek comment on specific issues and questions raised by the staff recommendations. We also seek comment on 88 In 2002, France Telecom Long Distance USA, LLC had retained revenues of $5.8 million for virtual private line service and Sprint had retained revenues of $163 million for frame relay/ ATM and $16 million for packet switching. See id. Tables C2- C11. Under the proposal Sprint would be required to report is revenues for Frame Relay/ ATM service, but would not be required to report its revenues of $2.4 million for packet switching since they are below the $5 million revenue threshold. 89 A draft of any updated filing manual will be released for public comment before it is adopted. 90 See Manual for Filing Section 43.61 Data in Accordance with the FCC’s Rules and Regulations (rel. June 8, 1995) (Section 43.61 Filing Manual); Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice (rel. July 15, 1997) (1997 43.61 PN); Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice, DA 98- 1369 (rel. July 9, 1998) (1998 43.61 PN); Further Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice, DA 99- 1332 (rel. July 7, 1999) (1999 43.61 PN); Annual Section 43.61( a) International Telecommunications Traffic Reports Due by July 31, 2000, Public Notice, DA 00- 1526 (rel. July 7, 2000) (2000 43.61 PN); Manual for Filing Section 43.82 Circuit Status Data in Accordance with the FCC’s Rules and Regulations (Section 43.82 Filing Manual). The Section 43.61 Filing Manual and the Public Notices, as well as the reports, are available on the FCC website at http:// www. fcc. gov/ wcb/ iatd/ intl. html. The Section 43.82 Filing Manual, as well as the reports, are available on the FCC web- site at http:// www. fcc. gov/ ib/ pd/ pf/ csmanual. html. 17 Federal Communications Commission FCC 04- 70 18 alternative or addit ional ways to simplify, clarify, and generally improve the reporting requirements. The staff will use comments that we receive on these proposals and the proposed schedules to develop the new filing manual for the annual traffic and revenue reports and the circuit- status reports, subject to our decisions on the issues that we raise for comment in this proceeding. 46. Filing Date. We seek comment on whether to change the date by which carriers are to file their annual traffic and revenue reports to May 1 st . 91 Carriers now file their data under section 43.61( a) in two stages, an initial filing by July 31 st and any corrections by October 31 st . 92 After these filings, the Commission staff reviews the submitted data and issues the consolidated report to the public within a few months, depending upon the need to track down and correct anomalies in the data the carriers submit. Thus, by the time the information is publicly available, it is approximately a year out of date. 93 A long gap between the end of a reporting year and the availability of the consolidated report reduces the value of the reported information. The changes the staff proposes to the filing procedures for the traffic and revenue report and the simplification of the required data should allow the carriers both to file the information more expeditiously and to maintain the reliability of their data. 47. In setting a new filing date, we seek to balance the benefit from having more current data against the burden on the carriers to file earlier. The staff recommendation set forth in Appendix C proposes to simplify the data carriers are required to report in a number of ways. For example, carriers must currently report the actual minutes of use they carried during the reporting period (i. e., a calendar year) and the revenues, and settlements payments associated with those minutes. 94 The staff recommendation in Appendix C proposes to change the reporting instructions to direct carriers to report the minutes of use, revenues, and settlement payments that a carrier actually records during the reporting period. 95 Any settlement payments received in the subsequent reporting period would be reported in the year in which they were received. This change should allow the carriers to have complete information available on their international services as soon as they close their books for a calendar year and allow them to file their traffic and revenue information with the Commission earlier. 91 Carriers would also be required to file their circuit -status information on the same date. See Section III. F. 2 infra. 92 47 C. F. R. § 43.61( a), (a)( 2). 93 For example, for the most recent section 43.61 report, the carriers filed their data for the year 2002 on July 31, 2003, and filed corrections on October 31, 2003. The Commission staff reviewed the submissions and issued the consolidated report in March 2004. 94 See Section 43.61 Filing Manual at Section 1. F (Measurement of Traffic and Revenues). The Commission adopted the current filing schedule (i. e., initial filing on July 31 st and corrections on October 31 st ) in part because of the long delay between the time a customer makes a call and the date on which the carrier settles with its correspondent for that call (the carriers do not settle some calls until the following year). 95 See Appendix C, Schedule 2. The current Section 43.61 Filing Manual requires carriers to report the actual traffic they carry during the reporting period and to record settlements payments associated with that traffic on an accrual, rather than on an actual- receipts, basis. Section 43.61 Filing Manual, Section 1( F) Measurement of Traffic and Revenues. 18 Federal Communications Commission FCC 04- 70 19 48. In selecting a proposed date for filing traffic and revenue reports, we also seek to avoid conflicts with other Commission filing deadlines. For example, a May 1 st date for filing the traffic and revenue reports would avoid the April 1 st date on which the carriers are required to file their Form 499- A submissions. We seek comment on whether a month would give carriers sufficient time to prepare their submissions, without requiring them to prepare two reports at the same time. 49. The proposed simplifications should also improve the ability of the carriers to file reliable traffic and revenue information by May 1 st , without the need to specify a particular date for filing corrections to their data. Any necessary corrections could be made during the staff review process. Should the staff find an anomaly in a carrier’s reported data, the staff could contact the carrier and assist it in resolving the issue. 96 In addition, adoption of a revenue threshold would reduce substantially the number of traffic and revenue reports the staff must review and, thus, shorten the time the staff needs for conducting its review. A shortened review period should allow the staff to issue a consolidated report months earlier than is now possible. To the extent that this occurs, the traffic and revenue data would be significantly more timely than at present. Greater timeliness, in turn, should make the traffic and revenue data more useful to the Commission, the carriers, and other users. We seek comment on this proposed revised filing schedule. C. Quarterly Reports for Large Carriers 50. We seek comment whether the public interest continues to require larger IMTS carriers to file quarterly traffic and revenue reports under section 43.61( b). 97 That section currently requires certain larger U. S.- international facilities- based and facilities- resale telephone carriers to file an additional, quarterly traffic and revenue report for any quarter in which its traffic exceeds one of the four specified thresholds. 98 Section 43.61( b) requires carriers that must file the quarterly report to submit traffic and revenue information for their switched, facilities-based telephone service and their switched, facilities- resale telephone service, using the same format that is specified in the filing manual for the annual traffic and revenue report. 99 The section requires the carriers to file the information within thirty days of the end of the quarter. 100 Carriers file their quarterly- report information on a confidential basis. 96 To ensure promptness in the release of the reports, we would expect carriers to respond to a staff query within 10 business days. 97 In the 2002 ISP Reform NPRM, we sought comment on whether current annual and quarterly traffic and revenue reporting requirements, along with other filing requirements, provide sufficient information to enable carriers to demonstrate possible anti- competitive behavior and permit Commission enforcement. 17 FCC Rcd at 19975, ¶ 37. In the 2004 ISP Reform Order, we decided to defer decisions on possible changes to the section 43.61( b) reports to this proceeding. 2004 ISP Reform Order at ¶ 60. 98 47 C. F. R. § 43.61( b). The four threshold criteria are set out in note 11, supra. 99 47 C. F. R. § 43.61( b)( 2). 100 47 C. F. R. § 43.61( b)( 2)( ii). The rule requires carriers to file their information for January- March on April 30; their information for April- June by July 31 st ; their information for July- September by October 31 st ; and their information for October- December by January 31 st of the following year. 19 Federal Communications Commission FCC 04- 70 20 51. The Commission adopted section 43.61( b) in its 1997 Benchmark Order, 101 because of a concern that liberalization of international simple resale (ISR) could lead to competitive distortions in the U. S. IMTS market through the introduction of one- way bypass. 102 The Commission adopted a presumption that competitive distortion exists on a route whenever the ratio of outbound (U. S.- billed) IMTS traffic to inbound (foreign- billed) IMTS traffic increases 10 or more percent in two successive quarterly measurement periods. 103 The Commission adopted the quarterly 43.61( b) report to detail such distortions in traffic flows that would indicate the existence of one- way bypass. To lessen the burden on smaller IMTS carriers, the Commission exempted all but the largest IMTS carriers from the need to file the quarterly report. 104 52. In the six years since the Commission adopted the section 43.61( b) quarterly reporting requirements, the market for international telecommunications services generally has become more competitive. For example, most countries have brought their settlement rates within the Commission’s benchmarks. This has reduced U. S. carrier settlements outpayments significantly. Additionally, in 1997, 69 Members of the World Trade Organization (WTO) made commitments to liberalize their telecommunications markets in varying degrees. 105 Implementation of those commitments has allowed U. S. carriers to enter the telecommunications markets in a number of other countries. While the international telecommunications market has become more competitive, U. S. international carriers have experienced anti- competitive abuses in some markets. 106 Indeed, AT& T has argued in the 2002 ISP Reform NPRM proceeding that the section 43.61( b) reports are still required to monitor compliance with the ISP. 107 We seek comment on whether the concerns that prompted the creation of section 43.61( b) remain important. In particular, we request comment on whether competition in the global IMTS markets has grown to such a degree that the carriers are no longer concerned about the possibility 101 International Settlement Rates, IB Docket No. 96- 261, Report and Order, 12 FCC Rcd 19806, 19919- 20 (1997). 102 Id. at 19920. The term “one- way bypass” refers to a practice whereby a foreign carrier would require its U. S. carrier correspondents to carry IMTS traffic to that country under their negotiated operating agreement, and to settle such traffic under the traditional international settlement arrangements, but would send traffic to the United States under ISR. Because ISR traffic is settled outside the international settlements arrangements, U. S. carriers would pay their foreign carrier correspondents settlement payments for the outbound traffic but would receive no settlements payments for the inbound traffic, thus, increasing the U. S. carriers’ settlements payments to the detriment of U. S. ratepayers. 103 Id. at 19919. 104 Id. at 19920. 105 Foreign Participation Order, 12 FCC Rcd at 23893, ¶ 1. 106 See AT& T Corp. Emergency Petition for Settlements Stop Payment Order and Request for Immediate Interim Relief and Petition of WorldCom, Inc., for Prevention of “Whipsawing” on the U. S.- Philippines Route, IB Docket No. 03- 38, Order, 18 FCC Rcd 3519 (Int. Bur. 2003) (2003 Philippines Order). 107 AT& T Corp. comments in IB Docket No. 02- 324 at 16, 19, 24, and 29 (filed Jan. 14, 2003); AT& T Corp. reply comments in IB Docket No. 02- 324 at 5 and 15 (filed Feb. 19, 2003). See also Worldcom, Inc. comments in IB Docket No. 02- 324 at 7- 8 (filed Jan. 14, 2003) (section 43.61( b) quarterly reports provide important information, but that information is often outdated by the time it is used). 20 Federal Communications Commission FCC 04- 70 21 of one- way bypass. We also seek comment on what, if any affect, our decision in the 2004 ISP Reform Order to eliminate the ISR policy has on the need to collect quarterly traffic and revenue data from large carriers. 108 53. In commenting on the continued need for the 43.61( b) reports, parties should consider whether the Commission could get the same type of information derived from the quarterly reports through less burdensome measures. For example, because the information reported in the quarterly reports is the same as that reported in the annual traffic and revenue reports, we seek comment whether our proposal to improve the timeliness of the annual reports would allow them to serve the same function in detecting traffic distortions as the quarterly report. 109 Additionally, because the information in the quarterly reports tracks the information required in the 43.61( a) report, any changes we make to the section 43.61( a) report would automatically be reflected in the quarterly reports as well. For this reason, we need make no specific proposals to change the information to be reported under the Quarterly report. 110 Rather, we seek comment on the continued need for section 43.61( b) reports. 54. We also seek comment whether there are other means by which we could accomplish the purposes of the quarterly reports through less burdensome measures. For example, we seek comment on whether IMTS carriers currently collect for their own purposes the same information that is submitted in the quarterly reports. If they do, it is possible that the individual carriers would be able to detect through their own data the kinds of traffic shifts the quarterly report was designed to show. Should a carrier notice such a shift, it could notify the Commission of a perceived problem. The Commission has authority to notify other U. S. carriers that a carrier has noticed an anomaly and to request those carriers to provide similar information from their own records. 111 It is possible such an approach would allow carriers to identify a competitive abuse faster than would the quarterly reports. Because an abuse that harms one U. S. carrier would also be likely to harm other U. S. carriers, it would seem to be in the interest of all the carriers to cooperate in responding to such a request. We note that a U. S. IMTS carrier recently notified us that one of its overseas correspondents had harmed it by diverting traffic to another carrier. We referred the issue to the other carriers, confirmed that there was a problem, and took prompt action to correct it. 112 We seek comment whether such an informal approach could replace the section 43.61( b) quarterly report. 108 2004 ISP Reform Order at ¶ 31. 109 We note, however, that the Commission’s 2000 International Biennial Review Order cited the existence of the section 43.61( b) report as the basis for its decision to remove the “benchmark condition” on foreign– affiliated U. S. carriers’ provision of facilities- based private line service. 17 FCC Rcd at 11429- 30, ¶ 31. The Commission’s Benchmark Order had prohibited foreign- affiliated carriers from providing facilities- based private- line service until their foreign affiliates’ settlement rates were at or below the relevant benchmark. Benchmark Order, 12 FCC Rcd at 19901- 12, ¶¶ 207- 231. The 2000 International Biennial Review Order stated that the condition is no longer necessary because the section 43.61( b) quarterly report would provide notice of substantial declines in a carrier’s switched service traffic and the Commission would be able to investigate the cause for such a change and bring an enforcement action if appropriate. 17 FCC Rcd at 11422- 23, ¶ 15. 110 The proposed rule in Appendix B contains the current language for section 43.61( b). 111 47 U. S. C. § 218. 112 2003 Philippines Order, 18 FCC Rcd 3519. 21 Federal Communications Commission FCC 04- 70 22 D. Quarterly Reports of Foreign- Affiliated Switched Resale Carriers 55. We also seek comment whether the public interest continues to require IMTS resellers affiliated with foreign carriers that possess market power to file quarterly reports under section 43.61( c). Section 43.61( c) requires U. S.- authorized IMTS resellers that are affiliated with a foreign carrier that (1) has sufficient market power at the foreign end of an international route to affect competition adversely in the U. S. market, and (2) collects settlement payments from U. S. carriers for traffic terminated in its home market, to file quarterly traffic and revenue reports on their affiliated routes. 113 The rule requires the U. S. carrier to file the report for the route where its affiliate has market power and requires that the report provide all the switched-resale traffic and revenue information for that route. The rule requires eligible carriers to file the report within 90 days of the end of the quarter covered by the data. 56. The Commission adopted the section 43.61( c) quarterly report in the Foreign Participation Order, in which the Commission established rules and policies governing entry by foreign carriers seeking authorization under section 214 of the Act to provide international telecommunications services in the United States. 114 Commenters raised a concern that entry of carriers that have market power in their home markets gives them further opportunities to game the settlements process by, for example, participating in a call turnaround scheme to turn U. S. -inbound calls of their foreign affiliates into U. S.- outbound calls. Call turnaround would generate additional settlements revenues for the foreign affiliate and increase the U. S.- carrier net settlements payments. 115 Such diversions would increase the revenues of the affiliated U. S. carriers and increase the outpayment of the other U. S. carriers. 116 The Commission recognized that foreign carriers have incentives to distort traffic flows, but did not find that foreign- carrier affiliation by itself would exacerbate potential distortions. Nor did it agree that, were such distortions to occur, U. S. market competition or U. S. subscribers would necessarily be harmed. 117 The Commission, therefore, did not adopt a condition proposed by one U. S. carrier to apply to switched- resale services the condition the Commission had imposed in its Benchmarks Order. The proposed condition would have prohibited the U. S. affiliate of a foreign carrier from offering IMTS on a switched- resale basis until its foreign carrier affiliate had reduced its IMTS settlement rates to or below the Commission’s prescribed benchmark. 118 Rather, the Commission adopted a requirement for switched resellers affiliated with foreign carriers that possess market power to file a quarterly report of their switched- resale traffic and revenues on 113 47 C. F. R. § 43.61( c). Section 43.61( c) states that, for purposes of this rule, the terms “affiliated” and “foreign carrier” are defined in section 63.09 of the rules, 47 C. F. R. § 63.09. 114 Foreign Participation Order, 12 FCC Rcd at 24014, ¶ 272. Specifically, the Commission adopted, as one factor in its public- interest analysis, a rebuttable presumption that applications from carriers from WTO Member countries do not pose concerns that would justify denial on competition grounds. 12 FCC Rcd at 23913, ¶ 50. With respect to applications from carriers that possess market power in non- WTO Member countries, the Commission maintained its policy of applying the “effective competitive opportunities” (ECO) test, under which the Commission would grant authorization under section 214 only when the applicant could show that its home country grants U. S. carriers equivalently effective competitive opportunities. 115 Foreign Participation Order, 12 FCC Rcd at 23983, ¶¶ 207- 08. 116 Id. at 23983. 117 Id. at 23893- 4. 118 Id. 22 Federal Communications Commission FCC 04- 70 23 the affiliated route. 119 The Commission stated that the report would allow the Commission to detect an attempt by U. S. carriers to engage in traffic distortion schemes on affiliated routes. 120 Subsequently, the Commission exempted CMRS carriers from filing the section 43.61( c) report. 121 The Commission concluded that CMRS carriers are only incidental providers of IMTS and that they have such a small market share that they could not effectively distort competition in the U. S. market. 