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Ext. of Lines, FCC95224/$ $/63.01 Contents of Applications/$ $/300.214 Extension of Lines/$  T-  Њ=y #&m PE37&P# FCC 95224 Ð(#U JOBefore the  FEDERAL COMMUNICATIONS COMMISSION  SH-.Washington D.C. 20554 ĐlU(# (#U  T -In the Matter of hh,V) ` `  hh,V)  T -VIA USA, Ltd. hh,V)File Nos. ITC93031  TX -TELEGROUP, INC. hh,V)ppITC93050 ` `  hh,V)  T-Applications for Authority Underhh,V)  T-Section 214 of the Communicationshh, V)  T-Act of 1934, as amended, to operatehh,V)  T-as International Resale Carriers hh,V) ` `  hh,V)  T@-DISCOUNT CALL  hh,V)File No.ITC93054  T-INTERNATIONAL CO.hh,V) ` `  hh,V)  T-Application for Authority Underhh,V)  T-Section 214 of the Communicationshh,V)  Tx-Act, as amended hh,V) SP- MORDER ON RECONSIDERATION  T- mZ  Adopted: June 13, 1995hh,VReleased: June 15, 1995  By the Commission:  S8- TABLE OF CONTENTS ĐlU  T-Nc Page No. (#U XUI. INTRODUCTION pR"(#s 2 XUII. BACKGROUND pR"(#s 2 XUIII. DISCUSSION pR"(#s 3  T%-XX` ` A.` ` U.S. Law ` pR"(#s 3  T&-XX` ` X ` ` (1) Sections 201(b) and 214 of the Communications Act and the Federal Wire Fraud Statute pR"(#s 4  T0(-XX` ` X ` ` (2) Section 202(a) pR"(#s 7  T)-XX` ` X ` ` (3)  Commission Policy p"(#w 9")0*0*0*-"Ԍ T-XX` ` B.` ` International Law and Comity ` p3"(#p 10  T-XX` ` X ` ` (1) International Telecommunication Regulations p3"(#p 10  T-XX` ` X ` ` (2) International Comity p3"(#p 15 XUIV. CONCLUSION p3"(#p 19 XUV. ORDERING CLAUSES p3"(#p 19  Sp-l  SH -l+I. INTRODUCTION  l  T -lU I. A. 1. a.(1)(a) i) a) 1. 1. i.(1)(a)(i) 1) a)1. ` ` With this order, we reconfirm that callback service utilizing uncompleted call signalling is consistent with our policy in favor of resale of international switched service. Callback advances the public interest, convenience and necessity by promoting competition in international markets and driving down international phone rates. We believe it is in the best interests of consumers and eventually of economic growth around the world.  T-2. ` ` On April 12, 1994, the Commission granted the abovereferenced Section 214  T-applications to resell international switched services using a "callback" configuration. xPH-ԍXVIA USA, Ltd et al., 9 FCC Rcd 2288 (1994) (Callback Order). (#Ƅ AT&T filed a  T-petition for reconsideration of our Callback Order in which it argues that callback service using uncompleted call signalling constitutes wire fraud and violates the Communications Act of 1934. After soliciting and obtaining the opinion of the Department of Justice, we find the use of uncompleted call signalling does not constitute wire fraud. We also conclude that the resale of international switched service for the provision of callback service using uncompleted call signalling is not an unreasonable practice or contrary to the public interest under the Communications Act. Further, we agree with the Department of State that this practice does not violate International Telecommunications Union (ITU) regulations. We accordingly deny AT&T's petition. In addition, as a matter of international comity, we reaffirm our prior conclusion that U.S.based providers may not offer international callback using uncompleted call signalling in countries that have specifically prohibited this practice.  S-- II. BACKGROUND אlU  T-3. ` ` Callback service is provided by U.S. international longdistance resellers as a means for their customers, located outside of the United States, to access U.Sbased international lines. Typically, a signalling call is placed by the originating caller overseas to the callback provider's switch located in the United States. If uncompleted call signalling is used, the caller dials the provider's switch in the United States, waits a predetermined number of rings, and hangs up without the switch answering. The switch then automatically returns the call, and upon completion, provides the caller with a U.S. dialtone. All traffic is thus originated at the U.S. switch. The calls are billed at U.S. tariffed rates, which are often much lower than those of the originating country. "H$X0*((_("Ԍ T-4. ` ` In the Callback Order, we found that the public interest, convenience and necessity would be served by granting the abovecited applications to resell the international switched services of various U.S. common carriers. We declined to find that one callback method uncompleted call signalling (or "code calling") constituted an unreasonable practice under Section 201(b) of the Communications Act. We noted that callback services could place significant downward pressure on foreign collection rates, to the ultimate benefit of U.S. ratepayers and industry by stimulating foreignbilled traffic and thus reducing the net settlements imbalance. We made no finding with respect to the legality of callback services under international law as set forth in the International  T-Telecommunication Regulations (ITR).X xP( -ԍXInternational Telecommunication Union, Final Acts of the World Administrative Telegraph and Telephone Conference (Melbourne, 1988) [hereinafter "International Telecommunication Regulations" or "ITR"](# However, we required that licensees provide service in a  T-manner consistent with the laws of countries in which they operate.d xP -ԍXCallback Order, 9 FCC Rcd, at 2290. (#d  TH -5. ` ` AT&T's petition for reconsideration alleges that uncompleted call signalling is an  T -unreasonable practice under Section 201(b) of the Communications Act,` x xP8-ԍX47 U.S.C. 151 et seq. (1995).(#` and is not in the public interest under Section 214 of the Act because it contravenes the federal wire fraud statute and constitutes theft of service. AT&T further alleges this practice violates Section 202(a) of the Act. MCI and Sprint agree. We received comments supporting AT&T's petition from  T -COMTELCA/INTELX  xP(-ԍXCOMTELCA is the Regional Technical Commission on Telecommunications of Central America, whose members are Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua. INTEL is the National Telecommunications Institute of Panama.(# which raise issues of international law and comity. In particular, COMTELCA/INTEL contend that callback services utilizing uncompleted call signalling violate Articles 1.5 and 3.3 of the ITR. Comments were also received on the legal status of callback services in general in a number of foreign countries, in support of the contention that U.S. authorization of callback offends international comity. We agreed that the issues raised in the comments supporting AT&T's petition merited examination, and sought, on our own motion,  T-additional comment on all of them.(  xPX-ԍXVIA USA, Ltd et al., 9 FCC Rcd 5224 (1994) (Sept. 12 Order).(#Ƈ We also solicited the views of the Department of Justice ("Justice") on the wire fraud issue, and the Department of State ("State") on the issues of international law and comity. VIA USA, Telegroup and the Telecommunications Resellers Association each filed in opposition to the Petition for Reconsideration.  