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(1) (a) (i) 1) a)%8=(%  H*%Ftq 2(ulbyvyw{x ~Default Paragraph FoDefault Paragraph Fontu toc 1toc 1v` hp x (#!(#B!(#B` hp x (#toc 2toc 2w` hp x (#` !(#B` !(#B` hp x (#toc 3toc 3x` hp x (#` !(# ` !(# ` hp x (#2*yZzx{|vtoc 4toc 4y` hp x (# !(#  !(# ` hp x (#toc 5toc 5z` hp x (#h!(# h!(# ` hp x (#toc 6toc 6{` hp x (#!(#!(#` hp x (#toc 7toc 7| 2ԏ}\~ztoc 8toc 8}` hp x (#!(#!(#` hp x (#toc 9toc 9~` hp x (#!(#B!(#B` hp x (#index 1index 1` hp x (#` !(# ` !(# ` hp x (#index 2index 2` hp x (#` !(#B` !(#B` hp x (#2Qv$lKtoatoa` hp x (#!(# !(# ` hp x (#captioncaption _Equation Caption_Equation Caption "i~'^:DpddȨDDDdp4D48ddddddddddDDpppd|Ld|pȐD8DtdDdpXpXDdp8Dp8pdppXLDpdddXP,PhD4htDDD4DDDDDDdDp8dddddȐXXXXXJ8J8J8J8pddddppppddpddddzpdddXXhXXXXXdddhdptL8LpLDLpphhp8ZDP8pppddƐXXXpLpLpLphfDtppppppȐhXXXpDppLDd4ddC6CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxHjdDdddddd8HH"&H>XHH8HB8>HH^HH>"".2",2,2,"222N2222"&22H22,006"6."""""""""""2H,H,H,H,H,XAB,>,>,>,>,""""H2H2H2H2H2H2H2H2H2H2H,H2H1H2H2H282H,H,H,B,B,B6B,H?>,>,>,>,H2H2H2H6H2H6H2""2"""2F866H2>>(>">">H2;H2H2H2H2XHB"B"B"8&8&8&86>*>>.H2H2H2H2H2H2^HH6>,>,>,H2>"H28&>"H2?22!!WFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN$<<$.2",2222`2 LL2 LL2L"",,2d""/>/>/>/x]SSSSx]x]x]x]xSxSx]SSxSxSf]xSxSxSxIxIxWxIx{nInInInISSSWS]a?/?]?9?]]WW]n/nKn9nCn/x]xx]x]SSxxIxIxI]?]?]?]WnUn9nax]x]x]x]x]x]xxWnInInIx]n9x]]?n9xSz+SS8-8WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNM9 yOb-ԍXxThe United States, Japan, the United Kingdom, Germany, and France are the top five countries in terms of locations for Fortune 500 companies. The United States accounts for 30 percent of the world total; Germany, 8 percent; and France, 6 percent. In addition, the United States, Germany and France account for 41 percent of international voice traffic: the United States, 25 percent; Germany, 10 percent; and France, 6 percent. (# In addition, FT and DT propose to invest in the third largest U.S. domestic interexchange and international services carrier, with approximately 10 percent domestic and international services market  X-share, not a fledgling startup.?xM9 {O -ԍXx#W*f9 xr G;X#See generally infra#X\  P6G;PP# at  7883.(#ƭ Given the size of the parties involved and the strategic investment and joint venture alliance they have planned, we find that the transaction, although falling below the threshold for automatic application, necessitates an effective competitive opportunities analysis under the newly adopted rules and policies.  X1-x'40.` ` 40We turn next to the question of which foreign markets we must analyze. Under Section 214, we apply our analysis only to those destination markets where the foreign carrier can exercise market power. As we mentioned previously, "market power" is defined in  X -the #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# as the ability to act anticompetitively against unaffiliated  X -U.S. carriers through the control of bottleneck services or facilities on the foreign end.@$ M9 {O-ԍXx#W*f9 xr G;X#See supra#X\  P6G;PP# footnote  FN1414 ; #W*f9 xr G;X#Foreign Carrier Entry Order#X\  P6G;PP# at  116; #W*f9 xr G;X#see also Eastman Kodak Co. v. Image  {O\-Technical Services, Inc#X\  P6G;PP#., 504 U.S. 451, 464 (1992) ("Market power is the power to force a purchaser to do something that he would not do in a competitive market . . . . It has been defined as the ability of a  yO-single seller to raise price and restrict output.") (quotation marks and citations omitted).  (# FT and DT are the incumbent, monopoly telecommunications facilities providers in France and Germany, respectively. Thus, they control bottleneck facilities in those markets and have market power. There is no record evidence in this proceeding regarding whether FT or DT has market power in other foreign markets. Accordingly, the relevant destination markets for our analysis in this decision are France and Germany. We also require Sprint, within 30 days of the effective date of this Order, to notify the Commission of any foreign carrier that controls, is controlled by, or is under common control with FT or DT. We will apply the effective competitive opportunities analysis to these markets unless Sprint demonstrates that  X<these foreign carriers do not have market power on these routes.A M9 yO -ԍXxWe reserve the right to impose any conditions enumerated in this decision, or other conditions, on Sprint's provision of service on those routes.(# #Xj9 xOG; DX# # Xj\  P6G;XXP#  X-x(41.` ` In applying our effective competitive opportunities analysis under Section 214,  X-we first examine the legal, or de jure, ability of U.S. carriers to enter the foreign destination  X-markets and provide international facilitiesbased services. If U.S. carriers are prohibited de  X-jure from competing in the provision of any international facilitiesbased IMTS service, then there are not effective competitive opportunities on that route. If the foreign carrier's"N A0*((#" destination market has no explicit legal restrictions on entry, we then will examine the other  X-factors of the effective competitive opportunities analysis to determine whether there are de  X-facto effective competitive opportunities. This analysis focuses on the actual conditions of  X-entry, #Xh*f9 xr G;`XX#i.e.#Xj\  P6G;XXP#, terms and conditions of interconnection, competitive safeguards, and the regulatory  X-framework.66BM9 {O#-ԍXx#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  4255.(#ƹ  X|-x)42.` ` An effective competitive opportunities finding can be made if such opportunities are present now or if it is reasonably certain that they will be available in the near future. Where effective competitive opportunities do not now exist, there will need to be clear and concrete commitments that effective competitive opportunities will be available in the near future in order for us to reach a favorable determination.52 Finally, we note that effective competitive opportunities are only a part of a larger public interest analysis; we must also consider whether other public interest factors mandate grant or denial of an application.  X -x*43.` ` To meet the standard of #Xh*f9 xr G;`XX#de jure#Xj\  P6G;XXP# market entry, France and Germany would be required to permit a U.S. carrier to obtain a controlling interest in a French or Germanbased facilities carrier able to originate and terminate IMTS traffic to and from the United States. In France, the provision of IMTS facilitiesbased service is a legal monopoly of France Telecom. The same is true in Germany, where DT holds the legal monopoly over the provision of international facilitiesbased service. U.S. carriers currently are prohibited as a matter of law from entering this market in both France and Germany.  X-x+44.` ` 95We note that both countries have publicly committed to implementing  X-international facilities and services competition by January 1, 1998.CZM9 {O-ԍXx#W*f9 xr G;X#See infra#X\  P6G;PP#   FN.5563 ש76.(#Ư The French and German Governments both have proposed plans for enacting national legislation in this regard. We are very encouraged by these developments, as we discuss more fully below. We view their public statements to be important indications of these countries' intent to liberalize their markets. Nonetheless, we believe that implementation of international facilities competition in  X-1998, over two years away, is too distant in time to be considered competition in the #Xh*f9 xr G;`XX#near  Xo-future#Xj\  P6G;XXP# under our effective competitive opportunities analysis. Moreover, the specific legal and regulatory framework for the competitive markets is not yet fully determined, leaving us  XC-unable to evaluate whether #Xh*f9 xr G;`XX#de facto #Xj\  P6G;XXP#competitive opportunities will exist after the legal barriers are removed.  X-x,45.` ` Given that #Xh*f9 xr G;`XX#de jure#Xj\  P6G;XXP# international facilities competition for IMTS is absent in France and Germany, we find that effective competitive opportunities for U.S. carriers to operate as international facilitiesbased carriers currently do not exist in those countries.  X"-x-46.` ` Although Sprint holds resale authorizations to serve France and Germany which may be subject to an effective competitive opportunities analysis, we see no need to conduct"#C0*(("" that analysis here given our finding that France and Germany do not offer effective competitive opportunities to provide international facilitiesbased services, and our ultimate conclusion in Section V below that the public interest weighs in favor of granting Sprint's petition, subject to certain conditions.  X- x3.` ` Effective Competitive Opportunities Analysis Under Section 310(b)(4)  X_-x.47.` `  IV.C.3 The presence of aggregated alien ownership in excess of 25 percent in Sprint,  XH-the parent corporation of Title III common carrier radio licensees, triggers the applicability of Section 310(b)(4)'s statutory benchmark, which requires that we determine whether the  X -"public interest will be served by the refusal or revocation of such license."OD| M9 yO -ԍXxSection 310(b)(4) states, in pertinent part, that no "common carrier . . . license shall be granted to or held by . . . any corporation directly or indirectly controlled by any other corporation of which any officer or more than one-fourth of the directors are aliens, or of which more than one-fourth of the capital stock is owned of record or voted by aliens, their representatives, or by a foreign government or  {O-representative thereof, or by any corporation organized under the laws of a foreign country, #W*f9 xr G;X#if the  {O}-Commission finds that the public interest will be served by the refusal or revocation of such license.#X\  P6G;PP#" (# x47 U.S.C.  310(b)(4) (emphasis added).O FT and DT will  X -each acq uire a 10 percent ownership interest in Sprint, a U.S. corporation that controls Title  X -III licensees.nE M9 yO-ԍXxThis investment percentage may not increase for 15 years from the date of FT's and DT's initial investment in Sprint. These restrictions cease to apply, however, in the event that another party or parties acquires more than a 20 percent interest in Sprint. In that case, FT and DT, subject to Section 310(b)(4), may acquire sufficient shares to maintain their interests equal to the interest of the other party  {O-or parties. #W*f9 xr G;X#See#X\  P6G;PP# Standstill Agreement at 910. (#n Based upon a Sprint ownership survey, Sprint maintains that FT's and DT's proposed acquisition of 10 percent of the shares each in Sprint will result in 25.17 percent alien ownership of Sprint's capital stock (plus or minus 1.74 percent at the 97.5 percent  X -confidence level).XF M9 yO-ԍXxSprint Petition at 2425.(#X Due to likely fluctuations in alien ownership from the publiclytraded nature of the company, Sprint believes the alien ownership may exceed the 25 percent  Xy-statutory benchmark at any one time by up to three percent. Therefore, Sprint requests the Commission to find that up to 28 percent alien ownership in Sprint is not inconsistent with the public interest.  X-x/48.` ` Through a public interest analysis, the Commission decides whether to authorize or revoke alien ownership or participation in excess of the Section 310(b)(4)  X-statutory benchmark on a casebycase basis.GN M9 {O#-ԍXx#W*f9 xr G;X#See PrimeMedia Broadcasting, Inc.#X\  P6G;PP#, 3 FCC Rcd 4293, 4295 (1988).(# We will first consider the impact of our newly  X-adopted effective competitive opportunities analysis.HM9 {Oi&-ԍXx#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  179219.(#ƻ We will then consider the extent of alien participation in Sprint's parent corporation in assessing the additional public interest"rH0*((" factors relevant to Section 310(b)(4) determinations.  X-x049.` ` In Section IV.B.2, we determined that effective competitive opportunities do not exist in France or Germany under our Section 214 analysis. Because we reach the ultimate conclusion (described in Section V below) that, on balance, the public interest weighs in favor of granting Sprint's petition subject to certain conditions, we see no reason to  Xv-conduct an effective competitive opportunities analysis under Section 310(b)(4).7IXvM9 yO-ԍXxThe commenters in this proceeding do not specifically address whether competitive opportunities exist in the French and German wireless markets. One commenter, AirTouch, mentions its experiences in these markets, and these comments are included below. (#7  XH-x150.` ` We note, however, that France and Germany have introduced a degree of competition in their wireless markets, unlike in their wireline facilities markets we examined above. This is true with respect to the types of Title III licenses in which FT and DT seek to  X -invest through Sprint. Through subsidiaries and affiliates, Sprint holds cellular,6J M9 yO-ԍXxAs we noted earlier, Sprint currently owns cellular assets, but has announced its intention to divest these  {Od-holdings. #W*f9 xr G;X#See supra#X\  P6G;PP# footnote  745 . (#6 paging,  X -satellite, and common carrier microwave radio licenses. #Xj\  P6G;XXP#In addition, Sprint owns interests in PCS licensees through its affiliate, STV. STV owns 40 percent of WirelessCo, a major PCS  X -licensee, and is the largest shareholder. It would appear that the French and German pagingK  BM9 yO-ԍXxThere is limited competition in the French paging market. In September 1993, Infomobile, a consortium in which AirTouch holds an 18.5 percent interest, won one of three nationwide paging network licenses in France. In Germany, there are three providers of nationwide paging services. The BMPT, however, has issued several dozen licenses for trunked radio networks. (#ƪ  X -and satelliteL * M9 yO-ԍXxThe French satellite services market generally is open to competition, with the notable exception of the transmission of public switched voice telephony. More than 50 satellite communications networks have been authorized. U.S. entities, including Scientific Atlanta, MCI and IBM, are among the licensees. Like France, Germany permits the provision of satellite services except for the transmission of public switched voice services. According to DT, nearly 50 satellite communications licenses have been  {Oj-awarded, 12 to U.S. entities. #W*f9 xr G;X#See#X\  P6G;PP# DT Reply Comments at 8 n.3.(# markets generally are open at least to the level of ownership collectively sought by FT and DT in Sprint: 20 percent. By contrast, there appears to be less competition in the  Xy-French and German cellularM"yM9 yO -ԍXxIn France, two entities are licensed to provide cellular services: a France Telecom affiliate, France Telecom Mobiles Radiotelephone (FTMR), and Societe Francaise de Radiotelephone (SFR). As a subsidiary of FT, FTMR is 100 percent governmentowned. Investment by nonE.U. entities in holders of French wireless telecommunications radio services licenses, including cellular licenses, is limited to 20 percent. This limit may be waived, particularly when the foreign entities' home market offers reciprocal treatment of French entities. AirTouch asserts that it has experienced discriminatory  yO~%-ownership policies in France. AirTouch Comments at 6. In Germany, cellular services are subject to limited competition. Two cellular providers are licensed by the BMPT to provide cellular services. These providers are a DT affiliate, DeTeMobil, and Mannesmann Mobilfunk GmbH (Mannesmann"'L0*((m'" Mobilfunk). DeTeMobil is 100 percent governmentowned; Mannesmann Mobilfunk is 34.5 percent owned by AirTouch, a U.S. entity. AirTouch states its belief that the German mobile services market is  {O -open to U.S. opportunity and ownership. #W*f9 xr G;X#Id.