122 57. We seek comment whether the 43.61( c) quarterly reports continue to be necessary to detect in timely fashion any potential traffic distortion by switched resellers on routes where they are affiliated with foreign carriers that possess market power. The steps we are proposing herein to make the data from the section 43.61( a) annual traffic and revenue report more timely may lessen the need for a quarterly report. It is also possible that the carriers could use their own information to detect a problem and notify the Commission of their concern. The Commission could then ask other carriers to provide similar information to use in analyzing the issue. We seek comment on the continued need for section 43.61( c). 123 We also seek comment on whether ad hoc information requests could substitute for the section 43.61( c) quarterly report, as well as the section 43.61( b) quarterly report. E. Circuit- Status Report 58. We seek comment on whether carriers should continue to file annual circuit- status information with the Commission. The annual circuit- status report required by section 43.82 provides the Commission, the carriers, and others information on how U. S. international carriers use their circuits. It provides the only information we receive on the number of available circuits and whether they are in use or are idle. The Commission uses the information from the circuit-status report to ensure that carriers with market power do not use their access to circuit capacity to engage in any anti- competitive behavior. Additionally, the Commission uses the information in our merger analyses to determine whether a proposed merger might result in an anti-competitive concentration of market power in the international transport market. 124 Furthermore, the Commission uses the report to implement the requirement in section 9 of the Communications Act that carriers pay annual regulatory fees for each of the bearer circuits they own. 125 We tentatively conclude that the circuit- status report continues to be useful in detecting anti- competitive behavior and should be retained. We seek comment, however, on whether there are alternative means for the Commission to obtain the information required for these activities. We also seek comment on the burden placed on carriers in providing the information required in this report, particularly in light of the changes that we describe below. 119 Id. at 23985 and 24014. 120 Id. at 23985. 121 2000 International Biennial Review Order, 17 FCC Rcd at 11429, ¶ 30. 122 Id. 123 The proposed rule in Appendix B contains the current language for section 43.61( c). 124 For example, in approving the merger between Qwest and U S West, the Commission relied on the 1998 circuit status report to find that the proposed merger would not affect competition adversely in any input market that is essential for the provision of international services. Qwest Communications International Inc, and U S West, Inc. Memorandum Opinion and Order, 15 FCC Rcd 5376, 5399- 5400, ¶ 47 (2000). 125 47 U. S. C. § 159. 23 Federal Communications Commission FCC 04- 70 24 59. If we retain the circuit- status report, we propose that carriers no longer report circuits they use for service between the continental United States and off- shore U. S. points or between off- shore U. S. points. The filing manual for section 43.82 currently states that circuits between the continental United States and an off- shore point (e. g., between Alaska and Guam) are considered to be international and should be reported in the circuit- status report. 126 For the reasons we discussed above in connection with the annual traffic and revenue reports, 127 we find that we should no longer treat circuits between U. S. points as international circuits. We also propose to eliminate the annual circuit- addition reports that carriers that resell international private lines are now required to file under section 63.23( e) of the rules. 128 60. In addition, we seek comment on ways to make the information in the circuit-status reports more useful. For example, currently, only common carriers file circuit- status reports. At the time that the reporting requirement was adopted, most circuits were provided by common carriers and almost all submarine cables were common carrier facilities. Increasingly, however, many of the international submarine cable and satellite facilities that are used for providing international services are operated on a non- common- carrier basis. 129 The Commission has stated in the past that common carriers may purchase circuits in non- common-carrier facilities for use in providing their IMTS and other common- carrier services and that, in such cases, the circuits become common- carrier facilities. Still, there are substantial numbers of circuits in non- common- carrier cables that are idle and available for use by common carriers, non- common carriers, and end users. The non- common- carrier owners of these facilities do not, however, file circuit- status reports. Thus, the current rule makes a distinction based on regulatory classification even though the facilities are generally fungible and are often provided from the same platform (submarine cable or satellite facility). In addition, the current rule puts the Commission in the position of effectively treating substantially similar platforms under different regulatory structures for purely regulatory reasons. As a result, we do not have information on circuits operated on a non- common carrier basis and their potentia l effect on the availability of circuits for common- carrier services. Making that information available in the public Commission compilation of the section 43.82 reports would be helpful in assessing the levels of unused capacity and the need for new cable facilities. This information is also important for accurately assessing the market in analyzing proposed mergers or acquisitions, since we currently only receive information on part of the potential capacity in a market. Accordingly, we seek comment on whether non- common carriers should file circuit- status reports. 61. The Appendix C attached to this Notice contains a staff recommendation to revise the annual circuit- status report (proposed Schedule 8). The proposed schedule would retain the requirement that carriers report their circuit- use information on the basis of 64 Kilobit per second (Kbps) equivalent circuits, but dispense with the requirement that they report the additional circuits they derive from those 64 Kbps circuits. The schedule would also include a service 126 Section 43.82 Filing Manual at Section 1. B (International Points used for Reporting Purposes). 127 See ¶¶ 29- 31 supra. 128 47 C. F. R. § 63.23( e). That rule requires all carriers that resell international private lines to file an annual report of any circuits they add during the reporting year. See Section 43.82 Filing Manual at 4, n. 3. 129 Cable landing licensees and satellite licensees may request authority to provide service on either a common carrier or non- common carrier basis. See 47 C. F. R. §§ 1.767( a)( 6), 25.114( c)( 14). 24 Federal Communications Commission FCC 04- 70 25 category called “data services” to clarify how carriers should report their virtual private line services and other switched data services. Virtual private- line services do not fit neatly within the service reporting categories in the current Section 43.82 Filing Manual. Such services provide the same function as dedicated private lines. The new category proposed by the staff would provide a place for carriers to report facilities used for virtual private lines and other data services that do not use dedicated facilities. We seek comment on the staff recommendations. F. Consolidation of the Traffic and Revenue Reports and the Circuit- Status Reports 1. Consolidation of the Reports 62. If and to the extent that we retain the reporting requirements, we propose to consolidate the existing sections 43.61 and 43.82 reports into one section of the rules. We note that both the section 43.61 and 43.82 reports require eligible carriers to report on most of the same services and to use the same list of countries. We find a benefit in combining the two reports in one rule section, and it appears likely that combining the rules would simplify carrier compliance with the reporting requirements. Consolidation of the reports would also make it easier for the Commission to ensure that future developments that would affect both reports are handled in a way to keep the two reports consistent. We seek comment on this proposal. 63. If we were to adopt the proposal to consolidate the two reporting requirements, carriers would still file their circuit- status information in a separate schedule. In the attached Appendix C there is a staff recommendation for a proposed Schedule 8. That proposed schedule sets out the staff’s recommendation for modifications of the existing circuit- status report and the format under which carriers would report their circuit information. We seek comment on the staff recommendation and on alternative proposals or approaches. 2. Consolidated Filing Date 64. Currently, section 43. 82 requires carriers to file their circuit- status information on March 31 st . We have proposed to change the filing date for the traffic and revenue reports to May 1 st . If we adopt the proposal to consolidate the traffic and revenue reports and the circuit-status reports into one rule, we must decide whether we should make the filing dates of the two reports consistent. We propose, therefore, to move the filing date of the circuit- status report to May 1 st . We seek comment on this proposal. 3. Consolidated Filing Manual 65. We also believe that it would be less confusing to the carriers and less burdensome to have one consolidated filing manual for both reports. At present, section 43.61 and section 43.82 have separate filing manuals that use somewhat different definitions and require carries to follow different formats in filing their information. To the maximum extent possible, the two reports should use the same list of international services and the same list of international service points. Consolidating both filing manuals would be the best way to ensure that the definitions and services used in both reports are and remain consistent over time. We request comment on this proposal. 66. In 1992, when the Commission codified section 43.61, the Commission made the rule general and delegated authority to the Chief of the Common Carrier (now the Wireline 25 Federal Communications Commission FCC 04- 70 26 Competition Bureau) to prepare a filing manual that would lay out the specifics of which carriers must file a report and what information the y must provide. 130 Similarly, in 1995, when the Commission codified section 43.82, it delegated authority for preparing a filing manual for the circuit- status report to the Chief of the International Bureau. 131 Because we propose to consolidate the traffic and revenue reports and the circuit- status reports, we propose that the Chief of the International Bureau should prepare the consolidated filing manual. We seek comment on this proposal and on alternative proposals or approaches. G. Reports on Division of Tolls for Telegraph Carriers 67. We propose to eliminate section 43.53 of the rules. 132 Section 43.53 requires a carrier that provides international telegraph service to file a report with the Commission within 30 days of the date of any arrangement with its foreign correspondents concerning the division of tolls for such telegraph communication, except for arrangements relating to transiting of telegraph traffic. The Commission adopted section 43.53 under the authority of section 211 of the Communications Act. 133 Because telegraph services have declined greatly over the years, it is not clear that the report required by section 43.53 continues to serve a useful purpose. The volume of telegraph traffic is sufficiently small that any anti- competitive abuses by foreign telegraph carriers are unlikely to have a negative effect on other services such as IMTS. The International Bureau recommended in the 2002 IB Biennial Regulatory Review Staff Report that we eliminate this report. We agree. We seek comment on this proposal. H. Other Issues 1. Confidentiality 68. Except for the quarterly reports under sections 43.61( b) and 43.61( c), 134 we generally have treated the information submitted pursuant to section 43.61 as non- confidential. The Commission, however, has allowed all carriers to submit on a proprietary basis specific pieces of information, such as information on transit traffic. The Commission has also granted carriers confidential treatment for circuit- status information submitted under section 43.82. Because we favor the free availability of information, we propose to continue our policy of making the carriers’ annual traffic and revenue data available to the public. The staff recommendation to eliminate from the annual traffic and revenue report the requirement to report country- by- country data for certain types of IMTS traffic, such as traffic that originates in foreign points but is “reoriginated” by a U. S. carrier for termination in the ultimate destination country, should eliminate the basis for most claims of competitive sensitivity. 135 In the interest of public access to information, even where we grant a request to keep a particular piece of information confidential, we propose to include that information in the industry- wide totals we compile in the annual International Telecommunications Data Reports. 130 1992 Section 43.61 Amendment Order, 7 FCC Rcd at 1380, ¶ 9. 131 1995 Circuit Status Report Order, 10 FCC Rcd at 8607, ¶ 13. 132 47 C. F. R. § 43.53. 133 47 U. S. C. § 211. 134 Most carriers currently file their quarterly 43.61( b) and 43.61( c) reports with a request for confidentiality. 135 See Appendix C, Schedule 4. 26 Federal Communications Commission FCC 04- 70 27 69. Also in the interest of free access to information, we seek comment on whether the circuit- status information the carriers submit under section 43.82 continues to be competitively sensitive or whether the carriers’ circuit- status information could also be made available to the public. Carriers that want continued confidential treatment for this information should address why the information is competitively sensitive. It is possible that information that is competitively sensitive when it is submitted would not continue to be sensitive after time has passed. Carriers should comment on whether the circuit- status information could be released after one year or after two years. 70. In 2002, eleven facilities- based and facilities- resale carriers asked the Commission to keep their section 43.61 traffic and revenue information confidential. These eleven carriers collectively accounted for $933 million of billed international revenues (IMTS, private line, and other international services). Although the Commission included the carriers’ information in the aggregated traffic and revenue figures for the whole industry, the information was not apportioned between services or reported in the country- by- country tables as that might have revealed the identity of the carriers. The deletion of this information, although it represented a small percentage of overall international telecommunications traffic and revenues, did skew the tables reporting carrier- by- carrier revenues and the tables reporting country- by-country revenues. We would like to avoid such problems in the future. We seek comment on ways that we can improve the accuracy of the Commission’s International Telecommunications Data report by ensuring that it includes data from all carriers. 71. Carriers that seek to protect the confidentiality of particular data elements may request such treatment under section 0.459 of the Commission’s rules. 136 That rule requires such a carrier to justify fully its request for confidentiality by providing enough information for the Commission to determine the need for confidential treatment. 137 The rule requires a carrier requesting confidentiality to submit an unredacted version of its data, as well as a redacted version to be made publicly available. Should the Commission decide to grant a request for confidential treatment of information that does not fall within a specific exemption pursuant to the Freedom of Information Act (FOIA), that Act requires the Commission to disclose publicly the information upon an appropriate request. 138 We note that the Commission may grant requests for confidential treatment either conditionally or unconditionally. As such, we note that the Commission has the discretion to release on public interest grounds information that does fall within the scope of a FOIA exemption. We seek comment on the granting of confidential treatment for particular pieces of data in the annual traffic and revenue or circuit- status reports. 136 47 C. F. R. § 0.459 (2002). 137 See 47 C. F. R. § 0.459( b). 138 See 47 C. F. R. § 0.461 (2002); 5 U. S. C. § 552. 27 Federal Communications Commission FCC 04- 70 28 2. Definitions 72. We seek comment on which terms, if any, we should define in the proposed rule. Currently neither section 43.61 nor section 43.82 contains any definitions. Section 43.61( c), however, refers to the definitions of “affiliated” 139 and “foreign carrier” 140 found in section 63.09. 141 We seek comment on whether the proposed rule should continue to refer to the definitions in section 63.09 or whether the definitions should be contained in the proposed rule itself. 73. We also seek comment on the continued use and proper definitions of the terms “facilities- based,” “facilities resale,” and “pure resale.” Although section 43.82 does not define “facilities- based common carrier,” the term is defined in section 63.09. 142 The Section 43.61 Filing Manual uses a similar, but different, definition for “facilities- based services.” 143 The 139 “Two entities are affiliated with each other if one of them, or an entity that controls one of them, directly or indirectly owns more than 25 percent of the capital stock of, or controls, the other one. “Also, a U. S. carrier is affiliated with two or more foreign carriers if the foreign carriers, or entities that control them, together directly or indirectly own more than 25 percent of the capital stock of, or control, the U. S. carrier and those foreign carriers are parties to, or the beneficiaries of, a contractual relation (e. g., a joint venture or market alliance) affecting the provision or marketing of international basic telecommunications services in the United States.” 47 C. F. R. § 63.09( e) (2002) (emphasis in original). 140 “Foreign carrier is defined as any entity that is authorized within a foreign country to engage in the provision of international telecommunications services offered to the public in that country within the meaning of the International Telecommunication Regulations, see Final Acts of the World Administrative Telegraph and Telephone Conference, Melbourne, 1988 (WATTC- 88), Art. 1, which includes entities authorized to engage in the provision of domestic telecommunications services if such carriers have the ability to originate or terminate telecommunications services to or from points outside their country.” 47 C. F. R. § 63.09( d) (emphasis in original). 141 47 C. F. R. § 63.09. 142 “Facilities- based carrier means a carrier that holds an ownership, indefeasible- right- of- user, or leasehold interest in bare capacity in the U. S. end of an international facility, regardless of whether the underlying facility is a common carrier or non- common carrier submarine cable or a satellite system.” 47 C. F. R. § 63.09( a) (emphasis in original). 143 “Facilities- based services are those services provided using international transmission facilities owned in whole or in part by the carrier providing service. Facilities- based carriers use one or more international channels of communications to provide international telecommunications service. An international channel is a wire or radio link that facilitates electronic communications between a United States point and another world point. A facilities-based carrier either owns international channels, has an ownership interest in the channel such as an indefeasible right of use (IRU), or leases the channel from an entity that does not report [those circuits in its own Section 43.61 reports]. Carriers must provide detailed data for the facilities- based services that they provide.” Section 43.61 Filing Manual at 15. See also Manual for Filing International Traffic Statistics pursuant to Section 43.61 of the Commission’s Rules, Order, 10 FCC Rcd 13418, 13420, ¶ 9 (IAD/ CCB, 1995) (1995 Manual Revision Order). 28 Federal Communications Commission FCC 04- 70 29 filing manual also defines “facilities- resale services” 144 and “pure resale.” 145 The Section 43.82 Filing Manual uses the definitions of those terms set out in the Section 43.61 Filing Manual. 146 74. We propose to amend the definition of “facilities- based” services to clarify that the term includes services that are provided using international transmission facilities that are leased from another common carrier or non- common carrier, other than a lease of private line capacity. We propose to adopt the same definition both for purposes of international carrier reporting under Part 43 of the rules and authorization of international service under Part 63. The current definition of “facilities- based carrier” under section 63.09( a) refers to leases of “bare capacity,” which apparently has caused confusion among reporting carriers. A lease of “bare capacity” is intended to be distinguished from the resale, or lease, of a private line circuit obtained directly or indirectly from a facilities- based international common carrier. 