S-3 III. DISCUSSION  S-lU A.U.S. Law   Tx-  TP-6. ` ` AT&T's petition for reconsideration asks us to reexamine our finding that uncompleted call signalling does not violate the federal wire fraud statute or Sections 214, 201(b) and 202(a) of the Communications Act. We reaffirm that international callback services using uncompleted call signalling violate neither the Communications Act nor the federal wire fraud statute." 0*((;"Ԍ T-   T-(1)X Sections 201(b) and 214 of the Communications Act and the Federal Wire Fraud Statute(#  T-  T-X(a)` ` Pleadings(#  T8-7. ` ` AT&T argues that uncompleted call signalling is contrary to the public interest under Section 214 and an unreasonable practice under Section 201(b) because it violates the federal wire fraud statute and constitutes theft of service. AT&T thus asks that we consider the lawfulness of the applicants' practices under criminal law, as a part of our public interest and reasonableness  T-determinations.a xP -ԍXAT&T Petition for Reconsideration, at 8.(#a VIA USA and Telegroup contend in their responses that wire fraud cannot occur without a completed call. In the alternative, they both argue, along with the Telecommunications Resellers of America (TRA), that uncompleted call signalling does not constitute wire fraud because there is no wrongful appropriation of money or property, based on the practice of international  T -facilitiesbased carriers not to charge for uncompleted calls. X xP-ԍXVIA USA Opposition, at 910; Telegroup Opposition, at 8,10; TRA comments, at 6.(#Ə Sprint noted that "codecalling" does  T -not "involve active misrepresentation of the kind that would support a finding of wire fraud."O  xPX-ԍXSprint Comments, at 6.(#O  T -8. ` ` Independent of its contentions regarding wire fraud, AT&T also alleges that "code TX-calling" is theft of service and a "wrongful invasion of AT&T's property."a Xx xPp-ԍXAT&T Petition for Reconsideration, at 7.(#a AT&T further objects to our finding that uncompleted call signalling does not impede revenueproducing use of the network and is thus not unreasonable. While AT&T does not allege the practice degrades network performance or otherwise imposes specific costs on AT&T or other network providers, it urges us to reconsider our previous decision because it maintains that allowing uncompleted call signalling under  T-the Callback Order amounts to a "de minimis exception for theft."I  xP8-ԍXId., at 6.(#I VIA USA, Telegroup, and TRA respond that uncompleted call signalling is not theft because the service that AT&T claims is being stolen is willingly provided free of charge.  T-X(b)` ` Discussion(#   T-9. ` ` Our Callback Order rejected AT&T's charge that uncompleted call signalling constitutes federal wire fraud and thus violates Section 201(b) of the Communications Act. We thus found that AT&T failed to show the practice is contrary to the public interest and unreasonable under Section 201(b).  T- 10. ` ` On reconsideration, we sought the opinion of the Department of Justice as to whether  T-uncompleted call signalling violates the federal wire fraud statute. See 18 U.S.C.  1343.  xP&-ԍXLetter from William Kennard, General Counsel, F.C.C., to Walter Dellinger, Assistant Attorney General, Department of Justice (September 22, 1994).(# Justice" 0*((+ " agreed with our prior analysis and determined that uncompleted call signalling does not constitute wire fraud. We therefore affirm that uncompleted call signalling does not violate the federal wire fraud statute.  T`- 11. ` ` According to Justice, the essential elements of a violation of Section 1343 are that "the defendant created a scheme to defraud or for obtaining money or property by means of false representations and, for the purpose of executing that scheme, made or caused some sort of  T-transmission by wire or radio in interstate or foreign commerce." X xPP-ԍXAttachment to Letter from Richard L. Shiffrin, Deputy Assistant Attorney General, Department of  xP -Justice, to William E. Kennard, General Counsel, F.C.C. (February 13, 1995) (Justice Dept. Memo), at 34. (# The Justice analysis focused on whether uncompleted call signalling constitutes a "scheme to defraud," which in turn requires an  T-analysis of existing precedent on what constitutes "dishonest methods or schemes."R xP -ԍXJustice Dept. Memo, at 8.(#R In each case involving fraud in obtaining phone service, Justice found four factors present: (1) the defendant obtained or conspired to obtain a service the carrier charged for; (2) the defendant avoided payment or did not pay the full rate for the service; (3) the defendant's conduct violated a statute, tariff or  T -formal agreement; and (4) the conduct was unauthorized or was concealed.I x xP-ԍXId., at 9.(#I  T - 12. ` ` In the case of uncompleted call signalling, Justice found, at most, only factors (2) and (4) present. Specifically, factor (2) is present because callback operators employing uncompleted call signalling do not pay for the service, and factor (4) may be present because uncompleted call  T0-signalling is not expressly authorized by AT&T or other international carriers.i 0 xP-ԍXJustice notes that it could be argued that factor (4) is not present because use of uncompleted call signalling was not concealed from AT&T and the practice is not prohibited by AT&T, but that the practice is arguably prohibited as AT&T now protests use of the practice. Justice Dept. Memo, at 9, n. 13.(#i However, Justice noted that factor (1) is absent because neither AT&T nor any other international carrier reflected in the record charges for uncompleted calls. In addition, factor (3) is inapplicable because, as noted in  T-our Callback Order, AT&T does not allege that uncompleted call signalling violates the governing  T-tariff between AT&T and its foreign corespondents.e  xP -ԍXCallback Order, 9 FCC Rcd, at 2291. (#e  T@- 13. ` ` Justice thus concludes that "there are insufficient indicia of fraud to make out a case under Section 1343 under the theories of those cases. . . . It appears, therefore, that the U.S. carriers  T-have found and are legitimately exploiting a loophole in AT&T's tariff structure."S  xP$-ԍXJustice Dept. Memo, at 11.(#S We agree with Justice's analysis that uncompleted call signalling is not a violation of the federal wire fraud statute and is not for that reason an unreasonable practice under Section 201(b) of the Communications Act. "x0*(("Ԍ T- 14. ` ` We turn next to AT&T's contention that uncompleted call signalling is an unreasonable practice under Section 201(b) because it constitutes theft of service. AT&T defines theft as "[t]he fraudulent taking of personal property belonging to another . . . with the intent to deprive  T-the owner of the value of the same, and to appropriate it to the use or benefit of the person taking." xP-ԍX AT&T Petition for Reconsideration, at 6, n.3 (quoting Black's Law Dictionary (6th ed. 1990)).(#ƣ We recognize that uncompleted call signalling constitutes an uncompensated use of the network. However, in the system as currently structured by facilitiesbased carriers, customers do not expect to pay for an uncompleted call. Nor do carriers expect to be compensated. Because there is no expectation of payment for uncompleted calls, the failure to pay for those calls does not deprive carriers of anything they are otherwise due. Thus, we cannot find that any "property" is "taken."   