#X\  P6G;PP# There are no restrictions on foreign ownership of wireless licenses in Germany.(#Ɨ and PCSN yM9 yOz-ԍXxThe French government has licensed one provider, a consortium led by Bouygues Telecom and including U S West, to provide PCStype services. Similarly, the German Government has licensed the Eplus consortium, which is 21 percent owned by BellSouth, to provide similar services. EPlus is considered a direct competitor of the German cellular service providers.(#ƣ markets: the number of licenses is limited to one or"yN0*((i"  X-two in each market. Finally, we note that t#Xh*f9 xr G;`XX##Xj\  P6G;XXP#he provision of common carrier microwave radio  X-links is not open to U.S. investment.OM9 yO4 -ԍXxIn France, the provision of common carrier microwave radio links is reserved to FT. Similarly, in Germany, the provision of common carrier microwave radio links is reserved to DT. (# We address in Section IV.B.5.c, #Xh*f9 xr G;`XX#infra#Xj\  P6G;XXP#, whether the proposed alien ownership poses concerns under the other public interest factors we consider in  X-our Section 310(b)(4) public interest analysis.  X-#Xj\  P6G;XXP##Xj9 xOG; DX## Xj\  P6G;XXP##Xj\  P6G;XXP# x4.` ` Competitive Concerns  Xx-  Xa-x251. IV.C.4 ` ` We concluded that effective competitive opportunities are not currently available to U.S. carriers under Section 214 for the provision of international  X3-telecommunications facilities or services in France and Germany because of #Xh*f9 xr G;`XX#de jure#Xj\  P6G;XXP# monopolies in both countries. Before our effective competitive opportunities analysis was adopted, the majority of commenters in this proceeding expressed concerns about the market power conferred by these monopolies in France and Germany. These parties are troubled by the effect that the Sprint/FT/DT alliance may have on competition in several telecommunications markets as a result of the potential for discrimination or other  X -anticompetitive conduct. The same kinds of concerns also were raised in the #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP#  X-proceeding, and we agree that these concerns are important public interest considerations  X-under Sections 4(i), 214, 310(b)(4) and 316P M9 {O"-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# 47 U.S.C.  316 (1994) (Commission authority to modify construction permits or licenses). (# of the Act, and other relevant statutory  Xh-provisions,Q\h M9 {O-ԍXx#W*f9 xr G;X#See, e.g., FCC v. RCA Communications, Inc.#X\  P6G;PP#, 346 U.S. 86 (1953) (there can be no doubt that  {Og-competition is a relevant factor in weighing the public interest); #W*f9 xr G;X#United States v. FCC#X\  P6G;PP#, 652 F.2d at 8182 (competitive considerations are an important element of the public interest standard). (# and possibly implicate our enforcement responsibilities under the Clayton Act.RFhM9 {O!-ԍXxUnder Section 11 of the Clayton Act, we are charged with enforcing, #W*f9 xr G;X#inter alia#X\  P6G;PP#, Section 7 of the  {O"-Clayton Act. #W*f9 xr G;X#See#X\  P6G;PP# 15 U.S.C.  18, 21. These provisions empower this Commission to disapprove anticompetitive acquisitions of stock "of common carriers engaged in wire or radio communications or radio transmissions of energy." Section 7 also proscribes the acquisition of the stock of a company by another company "where in any line of commerce in any section of the country" the effect of such acquisition may be "substantially to lessen competition, or to tend to create a monopoly." We have  {Ou&-discretion whether to enforce Section 7 of the Clayton Act. #W*f9 xr G;X#United States v. FCC#X\  P6G;PP#, 652 F.2d at 83. Because we find our jurisdiction under the Communications Act to be sufficient to address all the"?'Q0*(('" competitive effects of the proposed transaction, we exercise our discretion not to invoke our Clayton Act jurisdiction in this proceeding. (# "h R0*((" We thus address these concerns in this proceeding, independent of our effective competitive opportunities analysis.  X-x` ` a. Comments  X-x#Xj\  P6G;XXP#352.` ` A number of parties raise specific competitive concerns about FT's and DT's proposed investment in Sprint and the formation of the Joint Venture. They argue that FT's and DT's substantial equity investment in Sprint, and their interests in the Joint Venture,  XH-create financial incentives for FT and DT to use their monopoly positions in the French and German telecommunications markets to discriminate in favor of Sprint over competing U.S. international carriers on the U.S.France and U.S.Germany routes, and in providing transiting  X -services to Eastern and Central Europe.lSZ M9 {O-ԍXx#W*f9 xr G;X#See, e.g.#X\  P6G;PP#, AT&T Opposition at 2442; Letter from C. Fred Bergsten to Reed E. Hundt, Chairman,  yO-Federal Communications Commission (filed Jan. 18, 1995); CWA/IBEW Comments at 2; MCI Comments at 713. (#l ACC, AT&T, BTNA, and MCI argue that FT, DT, and Sprint will be able to use FT's and DT's absolute bottleneck of access facilities in their  X -home countries to the unfair advantage of Sprint and the Joint Venture. Furthermore, they argue, FT, DT and Sprint have the incentive and ability to enter into exclusive arrangements directing all international switched and private line traffic to each other. AT&T states that Sprint will have 50 percent control over FT's and DT's correspondent relationships with U.S. carriers (through its ownership in Joint Venture operations), and thus will have the  Xb-opportunity to discriminate against other U.S. carriers.UTbBM9 yOU-ԍXxAT&T Opposition at 21.(#U OFTEL expresses concern that France and Germany do not have independent regulatory authorities that can ensure that  X4-effective competition is in fact implemented.MU4M9 yO-ԍXxOFTEL Letter at 23.(#M   X-x453.` ` In response to the assertions that FT, DT and Sprint will engage in unlawful discrimination and enter into exclusive arrangements for the provision of international basic  X-telecommunications services, Sprint reaffirms its intent and states that FT and DT have reaffirmed their intent to continue their correspondent relations with other international  X-carriers.VVb M9 yO"-ԍXxSprint Petition at 30. (#V Moreover, Sprint, FT and DT state they will not impermissibly exclude competitors from the market for regulated basic services or unlawfully discriminate in favor of the other in accounting rates and settlements. In addition, Sprint emphasizes that it will  Xe-not be involved in carrying the bilateral correspondent traffic of other U.S. carriers.OWe M9 yO'-ԍXxSprint Reply at 4649.(#O They"e W0*((" also assert that FT and DT are legally required, by national and E.U. regulation, to offer  X-nondiscriminatory access to their networks.XM9 yOb-ԍXxSprint Petition#X\  P6G;PP# at 3135; FT Reply Comments at 2829; DT Reply Comments at 1823.(#Ʊ FT and DT state that the DGPT and the BMPT have demonstrated their independence from FT and DT in the past and will continue to do  X-so.oYXM9 yO-ԍXxFT Reply Comments at 2225; DT Reply Comments at 913.(#o In addition, Sprint claims that the potential for discrimination is less in this case than in  X-the #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# proceeding because Sprint carries approximately a third as much international traffic as MCI, and the equity investments by FT and DT are only 10 percent each, thus proportionately reducing their incentives to discriminate in favor of Sprint.  XJ-x554.` ` Finally, in response to AT&T's claims that FT and DT have agreed to impermissibly "steer" customers to the Joint Venture, Sprint claims that it is commercially reasonable and expected that parties to a joint venture will attempt to sell the joint venture's services to unsolicited customers. Sprint also emphasizes that customers are not steered by  X -the Joint Venture to Sprint, but only to the Joint Venture itself.bZ M9 yO-ԍXxSprint Supplemental Reply at 1213.(#b #Xj\  P6G;XXP#  X -x` ` b. Discussion  X-x655.` ` We share the parties' fundamental concerns about the potential for anticompetitive behavior by FT and DT on the U.S.France and U.S.Germany routes. FT and DT are monopoly providers of French and German international facilitiesbased services, control the local termination points in those countries, and control the national long distance networks to which interconnection is essential for the distribution of international traffic.  X-x756.` ` Before the proposed transaction, FT and DT had no incentive to discriminate in favor of Sprint, the Joint Venture or any of their competitors over others. The proposed transaction, however, will give FT and DT each a substantial financial stake in the success of Sprint and the Joint Venture and will, therefore, give each an incentive to engage in anticompetitive strategies to maximize the return on their investment. This discrimination could take a number of forms, such as: (1) routing calls to Sprint and the Joint Venture in proportions greater than those justified under our proportionate return policy; (2) otherwise manipulating the calculations and settlements payments to wrongfully favor Sprint and the Joint Venture; (3) routing highprofit calls to Sprint and the Joint Venture, and leaving the rest to their competitors; (4) undercharging Sprint and the Joint Venture and/or overcharging their competitors for use of the same essential facilities in France or Germany; (5) leaking to Sprint and the Joint Venture the confidential information that FT or DT receives from Sprint's and the Joint Venture's competitors; (6) giving Sprint and the Joint Venture advance notice of network changes and other information that Sprint, the Joint Venture and their competitors"xZ0*(("  X-will need to know; or (7) either as an agent or through an affiliated third party,[XM9 yOy-ԍXxThis third party could be Atlas, the entity created by FT and DT to provide Joint Venture services in Europe (except for in France and Germany) or Transpac and DatexP, the public data networks owned by FT and DT, respectively. (# selling the services of Sprint or the Joint Venture in ways that use FT's and DT's home market power.  X-x857.` ` Absent effective conditions, such strategic behavior could yield Sprint more customers, calls and revenues, and ultimately higher returns, than would otherwise be the case. Sprint would receive these returns simply because of its affiliation with FT and DT and not because of the superior quality, lower prices, or innovativeness of its services. At the same time, the costs of Sprint's rivals would be raised above competitive levels, which would tend to reduce competition in the market as a whole. Less competition would ultimately result in impaired market performance: higher prices, lower quality, and slower innovation  X -compared to what would exist in the absence of such conduct.#Xj\  P6G;XXP#  X -x958.` ` We reject Sprint's claims that FT and DT have no more leveraging power than  X -BT did in our #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# proceeding. Sprint argues that BT retains substantial market power in the United Kingdom and the ability to use this power to favor MCI at the expense of other  X -carriers. Sprint overlooks the fact that, in the United Kingdom, there is #Xh*f9 xr G;`XX#de jure#Xj\  P6G;XXP# #Xh*f9 xr G;`XX##Xj\  P6G;XXP##Xj\  P6G;XXP#competition#Xj\  P6G;XXP# in nearly every market segment. BT faces competition to some extent at all levels. The effect is that, unlike in France and Germany, in the United Kingdom U.S. carriers have a choice of carriers to haul their traffic. There also is an effective regulatory authority that is independent of BT, which employs fair and transparent procedures. U.S. carriers may resort to this authority in the event of anticompetitive conduct by BT. There currently are no such independent regulatory authorities with fair and transparent procedures in France or Germany. Notwithstanding FT's and DT's statements that the DGPT and the BMPT do not favor FT or DT, we share OFTEL's concerns about the current lack of legally independent regulatory authorities in France and Germany to ensure that fair, effective competition emerges in both countries.  X-x:59.` ` We also are not persuaded by Sprint's claim that the individual incentives on the part of FT and DT to discriminate in favor of Sprint or the Joint Venture are less than in  Xi-the #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# case because FT and DT are each purchasing only 10 percent of Sprint's equity. The Joint Venture arrangement provides for FT and DT to act in concert, and creates additional incentives beyond their investments in Sprint for FT and DT to favor unfairly Sprint and the Joint Venture. Thus, FT and DT generally have complementary interests regarding their involvement with Sprint.  X-x;60.` ` We also do not agree with the arguments of Sprint, FT and DT that national and E.U. regulatory prohibitions on discriminatory conduct by FT and DT are sufficient to protect competition. Such provisions are likely to be inadequate when, as in this case, there is  X"-#Xh*f9 xr G;`XX#de jure#Xj\  P6G;XXP# 100 percent monopoly market power and an incentive to discriminate, and the carriers remain completely governmentowned. Such provisions also cannot address the unfair"#[0*((e"" competitive advantage that may accrue to Sprint, particularly in the U.S. market for global,  X-seamless services, by virtue of its strategic alliance with FT and DT.\M9 {Ob-ԍXx#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  15 & 33.(#ƻ  X-x 5.` ` Countervailing Factors  X-  X-x<61. IV.C.5 ` ` While France and Germany do not currently offer effective competitive opportunities to U.S. carriers under Section 214, and FT and DT have both the incentive and ability to favor Sprint over competing carriers, there are strong countervailing reasons to grant the Sprint petition. First, the recent liberalization efforts in France and Germany have resulted in commitments to open various segments of their national monopolies to competition before 1998.FN5 Second, the FT and DT investment of $3.54.2 billion in Sprint will have a procompetitive impact on the U.S. telecommunications market, subject to conditions. Given these factors, we find, as the Justice Department has, that the competitive concerns arising from this transaction can be addressed through conditions and safeguards, in anticipation of the French and German markets opening to U.S. carriers in 1998.  X-x` ` a. Liberalization Developments in France and Germany  Xy-  Xb-x` `  i.Comments  X4- x=62. IV.C.5.A 139` ` AT&T and BTNA state that numerous liberalization proposals before the E.U. Commission and French and German Governments are still pending and the final results are uncertain. They state that there are no assurances that the proposed reforms will become law, or that implementing regulations and licenses will be issued. They also assert that there is no certainty that the current liberalization proposals will extend to facilities or services provided between E.U. member states and third countries. Finally, BTNA states that neither the French nor German Governments plan to relinquish majority ownership and control over FT or DT in  X-the near future.c]ZM9 yO-ԍXxBTNA Supplemental Comments at 2529.(#c  Xe-x` `  ii.Discussion  X7-x>63. FN.55 ` ` A critical factor in our approval of the proposed transaction is the policy shift in France and Germany towards competitive telecommunications markets. We recognize that this trend likely will be opposed. We also realize that, as AT&T and BTNA point out, timely, effective implementation of planned liberalization steps remains to be accomplished. Current developments, however, cannot be ignored in considering the proposed transaction.  