147 Thus, under the proposed rule, a facilities- based common carrier must report annually each active and idle circuit in the U. S. end of an international transmission facility in which it has acquired an ownership, indefeasible- right- of- user, or leasehold interest, other than the lease of a private line circuit from another reporting carrier. The proposed rule also would make clear that, in circumstances where a facilities- based carrier has executed a lease of bare capacity with another common carrier (or non- common carrier), it is the obligation of the lessee only to report the circuit( s) covered by the lease. 75. We also propose to recharacterize and redefine “facilities- resale” service as “private line resale” service to be consistent with the terminology used for international authorization of service in Part 63 of the rules and to better distinguish between facilities- based service and service provided utilizing “resold” or “leased” private lines obtained by a carrier directly or indirectly from an underlying facilities- based carrier. We seek comment on these proposals. 3. Electronic Filing 76. We seek comment whether it would significantly expedite and facilitate the submission of data if we were to encourage or mandate carriers to submit their traffic and revenue data and their circuit- status data electronically. Currently, the section 43.61 and 43.82 filing manuals direct carriers to submit their traffic and revenue and circuit- status data on diskettes, in ASCII- based record format fields. 148 In a number of areas, such as the filing of 144 “Facilities Resale services are provided by a carrier utilizing non- switched international circuits leased from other reporting international carriers. A facilities resale service is provided over international channels which are subject to Section 43.61 reporting by the underlying carrier. Carriers must provide detailed data for the facilities resale services that they provide.” Section 43.61 Filing Manual at 15. 145 “Pure resale services are switched services that are provided by reselling the international switched services of other carriers. Pure resale services are not provided to the public over the reseller's international channels of communications. Pure resale carriers may own domestic switches and circuits, but rely on other carriers to carry switched traffic between the United States and foreign points.” Section 43.61 Filing Manual at 16. 146 Section 43.82 Filing Manual at 8. 147 See Section 43.82 Filing Manual at 5. Resold private line circuits currently are reported annually in the section 63.23( e) circuit addition reports, which we propose to eliminate. See Section III. E. 148 This is because the DOS- based computer program the Commission uses to process the carrier data submissions and to prepare the annual International Telecommunications Data report requires data to be submitted in that format. 29 Federal Communications Commission FCC 04- 70 30 section 214 applications, we have encouraged applicants to file their data electronically, because electronically- filed data can be processed more quickly. 77. Applicants also have found electronic filing beneficial because the materials needed for filing are available online, without the need for obtaining a hard copy, and the information required for an application can be entered directly into the Commission’s computer system. Indeed, some carriers have requested that we allow them to file their section 43.61 and 43.82 data electronically, using a commercial spreadsheet computer program. Appendix C contains a staff recommendation that would allow carriers to file their traffic and revenue and circuit- status information using an electronic spreadsheet program. Electronic filing of these data should offer the same benefits of easy data entering and processing that we have experienced with our existing electronic filing arrangements. 78. To receive the maximum benefits from electronic filing, it would be necessary for all carriers to submit their data in electronic form and file in the same electronic format. We agree with the staff that basing electronic filing on the use of a commercial spreadsheet computer program would simplify the process of carrier data submission and Commission analysis of the traffic and revenue and circuit- status data. It appears that existing spreadsheet programs would be sufficient for Commission staff to analyze and consolidate the carriers’ data submissions. It also appears that these spreadsheet programs would be sufficient to allow carriers to submit their data easily and accurately. Internet access has become sufficiently common that few if any carriers would be disadvantaged by requiring them to file their data electronically. Further, the fact that commercial spreadsheet software is readily available and relatively inexpensive should further reduce the burden on carriers of electronic filing. As a result, we tentatively conclude that we should require carriers to submit their data electronically. We seek comment on this proposal and the staff recommendation in Appendix C. 4. Transition Period 79. We seek comment on whether a transition period for any changes to the reporting requirements would be necessary. If we determine that it is in the public interest to retain some or all of the reporting requirements, the staff would need to revise the filing manual prior to the first reports being filed under the new rules. 149 Does there need to be a transition period in addition to the time that would be required to draft and implement the new filing manual? 150 We also seek comment on whether there should be a transition period if we decide to eliminate the reporting requirements. IV. CONCLUSION 80. In this Notice, we set forth a number of proposals to revise several sections of Part 43 that establish the reporting requirements for carriers providing international service. These proposals are designed to protect consumers and U. S. carriers from anti- competitive behavior and to ensure that consumers enjoy greater choice of international service providers and lower prices. We seek comment on those proposed rule changes. We also seek comment on a proposal 149 Currently, there are separate filing manuals for the 43.61 traffic and revenue reports and the 43.82 circuit status reports. We have proposed to consolidate the two manuals into one. See Section III. F. 3 supra. 150 Any new reporting manual would be subject to review by the Office of Budget and Management under the Paperwork Reduction Act of 1995, P. L. 104- 13, 44 U. S. C. § 3501. 30 Federal Communications Commission FCC 04- 70 31 to repeal section 43.53 that requires providers of telegraph communications to file with the Commission copies of the division- of- tolls agreements into which they enter with their overseas correspondents. V. ADMINISTRATIVE MATTERS A. Ex Parte Presentations 81. This proceeding shall be treated as a “permit- but- disclose” proceeding in accordance with the Commission’s ex parte rules. 151 Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. 152 Other rules pertaining to oral and written presentations are set forth in section 1.1206( b) of the Commission’s rules as well. B. Initial Regulatory Flexibility Analysis 82. Pursuant to the Regulatory Flexibility Act (RFA), 153 the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and actions considered in this Notice. The text of the IRFA is set forth in Appendix A. Written public comments are requested on this IRFA. These comments must be filed in accordance with the same filing deadlines for comments on the Notice, and they should have a separate and distinct heading designating them as responses to the IRFA. The Commission’s Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of this Notice, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with the Regulatory Flexibility Act. 154 C. Initial Paperwork Reduction Act of 1995 Analysis 83. This Notice contains either proposed and/ or modified information collections. 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 Notice, as required by the Paperwork Reduction Act of 1995, Public Law 104- 13. Public and agency comments are due 60 days from date of publication of the Notice 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 151 47 C. F. R. §§ 1.1200, 1.1206; Amendment of 47 C. F. R. § 1.1200 et seq. Concerning Ex Parte Presentations in Commission Proceedings, GC Docket No. 95- 21, Report and Order, 12 FCC Rcd 7348 (1997). 152 47 C. F. R. § 1.1206( b)( 2). 153 See 5 U. S. C. § 603. The RFA, see U. S. C. § 601 et seq., has been amended by the Contract with America Advancement Act of 1996, Pub. L. No. 104- 121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). 154 5 U. S. C. § 603( a). 31 Federal Communications Commission FCC 04- 70 32 the respondents, including the use of automated collection techniques or other forms of information technology. D. Comment Filing Procedures 84. Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 C. F. R. §§ 1.415, 1.419, interested parties may file comments on or before [60 days after Federal Register publication], and reply comments on or before [90 days after Federal Register publication]. Comments may be filed using the Commission’s Electronic Comment Filing System (ECFS) or by filing paper copies. Parties are strongly encouraged to file electronically. See Electronic Filing of Documents in Rulemaking Proceedings, 63 Fed. Reg. 24,121 (1998). 85. Comments filed through the ECFS can be sent as an electronic file via the Internet to http:// www. fcc/ gov/ cgb/ ecfs. html. Generally, only one copy of an electronic submission must be filed. If multiple docket or rulemaking numbers appear in the caption of this Notice, however, commenters must transmit one copy of their comments to each docket or rulemaking number referenced in the Notice. In completing the transmittal screen, commenters should include their full name, U. S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e- mail. To get filing instructions for e- mail comments, commenters should send and e- mail to ecfs@ fcc. gov and should include the following words in the body of the message, “get form.” A sample form and directions will be sent in reply. 86. Parties who choose to file by paper must file an original and four copies of each filing. Each filing should also include an electronic version of the comments filed. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first class or overnight U. S. Postal Service mail (although we continue to experience delays in receiving U. S. Postal Service mail). The Commission’s mail contractor, Natek, Inc., will receive hand -delivered or messenger- delivered paper filings for the Commission’s Secretary at 236 Massachusetts Avenue, N. E., Suite 110, Washington, D. C. 20002. The filing hours at this location are 8: 00 a. m. to 7: 00 p. m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Commercial overnight mail (other than U. S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U. S. Postal Service first- class mail, Express Mail, and Priority Mail should be addressed to 445 12 th Street, S. W., Washington, D. C. 20554. All filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission. 87. Comments submitted on diskette should be on a 3.5 inch diskette formatted in an IBM- compatible format using Word for Windows or compatible software. The diskette should be clearly labeled with the commenter’s name, proceeding (including the docket number in the caption of this Notice, type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase “Disk Copy – Not an Original.” Each diskette should contain only one party’s pleadings, preferably in a single electronic file. 88. All parties must file one copy of each pleading electronically or by paper to each of the following: (1) The Commission’s duplicating contractor, Qualex International, 445 12 th Street, 32 Federal Communications Commission FCC 04- 70 33 S. W., Room CY- B402, Washington, D. C. 20554; e- mail: qualexint@ aol. com; facsimile: (202) 863- 2898; phone (202) 863- 2893. (2) James Ball, Chief, Policy Division, International Bureau, 445 12 th Street, S. W., Washington, D. C. 20554; e- mail: James. Ball@ fcc. gov. (3) Alan I. Feldman, Acting Chief, Industry Analysis and Technology Division, Wireline Competition Bureau, 445 12 th Street, S. W., Washington, D. C. 20554; e-mail: Alan. Feldman@ fcc. gov. (4) David Krech, Senior Legal Advisor, Policy Division, International Bureau, 445 12 th Street, S. W., Washington, D. C. 20554; e- mail: David. Krech@ fcc. gov. (5) John F. Copes, Attorney, Policy Division, International Bureau, 445 12 th Street, S. W., Washington, D. C. 20554; e- mail: John. Copes@ fcc. gov. (6) Linda D. Blake, Public Utilities Specialist, Industry Analysis and Technology Division, Wireline Competition Bureau, 445 12 th Street, S. W., Washington, D. C. 20554; e- mail: Linda. Blake@ fcc. gov. (7) James Lande, Economist, Industry Analysis Division, Wireline Competition Bureau, 445 12 th Street, S. W., Washington, D. C. 20554; e- mail: Jim. Lande@ fcc. gov. 89. Comments and reply comments and any other filed documents in this matter may be obtained from Qualex International, in person at 445 12 th Street, S. W., Room CY- B402, Washington, D. C. 20554, via telephone at (202) 863- 2893, via facsimile at (202) 863- 2898, or via e- mail at qualexint@ aol. com. The pleadings also will be available for public inspection and copying during regular business hours in the FCC Reference Information Center, Room CY-A257, 445 Twelfth Street, S. W., Washington, D. C. 20554 and through the Commission’s Electronic Filing System (ECFS) accessible on the Commission’s World Wide Website, www. fcc. gov. 90. Comments and reply comments must include a short and concise summary of the substantive arguments raised in the pleading. Comments and reply comments must also comply with section 1.49 and all other applicable sections of the Commission’s rules. 155 All parties are encouraged to utilize a table of contents, to include the name of the filing party and the date of 155 47 C. F. R. § 1.49. 33 Federal Communications Commission FCC 04- 70 34 the filing on each page of their comments’ length of their submission. We also strongly encourage that parties track the organization set forth in this Notice in order to facilitate our internal review process. 91. Written comments by the public on the proposed and/ or modified information collections are due 60 days from the date of publication of the Notice in the Federal Register. Written comments must be submitted by the public, Office of Management and Budget (OMB), and other interested parties on the proposed and/ or modified information collections on or before 60 days after the date of publication in the Federal Register of the Notice. In addition to filing comments with the Secretary, Marlene H. Dortch, a copy of any comments on the information collection( s) contained herein should be submitted to Judith B. Herman, Federal Communications Commission, Room 1- C804, 445 12 th Street, S. W., Washington, D. C. 20554, or via the Internet to Judith. B. Herman@ fcc. gov and to Kristy L. LaLonde, OMB Desk Officer, Room 10236 NEOB, 725 17th Street, N. W., Washington, D. C. 20503 or via the Internet to Kristy_ L._ LaLonde@ omb. eop. gov or via fax at 202- 395- 5167. 92. Commenters that file what they consider to be proprietary information may request confidential treatment pursuant to section 0.459 of the Commission’s rules. Commenters should file both their original comments for which they request confidentiality and redacted comments, along with their request for confidential treatment. Commenters should not file proprietary information electronically. See Examination of Current Policy Concerning the Treatment of Confidential Information Submitted to the Commission, Report and Order, 13 FCC Rcd 24816 (1998), Order on Reconsideration, 14 FCC Rcd 20128 (1999). Even if the Commission grants confidential treatment, information that does not fall within a specific exemption pursuant to the Freedom of Information Act (FOIA) must be publicly disclosed pursuant to an appropriate request. See 47 C. F. R. § 0.461; 5 U. S. C. § 552. We note that the Commission may grant requests for confidential treatment either conditionally or unconditionally. As such, we note that the Commission has the discretion to release on public interest grounds information that does fall within the scope of a FOIA exemption. E. Further Information 93. For further information regarding this proceeding, contact James Ball, Chief, Policy Division, International Bureau, David Krech, Senior Legal Advisor, Policy Division, International Bureau, or John Copes, Attorney, Policy Division, International Bureau at (202) 418- 1460. Information regarding this proceeding and others may also be found on the Commission’s website at www. fcc. gov. V. ORDERING CLAUSES 94. Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1, 4( i), 4( j) 11, 201- 205, 211, 214, 219, 220, 303( r), 309, and 403 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 154( j), 161, 201- 205, 211, 214, 219, 220, 303( r), 309 and 403, this NOTICE OF PROPOSED RULEMAKING IS HEREBY ADOPTED and COMMENTS ARE REQUESTED as described above. 34 Federal Communications Commission FCC 04- 70 35 95. IT IS FURTHER ORDERED that the Commission’s Consumer and Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this NOTICE OF PROPOSED RULEMAKING, including the Initial Regulatory Flexibility Act Analysis, to the Chief Counsel for Advocacy of the Small Bus iness Administration. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary 35 Federal Communications Commission FCC 04- 70 36 APPENDIX A INITIAL REGULATORY FLEXIBILITY ANALYSIS 1. As required by the Regulatory Flexibility Act (RFA), 1 as amended, the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) concerning the policies and rules proposed in this Notice of Proposed Rulemaking (NPRM). 2 Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM in paragraph 83. The Commission will send a copy of the Notice, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration. 3 In addition, the Notice and IRFA will be published in the Federal Register. 4 A. Need for, and Objectives of, the Proposed Rules 2. The Commission initiated this comprehensive review of the reporting requirements imposed on U. S. carriers providing international telecommunications services. The Commission believes that the proposals contained in the NPRM will make it easier for carriers, both small and large, to provide the information required by the rules. In addition, section 11 of the Telecommunications Act of 1996 directs the Commission to undertake, in every even-numbered year beginning in 1998, a review of certain regulations issued under the Communications Act of 1934, as amended. 5 3. The objective of this proceeding is to improve the reporting requirements imposed on carriers providing international telecommunications services in sections 43.61 and 43.82 of the Commission’s rules. 6 Specifically, the NPRM proposes to simplify, consolidate, and revise the annual traffic and revenue reporting requirements and the circuit- status reporting requirements. Also, the NPRM proposes to eliminate the rule that requires carriers to file reports regarding the division of international toll communication charges. 4. Currently, section 43.61 requires that all international telecommunications carriers file an annual report of their traffic and revenues. In addition, section 43.61 sets forth additional reporting requirements for specific carriers that meet the criteria set forth in the rule. Under section 43.82, facilities- based common carriers providing international telecommunications services must file an annual report on the status of their circuits. The information derived from 1 See 5 U. S. C. § 603. The RFA, see 5 U. S. C. §§ 601 – 612, has been amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104- 121, Title II, 110 Stat. 857 (1996). 2 We note that we may not certify this proceeding under 5 U. S. C. § 605, because our action will not have a significant economic effect on a substantial number of small entities (as discussed). 3 See 5 U. S. C. § 603( a). 4 Id. 5 Pub. L. No. 104- 104, 110 Stat. 56 (1996). 6 47 C. F. R. §§ 43.61, 43.82. 36 Federal Communications Commission FCC 04- 70 37 the international revenue and traffic report and circuit- status report is critical in understanding the international telecommunications market. These reports are the only source of publicly available information of this nature. 