Tp-15. ` ` In our Callback Order, we said that AT&T had not produced evidence that uncompleted call signalling imposes costs on AT&T and its ratepayers through uncompensated use of the network. AT&T understood us to say that any uncompensated use of the network is permissible  T -as long as it is "de minimis."I X xP-ԍXId., at 5.(#I This was not our intent. We do not condone the failure to pay  T -network owners the amount they charge for network use, de minimis or otherwise.  Uncompleted call  T -signalling is permissible because the carriers do not charge for such calls,  xP0-ԍXCf. Rules and Policies Regarding Calling Number Identification Service Caller ID, CC Docket No. 91281.(#Ƶ and not because carriers have failed to demonstrate that the costs such a call imposes are substantial or that it impedes use of  TX-the network.WX@ xP8-ԍXWe n HONGKONG ote that the Telecommunications Authority of Hong Kong has adopted the same position in its  xP-March, 1995 statement on the legality of callback services under its law. "Response to Specific Arguments of Hong Kong Telecom International Not Covered in TA's Statement on Callback  xP-Services," The Regulatory Status of Callback Services, Statement of Alexander Anthony Arena, the  xPX-Telecommunications Authority (TA), Hong Kong, at 34 (March, 1995).(#W  T-16. ` ` Indeed, as we noted in our Callback Order, AT&T is poorly situated to complain about someone using the network for an uncompleted call. It manufactures and markets answering machines which answer an incoming call on a shorter number of rings only when it has received messages. This allows the machine's owner to hang up before the machine answers if there are no messages to retrieve, avoiding any charges for the call, but nevertheless signalling that there are no  T@-recorded calls.d@  xP -ԍXCallback Order, 9 FCC Rcd at 2291. (#d AT&T argues that this service is distinguishable from uncompleted call signalling because the caller only intends an uncompleted call if the answering machine has no messages to play,  T-whereas users of uncompleted call signalling do not ever intend that the call be completed.c  xP$-ԍX AT&T Petition for Reconsideration, at 15.(#c We do not find this distinction relevant to our concerns here. AT&T has designed and marketed a device which utilizes the network free of charge in certain circumstances. We see no principled distinction between uncompensated use of the network by AT&T's answeringmachine customers and such use by customers of uncompleted call signalling services. The fact that AT&T and other companies"P0*((z" manufacture equipment designed to make free use of the network is powerful evidence that these carriers do not consider such use of the network compensable under their existing tarrifs.  T-17. ` ` Although we find that uncompleted call signalling is not an unreasonable practice, we note that uses of the network which degrade network performance or impair service offerings would violate the tariffs of the underlying facilitiesbased carriers. In this regard, we received comment  T-from Telecom Italia and KDD alleging network degradation due to callback services.IX xPx-ԍXSee letter from Ettore Riccitelli, North America Area Manager, Telecom Italia, to Reed E. Hundt, Chairman, F.C.C. (March 28, 1995); letter from Kazunori Inagaki, Director, Washington Liaison Office, KDKDDD, to Reed E. Hundt, Chairman, F.C.C. (May 23, 1995).(#I Although their comments refer to uncompleted call signalling, we understand these comments to be directed at "hot line" or "polling" methods of providing callback service. By this method, a U.Sbased reseller places a continuous stream of "bids" to the foreign customer's telephone number. When the customer chooses to initiate a call, he "answers" his telephone and is provided with a U.S. dialtone. Such a constant claim on network resources does not provide the carrier with a corresponding source of revenue, and at the same time it precludes the carrier from carrying revenueproducing traffic over those circuits.   T -18. ` ` As we stated in our Callback Order, U.S. facilitiesbased carriers generally have  T -tariff provisions requiring subscribers to avoid interfering with service provided by the carrier.1  xP-ԍXCallback Order, 9 FCC Rcd, at 2291. See, e.g., AT&T Tariff F.C.C. No. 1, Part 2.7.2.C, which states: "the operating characteristics of the Customer equipment or Customerprovided communications system connected to LDMTS must not interfere with or impair any of the services offered by this company." To the extent that specific uses of AT&T's tariffs can be shown to result in blockage of calls originated by AT&T, it would indeed interfere with AT&T's service and violate its tariff.(#1 These provisions could allow the facilitiesbased carrier to terminate service to a reseller whose "hot  T0-line" practices interfere with its ability to provide service. AT&T and MCI have each filed ex parte comments regarding this practice and each carrier asserts that such activity violates its underlying  T-tariff.7X xP-ԍX Letter from Leonard Sawicki, MCI to Diane J. Cornell, Chief, Telecommunications Division, International Bureau, April 27, 1995; Letter from Steven Garavito, AT&T to Diane J. Cornell, Chief, Telecommunications Division, International Bureau, May 2, 1995.(#7 These carriers are aware of the problem and actively take measures to stop this practice. Nothing in this order should be construed as authorizing such practices or preventing such remedial measures.   T@-19. ` ` In sum, because we agree with Justice that the use of uncompleted call signalling does not constitute federal wire fraud, and because we find that the practice does not constitute theft of service, we do not find that it is an unreasonable practice under Section 201(b) or that it is contrary to the public convenience and necessity under Section 214.   Tx-(2) Section 202(a)  T(-(a)` ` Pleadings " 0*((-"Ԍ T-20. ` ` AT&T alleges that uncompleted call signalling violates Section 202(a) because "[p]ermitting Applicants to use AT&T's network to transmit information discriminates unreasonably  T-against other customers who must pay for transmission of information."c xP-ԍXAT&T Petition for Reconsideration, at 11. (#c It offers little further analysis to support this contention. Telegroup argues that the Commission's rules do not permit us to consider AT&T's Section 202 argument on reconsideration because it was not raised in the original  T8-proceeding.Y8X xP0-ԍX Telegroup's Opposition, at 89.(#Y It further contends, as does VIA USA, that Section 202 applies only to discrimination against customers, not against carriers, and thus cannot apply here because AT&T does not allege that the applicants discriminate among any of its own customers. Further, VIA USA, Telegroup, and TRA agree with our earlier finding that the cases cited by AT&T to support its Section 202 contention are factually distinguishable. VIA USA and TRA also argue that the cases cited by AT&T were wrongfully decided and are of limited precedential value. Finally, TRA argues that in any event, the cases are not binding because the Commission is not bound to follow the statutory interpretation of  T -individual U.S. District courts.L  xP-ԍXTRA Comments, at 9.