X!-x?64.` ` As we mentioned above, Sprint filed its petition in October 1994. In February 1995, we adopted the NPRM in our foreign carrier entry proceeding which proposed that, when foreign carriers seek to enter the U.S. telecommunications market or become affiliated"#]0*(("" with a U.S. carrier, the Commission examine whether the relevant foreign telecommunications markets afford effective market access to U.S. carriers. Since the NPRM was released, the French and German Governments each have made specific commitments for further telecommunications liberalization.  X-x@65.` ` We have already noted the specific liberalization commitments made by the  Xv-French and German Governments.^vM9 {O-ԍXx#W*f9 xr G;X#See supra#X\  P6G;PP#   9544 .(#ƥ On October 20, 1995, in a letter to Commission Chairman Hundt, t FN.5 he French Government stated that it soon will allow entities other than FT to build and operate facilities (known as "alternative infrastructure") to offer already  X1-liberalized services._1ZM9 yO< -ԍXxLetter from Bruno Lasserre, Director General, DGPT, to Reed E. Hundt, Chairman, Federal Communications Commission, at 2 (Oct. 20, 1995) (Lasserre Letter). (# These services include data communications and closed user groups,`1M9 yO-ԍXxThe precise definition of "closed user group" differs from country to country within the European Union. The term typically is used to mean a stable and identifiable groups of users, and not the general public. The European Union has defined closed user group to include members of an integrated business community encompassing a corporation, partiallyowned subsidiaries, employees working outside company premises, major suppliers and customers or dealers.(# but exclude public switched voice telephony. The French Government states that legislation to enact this measure will be introduced in the French Parliament in the Spring of 1996, and  X -will take effect by July 1, 1996.Ta b M9 yO-ԍXxLasserre Letter at 2.(#T The French Government has made the same commitment regarding the liberalization of alternative infrastructure to the European Commission in the  X -context of DG IV's review of the Atlas and Phoenix transactions.b M9 {Oa-ԍXx#W*f9 xr G;X#See supra#X\  P6G;PP#   1212 . (#Ʀ  X-xA66.` ` Earlier this year, the DGPT issued an experimental license to MFSI, a U.S.owned company, to construct and operate a metropolitan network designed to serve the needs of closed user groups for data and voice communications. According to the French Government, other experimental alternative infrastructure licenses that will permit provision of  X4-public voice telephony services will be issued in early 1996.`c4 M9 yOi -ԍXxLasserre Letter at 2.(#`  X-xB67.` ` 67Similarly, on October 17, 1995, the German Government submitted a letter to Commission Chairman Hundt in which it stated its commitment to allowing alternative  X-facilities providers to commence operations as of July 1, 1996.dM9 yO%-ԍXxLetter from Dr. Wolfgang Boetsch, Federal Minister for Posts and Telecommunications, to Reed E. Hundt, Chairman, Federal Communications Commission (Oct. 17, 1995) (Boetsch Letter). (# Like the French Government, the German Government also has made this commitment to the European"ld0*(("  X-Commission.eM9 {Oy-ԍXx#W*f9 xr G;X#See supra#X\  P6G;PP#   1212 .(#ƥ In addition, the German Government states that further liberalization steps are possible before 1998 provided that they do not infringe on the exclusive rights held by DT. We note that ACC indicates that it received approval in June 1995 from the German Ministry  X-to operate as a switchless reseller of DT's monopoly public switched voice services.]fZM9 yO-ԍXx104Under this arrangement, ACC would provide service under contract with DT. ACC would buy switched capacity from DT at wholesale rates, and would provide services to ACC's German customers under  {OV-contract at retail rates. #W*f9 xr G;X#See#X\  P6G;PP# Letter from Helen E. Disenhaus, Counsel for ACC, to William F. Caton, Acting Secretary, Federal Communications Commission (citing attached Letter from Francis D.R. Coleman, Secretary and Corporate Counsel, ACC, to Dr. Wolfgang Boetsch, Federal Minister for Posts  {O -and Telecommunications (October 27, 1995)) (filed Nov. 20, 1995). #W*f9 xr G;X#See also infra#X\  P6G;PP#   112112 . (#]  X-xC68.` ` The liberalization of alternative infrastructure in the French and German telecommunications markets is an important first step towards the introduction of full and effective facilities and services competition. Alternative infrastructure providers will be permitted to compete with FT and DT to carry most nonpublic switched voice services, including data communications and intracorporate network services. Thus, potential competitors of FT, DT and the Joint Venture will have the legal ability to choose between underlying carriers for liberalized services, a useful hedge against certain types of anticompetitive conduct by FT or DT.  X -xD69.` ` In their letters submitted in this proceeding, the French and German Governments also have firmly committed to implementing full facilities and services competition by January 1, 1998. The French Government filed with the Commission a copy of its recently announced proposal for wideranging liberalization of the French telecommunications regulatory regime. The French Ministry of Information Technology and Postal Services issued this document in October 1995. A "public consultation document" entitled "New Ground Rules for Telecommunications in France," the document outlines the key features of the French Government's planned regulatory regime. It states that licenses of general applicability will be issued for most telecommunications services. Individual licenses will be issued for three categories: (1) operators of networks providing service to the general public; (2) providers of telephone services to the public; and (3) operators of radiobased  X-networks.gM9 yOH -ԍXxFrench Ministry of Information Technology and Postal Services, "New Ground Rules for Telecommunications in France," at 810 (Oct. 1995) (Public Consultation Document).(# In addition, the French Government states that there will be no limitations on the  X-number of licenses unless justified by frequency scarcity.Th. M9 yO#-ԍXxLasserre Letter at 2.(#T  X|-xE70.` ` Regarding interconnection, the public consultation document states that any authorized service provider will have the right to access networks open to the public. FT will have more extensive obligations, including publishing an interconnection "reference offer,""N h0*((" which will contain basic terms and conditions, rates, and interconnection points, by July 1997. This offer must be approved by a national regulatory authority. In addition, the "Select Committee," a group of independent experts, will review possible cost accounting methods. Mandatory and independent audited costaccounting measures will be developed, according to the public consultation document, to ensure costoriented pricing and to prevent  X-anticompetitive crosssubsidization.{iM9 yO-ԍXxPublic Consultation Document at 2223; Lasserre Letter at 2.(#{ The public consultation document further provides that operators will be able to appeal to the national regulatory authority for interconnection dispute  X_-resolution.kj_XM9 yOh -ԍXxPublic Consultation Document at 2326.(#k  X1-xF71.` ` The responsibility for supporting universal service will be shared among public operators; costs will be assessed and independently audited through transparent procedures by the Select Committee. Finally, the French Government states that a national regulatory authority will be established to ensure effective regulation. The public consultation document proposes two possible approaches to this authority. Under the first approach, the authority would handle arbitration and enforcement; regulation would be handled within the Ministry. Under the second approach, the national regulatory authority would handle regulatory  X-functions as well, and would be independent of the Ministry.kM9 yO)-ԍXxPublic Consultation Document at 2628; Lasserre Letter at 5.(#Ƈ  Xb-xG72.` ` The German Government also has taken steps to achieve full facilities and services liberalization by January 1, 1998. A Ministry draft Telecommunications Act, which the German Government expects to introduced in the German Parliament in early 1996,  X-details the regulatory principles for the new regime.lxM9 yOF-ԍXxGerman Ministry of Posts and Telecommunications, "Draft Telecommunications Act," (Jul. 27, 1995) (Ministry Draft Act); Boetsch Letter at 2.(# The German Government's letter  X-further explains these provisions. Licenses will be required for all service providers seeking to provide facilities or services currently within DT's monopoly, including public voice telephony. The number of licenses will not be restricted, except for radio licenses when warranted because of scarce resources. In addition, there will be no foreign investment  X-restrictions on licensing.mM9 {O+!-ԍXx#W*f9 xr G;X#Id.#X\  P6G;PP# at 3.(#Ɛ  X|-xH73.` ` Many of the details of the German interconnection regime have yet to be established. The Ministry states that dominant carriers (such as DT) will have the obligation to interconnect other carriers to their networks, and interconnection will be subject to  X7-regulatory review.n7b M9 {OJ'-ԍXx#W*f9 xr G;X#Id.#X\  P6G;PP#; Ministry Draft Act at 2223.(#ƨ In addition, universal service will include public voice telephony and"7 n0*((" certain types of leased lines. The Ministry states that only in exceptional cases will universal service obligations be imposed, and then only the dominant carrier or a service provider chosen through bidding procedures will be subject to such obligations. Should this provider incur deficits because of this obligation, service providers with more than five percent market  X-share will be required to contribute in proportion to their market share.coM9 {O-ԍXx#W*f9 xr G;X#Id.(#c Finally, the Ministry states that an independent federal regulatory authority, equipped with enforcement powers, will be established to implement the regulatory objectives of the new federal legislation.  X1-xI74.` ` We also note that European Union has established January 1, 1998, as the date by which most Member States, including France and Germany, must fully open their telecommunications markets by liberalizing existing monopolies for public voice telephony services and transmission facilities. The European Council of Ministers agreed in June 1995 that such liberalization should occur. Carrying out this agreement, the European Commission adopted, on July 19, 1995, a draft directive mandating full facilities and services liberalization  X -as of January 1, 1998.p ZM9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# European Council Resolution of July 22, 1993 on the review of the situation in the telecommunications sector and the need for further development in the market, 93/C 213/01, OJ C213; Draft Commission Directive amending Commission Directive 90/388/EEC, regarding the implementation of full competition in telecommunications markets (July 19, 1995). In addition, both the French and German Governments have undertaken to fully liberalize their telecommunications facilities and services by January 1, 1998 in order to obtain E.U. approval of the Atlas and Phoenix transactions. (# The same draft directive would require E.U. Member States, including France and Germany, to permit the use of alternative infrastructure for the provision of already liberalized services in 1996. When this directive is made final, which is expected to occur in early 1996, the European Commission will have the authority to initiate enforcement action should liberalization not occur in France and Germany as required.  X- xJ75.` ` We believe these commitments indicate that the French and German Governments are serious about telecommunications liberalization. We note that when the Sprint petition was filed last year, there were few, if any, liberalization plans in either country. Since that time, both Governments have announced concrete plans for increased competition leading to full facilities and services competition in 1998. Liberalization of alternative infrastructure will require FT and DT to relinquish their monopoly over the provision of telecommunications facilities to all customers, including their own competitors. Thus, they will no longer necessarily control significant cost components of their competitors' service offerings.  X7- xK76.` ` Of course, timely implementation and the development of effective regulatory rules remain to be accomplished. For example, in each country, not only must final legislation be enacted to formally remove the legal monopoly status, but an interconnection regime must be established, competitive safeguards must be implemented, and an independent"p0*((" regulatory body must be put in place to ensure effective competition. Nonetheless, we realize that the implementation of effective competition takes time, and the French and German Governments have committed themselves to this process and have established firm timetables for introducing full competition. We believe these commitments weigh in favor of granting Sprint's petition.  Xv- x` ` b. Effects on Competition in U.S. Markets  XH-x` `  i.Comments  X -xL77.  IV.C.5.B  ` ` Sprint states in its petition that FT's and DT's $3.54.2 billion investment would be used for a number of procompetitive purposes, both domestically and globally. Domestically, Sprint asserts, these funds will enable it to "expand and upgrade its existing  X -network, to undertake additional research and to develop new applications and services."uq M9 yON-ԍXxSprint Petition at iv; Sprint Reply at 7, 3538.(#u In addition, Sprint states that the capital invested by FT and DT will enable it to participate fully  X -in its broadband PCS venture, WirelessCo.Yr XM9 yO-ԍXxSprint Petition at iv, 20.(#Y Finally, Sprint asserts that the investment will enable Sprint to participate fully in its global seamless services joint venture with FT and DT. Sprint states that the investment also would enable it to retire debt and thus improve its credit rating. Only AT&T responds to Sprint's assertions, stating that Sprint has not demonstrated  XK-that it could not raise the capital in the worldwide financial markets.XsKM9 yO-ԍXxAT&T Opposition at 4546.(#X AT&T also argues that in any event the public interest benefits of the proposed transaction do not outweigh the potential for competitive harm.  X-x` `  ii.Discussion x` `   X-xM78. ` ` A second critical factor in our approval of the proposed transaction is the procompetitive effects in U.S. markets of the FT and DT investment in Sprint. In addition to  X-the effective competitive opportunities analysis, our #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# cites other factors that will be considered important in our overall public interest analysis for foreign carrier entry, including the general significance of the proposed entry to the promotion of  XP-competition in the U.S. communications market.tPxM9 {Oy"-ԍXx#W*f9 xr G;X#Foreign Carrier Entry Order#X\  P6G;PP# at  6172.