5. The information obtained from these reports is used extensively by the Commission, the industry, other government agencies, and the public. The Commission uses the information to evaluate applications for international facilities, track market developments and the competitiveness of each service and geographical market to formulate rules and policies consistent with the public interest, monitor compliance with those rules and policies, and guard the competitive effect of its decisions on the market. The Commission also uses the information to identify those routes for which settlement rates are at a level low enough to permit relief from certain regulatory requirements, includ ing the prohibition on the use of private lines for the provision of switched, basic services (“ ISR”). Carriers use the information to track the balance of payments in international communications services and for market analysis purposes. Carriers and potential entrants use the information for, among other things, assessment of market opportunities and to monitor competition in markets. The Commission, along with other government agencies such as the Department of Justice, uses the information in merger analyses and negotiations with foreign countries. In addition, the information contained in the circuit- status report allows the Commission to comply with the statutory requirements of the Omnibus Budget Reconciliation Act of 1993. B. Legal Basis 6. The NPRM is adopted pursuant to sections 1, 4( i) and (j), 11, 201- 205, 211, 214, 219, 220, 303( r), 309, and 403 of the Communications Act of 1934 as amended, 47 U. S. C. §§ 151, 154( i), 154( j), 161, 201- 205, 211, 214, 219, 220, 303( r), 309, and 403. C. Description and Estimate of the Number of Small entities to Which the Proposals will Apply 7. The RFA directs agencies to provide a description of, and, where feasible, an estimate of the number of small entities that may be affected by the proposals, if adopted. 7 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 8 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 9 A small business concern is one that: (1) is independently owned and operated; 7 5 U. S. C. § 603( b)( 3). 8 5 U. S. C. § 601( 6). 9 5 U. S. C. § 601( 3) (incorporating by reference the definition of “small- business concern” in the Small Business Act, 15 U. S. C. § 632). Pursuant to 5 U. S. C. § 601( 3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition( s) in the Federal Register.” 37 Federal Communications Commission FCC 04- 70 38 (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 10 8. The proposals in the NPRM apply only to entities providing international common carrier services pursuant to section 214 of the Communications Act; entities providing domestic or international wireless common carrier services under section 309 of the Act; entities providing common carrier or non- common carrier satellite services under section 309 of the Act; and entities licensed to construct and operate submarine cables under the Cable Landing License Act on a common carrier or non- common carrier basis. The Commission has not developed a small business size standard directed specifically toward these entities. However, according to SBA definitions, wired telecommunications carriers, cellular and other wireless providers, and telecommunications resellers would be considered small entities if they employ 1,500 employees or less. 11 The definition also considers satellite or other telecommunications providers as small entities if they have $12.5 million or less in annual receipts. 12 9. We have included small incumbent local exchange carriers in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e. g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” 13 The SBA’s Office of Advocacy contends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field of operation because any such dominance is not “national” in scope. 14 We have therefore included small incumbent local exchange carriers in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analysis and determinations in other, non- RFA contexts. 10. The carriers required to file the traffic and revenue and circuit- status reports are both large and small entities. In the 2002 annual traffic and revenue report, 706 carriers reported that they provided international message telephone service (IMTS) on a pure resale basis. 15 Pure resale providers resell the services of underlying U. S. facilities- based and facilities- resale carriers. Pure resale service is primarily provided by small businesses. For example, of the 706 carriers, 316 carriers had revenues less than $10,000; 560 had revenues less than $500,000; and 584 had revenues less than $1 million. 16 The report also shows that 56 U. S. facilities- based and facilities- resale carriers reported that they billed $9. 3 billion for IMTS service, $988 million for 10 15 U. S. C. § 632. 11 13 C. F. R. § 121.201, NAICS codes 517110, 513322, and 51730. 12 Id. at code 517410. 13 15 U. S. C. § 632. 14 Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27, 1999). The Small Business Act contains a definition of “small- business concern,” which the RFA incorporates into its own definition of “small business.” See 15 U. S. C. § 632( a) (Small Business Act); 5 U. S. C. § 601( 3) (RFA). SBA regulations interpret “small business concern” to include the concept of dominance on a national basis. 13 C. F. R. § 121.102( b). 15 See FCC, Wireline Competition Bureau, Industry Analysis and Technology Division, “2002 International Telecommunications Data” at page 1, Statistical Findings (March 2004). FCC website location http:// www. fcc. gov/ wcb/ iatd/ intl. html. 16 Id. 38 Federal Communications Commission FCC 04- 70 39 private line services, and $113 million for miscellaneous services. These carriers would be considered non- small entities under the SBA definition. 17 11. According to the 2002 Circuit- Status Report, 79 U. S. international facility- based carriers filed information pursuant to section 43.82. 18 The report does not yield employee or revenue statistics, so it is impossible for us to determine how many carriers could be considered small entities. Although it is quite possible that a carrier could report a small amount of capacity and have significant revenues, we will consider those 79 carriers to be small entities at this time. In addition, of the 79 carriers filing the annual circuit- status report for 2002, there were at least 8 carriers that did not have any circuits in 2002. 19 D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements 12. The NPRM proposes to retain the annual traffic and revenue reporting requirements and the circuit- status reporting requirements because the collection and public reporting of this information continues to be necessary in the public interest. The NPRM, however, proposes to simplify and clarify the reporting requirements to reduce the burdens for both small and large carriers. Because carriers currently are required to file annual traffic and revenue and circuit- status reports, the proposals contained in the NPRM will not impose any significant economic burden on small carriers. The information contained in the proposed reporting requirements is the same informatio n that the carriers collect and maintain during the routine course of business. The NPRM contains a staff recommendation on the proposed reporting requirements, including eight proposed schedules that show the specific information that carries would be required to report and how they would report it. The proposed reporting requirements are described below. However, because the Commission may change the reporting proposed in the NPRM based on comments received in this proceeding, the schedules may also change. 13. Schedule 1 contains a proposed new generic report. This report would be a one-page form that international section 214 authorization holders would be required to file annually. The generic form would require a carrier to provide basic information about its international section 214 authorization. Specifically, the carrier would be required to provide its name, its Form 499- A identification number, 20 its Commission Registration System (CORES) 17 See 13 C. F. R. § 121.201, NAICS Code at Subsector 517 – Telecommunications. 18 See International Bureau Releases 2002 Year- End Circuit Status Report for U. S. Facilities- Based International Carriers; Capacity Use Shows Modest Growth, rel. Dec. 24, 2003. The report is available on the FCC website at http:// www. fcc. gov/ ib/ pd/ pf/ csmanual. html. 19 Id. 20 FCC Form 499- A is the Commission’s Telecommunications Reporting Worksheet. All telecommunications carriers are required to file this form annually to calculate contributions to the universal service support mechanisms, as well as to the TRS Fund, the cost recovery for numbering administration, and the cost recovery for the shared costs of local number portability. In addition, the information is used by carriers to comply with the Commission’s registration requirement for new and existing carriers providing interstate telecommunications service. See 47 C. F. R. §§ 52.1( b), 52.32( b), 54.711( a), 64.604( c)( 4)( iii)( B), and 64.1195. 39 Federal Communications Commission FCC 04- 70 40 identification number, 21 and a list of the international section 214 authorizations that it holds. In addition, the carrier would provide basic information about the services that it provided the previous year. Based on the services the responding carrier reported, the schedule would inform the carrier whic h other schedules, if any, the carrier would be required to complete. 14. Proposed Schedules 2 and 3 would require carriers to submit information on IMTS and seek country- by- country traffic and revenue information. Schedule 2 will require carriers to provide the information on “outbound” IMTS traffic, whereas Schedule 3 will require carriers to provide the information on “inbound” IMTS traffic. Under Schedule 2, carriers would report, country- by- country, their minutes of outbound IMTS, their revenues, and their payouts to foreign telecommunications organizations for terminating outbound traffic. The carrier would report the sum of all traffic that falls within the definition of “U. S. Customer Traffic” and within the definition of “Other U. S.- Billed traffic.” 15. Proposed Schedule 3 would require carriers to report, on a country- by- country basis, the number of inbound minutes of IMTS they receive from their overseas correspondents and the dollar amounts they receive for terminating that traffic. Also, carriers would be required to continue to separate the inbound traffic they receive under the traditional settlement arrangements from inbound traffic they receive under all other arrangements, such as ISR, hubbing, etc. The NPRM seeks comment on whether carriers should be required to provide world- total data, such as the number of collect calls and associated minutes placed to foreign countries. 16. Proposed Schedule 4 would require carriers to provide IMTS minutes and revenues for three major market segments on a world- total (rather than country- by- country) basis. When reporting this information, carriers would be required to provide separate data for country direct, country beyond, and traditional transit. Carriers would separate traffic handled for foreign telephone operators from U. S.- customer traffic, and would divide U. S.- customer traffic between service provided to end- users and service provided to U. S. resellers. 17. Proposed Schedule 5 would require pure resale carriers with over $5 million in revenue from international services to report their U. S.- customer minutes and revenues separately for residential and small business users; large business users; and other pure resellers. 18. Proposed Schedule 6 would require carriers to provide country- by- country information on their international private- line services. Carriers would be required to report separately service provided over facilities they own and service provided over resold circuits. Carriers would report the revenues they derive from providing data services over facilities they lease from another carrier (facilities- resale). The NPRM seeks comment on whether to add additional reporting breakouts. 19. Proposed Schedule 7 would require carriers to provide information regarding miscellaneous services for which they had over $5 million in revenue the preceding year. Services other than IMTS and private- line service would be considered miscellaneous services. Carriers would be required to provide a minimal amount of information on the new services, 21 CORES is a web- based, password- protected, registration system that assigns a unique 10- digit FCC Registration Number (FRN) for use when doing business with the FCC. See New Commission Registration System (CORES) to be Implemented July 19, Public Notice, 15 FCC Rcd 18754 (2000). 40 Federal Communications Commission FCC 04- 70 41 such as the name of each service and the total annual revenues the carriers derived from the service. 20. Proposed Schedule 8 would require carriers to provide a snapshot of their active and idle circuits as of December 31 st of each year. Carriers would be required to report their circuit capacity on the basis of the type of facilities they use to provide service – submarine cables, satellites, and terrestrial links. Carriers would be required to report their circuit use in units of 64 Kilobit per second (Kbps) equivalent circuits. The NPRM seeks comment on whether this information should be reported on a different capacity unit, and if so, how should it be allocated. Also, the NPRM seeks comment on whether carriers should be required to provide idle satellite capacity by country and mobile satellite circuits. E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered 21. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “( 1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage or the rule, or any part thereof, for small entities.” 22 22. The NPRM seeks comment on a number of proposals to simplify and consolidate the reporting requirements for carriers providing international telecommunications servic es. The proposals in the NPRM are designed to reduce the regulatory requirements for both small and large carriers, while maintaining and enhancing the goals the reports serve. The Commission will also consider other additional significant alternatives developed in the record. 23. The possible change to the reporting requirements with the most significant impact on small carriers is the proposal to exempt pure resale carriers with less than $5 million in revenues from international services the preceding year from filing reports. Based on the number of carriers filing the annual traffic and revenue report in 2002, the majority of carriers would be considered small carriers. 23 This proposal would benefit a substantial number of small entities by relieving them from certain reporting requirements. 24. The NPRM proposes to simplify the information that the carriers, both small and large, must submit for any traffic and revenue reports. First, the NPRM proposes to eliminate the requirement that carriers provide information on the number of messages tha t they carried the previous year. Second, the NPRM proposes to eliminate the requirement that carriers use the billing codes set out in the Section 43.61 Filing Manual and the Public Notices. Currently, carriers report international telephone traffic under 12 different billing codes, and the various 22 5 U. S. C. § 603( c)( 1)-( c)( 4). 23 See FCC, Wireline Competition Bureau, Industry Analysis and Technology Division, “2002 International Telecommunications Data” at page 1, Statistical Findings (March 2004). FCC website location http:// www. fcc. gov/ wcb/ iatd/ intl. html. 41 Federal Communications Commission FCC 04- 70 42 billing codes have presented recurrent problems for carriers filing the reports as well as those who review the reports. Third, the NPRM proposes a set of schedules for the reporting of the traffic and revenue and circuit- status information in lieu of the two filing manuals that are currently used. The Notice proposes to streamline some of the reporting categories, which will reduce the reporting requirements on both small and large entities. 25. The NPRM proposes to consolidate sections 43.61 (traffic and revenue reporting requirement) and 43.82 (circuit- status reporting requirement) into one rule. Consolidating the rules will eliminate the requirement that carriers file two separate reports – one for traffic and revenue data and one for circuit- status data. The Notice proposes that one filing manual be developed that will satisfy the reporting requirements of the new rule. One consolidated filing manual for both reports would be less confusing and less time- consuming for both small and large carriers. 26. The NPRM also proposes to require carriers to file the report earlier than currently required in order to improve the timeliness of the resulting report. In selecting a proposed filing date, the Commission tried to balance the need for more expeditious filing with any burden an earlier filing would place on carriers. In addition, with more timely- filed data, it would be unnecessary for carriers to file corrected traffic and revenue data. The proposed new filing date minimizes any burden on the carriers because it does not coincide with any other reporting requirements. Also, carriers will not be burdened with filing another report with corrected data. 27. The NPRM seeks comment on whether it would significantly speed and facilitate the submission of data if the Commission were to encourage or mandate carriers to submit their data electronically. Electronic filing would lessen the burden of filing the reports for both small and large carriers. Because carriers maintain the data electronically, it would be practicable for carriers to submit the data in the same format rather than convert the data into a different format. 28. The NPRM proposes a general report that will make it very simple for a carrier to determine which, if any, reporting requirements are applicable to the carrier. In addition, this proposal will simplify a carrier’s compliance with other reporting requirements, such as the Form 499- A. F. Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rules 29. None. 42 Federal Communications Commission FCC 04- 70 43 APPENDIX B PROPOSED RULE CHANGES It is proposed that Parts 1, 43 and 63 of the Commission’s rules be amended as follows: PART 1 – PRACTICE AND PROCEDURE 1. The authority citation for Part 1 continues to read as follows: Authority: 47 U. S. C. 151, 154( i), 154( j), 155, 225, 303( r), 309 and 325( e). 2. Remove § 1.789 PART 43 – REPORTS OF COMMUNICATION COMMON CARRIERS AND CERTAIN AFFILIATES 3. The authority citation for Part 43 continues to read as follows: Authority: 47 U. S. C. 154; Telecommunications Act of 1996; Pub. Law 104- 104, sec. 402( b)( 2)( B), (c), 110 Stat. 56 (1996) as amended unless otherwise noted. 47 U. S. C. 211, 219, 220, as amended. 4. Remove § 43.53. 5. Section 43.61 is amended to read as follows: § 43.61 Reporting requirements for U. S. international carriers. (a) Annual Traffic and Revenue Reports. Each 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 a report with the Commission not later than May 1 of each year showing traffic and revenue for international services provided in the preceding calendar year. (b) Quarterly Traffic Reports for facilities- based carriers. (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 private- line 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 § 43.61 annual report of international telecommunications traffic; 43 Federal Communications Commission FCC 04- 70 44 (ii) The carrier's aggregate minutes of facilities- based or private- line 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 § 43.61 annual report of international telecommunications traffic; (iii) The carrier's aggregate minutes of facilities- based or private- line 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 § 43.61 annual report of international telecommunications traffic; or (iv) The carrier's aggregate minutes of facilities- based or private- line 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 §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 procedures for the annua l 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, private- line resale telephone service. (ii) The qua rterly 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. (c) Quarterly Traffic Reports for resale carriers. Each common carrier engaged in the resale of international switched services that is affiliated with a foreign carrier that has sufficient market power on the foreign end of an international route to affect competition adversely in the U. S. market and that collects settlement payments from U. S. carriers shall file a quarterly version of the report required in paragraph (a) of this section for its switched resale services on the dominant route within 90 days from the end of each calendar quarter. Commercial Mobile Radio Service (CMRS) carriers, as defined in § 20.9, are not required to file reports pursuant to this paragraph. (d) Circuit status reports. Each facilities- based 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 a circuit status report with the Commission not later than May 1 each year showing the status of its circuits used to provide international services as of December 31 of the preceding calendar year. (e) Filing Manual. The information required under this section shall be furnished in conformance with the instructions and reporting requirements prepared under the direction of the Chief, International Bureau, prepared and published as a filing manual. 