(#L  T -(b)` ` Discussion   T -21. ` ` Whether or not AT&T properly raised the issue, we do not believe Section 202(a) applies to uncompleted call signalling. Section 202(a) provides that "It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication  T-service. . . ."Qx xP-ԍX 47 U.S.C.  202 (a).(#Q The Court of Appeals for the District of Columbia Circuit has enunciated a threestep analysis for alleged violations of Section 202(a): "(1) whether the services are `like'; (2) if they are, whether there is a price difference between them; and (3) if there is, whether this difference is  Th-reasonable." h xP-ԍX Competitive Telecommunications Association v. F.C.C., 998 F.2d 1058, (D.C. Cir. 1993). See also  xP-MCI v. F.C.C., 917 F.2d 30 (D.C. Cir. 1990).(# It is unclear from AT&T's pleadings what services it contends are "like" uncompleted call signalling. We surmise that AT&T contends that users who convey information via normal International Message Toll Service ("IMTS") calls are unfairly discriminated against because they must pay to transmit information while other users are able to transmit information free of charge using uncompleted call signalling.   Tx-22. ` ` In determining whether services are "like," the D.C. Circuit uses a "functional equivalency" test, which focuses on whether "the services are different in any material functional respect." In applying this test, we look to the nature of the services and then determine whether  T-customers perceive them as the same, with cost considerations being the sole distinguishing factor.Z!`  xP&-ԍXMCI v. FCC, 917 F.2d at 39.(#Z Uncompleted call signalling and IMTS are obviously not "functionally equivalent" because IMTS provides realtime two way voice communication, whereas uncompleted call signalling merely" !0*((: " conveys oneway the simple signal that a call is made from a particular number. Moreover, although there is a price difference between the two services (most if not all carriers provide uncompleted calls free of charge while charging for IMTS calls), the almost universal acceptance of this distinction is strong evidence that this difference in price is based on an underlying difference in value and is therefore reasonable. We therefore do not find that uncompleted call signalling is unreasonably discriminatory in violation of Section 202 of the Act.  T-23. ` ` The two unreported U.S. district court cases cited by AT&T, decided in the 1950s,"X xPP-ԍXSouthwestern Bell v. National Van Lines, et al., Civ. Action No. 7021 (N.D. Tex. 9/27/57);  xP -Southwestern Bell v. King Van Lines, et al., Civ. Action No. T1524 (D. Kan. 12/10/56); Unreported  xP -cases generally have limited or no precedential value. See e.g. D.C.Cir. Rule 14. (#ƒ involved a scheme whereby two trucking companies conveyed loading and location information between drivers and their central offices in code by means of unaccepted persontoperson collect  Tp-calls. In our Callback Order, we found the conduct described in these cases was distinguishable from uncompleted call signalling because the defendants in those cases used operators to convey specific information and engaged in conduct contrary to the carrier's underlying tariff. In contrast, AT&T did not allege that uncompleted call signalling is contrary to any tariff, nor did it allege that it impedes revenueproducing use of the network. Thus the cases did not persuade us that uncompleted call signalling was contrary to the public interest.  TX-24. ` ` AT&T argues again that the cases are analogous to uncompleted call signalling. But AT&T misses the crucial distinction: the practice in which the trucking companies engaged violated  T-the carrier's tariffs, whereas uncompleted call signalling does not.# xP-ԍXNational Van Lines, Civ. Action No. 7021, slip op., at 3; King Van Lines, Civ. Action No. T1524, slip op., at 3.(#ƶ It has no effective reply to this distinction. We therefore cannot conclude from these cases that uncompleted call signalling violates Section 202.  Th-P(3) Commission Policy   T-(a)` ` Pleadings  T-  T-25. ` ` AT&T asserts that our finding that uncompleted call signalling is consistent with our international resale policy and not contrary to the public interest rests on the erroneous assumption  Tx-that uncompleted call signalling is "necessary" to promote resale.b$x@ xPX -ԍXAT&T Petition for Reconsideration, at 11.(#b MCI and Sprint also object to our finding. AT&T states that uncompleted call signalling is not necessary because other mPethods of providing international callback services exist which compensate the originating carrier for the initial  T-call.P% xPp$-ԍXId., at 11.(#P VIA USA and TRA argue that AT&T's statement misrepresents our actual conclusion: call T-back is in the public interest because it places downward pressure on foreign collection rates.i&`  xP&-ԍXTRA Comments, at 17; VIA USA Opposition, at 11. (#i TRA argues that, notwithstanding the existence of other callback methods, uncompleted call signalling is in" &0*((+ " the public interest because it enables service providers to offer the lowest possible collection rates and  T-exerts the greatest pressure on foreign carriers to lower international collection rates.M' xP@-ԍXTRA Comments, at 17.(#M  T-(b)` ` Discussion  T`-  T8-26. AT&T misunderstands our finding. We did not conclude that callback service utilizing  T-uncompleted call signalling is "necessary" to promote resale.c(X xP -ԍX AT&T Petition for Reconsideration, at 11.(#c And, obviously, we are well aware that there are alternate methodologies for offering callback services. But this does not mean that uncompleted call signalling is contrary to the public interest.  Tp-27. ` ` The market for international callback services has been created, at least in part, by the large disparity between U.S. and foreign collection rates. This disparity encourages suppliers to offer lower cost options like callback service to users who can then avoid higher cost, foreignbilled service. As users shift to callback service, a telecommunications operator will be under pressure to reduce its collection rates to consumers of similar services. These reductions, in addition to attracting some users away from callback service, will stimulate additional, foreignbilled demand which may have the beneficial effect of reducing the U.S. traffic imbalance, U.S. net settlements payments, and U.S. carriers' average net settlement cost per minute.  T-28. ` ` We continue to believe that callback service using uncompleted call signalling promotes the public interest by providing increased competition in foreign markets which places significant downward pressure on foreign collection rates, to the ultimate benefit of U.S. consumers  T-and industry whether located within the United States or abroad.) xP-ԍXSee, e.g., International Relay, Inc., 77 FCC Rcd 2d 819, 824 (1980). (#Ɛ Several telecommunications  Th-operators have lowered collection rates significantly in response to callback services.