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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* DA 96-1746 Before the FEDERAL COMMUNICATIONS COMMISSION Washington D.C. 20554 In the Matter of) ) AT&T Corporation ) ) Country Direct Service Agreement ) with Telecommunicaciones ) Internacionales de Argentina Telintar, S.A. ) MEMORANDUM OPINION AND ORDER Adopted: October 21, 1996 Released: October 21, 1996 By the Chief, International Bureau 1. On July 26, 1996, AT&T Corporation (AT&T), pursuant to Section 43.51 of the Commission's Rules, filed with the Commission its Country Direct Service Agreement Between Telecommunicaciones de Argentina Telintar, S.A., and AT&T Corp. (the "Agreement"). The Agreement sets the terms and conditions under which AT&T will provide its Country Direct Services (CDS), USADirect and WorldConnect, in Argentina and Telintar will provide its CDS, Argentina Directo, in the United States. The Agreement seeks to forbid AT&T to connect calls from Argentina placed via USADirect to resellers located within the United States. We conclude that such a restriction would require AT&T to violate its duty under Section 201 of the Communications Act to provide service within the United States upon reasonable request, would frustrate strong U.S. policies in favor of resale and, thus, is void as against U.S. public policy. We therefore prohibit AT&T from including language in its tariff to implement that portion of the Agreement and direct it to renegotiate its Agreement with Telintar to remove the relevant language. BACKGROUND 2. AT&T's USADirect service is an automatic or operator-assisted telephone service under which a caller in Argentina can dial a local number and be connected to an AT&T operator in the United States for the purpose of placing a call to a number in the United States. The call is billed at AT&T operator-assisted rates, rather than at the Telintar direct rates for a call to the United States. WorldConnect service enables a caller located in a country other than the United States, Puerto Rico, or Virgin Islands to place a USADirect call to a third country that is included in the WorldConnect group of countries that cooperate with AT&T to permit such calls. Telintar's Argentina Directo is a service similar to AT&T's USADirect service under which callers in the United States can connect to a Telintar operator in Argentina for the purpose of placing calls to Argentina at Telintar rates and using a Telintar calling card. 3. Section 1.1 of the Agreement provides that callers in Argentina may place a CDS call to the United States, on a collect, person-to-person or station-to-station basis or using a calling card issued by AT&T. Callers in the United States may make CDS calls to Argentina on the same bases. Section 1.1 allows AT&T to terminate WorldConnect calls from third countries in Argentina but does not provide for callers in Argentina to place WorldConnect calls destined to third countries. 4. Section 1.2 of the Agreement limits the availability of CDS service in Argentina to customers of AT&T who are temporarily in Argentina on business or pleasure. Similarly, it limits Argentina Directo service to Telintar customers temporarily in the United States on business or pleasure. Section 1.3 states that AT&T calling cards issued to U.S. expatriates residing in Argentina will have CDS service restricted to prevent them from placing CDS calls in Argentina. The section also provides that AT&T will not market its calling cards in Argentina. 5. Section 1.4 of the Agreement provides that AT&T's marketing of calling cards from Argentina and Telintar's marketing of calling cards in the United States will be limited to the target market identified in Section 1.2. It further provides that [n]o [CDS] calls will be offered to other cards (calling or credit cards) than [the AT&T and Telintar calling cards] mentioned above. Whereas the CNT [the Comision Nacional de Telecommunicaciones, the Argentine regulator] has advised AT&T that the use of USADirect Service by customers in Argentina for access to resellers in the United States violates Argentine law, AT&T, as long as such condition exists and, subject to FCC approval, will not encourage, market or allow USADirect calls originating in Argentina to access resellers in the United States. Finally, Section 1.4 provides that, if Telintar allows other U.S. carriers to offer new features with their CDS services in Argentina, it will allow AT&T to introduce the same features with its CDS. DISCUSSION 6. The above-quoted language makes clear that Telintar is seeking through this Agreement to restrict the scope of CDS services in Argentina. Many of the conditions, such as forbidding the use of credit cards to pay for calls or limiting the scope of AT&T calling cards issued to U.S. expatriates in Argentina, serve to restrict competition and appear to us not to be in the interest of consumers in either country. They are, however, matters that occur within Argentina and are outside our territorial jurisdiction. 