(#Ƶ We are persuaded by Sprint's arguments regarding the value of the transaction to Sprint as a competitor in the U.S. telecommunications market and find that the procompetitive benefits of the proposed transaction to U.S. telecommunications markets are significant and justify approving the transaction. Moreover, we do not agree with AT&T that Sprint should demonstrate it cannot raise the capital elsewhere in order for the investments by FT and DT to be considered a" t0*((;" positive public interest factor. There likely are many reasons behind Sprint's choice to raise capital through equity partners rather than through the world's financial markets. Taking on more debt, for example, could involve greater transaction costs than would otherwise be the case. In any event, we find no reason to question Sprint's representations that it needs these investments to participate fully in various sectors of the U.S. communications market, as  X-discussed below.uM9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Sprint Reply Comments at iii.(#ƨ  X_-xN79.` ` To begin our analysis of these claims, we examine the markets in which the proposed transaction will have competitive effects. These relevant markets include: domestic interexchange services; terrestrial commercial mobile radio services (CMRS); U.S.  X -international services; and global seamless services.v  ZM9 yO% -ԍXxWe note that Sprint affiliates control local exchange facilities, and thus are involved in the local exchange market. Because these local exchange affiliates presently are subject to little, if any, competition in most cases, we believe the transaction will have minimal competitive effects in the local exchange market. Thus, we do not include this market. (#ƣ  X -x` `  (a)hhDomestic Interexchange Services  X -  X - xO80.66` ` In the domestic interexchange services market, the major competitors and market shares in 1994 were AT&T, 55 percent; MCI, 17 percent; Sprint, 10 percent; LDDS (now WorldCom), 3 percent; and the remaining 15 percent shared by more than 400 other  Xy-carriers.w\yBM9 {Ol-ԍXxFederal Communications Commission, Common Carrier Bureau, Industry Analysis Division, #W*f9 xr G;X#Long  {O6-Distance Market Share First Quarter 1995#X\  P6G;PP#, Table 5 (Total Toll Service Revenues) (July 1995). These records consist of reports filed by carriers operating in the interexchange market.(#ƹ FT and DT currently are not involved in this market. Although capital investment  Xb-is not, by itself, necessarily procompetitive or efficient,xbf M9 {Oy-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# AT&T Opposition at 4546.(#Ƥ the competitive forces in the domestic interexchange market will likely drive Sprint to devote the investment to making  X4-itself a stronger competitor in the ways it describes.y4 M9 {O-ԍXx#W*f9 xr G;X#See MCI/BT#X\  P6G;PP#, 9 FCC Rcd at 3972.(#ƥ Sprint's strengthening of itself as a competitor against its larger rivals, AT&T and MCI, should yield procompetitive benefits for  X-consumers.Pz M9 {OA"-ԍXx#W*f9 xr G;X#Cf. IDB, Memorandum Opinion & Order#X\  P6G;PP#, 10 FCC Rcd at 1116 ("the proposed transaction will create procompetitive benefits by producing . . . improved capability of serving customers in several markets"). (#P In addition, by permitting Sprint to expand and upgrade its existing network, undertake additional research and develop new applications and services, the capital should  X-ultimately benefit consumers through lower prices and more service choices. Moreover, we find there are no apparent anticompetitive effects occurring in this market as a result of FT's and DT's investment. Accordingly, we find that the proposed transaction will have a procompetitive effect in the domestic interexchange services market. "z0*((o"Ԍ X-ԙx` `  (b)hhTerrestrial CMRS  X-xP81.` ` CMRS consists of certain mobile radio telecommunications services that are interconnected to the public switched telecommunications network and are offered to the  X-general public (or a substantial portion of it) for profit.{M9 {O-ԍXx#W*f9 xr G;X#See Implementation of Section 6002(B) of the Omnibus Budget Reconciliation Act of 1993, First Report,#X\  P6G;PP#  {O-10 FCC Rcd 8844 (1995) (#W*f9 xr G;X#First Annual CMRS Report#X\  P6G;PP#). (#Ƃ Terrestrial CMRS includes cellular, paging, specialized mobile radio, interconnected business radio, and broadband and  Xv-narrowband PCS.|&v$M9 yOK -ԍXxThis group of services has been called "terrestrial CMRS" and has been used in competitive analysis of  {O -acquisitions and joint ventures by the Commission's Wireless Telecommunications Bureau. #W*f9 xr G;X#Motorola,  {O -Inc.#X\  P6G;PP#, 10 FCC Rcd 7783, 778586 (1995), #W*f9 xr G;X#petition for reconsideration pending, cited with approval in  {O -Nextel Communications, Inc.#X\  P6G;PP#, DA951677,  32 & n.101 (released July 28, 1995). (# There are numerous existing competitors in this market, including AT&T, the Regional Bell Holding Companies and GTE. Sprint owns a 40 percent partnership interest, through its affiliate STV, in WirelessCo, which holds more broadband  X1-PCS licenses than any other entity.}1M9 {O-ԍXxFirst Annual CMRS Report, 10 FCC Rcd at 887578 (Table 2). At present, Sprint is a provider of cellular service on a significant scale, but it is divesting its cellular licenses and other assets.(# The other partners in WirelessCo are three cable  X -television multiple system operators.U~ l M9 {O7-ԍXxId. at 8879 (Table 2).(#U WirelessCo is expected to provide broadband PCS in competition with other CMRS providers and, perhaps, with providers of wireline local exchange services.  X -xQ82.` ` We agree with Sprint that this capital infusion to its wireless activities is an important procompetitive effect of the proposed transaction. To the extent Sprint plans to use the proposed investment to fund its PCS ventures to compete with current CMRS and wireline local exchange providers, the proposed transaction will be procompetitive. In the local exchange wireline market in particular, competition is nascent. There do not appear to be, and no party alleges, any anticompetitive effects in this market resulting from FT's and DT's proposed investment. Accordingly, we find that the proposed transaction will have important procompetitive effects in the terrestrial CMRS market.  X-x` `   (c)hhU.S. International Services  X-  X-xR83.` ` In 1993, AT&T's IMTS market share in terms of U.S. originated and terminated minutes was approximately 63 percent; MCI's share was approximately 24 percent;  X-Sprint's share was approximately 10 percent; and the remaining 3 percent were scattered.4X M9 yOB%-ԍXxFederal Communications Commission, Common Carrier Bureau, 1993 International Telecommunications Data (International Message Telephone Service, U.S. and Foreign Billed Traffic Originating or Terminating in the United States) (Nov. 1994). (#4 "0*((3" As in the domestic interexchange market, the FT/DT capital contribution would enable Sprint to upgrade its international facilities and provide new applications beneficial to U.S. customers. Neither FT nor DT has a market share of its own. Thus the proposed transaction would not increase Sprint's market share in the sense that FT's nor DT's market shares would be combined with Sprint's market share. More vigorous competition by Sprint, the third  X-largest international services carrier, would result in tangible benefits to customers, and #Xj9 xOG; DX## Xj\  P6G;XXP#is procompetitive. Specifically, Sprint's investment in its infrastructure and in the development of new applications should lead to a broadened range of customer choices, more price competition, and better quality service offerings in this market. These procompetitive effects are essentially the same type as we expect in the domestic interexchange market and noted as  X -attendant benefits in the #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# decision. In summary, w e conclude that, on balance, the proposed transaction will have procompetitive effects in the U.S. international services market, assuming the Sprint complies with the conditions described below.  X -x` `  (d)hhGlobal Seamless Services  X -  X-xS84.` ` In addition, we expect the transaction to have a procompetitive effect in the global seamless services market. Global seamless services is an emerging product market of  Xd-worldwide geographic scope, which we discussed briefly in the #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# decision.dM9 {O-ԍXx#W*f9 xr G;X#MCI/BT#X\  P6G;PP#, 9 FCC Rcd at 3971.(#ơ At present, the product dimension of this market consists of a combination of voice, data, video and other telecommunications services that are offered by a single source over an integrated international network of owned or leased facilities, and that have the same quality, characteristics, features and capabilities wherever they are provided. This endtoend service offers the advantage to customers of "onestop shopping" and singlesource billing. The principal customers are highend users such as multinational corporations, but individuals and  X-carriers may also be customers.#ZM9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Competitive Impact Statement, 60 Fed. Reg. at 4406061 (describing "seamless international  yO-telecommunications services"). hh(##  X-xT85.` ` The Joint Venture plans to offer midsize and large multinational business customers a variety of seamless voice, data, private line and videoconferencing options. These include global virtual private networks, international private lines and private networks, highspeed data offerings, packetswitched networks, bandwidth management products, storeand forward fax, and electronic mail. The services may employ advanced technologies such as frame relay, asynchronous transfer mode (ATM) and synchronous digital hierarchy (SDH) technologies, and may be basic or enhanced, depending on the needs of users. Lower volume users and travelers will be offered a number of global card and travel products. According to Sprint, these products will permit easy and costefficient access by individual users to international calling services worldwide on a prepaid and postpaid card basis. For users outside of their home markets, Sprint states, thirdcountry calling will provide an easy and efficient way to reach other international points worldwide. These customers will be"" 0*((!" traditional facilitiesbased carriers, as well as emerging carriers, resellers and niche service providers. In addition, the Joint Venture will offer transit and global termination services. Computerbased platforms for advanced carrier services also will be marketed to other  X-carriers.M9 {O4-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Sprint Petition at 1719.(#Ƥ  X-xU86.` ` At the time of our decision in #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP#, there were no established global seamless service providers. Today, there are several such providers in this market. As the Justice Department noted in its Competitive Impact Statement, global seamless service providers consist mainly of various carrier alliances, including AT&T's partnerships (through  X3-Worldpartners3ZM9 {O> -ЍXxWorldpartners is a nonexclusive, comarketing alliance of major telecommunication providers. #W*f9 xr G;X#See  {O -MCI/BT#X\  P6G;PP#, 9 FCC Rcd at 3971 n.98. It also has been described as being made up of equity and nonequity members. Equity members are AT&T, KDD of Japan and the national or principal telecommunications providers of Singapore, Sweden, Switzerland, Spain, and the Netherlands. Nonequity members are the national or principal telecommunications providers of Australia, Korea, New Zealand, Hong Kong, and Canada. Members do not hold equity in one another, and the alliance has not  {O-been subject to prior U.S. or E.U. regulatory approval. #W*f9 xr G;X#See#X\  P6G;PP# Competitive Impact Statement, 60 Fed. Reg. at 44061. Several parties raise concerns in this proceeding related to AT&T's Worldpartners alliance.  {O-#W*f9 xr G;X#See#X\  P6G;PP# BTNA Reply Comments at 5; ACC Reply Comments at 3. General issues regarding such marketing  {ON-alliances were addressed in our #W*f9 xr G;X#Foreign Carrier Entry Order. See Foreign Carrier Entry Order#X\  P6G;PP# at  9395. (#Ƴ and Uniworld), 3 M9 yO-ЍXxIn July 1995, AT&T and the Europeanbased consortium Unisource, comprised of dominant or monopoly carriers from Sweden, Switzerland, Spain, and the Netherlands, finalized the terms of their joint venture Uniworld. Unisource holds a 20 percent equity stake in Worldpartners, but the alliances  yO-remain separate entities. (#ƣ and the MCI/BT alliance (Concert).3M9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Competitive Impact Statement, 60 Fed. Reg. at 44061.(#ƿ The Joint Venture between Sprint, FT and DT would add another significant competitor to this market. Each of these alliances is targeting essentially the same potential global market for the world's large business customers.  X -xV87.` ` We believe Sprint's entry, through the Joint Venture, into the global seamless services market will yield significant competitive benefits for U.S. customers. The establishment of a new, viable competitor in this area should result in more competitive options for U.S. customers, particularly in terms of pricing and variety of services available for large scale, highend customers such as multinational corporations. In addition, the Joint Venture should offer a number of efficiencies for Sprint, such as greater economies of scale, easier entry into new markets and the sharing of risks. Given that several strong competitors already exist in this market, the procompetitive effects of the Sprint/FT/DT transaction outweigh any possible anticompetitive results in this market. "!>0*((T"  X-x` `  iii. Summary  X-  X-xW88.` ` We thus find that the transaction offers the additional public interest benefits of significant procompetitive effects in the U.S. market and, in particular, in the domestic interexchange, terrestrial CMRS, international, and global seamless services markets. The infusion of capital by FT and DT will assist Sprint's further development in markets in which it is already competing, and will facilitate Sprint's entry into new, undeveloped markets, to the ultimate benefit of U.S. customers. We disagree with AT&T that the public interest benefits of the proposed transaction discussed above do not outweigh the potential competitive harm, particularly given the conditions we impose. Thus, we find that these public interest factors weigh strongly in favor of granting Sprint's petition, subject to the conditions  X -discussed below.   X -x` ` c. Other Public Interest Factors  X -xX89.  IV.C.5.C  ` ` Other factors cited in our #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# that may be considered as part of the overall public interest analysis for foreign carrier entry include costbased accounting rates, and any national security or law enforcement issues, foreign policy or trade concerns raised by the Executive Branch. In addition, the extent of alien participation in Sprint's parent corporation is a public interest factor under Section 310(b)(4).  X-xY90.` ` AT&T argues that the implementation of costbased accounting rates by FT and  X-DT should be a precondition of approval of the petition.eM9 yO-ԍXxAT&T Supplemental Opposition at 3334.(#e We decline to adopt the specific  X-approach advocated by AT&T. We decided in the #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# that we would not take AT&T's approach, but instead would consider costbased accounting rates as an additional public interest factor. The accounting rates between the United States and Germany have significantly decreased in the last 10 years, following a general global trend. In 1985, the accounting rate between the United States and Germany was 1.2 Special Drawing Rights (SDR) (approximately $1.32); in 1995, the rate was 0.26 SDR (approximately  Xi-$0.39).iXM9 yOr-ԍXxFederal Communications Commission, International Bureau, "Accounting Rates for International Message Telephone Service of the United States," at 3 (Nov. 1, 1995). (# Although there remains room for further progress, Germany has taken significant strides towards a costbased accounting rate.  