*hx xP-ԍXSee, e.g., "Singapore Cuts Phone Rates," Wall St. J., Nov. 1, 1994, at A2; "Special Report: PTT revenue hit by 'callback' racket," Saudi Gazette, March 13, 1995; "Argentina Approves Telephone Rate Reductions," Reuters, October 1, 1993; "Phone War Pushes Brazil to Drop Long-Distance Rate," The Reuter European Business Report, August 1, 1993; "Alarm bells ring over Telebras tariffs - Brazil has returned to interventionism," Financial Times, November 1, 1994.(# This is important evidence that the provision of callback service furthers our underlying policy in favor of international resale and promotes the public interest.  R-  T-29. ` ` AT&T has thus failed to show that uncompleted call signalling is contrary to the public convenience and necessity under Section 214 of the Communications Act. We conclude that uncompleted call signalling neither constitutes theft of service nor violates the federal wire fraud statute. It is not an unreasonable practice under Section 201(b) of the Communications Act and does not cause a carrier to discriminate unreasonably in violation of Section 202(a) of the Communications Act. In sum, uncompleted call signalling is permissible under U.S. law and advances important policy goals. " ( *0*(( "Ԍ S- B.International Law and Comity   T-(1)International Telecommunication Regulations  T-  T`- (a)` ` Pleadings   T-30. Our Callback Order did not address the argument that callback services violate international law. That argument has now been put forward. As we take adherence to international  T-obligations seriously, we have sought the advice of the Department of State,+X xP( -ԍXLetter from Scott Blake Harris, Chief, International Bureau, F.C.C., to Vonya McCann, United States Coordinator, International Communications and Information Policy, Department of State (October 28, 1994).(# and address these issues here.  TH -Ԛ31. ` ` COMTELCA/INTEL assert that callback utilizing uncompleted call signalling violates international law. They contend that callback providers are Private Operating Agencies ("POAs") and Recognized Private Operating Agencies ("RPOAs"), as defined in the 1982 Nairobi  T -Convention,J,@  xPX-ԍXIntern48ational Telecommunication Convention, Final Protocol (Nairobi, 1982)("1982 Nairobi Convention"), Annex 22008, 2009 at 149. The 1992 ITU Geneva Convention removed the word "private" from the phrases "private operating agency and recognized private operating agency," but the definitions of the amended phrases remain virtually unchanged and thus would not alter our analysis.  xPx-See Constitution and Convention of the ITU, Final Acts (Geneva, 1992), Annex 100708 at 66. While the United States has signed the Geneva Final Acts, we have not yet ratified the Geneva ITU Constitution and Convention, with the result that the 1982 Nairobi Convention and not its successor binds the United States as a matter of both international and domestic law.(#J and therefore fall within the scope of the International Telecommunication Regulations. Noting that Article 1.5 of the ITR specifies that "the provision and operation of international  T -telecommunications services in each relation is pursuant to mutual agreement between  TZ-administrations,"`-Z  xP-ԍXITR, Article 1.5 at 4 (emphasis added).(#` they assert that uncompleted call signalling is a "relation" different from that contemplated in existing operating agreements between facilitiesbased carriers. They further contend that, since callback providers have not obtained operating agreements with administrations in the countries in which they operate, there is no "mutual agreement". In addition, they claim that callback providers are in violation of Article 3.3 of the ITR, which provides that "[a]dministrations shall  T-determine by mutual agreement which international routes are to be used."O.  xP -ԍXITR, Article 3.3 at 7.(#O COMTELCA/INTEL allege that callback services generate indirect routings of calls and affect accounting rates in ways Article 3.3 is designed to prevent, and in any event have not been agreed to by the affected Administrations.  T-32. ` ` VIA USA, Telegroup, and TRA contest the assertion that the ITR are applicable to callback providers, on the grounds that resellers are neither POAs nor RPOAs under the 1982 Nairobi Convention. Even if they were, these commenters contend that uncompleted call signalling is not a "service" within the scope of Article 1.5, but rather is a means of accessing a service "R .0*((\" IMTS already covered by underlying carriers' operating agreements. They further contend that Commission precedent and policy do not require resellers to obtain operating agreements. Similarly, these commenters argue that Article 3.3 should not be interpreted to require resellers which transit traffic through the United States to enter into operating agreements concerning their routing arrangements.  T-X(b) ` ` Discussion(#  T- 33. ` ` We limit our ruling on the international law issues to the uncompleted call signalling configuration of callback offerings because AT&T's petition and the comments submitted in response  Tp-to our Sept. 12 Order focused on this methodology.5/Xp xP -ԍXIn the Reconsideration Order, 9 FCC Rcd 5224, n. 5 (1994), we noted that COMTELCA/INTEL's comments also had referenced other callback methods, but the record subsequently developed does not address international law issues they might pose.(#5 In addition, the Department of State analyzed  TH -the international law issues posed by uncompleted call signalling only.0XH  xP-ԍXLetSTATELETRter from Ambassador Vonya McCann, United States Coordinator, International Communications and Information Policy, Department of State, to Reed E. Hundt, Chairman, F.C.C. (March 22, 1995) (State letter), at 1.(#  T -!34. ` ` There is no disagreement over the relevance of international law. The United States, as a party to the 1982 Nairobi Convention and to the ITR, is subject to the obligations imposed by  T -these instruments.1X  xPP-ԍXArti54cle 2, 1982 Nairobi Convention, see supra, note  4844 . Article 42(1) of this Convention expressly identifies ITU Administrative Regulations as constituting part of the binding international obligations imposed by Article 2. Articles 3(1) and 4(1) of the 1992 Geneva Convention are comparable in effect.(#Ɣ As the Commission has ruled, "[the] United States Government is bound...to assure that all U.S. nationals or other entities operating within its borders obey the binding  TX-international regulations" of the ITU.2X(  xP -ԍXInternati55onal Communications Policies Governing Designation of Recognized Private Operating  xP-Agencies, 104 FCC 2d 208, 216 (1986).(#  T0-  T-"35. ` ` The ITR do not purport to cover all aspects of telecommunications, especially technological developments such as callback that postdate their adoption. As State notes, the United States and other countries took the view (both during the international conference at which the ITR were agreed and in subsequent national ratification proceedings) that the ITR did not foreclose  Th-telecommunications innovations or impede differing national legal and regulatory regimes.3h  xP!-ԍXState letter, at 2.  