7. There is an aspect of the Agreement, however, that is within the jurisdiction of this Commission: the restriction in Section 1.4 of the Agreement that forbids AT&T to terminate CDS calls from Argentina on the premises of resellers within the United States. The Agreement does not specifically state so, but it appears that the restrictions are intended to prevent the use of CDS for the provision of something akin to what is known as "call- back" service from Argentina and, incidentally, from the United States. The Agreement would require AT&T to prohibit a caller in Argentina from using AT&T's USADirect service to reach a reseller in the United States that can then route the call to another telephone in the United States or in another country. The traditional variety of call-back service, which the Commission authorized in 1994, provides callers a virtually identical capability, except that it can be accessed by a direct-dial call using Telintar's facilities as well as USADirect or other forms of CDS. The restriction, therefore, would require AT&T, in the guise of a contractual obligation, to accomplish what the Commission refused to do in the call-back proceeding. 8. The Commission classified call-back service as a form of switched resale. The Commission has since 1976 maintained a strong policy in favor of allowing resale. The Commission has authorized the provision of telecommunications services by the resale of international switched telecommunications services since 1980. Resale of international private lines began in 1982, when the larger U.S. carriers began removing the resale prohibitions from their international private line tariffs. The Commission ordered U.S. carriers to remove any remaining resale restrictions from their international tariffs in 1991. The restrictions in the CDS operating agreement, thus, run counter to Commission policies designed to benefit consumers. 9. The contract seeks to require AT&T to frustrate strong Commission policy in favor of resale by limiting the telephone numbers to which its USADirect service is available. It is important to stress that the resale at issue here occurs within the United States, notwithstanding the assertion that the Argentine CNT has purported to declare such resale a violation of Argentine law. AT&T, like all U.S. carriers, has a duty under Section 201 of the Communications Act, 47 U.S.C. 201 (1986), to provide telecommunications services "upon a reasonable request therefor." In view of the Commission's strong policy in favor of resale, a request by a caller, using the facilities of a U.S. carrier, to be connected to a resale carrier in accordance with U.S. communications laws and policies is certainly a reasonable request for service. As a result, AT&T could not, on its own motion, restrict the availability of reseller services. Such an action would violate AT&T's duty under Section 201. We conclude that a foreign carrier cannot, in the guise of a contract, empower or require AT&T or any other U.S. carrier to violate its duty under the Act or to frustrate the Commission's requirement that U.S. carriers permit unlimited resale. 10. The Commission has long had a policy that it will void operating agreements, or portions of operating agreements that violate Commission policy. For example, in Atlantic Tele-Network, Inc. (ATN), the Commission struck down a clause in the operating agreement between ATN and its affiliate in Guyana that violated the Commission's policy requiring proportionate return. The Commission has also denied portions of operating agreements that provide for exclusivity on the grounds that they violate Commission policy in favor of competition. We therefore forbid AT&T to comply with the relevant language or to place provisions in its tariff giving effect to the prohibition. ORDER 11. Accordingly, IT IS ORDERED that the language in Section 1.4 of the Agreement between AT&T Corp. and Telintar that would prohibit AT&T from terminating calls from Argentina over its Country Direct Services on the premises of resellers in the United States is VOID and shall have no force or effect. 12. IT IS FURTHER ORDERED that AT&T shall not amend its tariffs to reflect the prohibition in Section 1.4 of the Agreement against terminating CDS calls from Argentina on the premises of U.S.-based resellers. 13. IT IS FURTHER ORDERED that AT&T and Telintar shall renegotiate Section 1.4 of the Agreement to remove the relevant language of Section 1.4. 14. IT IS FURTHER ORDERED that the action taken in this order against Section 1.4 of the Agreement shall not constitute a finding that other portions of the agreement are reasonable and shall be without prejudice to a further review of the Agreement at a future time either upon our own motion or upon the request of an interested person. FEDERAL COMMUNICATIONS COMMISSION Donald H. Gips Chief, International Bureau