X$-xZ91.` ` The accounting rates between the United States and France also have decreased  X -in the last 10 years, but much less than the U.S.Germany rates. They remain significantly above cost. In 1985, the accounting rate between the United States and France was 1.6  X-(SDR) (approximately $1.76); in 1995, the rate was 0.36 SDR (approximately $0.54).M9 {O@&-ԍXx#W*f9 xr G;X#See id.#X\  P6G;PP# at 2.(#Ɣ Today, the U.S.France accounting rate is nearly 28 percent above the U.S.Germany and" "B0*(("  X-U.S.U.K. accounting rates.M9 {Oy-ԍXx#W*f9 xr G;X#See id.#X\  P6G;PP# at 6 (listing the U.S.U.K. accounting rate as 0.25 SDR ($0.37)).(# There is no possible justification for this difference. Given the similar levels of infrastructure and economic development in France, Germany and the United Kingdom, the high volume of calls originated and terminated in each country, and the  X-geographic proximity of the these countries, the costs of originating and terminating U.S.  X-traffic in France should be similar to the costs for Germany and the United Kingdom."ZM9 {O-ԍXxAT&T has estimated that a costbased accounting rate for the United Kingdom is 0.08 SDR. #W*f9 xr G;X#See#X\  P6G;PP# AT&T Comments, BTNA Application for Authority Under Section 214 of the Communications Act to Provide International Resale Services as a Nondominant Common Carrier, File No. ITC93126 (filed Mar. 22, 1995).(#Ƶ But while the U.S.Germany and U.S.U.K. rates are in the same range, the U.S.France accounting rate is significantly higher.  XH-x[92.` ` 92Thus, although the accounting rates with France and Germany are moving downward, they remain well above cost, particularly in the case of France. Accordingly, we find this to be a negative factor in our public interest analysis, especially for France. We thus find that this transaction is in the public interest only if Sprint obtains a written commitment from FT to lower the accounting rate between the United States and France to the same range as the U.S.U.K. and U.S.Germany accounting rates, as described more fully below in paragraph  131131 .  X-x\93.` ` With respect to the other public interest factors laid out in the #Xh*f9 xr G;`XX#Foreign Carrier  X{-Entry Order#Xj\  P6G;XXP#, we note that the Executive Branch has not advised us of any national security, law enforcement, foreign policy, or trade concerns that support grant or denial of the petition.  X8-x]94. IV.B.5.D ` ` We next analyze the extent of alien participation in Sprint's parent corporation  X!-as a public interest factor identified in the #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# as relevant to our  X -analysis under Section 310(b)(4). DM9 {O-ԍXx#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  216.(#Ƴ Upon consummation of the transaction, Sprint could at any time have up to 28 percent alien ownership (10 percent FT, 10 percent DT and approximately 6.2 percent nonFT or DT, with a 3 percent margin for fluctuation), with 80 percent U.S. directors and 100 percent U.S. officers. Both prior to and after consummation of the transaction, however, 100 percent of the officers and directors of Sprint's whollyowned  X-Title III common carrier licensee subsidiaries will be U.S. citizens.M9 {O "-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Sprint Petition at 25.(#Ƨ Sprint maintains that the aggregated 28 percent alien ownership is consistent with the public interest and the  Xk-Commission's decision in #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# and falls within Commission precedent permitting alien ownership in excess of the statutory benchmark. x"?#h 0*(("Ԍ X-x^95.` ` In the common carrier context,ZM9 yOy-ԍXxCommon carrier licensees traditionally have been treated differently from broadcast licensees because  {OA-common carriers do not control the content of their transmissions. #W*f9 xr G;X#See Fox Television Stations, Inc.#X\  P6G;PP#, FCC 95313, at  21 (released Jul. 28, 1995). (#ƙ the Commission's decision whether to permit  X-a level of alien ownership or participation that exceeds the statutory benchmark traditionally has taken into account the overall level of alien involvement in the ownership and  X-management of the parent company.(M9 {OV-ԍXx#W*f9 xr G;X#See MCI/BT#X\  P6G;PP#, 9 FCC Rcd at 3973 (citing #W*f9 xr G;X#GRC Cablevision, Inc.#X\  P6G;PP#, 47 F.C.C.2d 467 (1974); #W*f9 xr G;X#LCI  {O -Communications, Inc.#X\  P6G;PP#, Mimeo No. 3491 (Mar. 31, 1986); #W*f9 xr G;X#Millicom#X\  P6G;PP#, 4 FCC Rcd 4846 (Com. Car. Bur.  {O -1989); #W*f9 xr G;X#IDB Communications Group, Inc.#X\  P6G;PP#, 6 FCC Rcd 4652 (Com. Car. Bur. 1991); and #W*f9 xr G;X#Teleport  {O -Transmission Holdings#X\  P6G;PP#, 8 FCC Rcd 3063 (Com. Car. Bur. 1993)).(#ƙ Recently, the Commission approved 92 percent alien ownership in the alien parent of a U.S. subsidiary which would control a licensee where more than 50 percent of the directors and 85 percent of the officers of the subsidiary would be U.S.  Xv-citizens.vM9 {O-ԍXx#W*f9 xr G;X#See Cable & Wireless#X\  P6G;PP#, File No. 60SATMISC95 (released Oct. 17, 1995).(# As in the #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# proceeding, it is only the potential for a three percent  Xa-fluctuation in alien ownership beyond the 25 percent statutory benchmark that causes the petitioners to seek a favorable Section 310(b)(4) declaratory ruling. In addition, this transaction involves a dominant U.S. presence among Sprint's officers, directors and  X -shareholders. Approval of the percentage of alien ownership in Sprint resulting from the transaction with FT and DT is consistent with the previous cases in which we have determined it would not be in the public interest to prohibit levels of indirect alien ownership  X -of common carrier licensees in excess of that proposed by Sprint. l M9 {O-ԍXx#W*f9 xr G;X#See GRC Cablevision, Inc.#X\  P6G;PP#, 47 F.C.C.2d at 467; #W*f9 xr G;X#GCI Liquidating Trust#X\  P6G;PP#, 7 FCC Rcd 7641 (1992);  {O-#W*f9 xr G;X#Teleport Transmission Holdings#X\  P6G;PP#, 8 FCC Rcd at 3063. (# Thus, our analysis of the extent of alien participation in Sprint's parent corporation under Section 310(b)(4) weighs in favor of approval.  X{-x 6 . Conditions and Safeguards  Xd-  XM-x` ` a. Comments  X- x_96. IV.C.4.B ` ` 150As noted above, a number of parties urge us to deny Sprint's petition until France and Germany open their telecommunications markets and offer effective market  X-access.^Z M9 {Oj"-ԍXx#W*f9 xr G;X#See, e.g.#X\  P6G;PP#, Letter from Gerd Eickers, ADPO, to Reed Hundt, Chairman, Federal Communications Commission (filed Dec. 20, 1994); BTNA Supplemental Comments at 58; Esprit Opposition at 78; and MCI Opposition at 1620. (#^ In addition to FT's and DT's monopoly status, these parties cite the lack of competitive safeguards and independent regulators as major deficiencies of the current French and German regulatory regimes. In addition to the competitive concerns mentioned in Section IV.B.4, AT&T, BTNA, CWA/IBEW, and ITI state that approval of Sprint's petition will"$0*((p"  X-remove incentives for faster liberalization in France and Germany.M9 {Oy-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# AT&T Supplemental Opposition at iv; BTNA Supplemental Comments at 67; CWA/IBEW Comments at 23; ITI Letter at 2. (# These parties also assert that approval of the transaction would undercut the U.S. Government's bargaining position in  X-the Negotiating Group on Basic Telecommunications (NGBT).#Xj\  P6G;XXP# Several parties also propose that, in the event we approve the transaction, we should impose certain conditions. For example, AT&T states that the Commission should withhold approval of the equity  X-investment and permit the parties' Joint Venture to proceed with conditions.S"M9 yO` -ԍXxThese conditions include: (1) prohibit Sprint from offering a new correspondent service with FT or DT unless FT and DT offer to provide the service on the same terms and conditions with any U.S. carrier with whom it has an operating agreement; (2) require that FT and DT implement costbased accounting rates with all U.S. carriers; (3) prohibit the "steering" of customers by DT and FT to Sprint or the Joint  {O -Venture; and (4) impose the conditions required in the #W*f9 xr G;X#MCI/BT Order#X\  P6G;PP#, including the prohibition against  {OJ -accepting any "special concession." #W*f9 xr G;X#See#X\  P6G;PP# AT&T Supplemental Opposition at 3137. AT&T also  {O-recommended specific conditions in a recently filed #W*f9 xr G;X#ex parte#X\  P6G;PP# submission. These conditions reflect  {O-concerns raised by AT&T previously in this proceeding, and we respond to those concerns below. #W*f9 xr G;X#See#X\  P6G;PP# Letter from R. Gerald Salemme, AT&T, to Jane Mago, Federal Communications Commission (filed Dec. 8, 1995). (#S  X_-x`97.` ` ACC and MFSI urge the Commission to treat Sprint as a dominant carrier on the U.S.France and U.S.Germany routes. They also believe that the conditions imposed by the Justice Department on MCI/BT, including transparency, confidentiality and international  X -simple resale requirements, should be imposed in this proceeding. M9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# ACC Opposition at 616; MFSI Opposition at 715. (#Ƽ Worldcom requests that the Commission condition any approval of Sprint's petition upon requirements that FT and DT implement costbased local switched rates, and not discriminate in their provisioning and  X -maintenance of facilities.P T M9 yO-ԍXxWorldCom Letter at 37.(#P Finally, Senator Dole urges the Commission not to artificially "freeze" Sprint's communications capacity because an arbitrary limit on communications  X -capacity will not alleviate concerns about foreign market leveraging. M9 yO<-ԍXxLetter from Senator Bob Dole to Reed E. Hundt, Chairman, Federal Communications Commission, (filed Dec. 12, 1995).(#ƫ  0  Xy-x` ` b. Discussion  Xb-  XK- xa98.` ` We have concluded that, in the overall public interest under Sections 214 and 310(b)(4), we should not withhold a positive public interest finding regarding the transaction until France and Germany offer effective competitive opportunities or the market access"%<0*(( "  X-requirements suggested by a number of the parties.HM9 {Oy-ԍXx#W*f9 xr G;X#See e.g.#X\  P6G;PP#, ACC Opposition at 1617; AT&T Supplemental Opposition at 1730; BTNA Supplemental Opposition at 812; MCI Opposition at 1620. We also decline to agree with Esprit that, if we grant Sprint's request, we should permit U.S. carriers to (1) engage in "oneway" resale and (2) route traffic over private lines between the United States and third countries through private lines between the United  {O-States and countries designated as equivalent. #W*f9 xr G;X#See#X\  P6G;PP# Esprit Reply Comments at 46 (filed Sep. 15, 1995). Esprit's recommended changes to our international private line policies were raised by other parties in  {O--the #W*f9 xr G;X#Foreign Carrier Entry#X\  P6G;PP# proceeding and addressed extensively in our final Order in that proceeding.  {O-#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  16570. We see no need to revisit these conclusions here. (# We are not discounting the importance of these factors; indeed, we expect these factors, including a fair and transparent interconnection regime, competitive safeguards, and an independent regulator, to be implemented in France and Germany by 1998. But we believe the significant public interest benefits of the transaction weigh in favor of a finding that this transaction is in the public interest, subject to conditions, notwithstanding the current lack of effective competitive opportunities in France and Germany.  XH- xb99.` ` 2We also believe that delay or denial of Sprint's petition until effective competitive opportunities exist in France and Germany would undermine the parties' proposed transaction and, accordingly, possibly result in the loss of the important public interest benefits of the transaction. Moreover, in view of these public interest benefits arising from the capital investment, we decline to permit only the parties' Joint Venture to proceed and withhold a finding that this transaction is in the public interest until effective competitive opportunities exist, as proposed by AT&T. Given our public interest findings, we also decline  X -to require Sprint to divest its operations on the France and Germany routes. M9 {O0-ԍXx#W*f9 xr G;X#See id.#X\  P6G;PP# at  11718.(#Ƣ  Xy- xc100.` ` 93We do believe, however, that Sprint must agree to adhere to the strict conditions described below until full facilities and services competition emerge in both countries in order to ensure that the parties do not engage in anticompetitive activities. We  X4-continue to believe, as we stated in the #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP#, that full facilitiesbased competition, rather than regulatory conditions, are the most potent safeguard against the abuse  X-of market power.j M9 {O#-ԍXx#W*f9 xr G;X#See id.#X\  P6G;PP# at  1516 & 29. (#ƨ Nonetheless, because of the public interest benefits of the proposed transaction and the commitments to foreign liberalization, we are willing to rely on strict conditions in this proceeding to protect competition. Because of the conditions we are requiring Sprint to accept as part of our public interest finding, we disagree with the AT&T, BTNA and CWA/IBEW that approval of Sprint's petition will remove incentives for the French and German Governments to undertake further liberalization. These conditions provide important incentives for earlier liberalization than might otherwise be the case. We thus do not believe that approval of this transaction will adversely affect NGBT negotiations. In any event, we do not believe it would be appropriate to delay our decision until after April  X9-1996, the deadline for an agreement in that forum, #Xj\  P6G;XXP#given Sprint's legitimate business needs"9& 0*((" for a timely decision.  X-x  X-xd101. FN.8 ` ` In its proposed Final Judgment and Competitive Impact Statement, the Justice Department reaches many of the same conclusions that we do about the potential for  X-anticompetitive conduct as a result of the proposed transaction.M9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Competitive Impact Statement, 60 Fed. Reg. at 4406365. (# It finds that, because of the  X-absence of privatization and the continued existence of #Xh*f9 xr G;`XX#de jure#Xj\  P6G;XXP# monopolies in France and Germany, additional relief is needed beyond that imposed in the MCI/BT Final Judgment. The Justice Department concludes that a series of conditions and requirements, imposed in two phases, is sufficient to address its concerns over potential anticompetitive conduct, particularly given the progress made in France and Germany towards a competitive telecommunications environment and the plans for the implementation of full facilities and services competition in 1998. As we note below, a number of the conditions we require Sprint to accept address concerns similar to those addressed by the Justice Department. We have taken into account the provisions of the proposed Final Judgment in designing our conditions in this Order, and we rely on the effectiveness of those provisions. The conditions described below, together with the provisions of the proposed Final Judgment, fully address our public interest concerns.  