44 Federal Communications Commission FCC 04- 70 45 (f) Definitions. (1) Two entities are affiliated with each other if one of them, or an entity that controls one of them, directly or indirectly owns more than 25 percent of the capital stock of, or controls, the other one. Also, a U. S. carrier is affiliated with two or more foreign carriers if the foreign carriers, or entities that control them, together directly or indirectly own more than 25 percent of the capital stock of, or control, the U. S. carrier and those foreign carriers are parties to, or the beneficiaries of, a contractual relation (e. g., a joint venture or market alliance) affecting the provision or marketing of international basic telecommunications services in the United States. (2) Facilities- based carrier means a carrier that ho lds an ownership, indefeasible- right- of- user, or leasehold interest (other than a lease of a private line circuit from another common carrier) in the U. S. end of an international facility, regardless of whether the underlying facility is a common carrier or non- common carrier submarine cable, a satellite system or any other facility. (3) Foreign carrier is defined as any entity that is authorized within a foreign country to engage in the provision of international telecommunications services offered to the public in that country within the meaning of the International Telecommunication Regulations, see Final Acts of the World Administrative Telegraph and Telephone Conference, Melbourne, 1988 (WATTC- 88), Art. 1, which includes entities authorized to engage in the provision of domestic telecommunications services if such carriers have the ability to originate or terminate telecommunications services to or from points outside their country. 6. Remove § 43.82 PART 63 – EXTENSION OF LINES, NEW LINES AND DISCONTINUANCE, REDUCTION, OUTAGE AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF RECOGNIZED PRIVATE OPERATING AGENCY STATUS 7. The authority citation for part 63 continues to read as follows: Authority: Sections 1, 4( i), 4( j), 10, 11, 201- 205, 214, 218, 403 and 651 of the Communications Act of 1934, as amended, 47 U. S. C. 151, 154( i), 154( j), 160, 201- 205, 214, 218, 403, and 571, unless otherwise noted. 8. Section 63.09 is amended by revising paragraph (a) to read as follows: (a) Facilities- based carrier means a carrier that holds an ownership, indefeasible- right- of- user, or leasehold interest (other than a lease of a private line circuit from another common carrier) in the U. S. end of an international facility, regardless of whether the underlying facility is a common carrier or non- common carrier submarine cable, a satellite system or any other facility. 9. Section 63.23 is amended by removing paragraph (e) and redesignating paragraph (f) as paragraph (e). 45 Federal Communications Commission FCC 04- 70 46 APPENDIX C STAFF RECOMMENDATION FOR CHANGES TO THE ANNUAL TRAFFIC AND REVENUE AND CIRCUIT- STATUS REPORTING REQUIREMENTS 1. The Commission delegates to the staff authority to prepare and issue filing manuals setting out the instructions and reporting requirements for filing the annual traffic and revenue reports 1 and the annual circuit- status reports. 2 These filing manuals, as supplemented by Public Notices, set out the specific information that carriers are required to provide pursuant to sections 43.61 and 43.82 and the format in which it mus t be provided to the Commission. 3 2. As part of the Commission’s comprehensive review of the reporting requirements for providers of international telecommunication services, 4 we – the staff of the International Bureau and the Wireline Competition Bureau – have reviewed the instructions and reporting requirements that carriers follow in filing their traffic and revenue data and circuit status data. Based on our review, we have developed a number of proposals to simplify and clarify the reporting requirements. These proposed changes are designed to improve the usefulness of the information obtained in the reporting process and to lessen the burdens placed on both the carriers and the Commission. These proposed changes are consistent with the Commission’s proposal to consolidate the annual traffic and revenue reports and circuit status reports into one rule and to have one filing manual for both reports. 5 In the Notice of Proposed Rulemaking (NPRM), the Commission seeks comment on the proposed schedules developed by the staff and other changes to the reporting requirements proposed by the staff. 6 The staff will use the comments received on these recommendations to develop the proposed new consolidated filing manual for the annual traffic and revenue reports and the circuit- status reports. 7 1 47 C. F. R. § 43.61( a)( 3). 2 47 C. F. R. § 43.82( c), (d). 3 See Manual for Filing Section 43.61 Data in Accordance with the FCC’s Rules and Regulations (rel. June 8, 1995) (Section 43.61 Filing Manual); Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice (rel. July 15, 1997) (1997 43.61 PN); Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice, DA 98- 1369 (rel. July 9, 1998) (1998 43.61 PN); Further Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice, DA 99- 1332 (rel. July 7, 1999) (1999 43.61 PN); Annual Section 43.61( a) International Telecommunications Traffic Reports Due by July 31, 2000, Public Notice, DA 00- 1526 (rel. July 7, 2000) (2000 43.61 PN); Manual for Filing Section 43.82 Circuit Status Data in Accordance with the FCC’s Rules and Regulations (rel. Mar. 5, 1996) (Section 43.82 Filing Manual). The Section 43.61 Filing Manual and the Public Notices, as well as the reports, are available on the FCC website at http:// www. fcc. gov/ wcb/ iatd/ intl. html. The Section 43.82 Filing Manual, as well as the reports, are available on the FCC website at http:// www. fcc. gov/ ib/ pd/ pf/ csmanual. html. 4 See Reporting Requirements for U. S. Providers of International Telecommunications Services; Amendment of Part 43 of the Commission’s Rules, IB Docket 04- 112, Notice of Proposed Rulemaking, FCC 04- 70 (rel. xx xx, xxx) (NPRM). 5 NPRM, Section III. F. 6 Id. at ¶¶ 43- 45. 7 A draft of any updated filing manual will be released for public comment before it is adopted. 46 Federal Communications Commission FCC 04- 70 47 BACKGROUND 3. Carriers are currently required to file their international traffic and revenue and circuit status information according to the instructions set out in the two manuals developed by the staff. The “Manual for Filing Section 43.61 Data” (Section 43.61 Filing Manual) was first adopted in 1992, 8 and last revised in 1995. 9 The Section 43.61 Filing Manual was supplemented by a number of Public Notices starting in 1997. 10 The “Manual for Filing Section 43.82 Circuit Status Data” (Section 43.82 Filing Manual) was adopted in 1995. 11 4. Under the Section 43.61 Filing Manual, a carrier must provide, by July 31 of each year, information on the number of messages, the number of minutes, and the amount of revenues for the international services that it provided the previous year. A carrier providing facilities- based 12 and facilities- resale services 13 must provide that information on a country- by-country basis, except that it may provide information on its miscellaneous services on a region-by- region basis. 14 Within a service, traffic is categorized according to various factors including the ownership of the facilities used to provide the service, how the traffic was exchanged with the foreign telecommunications carrier, and how the traffic was billed. To do this, a carrier must use one of 12 different billing codes for reporting their traffic and revenues. 15 A pure resale carrier 16 must provide its traffic and revenue information on a global basis and must provide a 8 Manual for Filing International Traffic Statistics under Section 43.61 of the Commission’s Rules, DA 92-968 (CCB rel. July 22, 1992). 9 Manual for Filing International Traffic Statistics pursuant to Section 43.61 of the Commission’s Rules, Order, DA 95- 1248 (rel. June 8, 1995) 10 See Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice (rel. July 15, 1997) (1997 43.61 PN); Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice, DA 98- 1369 (rel. July 9, 1998) (1998 43.61 PN); Further Clarification of Section 43.61 International Traffic Data Reporting Requirements, Public Notice, DA 99- 1332 (rel. July 7, 1999) (1999 43.61 PN); Annual Section 43.61( a) International Telecommunications Traffic Reports Due by July 31, 2000, Public Notice, DA 00- 1526 (rel. July 7, 2000) (2000 43.61 PN). 11 See Public Notice, DA- 96- 293 (rel. March 5, 1996). 12 “Facilities- based services are those services provided using international transmission facilities owned in whole or in part by the carrier providing service. Facilities- based carriers use one or more international channels of communications to provide international telecommunications service. An international channel is a wire or radio link that facilitates electronic communications between a United States point and another world point. A facilities-based carrier either owns international channels, has an ownership interest in the channel such as an indefeasible right of use (IRU), or leases the channel from an entity that does not report [those circuits in its own Section 43.61 reports]. Carriers must provide detailed data for the facilities- based services that they provide.” Section 43.61 Filing Manual at 15 (emphasis in original). See also Manual for Filing International Traffic Statistics pursuant to Section 43.61 of the Commission’s Rules, Order, DA 95- 1248, 10 FCC Rcd 13418, 13420, ¶ 9 (IAD/ CCB, 1995) (1995 Manual Revision). 13 “Facilities Resale services are provided by a carrier utilizing non- switched international circuits leased from other reporting international carriers. A facilities resale service is provided over international channels which are subject to Section 43.61 reporting by the underlying carrier. Carriers must provide detailed data for the facilities resale services that they p rovide.” Section 43.61 Filing Manual at 15 (emphasis in original). 14 Section 43.61 Filing Manual at 13. 15 See 2000 43.61 PN. 16 “Pure resale services are switched services that are provided by reselling the international switched services of other carriers. Pure resale services are not provided to the public over the reseller's international channels of (continued....) 47 Federal Communications Commission FCC 04- 70 48 checklist of the countries that it serves. Facilities- based and facilities- resale carriers must file their submissions on paper and on diskette. 17 A pure resale carrier need only file paper copies of its submissions. 18 5. Under the Section 43.82 Filing Manual, facilities- based carriers must report by March 31 of each year the status of their circuits as of December 31 of the preceding calendar year. A carrier is required to report active and idle circuits on a country- by- country basis according to type of facility used/ operated (satellite, submarine cable, terrestrial), using six different facility codes. 19 The carrier must file its submission on paper and on diskette. 20 GENERAL PROPOSALS 6. In the NPRM, the Commission makes a number of proposals and seeks comments on possible changes to the reporting requirements. Specifically, the Commission seeks comment on whether to: · eliminate the requirement that carriers report the number of messages they carried during the preceding year; · eliminate the requirement to file a traffic and revenue report or circuit- status report for traffic between the continental United States and U. S. off- shore points or between off- shore U. S. points; · establish a $5 million revenue threshold for a carrier to file annual traffic and revenue reports for pure resale services; · establish a $5 million annual revenue threshold for which miscellaneous services a carrier must report; · require that carriers annually file a one- page summary report; · require that all carriers file annual circuit status reports; · have a consolidated filing manual for both the traffic and revenue reports and the circuit status reports; and · change the filing date from March 31 st for the circuit status report and July 31 st for the traffic and revenue report to May 1 st for both reports. (... continued from previous page) communications. Pure resale carriers may own domestic switches and circuits, but rely on other carriers to carry switched traffic between the United States and foreign points.” Section 43.61 Filing Manual at 16. 17 Section 43.61 Filing Manual at 26- 28. The diskette format and coding instructions are set out in Section 2 of the manual. 18 Section 43.61Filing Manual at 26. 19 Section 43.82 Filing Manual at 17. 20 Section 43.82 Filing Manual at 19- 21. The diskette format and coding instructions are set out in Section 2 of the manual. 48 Federal Communications Commission FCC 04- 70 49 7. In addition to the changes the Commission proposes in the NPRM, the staff recommends the elimination of the billing codes set out in the Section 43.61 Filing Manual and associated Public Notices. Originally, the section 43.61( a) report asked carriers to report on traffic that “originates” in the United States, traffic that “originates” in a foreign country, and traffic that “transits” the United States. 21 In practice, this simple categorization proved unworkable, because it did not account for all services, such as collect international calls that originate in a foreign country but are billed to the U. S. customer. For this reason, the Common Carrier Bureau altered the definition of traffic to be reported to “traffic billed in the United States” and “traffic billed in a foreign country.” 22 To assist the carriers in filing their traffic and revenue reports, the Common Carrier Bureau developed billing codes to describe telephone traffic that “originates in the United States” (billing code 1) and traffic that “originates in a foreign country” (billing code 2). More recently, however, the international telephone market has become more complex due to the introduction of a variety of new methods of handling traffic outside the traditional international settlements process. The Commission now has 12 different billing codes to account for the various ways traffic is handled. 23 Each of these new traffic handling methods have complicated the reporting process and required changes to the section 43.61 requirements and the billing codes used to account for them. Use of the proposed schedules discussed in this Appendix would eliminate the use of billing codes and should simplify the reporting of traffic and revenue information. Proposed Schedules 8. Attached are eight proposed schedules that set out the staff proposals to simplify and clarify reporting under the revised annual traffic and revenue report and the revised circuit-status report. The proposed schedules are not the actual schedules that carriers would file, but rather the conceptual framework of what would be filed. The actual reporting formats would be developed as part of the new manual. 9. Schedule 1 applies to all entities subject to the reporting requirements. Schedules 2, 3, 4, and 5 apply to international message telephone service (IMTS). Schedule 6 applies to international private- line service. Schedule 7 applies to all other international telecommunications services. Schedule 8 applies to all facilities- based carriers that are required 21 Transit traffic refers to traffic that originates and terminates outside the United States but is carried through the country. 22 Under this categorization, collect calls placed to the United States from an overseas point are classified with traffic billed in the United States and collect calls from the United States to another country are classified with traffic billed outside the United States. 23 2002 International Telecommunications Data at 12. (The report is available on the FCC web- site at: http:// www. fcc. gov/ wcb/ iatd/ intl. html.) Billing codes 1 and 11 account for calls billed in the United States (code 1 for calls settled under traditional settlement arrangements and code 11 for calls settled under other methods). Billing codes 2 and 12 account for calls billed in foreign countries (code 2 for traditional settlements and code 12 for other methods). Billing code 3 accounts for traditional transiting calls. Billing codes 4 and 14 account for U. S.- billed country- direct and country- beyond calls (code 4 for traditional settlements and code 14 for other methods). Billing codes 5 and 15 account for the terminating (inbound) leg of calls reoriginated by U. S. carriers (code 5 for traditional settlements and code 15 for other methods). Billing code 35 accounts for the terminating leg of U. S- carrier reoriginated calls that were terminated overseas by pure resale. Billing codes 6 and 16 account for originating (outbound) leg of calls reoriginated by U. S. carriers (code 6 for traditional settlements and code 16 for other methods). 49 Federal Communications Commission FCC 04- 70 50 to file circuit- status reports. We have also included with the proposed schedules a reporting example for five carriers. The example shows the different source of traffic and method of termination for each carrier. It also shows how the carriers’ minutes and revenues/ payouts would be reported on schedules 2, 4, and 5. 10. The proposed schedules are discussed in detail below. Comments are requested on the proposed schedules. A. Proposed Schedule 1: Summary Report 11. In the NPRM, the Commission seeks comment on whether section 214 authorization holders should file a summary report indicating whether they provided international service during the preceding year and updating their contact information. “Schedule 1: Summary Report” is a one- page summary schedule that could be used if the Commission adopts such a requirement. 24 All holders of international section 214 authorizations would be required to file this schedule by May 1 each year. 25 12. Schedule 1 would require the carrier to provide basic information about its international section 214 authorization. The carrier would be required to provide its name, its Form 499- A identification number, 26 its CORES identification number, 27 and a list of the international section 214 authorizations that it holds. The proposed schedule also would require the carrier to provide basic information about the services that it provided the preceding year. Based on the services the responding carrier reported, the schedule would inform the carrier which other schedules, if any, the carrier would be required to complete. 28 For example, if the carrier provided facilities- based or facilities- resale U. S.- billed services, the schedule would direct the carrier to complete Schedules 2 and 4. If the carrier provided no international telecommunications the previous year, the schedule would indicate that the carrier need not file any additional information. 13. Schedule 1 would also provide to the filer information on which entities are required to file, including subsidiaries of the authorization holder that might need to file 24 See NPRM at ¶¶ 36- 38. 25 In the NPRM, the Commission proposes to require carriers to file their annual traffic and revenue and circuit -status information by May 1 each year. See NPRM at Section III. F. 2. Currently, carriers are required to file their annual traffic and revenue information by July 31, and their circuit status information by March 31. See 47 C. F. R. §§ 43.61( a), 43.82( a). 26 The administrators of the universal service fund use the FCC Filer 499 ID to track universal service, telecommunications relay service, number portability, and number administration filings and contributions. Administrators also use this code to track some regulatory fee payments. The Commission’s Data Collection Agent assigns the code after a company files its first FCC Form 499. One can find Filer 499 IDs for current 499 filers at http:// www. gullfoss2. fcc. gov/ cib/ form499/ 499a. cfm or in the FCC report Telecommunications Provider Locator, which is available on the Commission’s website at http:// fcc. gov/ wcb/ iatd/ stats. html. 27 The FCC Registration Number (FRN) is used to identify an entity within all Commission Licensing/ Filing systems and RAMIS (the Commission’s Revenue Accounting Management Information System). This number is assigned by CORES (the Commission Registration System) and can be obtained at https:// gullfoss2. fcc. gov/ cores/ CoresHome. html. 28 When filing is available through the FCC website, Schedule 1 will be able to provide direct links to the other schedules based on which service categories the carrier checks. 50 Federal Communications Commission FCC 04- 70 51 separately. Regarding entities that hold authorizations through various subsidiaries or affiliates, the question arises as to which of those subsidiaries or affiliates should file Schedule 1. The staff recommends that each entity that files a separate annual FCC Form 499- A should file separately a Schedule 1. Comments are requested on the appropriate determination as to which entities in a corporate structure should file. B. Proposed Schedule 2: U. S. Billed Traffic -- Country- by- Country Data 14. Proposed Schedule 2 and proposed Schedule 3 apply to IMTS and seek country-by- country traffic and revenue information. The two proposed schedules are related in that Schedule 2 seeks information on “outbound” IMTS traffic and Schedule 3 seeks information on “inbound” IMTS traffic. The two schedules are a simplified version of the information carriers now file under section 43.61( a) for “U. S.