See July 1, 1991 Letter of Transmittal from the Secretary of State to the President for the International Telecommunication Regulations at VI, 102th Cong., 1st Sess. U.S. Senate Treaty  xP#-Doc. 10213 (1991). See generally, Document AP IX27E, CCITT, IXth Plenary Assembly, Melbourne, 1988 (in particular, paras 1 3.7, Statement of the United States and Statement of the United Kingdom).(# The signatories to the ITR thus did not intend that they be definitive in scope. As State observes: " 030*(("ԌXthe callback configuration was not anticipated during the negotiation and conclusion of the International Telecommunications Regulations...and has not been anticipated by the Recommendations developed by the International Telegraph and Telephone Consultative Committee (CCITT) or, to date, by its successor, the Telecommunication Standardization  T`-Sector (ITUT). Thus, it is our view that the `callback configuration' is not prohibited by the  T8-Melbourne Agreement or any of the current ITUT Recommendations.R48 xP-ԍXState letter, at 2.(#R (#  T-#36. ` ` That callback was neither envisaged nor prohibited by the ITR or subsequent ITUT Recommendations does not necessarily place it outside the scope of specific ITR provisions. We are not persuaded, however, by COMTELCA/INTEL that the uncompleted call signalling callback configuration contravenes Articles 1.5 and 3.3 of the ITR.  T -$37. ` ` International telecommunication "service" is defined in Article 2.2 of the ITR as "the offering of a telecommunication capability between telecommunication offices or stations of any nature that are or belong to different countries." The generality of this definition was intended to  T -complement the purpose, set forth in Article 4.2, that "Members...provide, by mutual agreement, a  T -wide range of international telecommunication services which should conform, to the greatest extent practicable, to the relevant CCITT Recommendations." Thus, in defining "service" under Article 2.2, ITUT (formerly CCITT) Recommendations should be the guide. As noted above, callback is not the subject of any such Recommendation. State therefore concludes: "...[u]nder the Melbourne Agreement and existing ITUT Recommendations, callback as a technical configuration is not a discrete `international service,' as that term is used in the Melbourne Agreement (Art. 1.1, Art. 2.2); rather the callback configuration is a signalling mechanism that facilitates the provision of telephony  Th-service by underlying carriers."T5hX xP`-ԍXId. at 4.(#T We concur in this analysis.  T-%38. RPOA  ` ` Article 1.5 of the ITR provides: "Within the framework of the present Regulations, the provision and operation of international telecommunication services in each relation is pursuant to  T-mutual agreement between administrations."6 xPP-ԍXCOMTELCA/INTEL frame the question as whether callback is a "relation" different from those  xP-already contained in operating agreements entered into pursuant to Article 1.5. See COMTELCA/INTEL Reply Comments at 9. This assumes, however that callback is a "service" within the scope of Article 1.5. We focus on that legal issue, and conclude that the assumption is wrong.(# Uncompleted call signalling is simply a means of accessing IMTS, a service which is already explicitly included in operating agreements between facilitiesbased providers, and thus subject to "mutual agreement." Callback providers offer a means of delivery different from that ordinarily utilized by a customer in a foreign country, but the service  T(-delivered (IMTS) is identical.7( xP`$-ԍXThe Hong Kong Telecommunications Authority, in concluding that callback services do not infringe Hong Kong Telecom International's monopoly over provision of international facilities, relied on the  xP%-same rationale: callback is simply a means of access and not a competing provision of facilities. See  xP&-Hong Kong Telecommunications Authority Statement, supra, note HONGKONG22, at 5. KDD, by contrast, contends that call-back is distinguishable from IMTS because it is perceived by consumers as an alternative"'60*(('"  xP-international service, see KDD letter, supra note  KDD25 . (# Since callback is not a service under Article 2.2, the "mutual"( X70*((=" agreement" requirement only applies to the underlying IMTS service, not to the callback  T-configuration used to access that service.8X xP-ԍXReliance by commenters VIA USA and TRA on the Commission's InternatioIRInal Relay, Inc. (IRI)  xP-order, 77 FCC 2d 819 (1980), on recon. 82 FCC 2d 41 (1980), for the proposition that an operating  xP`-agreement is not required as a matter of international law is, however, misplaced. Because IRI needed to ensure interconnection in a foreign country, it did not contest that an operating agreement was an appropriate condition of its Section 214 authorization, but rather insisted only that it need not be a condition precedent, and the Commission so found. Nothing in that order addressed whether  xP -international law, in the form of the ITR or other binding international obligations, compelled the Commission to insist that resellers enter into operating agreements as a condition of a Section 214  xP -authorization. We nevertheless observe that our finding in IRI supports our policy goals here in that  xP -callback, like international resale generally, promotes competition and would be frustrated by imposition of an operating agreement requirement. (# As the "mutual agreement" obligation does not apply to the uncompleted call signalling method, we need not reach the separate contention that it does not apply to callback providers because they are neither POAs nor RPOAs under the terms of the 1982 Nairobi Convention.  T8-  T-&39. ` ` We further agree with State's conclusion that the uncompleted call signalling callback configuration is consistent with Article 3.3 of the ITR governing the transiting of international traffic. That article provides: X` hp x (#%'0*,.8135@8:x[ xP-ԍXMexico and Thailand.(#M Three identify specific administrative regulations or rulings barring international  T-callback.c?[ xP8-ԍXCosta Rica, the Phillipines and Venezuela.(#c The largest category, twelve countries, point to general telecommunications legislation or concession arrangements which have the effect of requiring administrative approval or licensing of all  T@-activities not vested in the national provider.@@[ xPx-ԍXBelize, Bolivia, Colombia, Costa Rica, Czech Republic, Ecuador, Mexico, Panama, Peru, Phillipines, Thailand, and Venezuela.(#ƴ None of the countries in this last category suggest that such approval or licensing of callback providers would take place. Indeed, the overall position  T-expressed in these statements is to the contrary.  