Xd- xe102.` ` Upon careful consideration of the record in this proceeding, we impose, in general, five conditions to prevent potential anticompetitive conduct and minimize the unfair competitive advantages accruing to Sprint from its affiliation with FT and DT. First, we find that Sprint is a dominant carrier for the provision of U.S. international services on the U.S.France and U.S.Germany routes. Second, we will not allow Sprint to operate additional circuits on the U.S.France and U.S.Germany routes until France and Germany have liberalized two important markets: alternative infrastructure for already liberalized services (which include most nonpublic voice services) and basic switched voice resale. Third, we  X-require Sprint to comply with nondiscrimination and reporting requirements. Fourth, we find this transaction serves the public interest only if Sprint obtains a written commitment from FT to lower the accounting rate between the United States and France to the same range as the U.S.U.K. and U.S.Germany accounting rates. Fifth, if the anticipated liberalization measures and implementation of effective competitive opportunities do not occur as planned, we will take further action no later than the Spring of 1998. Provided that Sprint complies with the conditions of this ruling, we conclude that we need not designate for hearing the issue whether the public interest would continue to be served by Sprint's holding of Title II authorizations and Title III licenses if these investments and the Joint Venture are consummated.  X!-x` `  i.Regulating Sprint as a Dominant Carrier  X"-  X#-xf103.IV.C.4.B.II` ` The first condition includes the regulation of Sprint as a dominant carrier for the provision of U.S. international services on the U.S.France and U.S.Germany routes until"j$'Z0*((F#" Sprint can demonstrate that there is no substantial risk of anticompetitive effects in the U.S.  X-international services market from its affiliation with FT and DT.M9 {Ob-ԍXx#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  253 & n.358.(#ƻ We recently modified our dominant carrier safeguards to require tariff filing on 14days notice, prior Section 214 authorization for circuit additions or changes; the filing of quarterly traffic and revenue reports; and the maintaining of provisioning and maintenance records that cover the network facilities and services a dominant, foreignaffiliated carrier procures from its foreign carrier affiliate. This requirement includes services that a dominant carrier procures on behalf of  X_-joint ventures for the provision of U.S. basic or enhanced services._ZM9 {Oj -ԍXx#W*f9 xr G;X#See id.#X\  P6G;PP# at  26273.(#Ƣ  X1-xg104.` ` The #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# adopts a change in our policy regarding when we will consider a foreign carrier investment in a U.S. carrier to constitute an "affiliation" for purposes of determining regulatory treatment of the U.S. carrier. First, we have lowered the affiliation threshold control to a greater than 25 percent interest or a controlling interest at any level. In addition, we have indicated we may regulate a carrier as dominant even if an investment is less than 25 percent if there are other contractual arrangements between the  X -parties which could have a significant impact on competition. M9 {OF-ԍXx#W*f9 xr G;X#See id.#X\  P6G;PP# at  8892. (#ƣ  X{-xh105.` ` In this case, although the combined equity interests of FT and DT are less than 25 percent, we nonetheless find an affiliation in this case for the same reasons we found an  XM-affiliation under our effective competitive opportunities analysis.M~M9 {O|-ԍXx#W*f9 xr G;X#See supra#X\  P6G;PP# at   3839 .(#ƨ In particular, this transaction involves two of the largest foreign carriers in the world, which control bottleneck  X-facilities in two of the biggest destination markets for U.S. traffic.M9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# 47 C.F.R.  63.01(r)(7). (#Ƨ These carriers propose to invest in the third largest U.S. domestic interexchange and international telecommunications services carrier as part of their Joint Venture. The monopoly positions of FT and DT in their own countries, combined with their 10 percent each equity interest in, and Joint Venture with, Sprint, provide the incentive and ability for FT and/or DT to engage in anticompetitive conduct favoring Sprint on these routes. For example, to the extent FT and DT can take actions to enhance Sprint's position and Sprint's stock value increases as a result, FT and DT would themselves profit by the rise in value of their equity investment in Sprint.  XP-xi106.` ` Moreover, the potential impact on competition in the U.S. basic international services market warrants dominant carrier treatment to enable us to closely monitor Sprint's circuits additions, traffic and tariffs for service to these countries, as well as the treatment afforded FT and DT in the provisioning and maintenance of their basic network services and facilities. Accordingly, we find under our new policy regarding affiliation that Sprint cannot"(0*((x" be treated as nondominant on the France and Germany routes because Sprint's affiliated  X-carriers, FT and DT, control bottleneck facilities in those countries.M9 {Ob-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# 47 C.F.R.  63.10(a)(2) & (3). (#Ʈ We also find that, under our current definition of affiliation, Sprint must be regulated as dominant on the France and Germany routes. We thus require Sprint to comply with the specific dominant carrier  X-regulation requirements set forth in paragraph  DOM140  of this Order.  Xv-xj107.` ` The longer tariff filing period for dominant carriers will give us a better  X_-opportunity to detect potential predatory pricing before it occurs.$_ZM9 yOj -ԍXxCurrently, nondominant carriers are subject to the same 14day tariff filing notice requirement. We  {O2 -have proposed in another proceeding, however, to reduce this waiting period to one day. #W*f9 xr G;X#See  {O -Streamlining the International Section 214 Authorization Process and Tariff Requirements#X\  P6G;PP#, FCC 95286, at  52 (released Jul. 17, 1995).(# Similarly, the requirement that Sprint file quarterly traffic reports and seek prior approval for circuit additions or changes on the France and Germany routes will better enable us to monitor traffic flows between Sprint and FT in France and DT in Germany and to remedy promptly any abuses of foreign market power. Prior approval for circuit additions or changes is required of all dominant carriers and, in this case, would enable competitors of Sprint and the Joint Venture to determine if discrimination is occurring. We thus agree with ACC and MFSI that these requirements are necessary to aid detection of, and help deter, anticompetitive conduct. By doing so, dominant carrier regulation will protect competition until France and Germany offer effective competitive opportunities.  Xb-xk108.` ` Because FT and DT continue to hold monopolies over key infrastructure, we believe there is a stronger potential for the anticompetitive use of foreign market power than  X4-in #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP#. Thus, regulation of Sprint as a dominant carrier is necessary on the routes where it is receiving traffic from FT and DT at least until full infrastructure and services  X-liberalization and procompetitive regulation emerges in France and Germany._FM9 yO-ԍXx47 C.F.R.  63.01(r)(1)(i) & (ii). (#_ If effective competition and effective regulation actually emerge in each country, the potential anticompetitive effects would be diminished and the types of conditions we imposed on that transaction may then be adequate to protect competition. We reserve the right to extend dominant carrier regulation to additional U.S.international routes in the event FT, DT and Sprint enter into a similar alliance with any other "foreign carrier." We also reserve the right to extend to additional U.S. international routes dominant carrier regulation and reporting requirements contained in this Order in the event Sprint has or acquires an "affiliation" with  XP-any "foreign carrier"as those terms are defined in our #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# and Section 63.01(r)(1)(i) and (ii) of the Commission's Rules. " )0*((["  X-x` `  i i.Circuit Restrictions  X-  X- xl109.IV.C.4.B.IIV.C.4.B.I` ` Under the second condition, we will not allow Sprint to operate additional circuits on the U.S.France and U.S.Germany routes until two milestones have been met. These milestones are described in detail below. This condition is necessary to mitigate Sprint's unfair competitive advantage over other U.S. carriers on the routes where FT and DT have monopoly market power on the foreign end for the interim period until further  X_-competition emerges in those markets. Thus, while we will permit Sprint to #Xh*f9 xr G;`XX#acquire#Xj\  P6G;XXP#  XJ-additional circuit capacity, we will not allow Sprint to #Xh*f9 xr G;`XX#operate#Xj\  P6G;XXP# any newlyacquired circuits until Sprint demonstrates that these competitive milestones have been met. To implement this condition, we require Sprint to file with the Commission, within 15 days of the effective date of this Order, a circuit status report on the U.S.France and U.S.Germany routes, specifying the number of circuits in which Sprint has an ownership, indefeasible right of use or leasehold interest, and the number of circuits it is operating on these routes.  X - xm110.IV.C.4.B.IIV.C.4.B.I` ` By virtue of its Joint Venture with FT and DT, we find that Sprint has an advantage over other U.S. carriers that have no possibility of forming a similar alliance with  X}-another French or German carrier. As we concluded in the #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP#, if there is no opportunity for participation by other U.S. carriers, then the benefits of providing international service on an endtoend basis will flow solely to the monopoly foreign carrier and its U.S. affiliate. Our approach to future Section 214 authorization requests by Sprint is designed to mitigate the unfair competitive advantage accruing to Sprint, FT and DT until further liberalization occurs. We also believe such action will provide further incentives for the French and German Governments and FT and DT to continue to liberalize their telecommunications markets before 1998.  X-xn111.IV.C.4.B.IIV.C.4.B.I` ` The first milestone is implementation of alternative infrastructure competition in France and Germany. To meet this milestone, France and Germany must permit infrastructure to be offered by entities other than FT or DT, or their affiliates. Such alternative infrastructure must be permitted to carry all currently liberalized services in France and Germany, including data communications and closed user groups traffic (but not public switched voice services). This development opens the way for new facilitiesbased carriers for most telecommunications services. Thus, at least with respect to already liberalized services, U.S.affiliated entities may begin to have competitive alternatives to FT and DT to carry their nonpublic switched voice traffic in France and Germany.  X -xo112.IV.C.4.B.IIV.C.4.B.I` ` 112The second milestone is the existence of opportunities to provide basic switched voice resale, including for the provision of traffic originated or terminated in the United States. For purposes of this proceeding, we define liberalized basic switched voice resale to include public switched voice services which may be offered to the public using facilities provided by a separate underlying carrier, and may be provided to and from the United States. Such resale opportunities must be available to all similarly situated U.S.affiliated entities on the same terms and conditions. To meet this milestone, it is sufficient that the reseller simply provide its own billing functions, and no switching or other functions")'*0*((%" for itself. In countries such as Chile, Canada, Sweden, and the United Kingdom, allowing such resale has served to aid the entry of competitors in the marketplace and to exert competitive pressure on rates, resulting in lower rates to the benefit of customers. The French and German Governments each have indicated that FT and DT may enter into switchless resale arrangements with third parties, as subcontractors, within the current French and  X-German legislative frameworks.VZM9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Letter from Bruno Lasserre, Director General of DGPT, to Commissioner Susan Ness, Federal Communications Commission (filed Dec. 11, 1995); Letter from BMPT to Francis Coleman, ACC (filed June 30, 1995). (#V Thus, it is entirely within the authority of FT and DT to determine this condition will be satisfied. Although there is no legal compulsion in either country for FT or DT to do so, FT and DT can voluntarily enter into such arrangements, and thus have it within their power to satisfy the basic switched voice resale milestone.  X -xp113.IV.C.4.B.IIV.C.4.B.I ` ` Although the opportunity to provide basic switched voice resale is not as desirable as full competitive provision of infrastructure, and would still require use of FT's or DT's underlying facilities, it is nonetheless an important interim step. The availability of basic switched voice resale in France and Germany will put U.S. competitors of FT, DT and the Joint Venture on more equal footing with these entities. In particular, basic switched voice resale competition essentially would allow competitors to compete for customers at every level with FT and DT, including for public switched voice customers. Competitors of FT, DT and the Joint Venture would then have the opportunity to market themselves, as only FT and DT now can, as "full service" providers. Until basic switched voice resale opportunities are available, such marketing and service offerings are not possible. The competitive availability of alternative infrastructure and basic switched resale also will limit FT's and DT's ability to leverage their monopoly power unfairly. These two forms of competition will start the process of adapting to competition, which should help ease the implementation of full facilities and services competition, to the benefit of potential competitors. This condition also will serve as an important incentive for the effective implementation of liberalization steps sooner than might otherwise be the case, thus minimizing the competitive harm to other U.S. carriers that wish, but are not currently permitted, to participate in the French and German markets.  