- Billed” and “Foreign- Billed” IMTS traffic and revenues. Under schedule 2 a carrier would report minutes and revenues/ payout if the “source of traffic” is from (1) end users or (2) another U. S. carrier and the carrier terminates those minutes with (1) a foreign carrier, (2) on the spot market, or (3) self terminates in the foreign country. 15. Schedule 2 simplifies the information carriers must report for U. S.- billed facilities- based IMTS traffic in a number of ways. The schedule would eliminate the current requirement that carriers report: (1) IMTS traffic under various “billing codes”; (2) for each country the number of “calls”; (3) traffic between and among the United States mainland and “Off- Shore U. S. Points,” consistent with the Commission’s proposal in the NPRM; 29 (4) “service codes”; (5) separately for each country their “retained revenues”; (6) country- by- country their “country direct” and “country beyond” traffic, their ISR/ Hubbed traffic, and their reoriginated traffic; (7) regional totals for their traffic; and, (8) transiting traffic. 16. Schedule 2 would require carriers to continue to report on country- by- country basis the minutes of outbound IMTS, revenues, and payouts to their correspondents for terminating outbound traffic. Column 1 – U. S. Traffic by Source -- would require carriers to divide the total minutes of IMTS traffic they report between traffic they receive from U. S. end user customers (subcolumns (a) and (b)) and traffic they receive from another U. S. carrier (subcolumns (c) and (d)). The carriers would not report traffic taken from the spot market, traffic reoriginated for foreign carriers or traffic they hand to another U. S. carrier to terminate. Resale carriers would report their traffic on Schedule 5 and not on Schedule 2. Revenues reported should be consistent with revenues in the filer’s closed books of account. Unless recognized in the books of account for the prior period, revenues associated with out of period adjustments should be recognized in the accounting period in which they occur. 17. Given the difficulties of assigning an exact price for each call, we recommend that carriers classify revenues as either “route specific revenues” or “non- route specific revenues.” Route specific revenue would consist of all revenues that are directly associated with individual calls in the billing process based on per- minute or per- call charge s. These revenues would consist of the after- discount rates actually billed to the customer, including any surcharges that are accounted for as company revenues, special operator charges, and payphone compensation recovery charges. Non- route specific revenue, on the other hand, would consist of revenues associated with international services, but not directly associated with individual calls. Other 29 See NPRM at ¶¶ 29- 31. 51 Federal Communications Commission FCC 04- 70 52 revenues would include flat monthly charges, amounts billed where the customer’s calls fell short of contracted minimum volume levels, and one- time connection, termination, and service order charges. 18. We recommend that carriers report only route specific revenues on a country- by-country basis. This would eliminate the obligation of carriers to allocate other revenues to individual calls. Carriers have no business purposes for making such assignments and making such assignments is both burdensome and problematic. Consequently, we propose to have carriers file non- route specific revenues as a total for all points, and not on a country- by- country basis. The non- route specific revenues would be added to the route specific revenues to obtain the total revenues to all points for a carrier. 19. Column 2 -- U. S. Traffic by Method of Termination -- would require the carriers to divide the minutes of IMTS traffic they report between that which they settle under traditional settlements (subcolumn (e)) and that which they handle under any other arrangement such as ISR, hubbing, etc. (subcolumn (g)). Subcolumns (f) and (h) wo uld require carriers to provide the dollar amounts that they pay out to their overseas correspondents for terminating the minutes they report in subcolumns (e) and (g). Payouts should be net of any volume discounts. Out- of-period adjustments to payments should be included in the year in which the adjustments are paid or received, not as revisions to the year for which the adjustments are made. 20. The information in column 2 would allow the Commission to determine the percentage of U. S. customer traffic on a particular route that is terminated under the traditional international settlements process and the percentage that is being terminated under hubbing and other non- traditional arrangements. This would allow the Commission to determine how successful U. S. carriers have been in reducing the amount they pay for termination of outbound IMTS traffic. If termination costs on such routes are not declining, the information in column 2 would alert the Commission that it may need to determine the cause. Over time, this information should allow the Commission to determine the true cost of terminating outbound IMTS traffic and may assist in spotting possible anti- competitive behavior on a route. 21. Column 3 is “Total U. S. Traffic.” The totals in this column should match the totals in column 1 and column 2 since the source minutes and revenues and termination minutes and revenues for a call are reported by the same carrier. Thus, subcolumn (i) should equal the sum of subcolumns (a) and (c) as well as the total of subcolumns (e) and (g). Similarly subcolumn (j) should equal the total of subcolumns (b) and (d) and subcolumn (k) should equal the total of subcolumns (f) and (h). C. Proposed Schedule 3: Country- by- Country Data for Inbound IMTS Traffic 22. Proposed Schedule 3 would report the information about inbound traffic that is analogous to the information on outbound traffic reported in Schedule 2. Schedule 3 is similar to, but simpler than, the carriers’ existing reporting requirement under section 43.61. The proposed schedule would require carriers to continue to report, on a country- by- country basis, the number of inbound minutes of IMTS carriers receive from their overseas correspondents and the dollar amounts they receive for terminating that traffic. The proposed schedule would also require the carriers to continue to separate the inbound traffic they receive under the traditional settlement arrangements from inbound traffic they receive under all other arrangements such as ISR, hubbing, etc. 52 Federal Communications Commission FCC 04- 70 53 23. As in the case of Schedule 2, Schedule 3 would simplify the reporting of inbound traffic in several respects. The proposed schedule would eliminate the current requirement that the carriers report: (1) the number of inbound calls; it requires them to report only the number of minutes they handle; (2) separately inbound traffic destined to off- Shore U. S. points, consistent with the Commission’s proposal in the NPRM; 30 and (3) regional totals for inbound traffic. 24. Column 1 – Traditional Settlement -- would require carriers to report separately the total inbound minutes and receipts for IMTS they receive under the traditional settlement arrangements (subcolumns (a) and (b)). Column 2 – Total Traffic – would require carriers to report their total minutes and receipts for inbound traffic. This would include traffic terminated through traditional settlements as well as through alternative settlement arrangements, ISR and traffic from spot markets. This information would allow the Commission to monitor the percentage of traffic from a particular destination that is settled under the traditional international settlements process and the percentage that is terminated under other arrangements. This information complements the information the Commission would receive under Schedule 2 and assists the Commission in determining whether the cost of handling traffic is increasing or decreasing. The inbound routing information would also allow the Commission to monitor the arrangements U. S. carriers have with their correspondents to ensure that U. S. carriers continue to receive a fair portion of the traffic inbound to the United States. We seek comment on proposed Schedule 3. D. Proposed Schedule 4: World Total Data for U. S.- Billed Facilities- Based IMTS 25. Proposed Schedule 4 would require carriers to provide additional detail on a world total basis for the IMTS minutes and revenues for traffic billed to U. S. customers and for traffic billed to others. Schedule 4 would require carriers to report the minutes of collect calls, international toll- free calls, country- beyond calls, and country- direct calls they handle. The proposed schedule would also require carriers to report some information on traffic they handle on behalf of foreign carriers and spot markets. Specifically, the proposed schedule requires carriers to report separately the minutes and revenues they receive from foreign carriers for traditional IMTS transit traffic, refiled traffic, and traffic received from spot markets. 26. Schedule 4 would simplify the current reporting requirements by eliminating the current requirement that carriers report country- by- country data for transiting traffic. The proposed schedule also would eliminate the current requirement to report separate country-beyond and country- direct traffic from other types of U. S. billed traffic on a country- by- country basis. The Commission can use the country- by- country data filed under Schedule 2 broadly to monitor pricing trends and levels of traffic for particular countries. The proposed schedule also would eliminate the current requirement that carriers include in their country- by- country filings any reoriginated traffic or traffic taken from spot markets. We request comment on the proposed schedule. 30 See NPRM at ¶¶ 29- 31. 53 Federal Communications Commission FCC 04- 70 54 E. Proposed Schedule 5: World Total Data for U. S.- Billed Pure Resale IMTS 27. Proposed Schedule 5 combines the report carriers providing pure resale services currently submit under section 43.61( a) with some new customer information. If the Commission adopts the revenue threshold proposed in the NPRM, only carriers with $5 million or more in revenue from pure resale of international services the preceding year would be required to file this schedule. Also, if the Commission decides to require carriers to file consumer information on a regular basis, Schedule 5 would require a pure resale carrier also to report its U. S. customer minutes and revenues separately for: (1) U. S. end- user traffic; (2) traffic handled for other U. S. carriers; and (3) traffic re- originated for foreign carriers. 28. Schedule 5 would simplify current reporting requirements under section 43.61 by eliminating the need for a carrier to report the number of IMTS calls it resells. The proposed schedule would also eliminate the requirement to report separately resale IMTS traffic between and among Off- Shore U. S. Points. 29. The information requested in Schedule 5 is necessary to monitor the development of the IMTS market and to assess the effect of market changes on U. S. consumer prices for IMTS. This information would also be valuable in assessing the effect of our international telecommunications policies and the need for changes to those policies as the market changes and develops. Changes in the IMTS market are likely to affect small and large users quite differently. Large users have considerably more bargaining power in dealing with telecommunications carriers than do small users. It is important for us to see the differential effects of market changes on small and large users to determine whether we need to refine our policies to ensure that small users receive the benefits of the emerging competitive IMTS market. The information we seek separately on the traffic that U. S. resale carriers sell to other carriers (carrier’s carrier traffic) is important because the growth in the pure resale IMTS market has already changed the business of facilities- based carriers. FCC Form 499- A filers reported that they provided nearly $8 billion of international toll service on a carrier's carrier basis in 2001, compared with $5 billion for 1999. 31 However, we do not know how much pure resale traffic is also carrier’s carrier traffic. Similarly, facilities- based carriers are themselves becoming resellers through subsidiaries that buy minutes of IMTS from their affiliates and resell the m to end users. Separating end- user traffic from traffic carried for resellers and foreign carriers would enable the Commission to eliminate the double- counting that exists in our current statistics. 30. The proposed schedules are designed to provide the minimum information necessary to monitor the IMTS market and to ensure compliance with the Commission’s international telecommunications policies. We have attempted also to make it as easy as possible for both facilities- based and resale carriers to gather and submit the information. Many carriers will be able to supply the requested information with no additional burden because they serve only one of the broad classes of customers. For other carriers, much of the information the schedule would require can be derived from the bills carriers present to their customers and, in the case of pure resale carriers, from the bill they pay to the carriers from whom they buy IMTS for resale. Similarly, with respect to the breakdown between small residential and business 31 Industry Analysis and Technology Division, Wireline Competition Bureau, Telecommunications Industry Revenues, (March 2003) and Industry Analysis Division, Common Carrier Bureau, Telecommunications Industry Revenues (September 2001). 54 Federal Communications Commission FCC 04- 70 55 users, carriers should be able to derive much of the information from customer billings. The rest of the information should be available from the carriers’ general books of account. Should carriers have any difficulty in separating the data for smaller and larger users, this burden could potentially be reduced if the carriers were to undertake periodic statistical studies to determine the relative percentage of total IMTS traffic that small and large users represent and then to apply those percentages to their total IMTS traffic and revenues. Application of the proposed $5 million revenue threshold should further reduce the burden imposed by the requirement to report consumer pricing information. 31. We seek comment on the proposed schedule. Comments are also requested on whether pure resale traffic should be reported on Schedule 2. Under the current filing manual and the proposed schedules, carriers would be required to separate U. S. customer traffic between facilities- based and facilities- resale traffic, on the one hand, and pure resale traffic on the other. The pure- resale traffic would not be reported on a country- by- country basis. Filers are asked to comment whether it would be easier to report all U. S. customer traffic on a country- by- country basis in the first column of schedule 2 rather than dividing the traffic between the two schedules. F. Proposed Schedule 6: Country- by- Country Data for Private- Line and Data Services 32. Proposed Schedule 6 sets out a revised annual traffic and revenue report for international private- line services. The proposed schedule would continue to require carriers to provide country- by- country information on their international private- line services, as they currently do under section 43.61( a). The schedule would also require carriers to report separately service provided over facilities they own and service provided over resold circuits. 33. Schedule 6 would simplify the information that carriers are required to report for private- line service compared to the existing section 43.61 report in several respects. The proposed schedule would eliminate: (1) the six classes of private lines for which section 43.61 requires the carriers to report (carriers would report one total figure for all classes of private lines); (2) the requirement for carriers to report separate billing and service codes for private lines; (3) the requirement to report the number of circuits and 64 Kbps circuits carriers lease to customers; and (4) the requirement to report regional totals for private lines leased to customers. 34. Interna tional private- line services represent a significant and growing part of the international carriers’ overall business. Besides their own internal communications, customers also lease international private lines for use in providing services to end users. For example, providers of enhanced services use private lines to provide their computer- based services. Many of the uses for international private lines are potential substitutes for IMTS or other international common- carrier services. 35. Schedule 6 includes a new category called “Data Services.” This category has been added to ensure the proper reporting of several new services, such as virtual private- line service (VPL), that carriers have begun to offer in recent years. From the customer’s point of view, these services provide the same function as international private- line services. That is, the customer may use them to move information from one of its locations to another. The difference is that, unlike private- line service, where there is a dedicated circuit between the customer’s premises that is available solely for the use of the customer, these data services rely on packet-switched transmission technology without use of a dedicated circuit. These services do not fit 55 Federal Communications Commission FCC 04- 70 56 neatly into the format of the existing section 43.61( a) report, which has led to confusion on how to classify them for reporting purposes. The new category in the proposed Schedule 6 is intended to simplify the carriers’ response to the revised annual traffic and revenue report by clarifying where they should report such data services. 36. The proposed schedule would require carriers to report in subcolumn (c) the revenues they derive from providing the data services over facilities they own. The carriers would report in subcolumn (d) the revenues they derive from providing such data services over facilities they lease from another carrier (facilities- resale). Schedule 6 would not require carriers to submit any information as to the volumes of these services they carry. 37. Comments are requested on a number of specific issues. Should private- line service provided over resold circuits be reported under the Miscellaneous Service category (see proposed Schedule 7), rather than the private- line category (proposed schedule 6)? Should we require additional breakouts of revenues by service and, if so, on a country- by- country basis or on a world total basis? Should we require carriers to separate the revenues they receive for private lines provided to end users for their internal communications from the revenues they receive for private lines provided to other carriers for resale? Should carriers report as private line or miscellaneous service revenues from providing bare transponder capacity? Should carriers be required to separate revenues from dedicated private- line services and revenues from virtual private- line services, such as the provision of capacity between two points measured in frames? G. Proposed Schedule 7: World Total Data for Facilities- Based Miscellaneous Services 38. The proposed Schedule 7 sets out the information that carriers would be required to provide regarding miscellaneous services. Services other than IMTS and private- line service are reported under the category “Miscellaneous Services.” In 2001, carriers provided information on four services under the miscellaneous category. It is through this reporting category that the Commission has become aware of new international services as they were introduced. That category should continue to be useful as the international telecommunications market evolves in the future. 39. Schedule 7 is similar to the report carriers currently file for miscellaneous services under section 43.61. The proposed schedule would continue to require carriers to report minimal information about services that would not be specifically enumerated in the revised filing manual — the name of each service and the total annual revenues the carriers derive from the service. The proposed schedule would, however, simplify the existing reporting requirement by eliminating the current requirement to measure the quantity of the service (e. g., minutes, messages, lines, etc.). The proposed schedule also would eliminate the requirement to report information separately for each region of the world. Any revenue threshold that is adopted for reporting miscellaneous services would apply. 32 40. The proposed schedule would replace the existing section 43.61 reporting requirement and would not add any additional reporting burden. Also, the elimination of 32 See NPRM at ¶¶ 38- 42. 