T-*43. ` ` All of the foreign governments or carriers whose comments support the AT&T petition ask that the Commission withdraw authorization for callback services because of their national objections. In addition, COMTELCA/INTEL, as well as several foreign governments and  T(-carriers, assert that the resolution adopted at the 1994 ITU Plenipotentiary Conference in KyotosA( [ xP&-ԍXSee supra note  KYOTO60 . (#s highlights the strength of governmental objection to international callback services. " A0*((i" COMTELCA/INTEL further point out that Commission precedent has expressly recognized the  T-importance of international comity considerations. While acknowledging that our Callback Order did require callback providers to act in a manner consistent with the laws of countries in which they  T-operate, COMTELCA/INTEL contend that this requirement thus far has proven ineffective,B [ xP-ԍ XCOMTELCA/INTEL Reply Comments, at 21. Foreign countries assert that they are unable to identify some international callback providers to the extent they utilize local representatives, advertisements, or direct mail solicitations to obtain customers, thereby avoiding establishment or other forms of local presence which would make them amenable to domestic legal requirements.(#ƴ and that the Commission should further insist that callback providers seeking authorization under Section 214 certify their compliance with relevant foreign law as a precondition to licensing.  T-+44. ` ` VIA USA asserts that the scale of foreign objection to international callback is overstated, noting that a number of countries have either expressly allowed uncompleted call signalling to occur or taken steps (such as reducing international rates) indicating their accommodation to the phenomenon. VIA USA, Telegroup, and TRA do not contest the appropriateness of FCC recognition of international comity, but rather contend that the general requirement contained in the  T -Callback Order regarding conformity with applicable foreign law fully satisfies this standard. Indeed, they argue that going further would put the United States in the position of enforcing foreign telecommunications service approval procedures, contrary to U.S. declarations in the final protocol to  T -the ITR.C [ xP-ԍXIITRTR, Final Protocol (for the United States of America), No. 39(I)(a),(b) at 59.(#ƚ  TX-(b) Discussion  T-,45. ` ` Our Callback Order expressly required applicants to provide international callback  T-offerings "in a manner that is consistent with the laws of countries in which they operate."bD@[ xP-ԍXCallback Order, 9 FCC Rcd at 229 .(#b The submissions of COMTELCA/INTEL and a number of other governments suggest that this general requirement may not have deterred some callback providers from offering their services in countries which regard them as illegal. We therefore have reviewed international callback using uncompleted call signalling in light of the doctrine of international comity. We reaffirm our previous finding that callback providers utilizing the uncompleted call signalling configuration must provide this offering in a manner consistent with the laws of countries in which they operate.   T--46. ` ` Preliminarily, we note that our findings with respect to international comity, as with regard to international law, apply to the uncompleted call signalling configuration of international callback only. The comments center on this means of offering callback, and State's analysis limits itself to this methodology.  T-   T-.47. ` ` The doctrine of comity reflects the broad concept of respect among sovereign nations, and is useful in determining "the recognition which one nation allows within its territory to the  T-legislative, executive or judicial acts of another nation."E[ xP&-ԍX Hilton v. Guyot, 159 U.S. 113, 16364, 16 S.Ct. 139, 143 (1895). See Restatement (Third) of the Foreign Relations Law of the United States,  101, comment e (1986).(# It is a discretionary means for U.S. courts"( E0*(( " and agencies to take account of foreign sovereign acts, and therefore is distinct from obligations  T-imposed under international law.F[ xP@-ԍXSee 1 Oppenheim, International Law, at 34 n.1; see also J. Paul, Comity in International Law, 32 Harv. Int'l L.J. 1,2 (1991).(# Indeed, the United States declared, in the Final Protocol adopting the International Telecommunication Regulations in 1988, that we understood the ITR as a whole, and Article 1.7 in particular, to mean that we did not "accept any obligation to enforce any provision of  T`-the domestic law or regulations of any other Member."eG` [ xP -ԍXSee supra, note  ITR67 .(#e The United States also declared that it did not "endorse, in any way, domestic procedures of other Members which would require approval for providers of telecommunication services...seeking to do business outside the United States of  T-America."HH[ xP8 -ԍXId.(#H These declarations make clear that foreign governments could not, simply by enacting domestic legal, regulatory, or procedural measures, require the United States to implement such  T-measures as a matter of international law.I@[ xPx-ԍXSee President's Message to Congress Transmitting International Telecommunications Regulations (Melbourne, 1988), Treaty Doc. 10213, 102d Congress, 1st Session (1991), at X.(# They do not, of course, preclude us from choosing to honor a provision of foreign law or regulation where we believe it warranted by exceptional circumstances.  T -/48. ` ` International callback has been actively debated in international fora in recent years, most notably at the 1994 ITU Plenipotentiary Conference in Kyoto, which passed a resolution on alternative calling services. Comity is a central element of that resolution, which recommends that a member state having jurisdiction over a callback provider whose operations infringe another member state's laws "inquire into the matter and take such actions as may be appropriate within the constraints  T0-of its national law."gJ0[ xPh-ԍX See supra, note  KYOTO60 . The resolution also urges Member States to cooperate in the application of the resolution, and commissions the ITU's Telecommunication Standardization Sector (ITUT) to accelerate  xP-its studies and prepare a report concerning alternative calling practices. See also PCC.I Resolution II95, establishing an ad hoc working group to study callback. PCC.I is the Permanent Consultative Committee of CITEL, the telecommunications arm of the Organization of American States. (#g  T-049. ` ` Foreign governmental views on international callback are not uniform. Even among the countries of Central and South America, where opposition to international callback services is  T-particularly strong, certain countries (e.g. Argentina)KH [ xPx!-ԍXTelintar B.A. incidentes y otros c/ Comision Nat. de Telecomunicaciones, 2d Appellate Court, December 27, 1994.(#Ʈ have found international callback to be legal.  Th-In Asia, Hong Kong has found callback consistent with its domestic telecommunications regime,Lh[ xP$-ԍXHong Kong Telecommunications Authority Statement, supra, note HONGKONG22.(#ƒ  T@-while Japan and Singapore have declined to take action to prevent it.RM@0[ xP'-ԍXVIA USA Comments, at 13. (#R The European Commission"@M0*((" has noted, without objection, the availability of callback services within the territories of its member  T-states.N[ xP@-ԍXCommission of the European Communities, Green Paper on the Liberalization of Telecommunications  xP-Infrastructure and Cable Television Networks, Part II, January 25, 1995, at 96.