Xe-xq114.IV.C.4.B.IIV.C.4.B.I` ` This condition only affects Sprint's operation of additional capacity it is authorized to acquire subsequent to the consummation of the transaction on the France and Germany routes; it will not prevent Sprint from acquiring additional capacity as it becomes available or is needed to meet its expected long term capacity needs. Business realities may mean that Sprint will be required to invest now in capacity on a submarine cable, for example, that is not yet operational. As a dominant carrier, Sprint will be required to obtain prior Section 214 authority to acquire and operate any additional circuits. Because of the particular circumstances of this transaction, however, we will consider granting Sprint Section 214 authority only to acquire, not operate, capacity on either the France or Germany routes until the two competitive milestones are reached. Thus, while we will permit Sprint to acquire capacity on these routes, we will not allow Sprint to operate any such capacity"#+0*((e"" acquired after the consummation of the transaction until Sprint can demonstrate that the competitive milestones have been reached. x  X-xr115.IV.C.4.B.IIV.C.4.B.I ` ` Based on our review of Sprint's confidential circuit status reports, published information on Sprint's capacity ownership on TAT12/13 and other the transatlantic cables, and Sprint's average growth rate, we are confident that this remedy will not adversely impact Sprint's short term ability to respond to marketplace demands. Moreover, this restriction  X_-does not affect Sprint's ability to provide service on these routes on a resale basis. We emphasize that we expect this condition to be shortterm. Both FT and DT have the ability to satisfy the resale milestone by introducing resale at any time. Moreover, the French and German Governments have committed both to the E.U. and U.S. authorities to permit alternative infrastructure competition by July 1996. There is no reason, then, that this circuit restriction should not be able to be lifted in six months time. Upon Sprint's demonstration to the Commission that these two milestones have been met, the Commission will promptly lift this restriction from all previously conditioned Section 214 authorizations.  X- x` `  iii.Nondiscrimination and Reporting Requirements  Xb-xs116.IV.C.4.B.III` ` The third condition consists of nondiscrimination and reporting requirements based on longstanding procompetitive rules and policies of this Commission. These  X4-requirements, similar to those imposed in the #Xh*f9 xr G;`XX#MCI/BT#Xj\  P6G;XXP# proceeding, are designed to prevent Sprint from accepting the benefits of any anticompetitive use of market power by FT or DT.  X-Moreover, Sprint has volunteered to accept these requirements.LM9 yO-ԍXxSprint Reply at 12.(#L These requirements will  X-remain in place indefinitely unless expressly removed by Commission order. Sprint 's failure to comply with these requirements may result in the imposition of fines or forfeitures or a  X-revocation of one or more of its licenses.Y\XM9 {O-ԍXx#W*f9 xr G;X#See#X\  P6G;PP# Sections 312(a), 502 and 503 of the Act, 47 U.S.C.  312(a), 502 and 503; #W*f9 xr G;X#Pass Word#X\  P6G;PP#, 76  {O-F.C.C.2d 465 (1980), #W*f9 xr G;X#aff'd sub nom. Pass Word v. FCC#X\  P6G;PP#, 673 F.2d 1363 (D.C. Cir. 1982) (common carrier license revoked based on carrier's deliberate misrepresentation to the Commission)).(#Y  X-xt117.` ` We impose a number of nondiscrimination and reporting requirements. First, Sprint is prohibited from agreeing to accept, directly or indirectly, any special concessions from any foreign carrier or administration with respect to traffic or revenue flows between the  XP-United States and any foreign country. P|M9 yO}"-ԍXxSection 63.14 of the Commission's Rules defines special concessions as "any arrangement that affects traffic or revenue flows to or from the United States that is offered exclusively by a foreign carrier or administration to a particular U.S. international carrier and not also to similarly situated U.S.  yO$-international carriers authorized to serve a particular route." 47 C.F.R.  63.14. (# This requirement reflects a nondiscrimination  X9-safeguard adopted in the #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP#. We also note that numerous cable landing licenses and Section 214 authorizations held by Sprint contain similar prohibitions"$,d 0*((z"  X-against accepting "exclusive arrangements" from any foreign carrier or administration.~M9 {Oy-ԍXx#W*f9 xr G;X#See, e.g., US Sprint Communications Company Limited Partnership#X\  P6G;PP#, FCC No. 91416, at  20 (released  {OC-Jan. 10, 1992) (TAT10 cable landing license); #W*f9 xr G;X#Sprint Communications Company L.P.#X\  P6G;PP#, DA 952394, at  18 (released Dec. 1, 1995) (Section 214 authorization to provide switched services via international private lines interconnected to the public switched networks in the United States and the United  {O-Kingdom); #W*f9 xr G;X#see also US Sprint Communications Company Limited Partnership#X\  P6G;PP#, 4 FCC Rcd 6279, 6284 (1989) ("We will remind US Sprint that exclusive arrangements with correspondents have long been held to be contrary to Commission policy.").(#  X-xu118.` ` Second, in keeping with the requirement not to accept "special concessions"  X-directly or #Xh*f9 xr G;`XX#indirectly#Xj\  P6G;XXP# from FT or DT, Sprint shall obtain a written commitment from FT and DT not to offer or provide any special concessions to Sprint or the Joint Venture in FT's and  X-DT's provision of basic telecommunications services or facilities.<XM9 yON -ԍXxIf we find in the future that FT and DT have violated these written commitments, we will take further action, which could include fines, additional conditions or, ultimately, revocation of Sprint's Section 214 authorizations on the France and Germany routes. (#< A copy of this written commitment must be filed with the Commission 15 days prior to consummation of this transaction.  X3-xv119.` ` 160Third, Sprint shall file with the Commission quarterly reports summarizing its records on the provisioning and maintenance of facilities and services by FT and DT to Sprint, including, but not limited to, correspondent or other basic services or facilities  X -procured on behalf of customers of Joint Venture offerings, in France and Germany. . M9 yO-ԍXxWe note our authority to require Sprint to provide us with this information pursuant to Section 218 of the Act. These reports will be made publicly available in the record of this proceeding. (# These reports shall include information about any distribution or interconnection arrangements, including pricing, technical specifications, functional capabilities and other quality or  X -operational characteristics, such as provisioning and maintenance times. Although we do not  X-require such reports of other dominant carriers in our #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP#, M9 {O-ԍXx#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  26365.(#ƺ we believe that such reports are necessary in this case to enable competitors and users to determine if discrimination is occurring because of the large traffic flows between the United States and France and Germany and the resulting potential significant impact of anticompetitive conduct on the U.S. telecommunications market. To provide additional monitoring, we also require Sprint to file with the Commission, within 15 days of the effective date of this Order, a circuit status report on the U.S.France and U.S.Germany routes, specifying the number of circuits.  X-xw120.` ` These requirements are designed to ensure that Sprint, the Joint Venture, FT and DT do not use their new relationship, in combination with FT's and DT's foreign market"-0*((R"  X-power, to favor each other at the expense of competitors and competition generally.ZM9 yOy-ԍXxWe note that the Justice Department shares these concerns, and the proposed Final Judgment addresses these concerns by requiring Sprint and the Joint Venture to comply with certain nondiscrimination and  {O -disclosure requirements. #W*f9 xr G;X#See#X\  P6G;PP# footnote  DOJ12  #W*f9 xr G;X#supra#X\  P6G;PP#.(# We have described in detail above how FT and DT will have both the ability, through their foreign monopolies, and the incentive, as a result of their investments in Sprint and the Joint Venture, to engage in such conduct. With respect to concerns that FT, DT and Sprint could use their relationship to manipulate traffic streams or accounting rates, we reiterate that existing Commission policy with respect to these matters effectively limits the parties' ability to engage in such anticompetitive conduct. As a U.S. carrier, Sprint must: (1) not agree to  X_-accept more than its proportionate share of return traffic from its foreign correspondent;|_M9 yO -ԍXxThis merely restates our longstanding policy that U.S. international carriers should be afforded nondiscriminatory treatment in their traffic relations with a given country and therefore receive a  {O -proportionate share of return traffic. #W*f9 xr G;X#See Regulation of International Accounting Rates#X\  P6G;PP#, 6 FCC Rcd  {OT-3552, 355455 (1991), #W*f9 xr G;X#on recon.#X\  P6G;PP#, 7 FCC Rcd 8049 (1992); #W*f9 xr G;X#see also#X\  P6G;PP# 47 C.F.R.  64.1001(g) (carriers filing notifications of, or waivers for, changes in accounting rates shall certify that they have not bargained for, nor received any indication that they will be given, more than their proportionate share of return traffic). (# (2) settle its accounts in accordance with the nondiscriminatory accounting rates it is required to  X1-file with this Commission;1. M9 yO-ԍXxThis requirement, for example, would preclude Sprint from taking advantage of any intraE.U. accounting rate not made available to similarly situated U.S. carriers.(# (3) file copies of all contracts, agreements and arrangements that  X -relate to the routing of traffic (including transiting traffic) and settlement of accounts; M9 yOQ-ԍXxThis would include, for example, agreements for the proportionate return of traffic, even where the  {O-agreement is not written. #W*f9 xr G;X#See#X\  P6G;PP# Section 43.51(b) of the Commission's Rules, 47 C.F.R.  43.51(b). The disclosure of contracts, agreements and arrangements relating to the transiting traffic should allow better monitoring of Sprint's transiting arrangements with FT and DT, responding to CWA/IBEW's concerns about anticompetitive transiting arrangements between Sprint and FT and DT. (#Ɓ and (4) not accept any changes in its accounting rates that are not made available to all other competing U.S. carriers on a nondiscriminatory basis. Moreover, pursuant to the "no special concessions" requirement, Sprint is precluded from bargaining for, or accepting, any preferential changes in the current method used by FT or DT to allocate return traffic among  X -U.S. carriers.?X 8M9 yO -ԍXxIf we find in the future that Sprint has violated its "no special concessions" obligation, we will take further action, including imposing fines, additional conditions or, ultimately, revoking Sprint's Section 214 authorizations on the France and Germany routes.(#?  Xy-xx121.` ` Sprint's "no special concessions" obligation also would preclude Sprint from accepting from FT or DT, or from any other foreign carrier or administration, preferential or exclusive operating agreements or marketing arrangements for the provision of basic"K.X0*((I"  X-telecommunications services, including the introduction and provision of new basic services. M9 {Oy-ԍXxWe note the concern, also expressed in the #W*f9 xr G;X#MCI/BT#X\  P6G;PP# proceeding, that FT or DT may offer, as part of an incentive to purchase their basic telecommunications services in their home countries, a discount or preference based on the French or German customer's selection of Sprint as its U.S. carrier. Under its "no special concessions" obligation, however, Sprint may not knowingly participate in the handling of any FranceU.S. or GermanyU.S. basic telecommunications service for which FT or DT has offered a discount conditioned upon selection of Sprint as the U.S. carrier for such service. For example, Sprint may not accept traffic from FT or DT pursuant to a plan in which FT or DT customers are offered a discounted rate on either domestic or international private line service if the other half of the international private line is procured from Sprint.(# This obligation would preclude Sprint from offering a new correspondent or other basic service, or concluding an operating agreement for such a new service, with either FT or DT unless FT or DT offer to provide the service or operating agreement on the same terms and  X-conditions to similarly situated U.S. carriers, a concern raised by AT&T.M9 {O -ԍXx#W*f9 xr G;X#See supra#X\  P6G;PP# at footnote 151.(#ơ Similarly, Sprint would be precluded from accepting from FT or DT any distribution or interconnection arrangements, including pricing, technical specifications, functional capabilities, or other quality and operational characteristics, such as provisioning and maintenance times, at rates or on terms and conditions that are not available on a nondiscriminatory basis to all competing U.S. carriers. In these examples, the reports to be filed by Sprint will enhance the Commission's ability to monitor Sprint's compliance with its obligation to accept no special  X -concessions from FT or DT.Z , M9 yO-ԍXxThis reporting requirement should respond to WorldCom's concern that the terms and conditions of FT's and DT's provision of facilities to Sprint be transparent in order to identify discriminatory  {Op-treatment. #W*f9 xr G;X#See#X\  P6G;PP# WorldCom Letter at 57.(#Ɔ  X -xy122.` ` Sprint also would be prohibited from agreeing to accept any arrangement with FT or DT for the joint handling of basic traffic originating or terminating in third countries on  X -terms and conditions not available on a nondiscriminatory basis to all competing U.S. carriers.  X- #Xj9 xOG; DX## Xj\  P6G;XXP#  Xy-xz123.` ` Our "no special concessions" requirement would prohibit Sprint from accepting directly from FT or DT, or indirectly, through the Joint Venture, prior to public disclosure, any information about FT's or DT's basic network services that affects either the provision of basic or enhanced services or interconnection to the French or German public switched  X-network by U.S. carriers or their U.S. customers.NN M9 yO"-ԍXxWe note that the proposed Final Judgment requires Sprint to disclose, within 30 days of receipt, FT or  {O"-DT network changes. #W*f9 xr G;X#See#X\  P6G;PP# Proposed Final Judgment, 60 Fed. Reg. at 4405152. (#N In addition, Sprint would be precluded from accepting French or German telephone customer information (including names and addresses) from FT or DT unless such information also is available to other U.S. competitors.  X-x{124.` ` As a further example, Sprint would be prohibited from accepting, either directly or indirectly, through the Joint Venture or from FT or DT, any proprietary or"/0*((R" confidential information obtained by FT or DT from competing U.S. carriers in the course of regular business activities with such U.S. carriers, unless specific permission has been obtained in writing from the U.S. carrier involved. Such information might relate to the provision of interconnection or other necessary services, correspondent relationships, or  X-negotiations of operating agreements, including accounting rates.M9 yO-ԍXxWe again note that the proposed Final Judgment shares our concerns, and imposes confidentiality requirements on both Sprint and the Joint Venture.(#  Xv-x|125.` ` In addition, we agree with AT&T that the "steering" of customers by the Joint Venture partners to the Joint Venture violates the "no special concessions" requirement to the  XH-extent a basic service customer is being "steered" to a particular U.S. carrier.H M9 {O -ԍXx#W*f9 xr G;X#See#X\  P6G;PP# AT&T Supplemental Opposition at 23.