56 Federal Communications Commission FCC 04- 70 57 reporting regional totals would reduce the current burden. Furthermore, because any revenue threshold that may be adopted wo uld apply to each service reported in the miscellaneous services category, the schedule would reduce or eliminate the reporting burden for providers of many emerging services. Comments are requested on the proposed schedule. Comments are also requested on whether carriers should report separately revenues for services provided over owned and resold circuits. Similarly, should carriers separate revenues for services provided on a pure resale basis? H. Proposed Schedule 8: Country- by- Country Capacity Data 41. Proposed Schedule 8 would replace the current section 43.82 report. Like the existing section 43.82 report, Schedule 8 would require carriers to provide a snapshot of their active and idle circuits as of December 31 st of each year. Schedule 8 would also retain the basic structure of the existing section 43.82 report, under which carriers report their circuit capacity on the basis of the type of facilities they use to provide service -- submarine cables, satellites, and terrestrial links. 42. The proposed schedule would also require carriers to continue to report their circuit use in units of 64 Kbps- equivalent circuits. Modern transmission facilities have very large capacities, such as a STM- 1, which has a capacity of 1,890 64 Kbps circuits, complicating the accounting for individual 64 Kbps circuits in such facilities. Comments are requested on whether to continue to require capacity information to be reported on the basis of 64 Kbps circuits. One of the purposes for the circuit- status report is to verify that carriers have paid their statutory regulatory fees, and section 9 of the Communications Act mandates that regulatory fees be calculated on the basis of 64 Kbps circuits. 33 Commenters should address the advantages and disadvantages of using a different capacity unit for the circuit- status report and how it would affect for the collection of regulatory fees. 43. The proposed schedule makes a number of changes to the circuit- status report that should simplify the information the carriers must submit and the format in which they submit it. First, the proposed schedule would eliminate the requirement that carriers report the extra circuits they derive from their 64 Kbps circuits through use of circuit- multiplication equipment. Second, the proposed schedule would include a new service category called “Data Services” that simplifies the carriers’ reporting of switched data services discussed above with respect to proposed Schedule 6. 34 Currently, under section 43.61( a), carriers report circuits used for these services in the “Other Services” category, along with various, unrelated services. Proposed Schedule 8 simplifies the reporting of these services by providing a place -- subcolumns (d), (j) and (m) for cable, satellite, and terrestrial, respectively — where carriers would report the number of circuits they employ on December 31 st for the provision of such data services. Proposed Schedule 8 would retain the category of “Other Services,” for reporting of other services, including new services, not otherwise provided for in the listed categories. 33 47 U. S. C. § 159. 34 These are the packet- switched services that carriers have introduced as a substitute for traditional international private- line service 57 Federal Communications Commission FCC 04- 70 58 44. The staff believes that the information reported in the revised circuit- status report is essential for understanding the status of a vital component of the telecommunications industry. The schedule would give the Commission information on both the availability of new circuits and the amount of currently unused circuit capacity. Both can adversely affect service to users. The Commission has gathered annual circuit- use information under section 43.82 since 1995. During that period, the reported number of activated 64 Kbps circuits has increased from 164,418 in 1995 to 2,844,862 in 2002, a compounded annual growth rate of 50 percent. The number of reported idle 64 Kbps circuits has grown during the same period from 100,582 to 3,900,202 circuits in 2002, a compounded growth rate of 59 percent. 35 The combined total number of 64 Kbps for all countries has shown a compounded annual growth rate of 66 percent. These figures indicate that the international telecommunications market is substantial and growing. It also indicates that there is at present a substantial amount of idle transmission facility capacity. 45. The information from this circuit- status report has provided the Commission staff, the industry, and the general public with important information on the use of international circuit capacity. The Commission has used this information in many Commission proceedings, including, for example, the Commission’s analyses of proposed mergers and the Commission’s satellite thin- route market study. Without the information from the revised circuit- status report, it would be more difficult for the Commission to perform the se functions. However, because only common carriers currently file the circuit- status report, the Commission does not have a complete and accurate picture of available circuit capacity. 46. We also seek comment on whether a U. S.- authorized international carrier that provides only intercity and local termination services to a foreign- authorized carrier for termination of foreign originating traffic should be required to report the international circuits used to transport that traffic regardless of whether the U. S.- authorized carrier has executed a lease arrangement with the foreign carrier for use of the circuits. We believe that, in many instances, foreign- authorized carriers are purchasing whole circuits in international transport facilities that land in the United States and may be obtaining from U. S.- authorized international carriers only intercity and local termination services. In such circumstances, we are concerned that the international transport circuits do not get reported under our current manual. We tentatively conclude that we should revise our current manual specifically to require that U. S. -authorized international carriers include those circuits in their circuit status reports. We also caution all carriers that the termination of foreign telecommunications traffic in the United States constitutes the provision of a telecommunications service under section 214 of the Communications Act. A telecommunications carrier that connects its facilities to those operated by a foreign- authorized carrier for the purpose of terminating foreign- originating traffic in the United States must be authorized to operate as an international carrier pursuant to section 214 of the Act and section 63.18 of the Commission’s rules. 47. Comments are requested on several specific issues regarding the reporting of circuit capacity. Should we continue to use the existing definitions of “facilities- based circuits,” including the definition of “ownership interests,” and “resold circuits”? If not, how should they be defined? Should we have a separate line category for Video service circuits, or is it adequate 35 1996 Circuit Status Report (rel. Dec. 2, 1997), at 27 and 2002 Circuit Status Report (rel. Dec. 24, 2003), at 30. The reports are available on the FCC website at www. fcc. gov/ ib/ pd/ pf/ csmanual. html . 58 Federal Communications Commission FCC 04- 70 59 to include these services in the “other” services category? Should we retain the existing conversion ratio used to calculate 64 Kbps equivalents for video circuits? Should bare transponder capacity be included with facilities- based capacity reported in Schedule 8? If, so, should all bare transponder capacity be reported, only in instances where it is provided to non-carriers, such as when it is provided to end- users who carry their own video traffic? Should point- to- multi- point satellite capacity be allocated to the countries in which circuits are accessed or instead should they be reported on a regional or world total basis? Should idle satellite capacity be reported by country? If so, how would it be allocated? Or should it be reported on a regional or world total basis? Should mobile satellite services (charged by time, not by circuit) be reported? If so, how should they be converted to circuit units? If we require that U. S. carriers report circuits owned wholly by their foreign carrier correspondents, but for which the U. S. carrier provides only inter- city and local termination services, should we require the U. S. carrier to specify that it neither owns nor leases the whole circuit? CHANGES IN FILING FORMAT 48. In addition to the changes in the information that carriers report regarding international traffic and revenue and circuit status, changing the format under which the carriers file the reports would benefit the carriers. Currently, the computer program that the Commission staff uses to prepare the traffic and revenue reports and the circuit status reports requires carriers to file country- by- country traffic and circuit data using ASCII- based record format field s. The files consist of individual records, each defined as 131 characters divided into 14 fields for the section 43.61 filings and 10 fields for the section 43.82 filings. Carriers must prepare multiple records to provide all of the required information for an individual route. The records are then validated and processed using a DOS- based program. This program includes a report generator that produces summaries that the staff imports into current spreadsheets and database programs for further analysis and to create tables for publication. Carriers have complained that this process is cumbersome and have asked for permission to file their data in a simpler format. 49. The staff recommends replacement of the current DOS- based filing procedures with spreadsheet- based reporting for country- by- country data, and internet- form- based reporting for other schedules. This change would allow carriers to file their data using a commercial spreadsheet program. With a spreadsheet- based system, the carriers could enter all data associated with a particular country on a single row. The columns would be predefined and would include information such as the year, the country code, total minutes, etc. Filed spreadsheets could be loaded into database programs such as Access® and special queries could be used to validate data and prepare summary reports. This should substantially reduce the burden on carriers in preparing their data submissions. The schedules that do not require country- by- country data are far simpler: carriers could easily prepare and submit such information online. This, too, would substantially reduce the burden on the filing carrier, facilitate interactive edit checks, and allow data to be automatically loaded into Commission database programs. Comments are requested on this proposal. 59 Federal Communications Commission FCC 04- 70 60 50. The staff also recommends that the reports be available through the Commission’s website. This would allow carriers to enter their information directly into the Commission’s data processing system without having to download the schedule or obtain a paper copy. Another benefit of web- based access would be that, if the carrier checks a category in the proposed Schedule 1 that requires the filing of another schedule, the carrier would be informed of that requirement and the nature of the information to be provided. Comments are requested on this proposal. 60 Federal Communications Commission FCC 04- 70 Schedule 1: Summary Report 1 Filer Name 2 Filer 499- A ID 3 CORES ID 4 214 Authorization Numbers 5 (Use additional sheets if necessary) 6 7 Check all of the following boxes that apply for the prior calendar year 8 Provided no international telecommunications services and owned no international circuits. 9 Provided facilities based or facilities resale U. S. Billed IMTS services to U. S. end users or carriers If checked, include Schedule 2 and Schedule 4. 10 Provided facilities based or facilities resale Foreign Billed IMTS services If checked, include Schedule 3. 11 Provided transiting service to foreign carriers, or provided facilities based or facilities resale reorigination service for foreign carriers or spot market customers. If checked, include Schedule 4. 12 Provided IMTS on a pure resale basis, and billed $5,000,000 or more for such services If checked, include Schedule 5. 13 Provided facilities- based or facilities resale private line or data services If checked, include Schedule 6. 14 Provided other international services If checked, include Schedule 7 for each service for which billings were $5,000,000 or more. 15 Owned international circuits or provided telecommunications over resold international circuits. If checked, include Schedule 8 [See Schedule 8 for definition of owned circuits.] 16 Check if a foreign governmental body, a foreign company, or a citizen of a foreign country directly or indirectly owns at least ten percent of the equity of the filer. All entities holding international 214 licenses must file Entities that make consolidated FCC Form 499 filings should make consolidated international traffic and revenue, and circuit data filings. Entities that do not file an Annual FCC Form 499- A and that do not have a current CORES- ID should provide contact information, including a contact name, address, telephone number and e- mail address, if available. 61 Federal Communications Commission FCC 04- 70 Schedule 2: U. S. Billed Traffic - Country- by- Country Data Note: no distinction made between facilities based traffic, facilities resale traffic, or traffic. that is terminated via a spot market. Excludes traditional transit traffic, traffic reoriginated for foreign carriers, traffic taken from spot markets, and traffic terminated via pure resale. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) U. S. Traffic by Source U. S. Traffic by method of termination Total U. S. Traffic U. S. End User Customers Another U. S. Carrier (excludes traffic taken from spot markets or reoriginated for foreign carriers) Traditional Settlement (including traditional transit through a third country) All Other (including traffic terminated via a spot market or hubbed through a third country) By Country of Termination Minutes Route Specific Revenue Minutes Route Specific Revenue Minutes Payout Minutes Payout Minutes Route Specific Revenue Payout Afghanistan Albania Algeria Andorra Angola ...... Zimbabwe Non- Route Specific Revenue Non- Route Specific Revenue Non- Route Specific Revenue Total all points Minutes Total Revenue Minutes Total Revenue Minutes Payout Minutes Payout Minutes Total Revenue Payout Total all points 62 Federal Communications Commission FCC 04- 70 Notes for Schedule 2 Country- by- Country Data for U. S. Billed Traffic - I. Who must file: All carriers providing U. S.- billed IMTS to U. S. customers over their own facilities or over resold private lines (also referred to as “facilities- resale”) in the United States. II. What must be filed on Schedule 2 Include in Schedule 2 all U. S.- billed IMTS provided to U. S. customers over the carrier’s owned or leased facilities or over resold private lines (U. S. Traffic). Specifically: a) IMTS calls that originate in the United States for which the carrier records billed revenue, and that the carrier either: (i) carries between the U. S. and a foreign point over owned or leased facilities or over resold private lines; or (ii) arranges termination via a spot market. b) IMTS calls that terminate in the United States for which the carrier records billed revenue. (For example: collect calls and calls to toll- free numbers.) c) Country- direct and country- beyond calls offered by U. S. carriers to their customers. Exclude from Schedule 2: a) U. S.- billed traffic carried on a pure- resale basis, i. e., routed through an underlying facilities- based or facilities- resale carrier. Report on Schedule 5 world totals for pure resale traffic if the traffic exceeds the reporting threshold for pure- resale traffic. b) IMTS calls that originate in a foreign point, transit a U. S. point and terminate in a foreign point. Typically a U. S. carrier receives compensation for handling such traffic and pays a settlement, settlement- like or spot market charge for termination. Report on Schedule 4 world totals for transit traffic, including traffic that is handled for foreign carriers under traditional transit arrangements as well as traffic that is reoriginated for foreign carriers. c) IMTS calls taken from a spot market. Report on Schedule 4 world totals for traffic taken from spot markets and terminated in foreign points. Report traffic by the foreign country in which the call actually originates or terminates. If calls are terminated via a spot market or are sent to a service provider in an intermediate point and then reoriginated, report the traffic to the destination point even though the filer gives up the call at the intermediate point and pays termination amounts to the service provider in the intermediate 63 Federal Communications Commission FCC 04- 70 point. Country- direct and country- beyond traffic is reported by the country in which the traffic originates. III. Explanation of columns Columns (a) – (d): U. S. Traffic by source of traffic Column (a) -- Minutes handled for U. S. end- user customers should be based on the quantity of minutes billed to end- user customers as measured for the purposes of intercarrier compensation, if known. If this amount is not known, then minutes should be based on the number of minutes actually billed to end- user customers. Column (b) – Route specific revenues for U. S. end- user customers include charges billed for individual calls based on per call or per minute charges, including any surcharges accounted as revenue. Route specific revenues would include operator handling charges, call set up charges, surcharge amounts added for collect calls, and the value of associated minutes or units charged to prepaid calling cards based on the face value of the cards. Non- route specific revenues include plan charges, amounts billed where customers do not satisfy monthly minimum charges, service connection and disconnect charges or other charges that cannot be identified with a particular country of termination. Report the world total of non- route specific revenues on the line provided. Column (c) -- Minutes handled for other U. S. carriers should be based on the quantity of minutes billed to other U. S. carriers. The number of minutes should be those used for purposes of intercarrier compensation, if known. If this amount is not known, then minutes should be based on the number of minutes actually billed to the carriers. Column (d) – Revenues from other U. S. carriers includes all charges billed to other U. S. carriers for carrying their IMTS traffic to foreign points or for routing their IMTS traffic via a spot market. See Column (a) instructions for explanations of route specific and non- route specific revenues. Revenues reported should be consistent with revenues in the filer’s closed books of account. Unless recognized in the books of account for the prior period, revenues associated with out of period adjustments should be recognized in the accounting period in which they occur. Both route-specific and non- route specific revenues should be reported net of discounts applied to or calculated based on those charges. Note that all revenues from U. S. Traffic should be reported in FCC Form 499- A filings on Lines 310, 311, 411, 412, 413 or 414, as appropriate. Columns (e) -- (h): U. S. Traffic by method of termination Column (e) – Traditional Settlement minutes include all U. S. traffic, including country- direct and country- beyond traffic, terminated under settlement agreements between the filer and a foreign carrier pursuant to the Commission’s International Settlements Policy (“ ISP”). (The ISP and exemptions to the ISP are described in Part 43 of the Commission's rules.) This includes 1) traffic that originates from U. S. customers and terminates with a foreign carrier under a traditional 64 Federal Communications Commission FCC 04- 70 accounting rate arrangement; 2) traffic that originates from U. S. customers, transits a third country, and that terminates under a traditional accounting rate arrangement between the U. S. carrier and the foreign carrier in the country of termination; 3) collect or international toll free traffic that U. S. carriers terminate for foreign carriers under a traditional accounting rate arrangement. This category excludes traffic that U. S. carriers handle for third countries under traditional transit arrangements between the originating and the terminating carriers. This category also excludes traffic that U. S. carriers handle for third countries by arranging for transit through foreign points and that terminates under traditional accounting rate or other termination arrangements with foreign carriers. Minutes in column (e) should be the number of minutes used for intercarrier compensation. Column (f) – Traditional settlement payouts consist of payouts due to foreign carriers for traffic reported in Column (e) pursuant to the Commission's ISP. Payout includes any surcharges owed to foreign carriers for collect calls terminated in the United States. Where U. S. carriers employ traditional transit arrangements, payouts include both the amounts due to the country of termination as well as any transit fees. Column (g) – All other U. S. traffic minutes consist of all other minutes that are handled for either U. S. end users or other U. S. carriers and that are terminated through one or more foreign carriers or terminated via a spot market. Minutes in column (e) should be the number of minutes used for intercarrier compensation. Column (h) – All other traffic payout consist of all compensation paid to foreign carriers or spot markets as compensation for handling or terminating traffic reported in Column (g). This includes termination charges for non- ISP traffic, including payments for traffic terminated via spot markets. Out- of- period adjustments to payments should be included in the year in which the adjustments are paid or received, not as revisions to the year for which the adjustments are made. Note that carriers do not include in Columns (e) – (h) traffic that they reoriginated for foreign carriers or traffic taken from spot markets, even if such traffic was terminated under traditional settlement arrangements. Carriers that take traffic from multiple sources and that terminate this traffic using multiple arrangements may not be able to associate specifically sourced calls with specific termination arrangements. In such cases, carriers should assume that proportionate amounts of traffic by source use each termination arrangement. Carrier 5 in the attached examples illustrates reporting where the carrier knows the termination arrangement for each source of traffic. Carrier 3 in the examples illustrates reporting where the carrier cannot link the termination arrangement to traffic by source. Columns (i) -- (k): Total U. S. Traffic Column (i) -- Total minutes reported in Column (i) should equal the sum of the minutes reported in Columns (a) and (c) and also should equal the sum of the minutes reported in columns (e) and Column (g). 