(# A study of callback and other alternative calling procedures by the Organization for Economic Cooperation and Development (OECD) noted that they are driven by price distortions in monopolybased markets. The OECD study concluded that, by introducing competition for international telephone service, these services "play a useful role in the marketplace and need to be  T8-encouraged."O8 [ xP-ԍXOECD Working Party on Telecommunication and Information Services Policy (TISP), "Refile and Alternative Calling Procedures," DSTI/ICCP/TISP/AH(94)1, May 1994, at 17.(#  T-150. ` ` Nevertheless, the record demonstrates that some foreign governments regard international callback services as contrary to their national laws, and that they view activities taking place within the United States by providers who utilize uncompleted call signalling as contributing to  Tp-the evasion of their laws. The Commission's previous discussion of international comityaPpx[ xP-ԍ XThe Commission identified comity as a relevant consideration in issuing a Section 214 authorization for  xPP-the construction and operation of intercontinental submarine cable facilities.  AT&T, 4 FCC Rcd  xP-1129, 1131 (1988); Inquiry into the Policies to be Followed in the Authorization of Common Carrier  zP-Facilities to Meet North Atlantic Communications Needs During the 19912000 Period, (Third Notice of  zP-Proposed Rulemaking), 3 FCC Rcd 775, 787 (1988). (#a has not addressed the situation before us today, in which some foreign countries' laws and regulations conflict with U.S. policy. We believe that foreign governments which have decided to outlaw uncompleted call signalling bear the principal responsibility for enforcing their domestic laws, just as our mandate is to implement the statutory requirements of the Communications Act. However, we recognize that foreign governments face unusual difficulties in giving effect to their laws and regulations barring uncompleted call signalling. Our invocation of comity in this circumstance would assist in the  TX-effective enforcement of such foreign laws and regulations.pQX, [ xP$-ԍXForeign enforcement activities are also taken into account by the Department of Justice when it decides whether to apply the doctrine of comity. Specifically, Justice looks at "the extent to which the enforcement activities of another country with respect to the same persons, including remedies resulting from those activities, may be affected; and...the effectiveness of foreign enforcement as compared to U.S. enforcement action." U.S. Department of Justice, Antitrust Division, Antitrust Enforcement Guidelines for International Operations (April, 1995) at 21. (#p We therefore find, as a matter of international comity, that the Commission should prohibit carriers authorized to provide callback service utilizing uncompleted call signalling from providing this offering in countries where it is expressly prohibited. We would expect no less from foreign governments in a comparable context.  T-251. ` ` Accordingly, we reiterate the requirement articulated in our Callback Order that applicants may not provide callback using uncompleted call signalling to countries which have  T@-clearly and explicitly prohibited this offering by statute or regulatory decision.RX@[ xP%-ԍXThe State letter also states that the Commission should require prospective callback providers to ensure that the relevant facilitiesbased carriers' operating agreements do not prohibit use of the uncompleted call signalling callback configuration. We note that there do not appear to be any such"'Q0*((7'" prohibitions in carriers' current operating agreements. In view of our finding above that callback utilizing the uncompleted call signalling configuration is not prohibited by international or U.S. law, we see no basis for imposing such an additional requirement on callback providers. We note, moreover, that any attempt by facilitiesbased carriers and their foreign correspondents contractually to bar competition by international resellers through such a prohibition in an operating agreement may pose potentially complex competitive concerns. (#Ƹ Any demonstrated"@@R0*((" failure to observe this requirement will be subject to FCC enforcement action. Finally, we will use our enforcement authority to identify and sanction those resellers, including callback providers, which are operating without proper Section 214 authorizations and tariffs. ` `  T`-352. ` ` We will ask the Department of State to communicate our findings and conclusions in this proceeding to foreign governments. Any foreign government which has expressly found international callback using uncompleted call signalling to be unlawful, and which has been unable to enforce its domestic law or regulation against U.S. providers of this offering, may so notify the United States Government. Its notification should include specific documentation of its legal restrictions on international callback utilizing uncompleted call signalling, evidence of violations by particular carriers, and a description of its enforcement measures. Any foreign government also may convey to the Commission's staff documentation of its specific statutory or regulatory measure in order to put U.S. carriers on notice that international callback utilizing uncompleted call signalling is  T -illegal in its territory. To facillitate such notification, we will maintain and periodically publish a list  T -of countries which have forwarded such information to the Commission. The Commission's staff will maintain a file of all such communications, for appropriate agency action and for reference. ` `  SX-. IV. CONCLUSION אlU  T-453. ` ` In this order, we affirm our order and authorization granting the applications of VIA USA, Ltd., Telegroup, Inc. and Discount Call International Co. to resell international switched services of other carriers using a callback configuration. Such services are in the public interest because they promote increased competition and create incentives for the reduction of foreign collection rates, to the benefit of U.S. consumers and industry. We affirm our determination that callback provision utilizing an uncompleted call signalling configuration does not violate the federal wire fraud statute, and is consistent with the Communications Act. We further conclude that callback services using the uncompleted call signalling configuration are consistent with the International Telecommunication Regulations. Finally, we believe that it is appropriate for the Commission, as a matter of international comity, to take note of foreign governments' legal determinations that international callback services violate their domestic laws. We affirm that international callback providers utilizing uncompleted call signalling may provide this offering only when it is not expressly prohibited by the laws of the countries in which they operate, and, accordingly, so condition these authorizations.  S- V. ORDERING CLAUSES ĐlU  T`-554. ` ` Accordingly, IT IS ORDERED that the petition for reconsideration filed by AT&T IS DENIED. " @R0*((#"Ԍ T-655. ` ` IT IS FURTHER ORDERED that applicants are prohibited from providing callback using uncompleted call signalling to a country which has expressly prohibited this offering in its territory by statute or regulatory decision.   T`-756. ` ` This order is effective upon release. ` `  FEDERAL COMMUNICATIONS COMMISSION  T- ` `  William F. Caton ` `  Acting Secretary