65 Federal Communications Commission FCC 04- 70 Column (j) – Total revenues reported in Column (j) should equal the sum of revenues reported in Columns (b) and (d). Column (k) – Total payouts reported in Column (k) should equal the sum of payouts reported in Columns (f) and (h). IV. Definitions Country- direct and country- beyond services are U. S. carrier offerings that allow the U. S. carrier’s customers in foreign locations to route calls through U. S. carrier facilities to reach the United States (country- direct) or any world point (country- beyond). Country- direct and country- beyond services rely on alternative billing arrangements, such as credit cards, and enable the customer at a foreign point to be served by a U. S. carrier rather than by a foreign carrier. Note that U. S. carriers or their affiliates may operate in foreign countries as foreign carriers. They do not report traffic on calls that they carry as a foreign carrier. Country of Termination: For calls that originate or terminate in a U. S. point, the country of termination is the foreign point associated with each IMTS call. For country- beyond calls, the country of termination is the foreign point in which the call originates. Facilities- based refers to service provided using international transmission facilities owned in whole or in part, or leased (other than a lease of private line capacity), by the carrier providing the service. A facilities- based carrier either owns international channels, has an ownership interest in international channels such as an indefeasible right of use (IRU), or leases the channel from another common carrier or from a non- common carrier. In such instances, the underlying provider would not be reporting circuits or capacity in Schedule 8. Facilities- resale refers to service provided by reselling an international private line service provided to the reseller by another common carrier. For purposes of filing section 43.61 traffic and revenue data, no distinction is made between traffic handled on a facilities- based and facilities- resale basis. Both types of traffic are reported in Schedule 2. IMTS is an acronym for International Message Telephone Service, i. e., international telecommunications services provided over the public switched network. IMTS includes collect calls and subscriber toll- free calls. For this purpose, international refers to calls that either: - originate in a U. S. point and terminate in a foreign point; - originate in a foreign point, and terminate in a U. S. point, or - originate in a foreign point, transit a U. S. point, and terminate in a foreign point. Calls that both originate and terminate in a U. S. point are not reportable as IMTS and normally would not be included in a 43.61 report. Incidental international traffic is traffic that originates or terminates on mobile units such as wireless telephones that are provisioned as U. S. domestic service and billed as domestic service and that arises when a wireless unit is in Canada or Mexico but is communicating directly with a 66 Federal Communications Commission FCC 04- 70 transmitter located in the United States. Such traffic is considered to be domestic and not international. International channel: An international channel is a wire or radio link that facilitates electronic communications between a U. S. point and a point outside the United States. Pure resale refers to switched services provided by reselling the switched services of an underlying facilities- based or facilities- resale carrier. Some pure resellers resell the services of other pure resellers. In either case, the underlying facilities- based or facilities- resale carrier routes the pure reseller’s traffic to the international point, arranges for termination of the traffic, and reports the traffic on a country- by- country basis in its own 43.61 reports. Note that facilities- based and facilities- resale carriers do not report in Schedule 2 any traffic that they handle as pure resellers. Note that carriers do not report in Schedule 2 any traffic originating in a foreign country that they bring into the U. S. over owned, leased or resold circuits and that they route to a third country on a pure- resale basis. (The underlying U. S. carrier whose switched service is being resold, however, will report these minutes in Schedule 2 by country of termination.) The filer will separately identify such traffic in Schedule 5 if total pure resale revenues surpass the filing threshold for pure-resale traffic. Reorigination traffic is billed by a foreign carrier, transits a U. S. carrier's facilities and terminates in a foreign point. Unlike traditional transiting arrangements, reorigination traffic is not settled pursuant to an accounting rate agreement between the originating and terminating carriers. Reorigination allows the foreign carrier to take advantage of the U. S. carrier's accounting rate or other termination arrangement with the carrier in the terminating country. The U. S. carrier treats reorigination traffic like U. S.- billed traffic when it settles with the carrier in the country of termination, and it reports this traffic in Schedule 4, not Schedule 2. Reorigination service also is referred to as “hubbing” service. Spot Market is an organized market in which carriers contract for the ability to terminate a specified amount of traffic in the public switched network for an international point. The buyer may not know the identity of the seller and the traffic typically is exchanged via a switch that is controlled by the spot market. U. S. carriers that terminate traffic by routing their minutes to a spot market report these minutes on Schedule 2. U. S. carriers that take traffic from a spot market for termination in foreign points are considered to be providing a transit service (reported on Schedule 4.) U. S. carriers that take traffic from a spot market for termination in a U. S. point are considered to be providing foreign billed service (reported on Schedule 3.) Transiting traffic consists of calls that originate with a foreign carrier, are handled by a U. S. carrier through facilities in the United States, and then terminate in an international point. These minutes include (1) traditional transit traffic where the originating carrier owes the terminating carrier a payment based on the settlement agreement between the two foreign carriers; (2) traffic originating from, and terminating in, foreign points, and either terminated directly with foreign carriers based on a traditional accounting rate arrangement between the U. S. carrier and the terminating foreign carrier pursuant to the Commission’s ISP, or based on a non- ISP termination arrangement negotiated between the U. S. carrier and the terminating foreign carrier, or indirectly through 67 Federal Communications Commission FCC 04- 70 another foreign carrier; and (3) some traffic taken from spot market switches for termination in foreign points (i. e., spot market traffic that originated with a foreign carrier. Note that traffic taken from spot market switches is reported in Schedule 4, not Schedule 2. Schedule 4 does not require that carriers distinguish between spot market traffic that originated with a foreign carrier and traffic that originated with a U. S. carrier.) United States, for purposes of filing section 43.61 data, is defined as the contiguous United States, Alaska, Hawaii, American Samoa, Baker Island, Guam, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Island, Navassa Island, the Northern Mariana Islands, Palmyra, Puerto Rico, the U. S. Virgin Islands, and Wake Island. No distinction is made based on where traffic originates, terminates, or transits in the United States. U. S. Billed Traffic consists of (1) residential and business (non- residential) direct dial distance (DDD) calls; (2) operator- handled calls, (3) prepaid calling card calls; (4) payphone calls; (5) minutes sold to U. S. resellers (carriers' carrier traffic); (6) collect calls from foreign points; (7) international toll- free calls from foreign points to the United States; (8) "country direct" calls (calls originating in foreign points by customers of a U. S. carrier and terminating in the United States); and (9) "country- beyond" calls (calls originating in foreign points by customers of a U. S. carrier, handled by a U. S. carrier through facilities in the United States, and then terminating in foreign points. Note that collect calls placed in the United States to foreign points are treated as foreign billed calls while collect calls placed in foreign points to the United States are treated as U. S. billed calls. Calls that carriers reoriginate or hub for foreign carriers or for spot market customers are referred to and reported in Schedule 4 as transit traffic. U. S. customers are U. S. end users and U. S. carriers. U. S. Traffic is the sub- set of U. S.- billed traffic that is taken directly from U. S. customers (end users or U. S. carriers) and that is completed over owned or resold lines (facilities- based or facilities-resale). For purposes of Schedule 2, U. S. Traffic does not include traffic that the filing carrier terminated via pure resale. It also does not include the filing carrier’s transit traffic. In addition, it does not include traffic that the filing carrier’s end user or carrier customers route over international private lines provided to them by the filer. (The filing carrier would report its provision of private line service on Schedule 6; its carrier customers would report any traffic and revenues associated with their resale of the private line circuits in either Schedule 2 (for IMTS) or Schedule 6 (for private line service)). 68 Federal Communications Commission FCC 04- 70 Schedule 3: Country- by- Country data for Inbound IMTS Traffic (a) (b) (c) (d) Traditional Settlement Total Traffic By Country of Origination (Including traditional settlement and all other arrangements, including traffic taken from spot markets) Minutes Receipts Minutes Receipts Afghanistan Albania Algeria Andorra Angola ...... Zimbabwe Spot Market Total 69 Federal Communications Commission FCC 04- 70 Schedule 4: World Total data for Selected Types of Facilities- based, Facilities- resale, and Transit IMTS Traffic World Totals Total Minutes Revenues U. S. End- User Customer Traffic that originates outside the United States 1 Collect calls 2 Subscriber toll- free calls 3 Country- beyond calls 4 Country- direct calls Receipts From Foreign Carriers Minutes Or Spot Market Other Traffic that Originates Outside the United States, or that is Taken From a Spot Market for Termination to Foreign Points 5 Traditional Transit traffic originating and terminating in foreign points 6 Other Transit traffic that originates in a foreign point, is routed to and reoriginated in the U. S. and then terminates directly on foreign carriers, or indirectly through another foreign carrier. 7 Traffic taken from spot market switches for which the filer agrees to provide foreign termination services, i. e. carry to foreign points. 70 Federal Communications Commission FCC 04- 70 Schedule 5: World Total data for U. S. Billed Pure- resale IMTS Traffic See Schedule 2 for additional definitions. Schedule 5 would be completed only by filers who billed $5 million or more for pure- resale IMTS. World Totals U. S. Billed Traffic. End- User traffic 1 Minutes 2 Billed revenue Carrier's Carrier service for other U. S. carriers 3 Minutes 4 Billed revenue Other Traffic (Traffic reoriginated for foreign carriers or taken from a spot market) Traffic reoriginated for foreign carriers but terminated via pure resale 5 Minutes 6 Receipts from foreign carriers Definitions: Pure resale consists of calls for which the carrier does not make termination arrangements. Instead, the carrier contracts with another U. S. carrier to haul the traffic to the destination country and make arrangements. Termination via the spot market would not constitute pure resale. 71 Federal Communications Commission FCC 04- 70 Schedule 6: Country- by- Country data for private line and data services. (a) (b) (c) (d) Private Line Services Data Services By Foreign Point Service Provided Over Owned Facilities Service Provided Over Resold Circuits Service Provided Over Owned Facilities Service Provided Over Resold Circuits Revenue Revenue Revenue Revenue Afghanistan Albania Algeria Andorra Angola ...... Zimbabwe Total all points Definitions: Private line services include the provision of dedicated circuits between two points. Data services include: packet switching, frame relay/ ATM and similar services whether provided as switched service or as a dedicated amount of capacity between two points. For switched data services, filers that do not price based on destination should assign revenues in proportion to the capacity used for switched data services. 72 Federal Communications Commission FCC 04- 70 Schedule 7: World total data for facilities- based miscellaneous services Schedule 7 would be completed for each miscellaneous service for which the filer billed $5 million or more. World Totals 1 Type of service 2 Revenue for calendar year Definitions: Miscellaneous services include: telegraph; exchange telex service; switched video, occasional television, point- to- multi- point satellite services, and other telecommunications services not properly classified as IMTS, private line or data. Miscellaneous services do not include data services such as packet switching and frame relay/ ATM. 73 Federal Communications Commission FCC 04- 70 Schedule 8: Country- by- Country capacity data (Replaces 43.82 reports) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) Cable Satellite Terrestrial By Foreign Point Total Circuits IMTS Private Line Data Other Services Idle Total Circuits IMTS Private Line Data Other Services Idle Total Circuits IMTS Private Line Data Other Services Idle 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents 64 kbps equivalents Owned Circuits Afghanistan Albania Algeria Andorra Angola ...... Zimbabwe Total all points Resold Circuits Afghanistan Albania Algeria Andorra Angola ...... Zimbabwe Total all points Definitions: Circuits used for switched services should be associated with the country to which the circuit connects, even if switching in the foreign point is then used so that traffic over the circuit is routed to other foreign points. A circuit is a path for electronic transmission of information between two or more points, including transmission by cable, wire, radio, visual or other electromagnetic or fiber optic systems. Owned Circuits: A facilities- based carrier is any entity that is authorized as such. Facilities- based carriers either have an ownership interest, and IRU interest, or a leasehold interest in bare capacity in an international facility, regardless of whether the underlying facility is a common or non- common carrier submarine cable, terrestrial facility, or satellite system. Leased satellite circuits are reported by the carriers that lease the circuits, rather than by the underlying satellite provider. Resold Circuits: Resold circuits are circuits leased from other reporting international carriers and consist of any circuits that do not meet the definition of owned circuits. Resold circuits include dedicated amount of capacity obtained between two points, regardless of underlying technology. Note that carriers that provide only switched services, and that do so only by reselling the international switched message services of other carriers, do not have circuits. Private line services include the provision of dedicated circuits between two points. Data services include: packet switching, frame relay/ ATM and similar services whether provided as switched service or as a dedicated amount of capacity between two points. Other services include miscellaneous services such as telegraph; exchange telex service; switched video, occasional television, point- to- multi- point satellite services, and any other telecommunications services not properly classified as IMTS, private line or data services. Other services also include circuits that are used to provide enhanced services. Note: Amounts reported in column (a) should equal the total of amounts reported in (b) + (c) + (d) + (e) + (f) 74 Federal Communications Commission FCC 04- 70 Reporting Example Source of Traffic Method of Termination of Traffic End 1000 minutes Carrier 1 Country 1 Users $300 revenue 1000 minutes traditional settlement $240 payment 3500 minutes Spot Market Another $350 payment U. S. 3500 minutes Carrier $350 revenue End 1000 minutes Carrier 2 Country 1 Users $200 revenue 500 minutes ISR $120 payment Hubbed through 1500 minutes third country Reoriginated traffic $150 payment Foreign 1000 minutes Carrier $100 settlement- like receipt End 1000 minutes Carrier 3 Country 1 Users $200 revenue 500 minutes ISR $120 payment Another 1500 minutes U. S. Carrier Another $150 payment U. S. 1000 minutes Carrier $100 revenue Spot 1000 minutes Carrier 4 Country 1 Market $200 settlement like- receipt 500 minutes ISR $120 payment Another 1500 minutes U. S. Carrier Reoriginated traffic $150 payment Foreign 1000 minutes Carrier $100 settlement- like receipt End 1000 minutes Carrier 5 Country 1 Users $200 revenue 500 minutes traditional settlement $120 payment Another 1500 minutes U. S. Carrier Affiliated Reoriginated traffic $150 payment Foreign 1000 minutes Carrier $0 settlement- like receipt 75 Federal Communications Commission FCC 04- 70 Schedule 2: U. S. Billed Traffic - Country- by- Country Data (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Source of Traffic Traffic by method of termination Total U. S. Traffic U. S. End User Customers Another U. S. Carrier (excludes traffic taken from Spot Markets or reoriginated for Foreign Carriers) Traditional Settlement (including traditional transit through a third country) All Other (including traffic terminated via a spot market or hubbed through a third country) By Country of Termination Minutes Route Specific Revenue Minutes Route Specific Revenue Minutes Payout Minutes Payout Minutes Route Specific Revenue Payout Carrier 1 Country 1 1000 $300 3500 $350 1000 $240 3500 $350 4500 $650 $590 Carrier 2 Country 1 1000 $200 1000 $135 1000 $200 $135 Carrier 3 Country 1 250 $50 250 $25 500 $120 500 $75 $120 Carrier 4 Country 1 Carrier 5 Country 1 500 $100 500 $120 500 $100 $120 Total all filers for Country 1 2750 $650 3750 $375 1500 $360 5000 $605 6500 $1,025 $965 Schedule 4: World Total data for Selected Types of Facilities- based IMTS Traffic * (a) (b) (c) (d) (e) (f) Line 5 Line 6 Line 7 Traditional Transit Reorigination Spot Market Minutes Receipts Minutes Receipts Minutes Receipts Carrier 1 World Total Carrier 2 World Total 1000 $100 Carrier 3 World Total Carrier 4 World Total 250 $50 250 $25 Carrier 5 World Total Total All Filers 0 $0 1250 $150 250 $25 * The examples do not assume any collect, international toll free, country- direct, or country- beyond traffic. Therefore Lines 1 through 4 are omitted from the example. Schedule 5: World Total data for U. S. Billed Pure- resale IMTS Traffic Source of Traffic U. S. End User Customers Another U. S. Carrier (excludes traffic taken from Spot Markets) for foreign carrier or taken from spot market) Minutes Revenue Minutes Revenue Minutes Receipts Carrier 1 World Total Carrier 2 World Total Carrier 3 World Total 750 $150 750 $75 Carrier 4 World Total 1500 $225 Carrier 5 World Total 500 $100 1000 $0 Total All Filers 1250 $250 750 $75 2500 $225 76