(#Ʈ Under the terms of the Joint Venture Agreement, each partner is required to use commercially reasonable efforts to persuade its customers to use the Joint Venture's services. Thus, for example, if an FT customer in France requests from FT a basic, private line service between France and the United States, FT is required to attempt to persuade the customer to use Sprint, the Joint Venture partner serving the United States, for the U.S. end. Although the customer may ultimately choose another U.S. carrier anyway, this arrangement affects traffic flows, and requires foreign carriers (FT and DT) to attempt to persuade customers to use one particular U.S. carrier (Sprint) for the provision of basic services. The same arrangement is not available to other U.S. carriers, and thus, by its terms, such "steering" would be an  Xb-impermissible special concession under Section 63.14 of our Rules.<$bM9 {O-ԍXx#W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  258. We note, in response to Sprint's concern that other U.S. carriers will be permitted to engage in such steering, that all U.S. carriers are subject to the same special  {OW-concessions requirement. #W*f9 xr G;X#See id.#X\  P6G;PP# Thus, it is unlawful for any other U.S. carrier to engage in such a steering arrangement. (#<  X4-x}126.` ` Our requirement that Sprint maintain complete records and provide quarterly reports on the provisioning and maintenance of facilities and services provided by FT and DT to Sprint specifically includes any services or facilities procured on behalf of customers of  X-Joint Venture offerings in France and Germany. This requirement will enhance our ability to  X-monitor Sprint's compliance with our "no special concessions" requirement. We may revisit the need for these reporting requirements when France and Germany are fully liberalized. But until effective competition exists in these countries, we believe that FT's and DT's market power merits this additional measure.  Xe-x~127.` ` We recognize the concerns in the record raised by FT's and DT's participation in the Joint Venture, when combined with their 20 percent stake in Sprint. These factors may, for example, give FT and DT an incentive to provide Sprint preferential access to their basic services networks. This potential discrimination could take various direct or indirect forms, including preferential pricing or treatment in the provision and maintenance of both international halfcircuits and of local exchange services or advance disclosure of technical"00*((<" specifications. We find that our concerns about the potential leveraging of foreign market power in basic service offerings to gain an advantage in the global seamless service market are satisfactorily addressed at this time by the "no special concessions" requirement and  X-recordkeeping and reporting requirements we have imposed on Sprint.   X-x128.55` ` We also require Sprint to file progress reports detailing the status of the  Xv-telecommunications markets and regulatory regimes in France and Germany.vM9 yO-ԍXxWe impose this condition pursuant to the authority granted the Commission by Section 218 of the Communications Act, 47 U.S.C.  218.(# We believe these reports will assist us in determining whether progress is being made in liberalizing these markets. In the event appropriate progress is not being made, we may need to consider additional safeguards to protect against anticompetitive conduct.  X -x129.` ` As we noted above, France and Germany have committed to taking certain steps to implement effective competitive opportunities in their telecommunications markets by January 1, 1998. We direct Sprint to provide the Commission with the following information regarding French and German regulatory developments: the text of any laws, resolutions, regulations and court decisions relevant to the implementation of telecommunications services and facilities competition, and any descriptive information regarding enforcement of and compliance with these provisions. This descriptive information should address how France and Germany are progressing in meeting the specific effective competitive opportunities  XK-criteria. We also require Sprint to report on the status of the ownership of FT and DT.\K M9 {O-ԍXxAs we indicated in the #W*f9 xr G;X#Foreign Carrier Entry Order#X\  P6G;PP#, separation between the regulator and the dominant or monopoly carrier is most clearly achieved when the dominant or monopoly carrier is not government {O-owned. #W*f9 xr G;X#See Foreign Carrier Entry Order#X\  P6G;PP# at  5455.(# These reports should be filed no later than July 31 of each year (beginning in 1996) until this Commission determines that there are effective competitive opportunities in France and Germany. We will include these reports in the public record in this proceeding, which will remain open until we find effective competitive opportunities exist in both France and Germany.  98.D In 1998, this report must be filed by March 31, as described below.  X-x130.` ` Finally, to ensure if the alien ownership level in Sprint does not exceed 28  X-percent, we require Sprint to conduct periodic surveys of their public shareholders. We also require Sprint to obtain prior Commission approval before increasing FT's or DT's ownership or voting interest in Sprint. In addition, Sprint must file any substantive amendments or modifications to: (1) the Investment Agreement; (2) the Stockholders' Agreement; (3) the Joint Venture Agreement (4) the Certificate of Amendment to Sprint's Articles of Incorporation; (5) the Proposed Amendments to Sprint's Bylaws; and (6) the Standstill Agreement with the Commission within 30 days of execution. We also require Sprint to file with the Secretary of this Commission, within 30 days of the effective of this Order or prior to the consummation of this transaction, whichever is sooner, a letter accepting the terms and conditions of this Commission ruling." 1D0*(("Ԍ X-ԙx` `  iv. Accounting Rate Condition  X-x131.` ` 131For the reasons described in paragraph  9292  above, we find that this transaction serves the public interest only if Sprint obtains a written commitment from FT to lower the accounting rate between the United States and France to the same range as the U.S.U.K. and U.S.Germany accounting rates. The written commitment should indicate that FT will implement these reductions in the near future and in no event later than two years from the adoption date of this Order. A copy of the written commitment shall be filed with the Commission 15 days prior to consummation of the transaction. The filing of this commitment is a precondition to our finding that this transaction serves the public interest.  X -x` `  v.Possible Additional Conditions or Sanctions  X -x132.REP109` ` This grant is based in large part upon commitments made by the French and German Governments; if full liberalization is not implemented as planned, we will be required to take further action. We thus require Sprint to report by March 31, 1998 on the progress France and Germany have made in meeting their liberalization commitments and, specifically, whether France and Germany afford effective competitive opportunities at that time. We will place Sprint's report on public notice and seek comment. If the record demonstrates there are serious questions about whether the anticipated measures have been taken, and effective competitive opportunities still are not available, we will designate for hearing the issue of whether the public interest continues to be served by Sprint's holding of Section 214 facilities authorizations on the U.S.France and U.S.Germany routes and, if necessary, Sprint's holding of Section 214 resale authorizations on these routes.  X-x133.` ` Finally, the terms of this decision are subject to any obligations that might arise as a result of the current negotiations in the NGBT under the auspices of the World Trade Organization. We will adjust the terms of this Order as necessary to comply with any such  X|-commitments.  XN-i% V. Conclusion  X7-  X - x 134.V` ` After careful consideration of the arguments made by all parties, we conclude that, on balance, the public interest will be served by the grant of this declaratory ruling subject to our prescribed conditions. We find that France and Germany do not currently offer effective competitive opportunities to U.S. carriers and that FT and DT have the incentive and ability to favor Sprint over other U.S. carriers. Our analysis reveals significant competitive concerns arising from FT's and DT's monopoly positions in those countries. Our confidence that the conditions we have placed on this transaction are sufficient to control anticompetitive conduct and mitigate potential anticompetitive effects in the U.S. telecommunications market in the short term is due in large measure to the commitments the French and German Governments have made to implementing wideranging liberalization schemes.  X#'- x 135.` ` The procompetitive impact of the equity investment on the U.S."#'20*((%" telecommunications market is another strong public interest factor that weighs in favor of approving the transaction. FT's and DT's infusion of $3.54.2 billion into Sprint will serve the public interest in a number of ways. In the United States, the transaction will make Sprint a stronger, more competitive participant in the domestic interexchange, terrestrial CMRS, and international services markets. It also will allow Sprint to expand and improve its network services and product offerings and to expand the range of communications services it offers to the American public. U.S. consumers should have increased access to new and existing telecommunications services and lower prices, which will help stimulate economic growth. In  XH-the global seamless services market, the transaction will create a significant new competitor.  X - x 136.` ` We encourage further marketopening steps in France and Germany before 1998. We also urge the implementation of full facilities and services competition in such a way that affords effective competitive opportunities. In the interim, we believe the conditions we impose will safeguard against anticompetitive behavior and other potential anticompetitive effects from the strategic investment by FT and DT. They also will help mitigate Sprint's unfair competitive advantage over other U.S. carriers serving France and Germany.  Xy-x137.` ` We therefore grant Sprint's request for a ruling that 10 percent equity investments each, for a total of 20 percent, by FT and DT do not result in a transfer of control of Sprint to FT and DT. Although FT and DT each may acquire a certain degree of influence in Sprint's corporate decisionmaking process, we conclude this influence would not  X-rise to a level that constitutes control under Section 310(d). We also grant Sprint's requests for a ruling that foreign ownership in Sprint of up to 28 percent, as set forth in its submissions, is not inconsistent with Section 310(b)(4) of the Act, and that the proposed transaction is not otherwise inconsistent with the public interest, so long as Sprint adheres to the conditions imposed above.  X-  X-*  VI. Ordering Clauses ă  X|-#Xj\  P6G;XXP#x  Xe-x138.VI` ` Accordingly, IT IS ORDERED that the petitioners' request for a declaratory ruling, ISP95002, is GRANTED. Prior approval pursuant to Section 310(d) of the Act is not required before the FT and DT investments in Sprint can occur because the transaction does not involve a transfer of control. Furthermore, the level of up to 28 percent foreign ownership in Sprint, as described, is not inconsistent with the public interest under Section 310(b)(4) of the Act if Sprint complies with the conditions and requirements set forth in this Order.  X!-x139.` ` IT IS FURTHER ORDERED that, pursuant to Section 218 of the Act, 47 U.S.C.  218, Sprint shall report, within 30 days of the effective date of this Order, the destination markets other than France and Germany in which FT or DT controls, is controlled by, or is under common control of a foreign carrier. These reports shall also specify whether  XQ%-these foreign carriers have market power, as defined in paragraph  4040  of this Order.  X#'-x140.55` ` 87DOMIT IS FURTHER ORDERED that Sprint shall be regulated as a dominant"#'30*((%" carrier, pursuant to Section 214 of the Act, 47 U.S.C.  214, and Section 63.10 of the Commission's Rules, 47 C.F.R.  63.10, on the U.S.France and U.S.Germany routes. Sprint must therefore comply with the following requirements until further Order by the Commission62:  X-x` ` A. Sprint shall file tariff provisions pursuant to Section 203 of the Communications Act, 47 U.S.C.  203, and Part 61 of the Commission's rules, 47 C.F.R. Part 61, for the provision of U.S. basic international services between the United States and France and the United States and Germany. Absent contrary Commission action, the tariffs will become effective 14 days after filing;  X -x` ` B. Sprint shall seek, pursuant to Section 63.01 of the Commission's rules, 47 C.F.R.  63.01, additional authorization under Section 214 of the Communications Act , 47 U.S.C.  214, before adding or discontinuing circuits between the United States and France and the United States and Germany;  X-x` ` C. Sprint shall file, pursuant to Section 218 of the Act, 47 U.S.C.  218, quarterly reports of revenue, number of messages and number of minutes of both originating and terminating traffic (each reported separately and not aggregated) for the U.S.France and U.S.Germany routes within 90 days from the end of each calendar quarter; and  X-x` ` D. Sprint shall, pursuant to Section 218 of the Act, 47 U.S.C.  218, maintain complete records on the provisioning and maintenance of network facilities and services it procures from FT or DT, including, but not limited to, those it procures on behalf of customers of Joint Venture offerings.  X-x141.` ` IT IS FURTHER ORDERED that, pursuant to Section 214 of the Act, 47 U.S.C.  214, the Commission will not allow Sprint to operate additional circuits on the U.S.France and U.S.Germany routes to provide facilitiesbased services until the Commission finds that France and Germany:  X7-x` ` A. Permit the provision of alternative infrastructure to be used to provide already liberalized services, in which U.S.affiliated entities are permitted to participate; and  X-x` ` B. Permit the provision of basic switched voice resale, including U.S.originated and terminated international public switched voice services. Such resale opportunities must be available to all similarly situated U.S.affiliated entities on the same terms and conditions. This condition may be removed on a routebyroute basis as Sprint demonstrates that a country has liberalized its telecommunications markets in the manner specified in (A) and (B) above.  X#'-x142.` ` IT IS FURTHER ORDERED that, pursuant to Section 218 of the Act, Sprint"#'40*((%" shall file with the Commission, within 15 days of the effective date of this Order, a circuit status report on the U.S.France and U.S.Germany routes, specifying the number of circuits in which Sprint has an ownership, indefeasible right of use, or leasehold interest, and the number of circuits it is operating on these routes.  X-x143.` ` IT IS FURTHER ORDERED that, pursuant to Section 63.14 of the Commission's Rules, 47 C.F.R.  63.14, Sprint is prohibited from agreeing to accept special concession directly or indirectly from any foreign carrier or administration with respect to traffic or revenue flows between the United States and any foreign country, or agreeing to enter into such arrangements in the future.  X -x144.` ` IT IS FURTHER ORDERED that Sprint, pursuant to our requirement to accept no special concessions directly or indirectly from FT or DT, shall obtain a written commitment from FT and DT not to offer or provide any special concessions to Sprint or the Joint Venture, relating to the provision of basic services or facilities. A copy of such written agreement shall be filed with this Commission 15 days prior to the consummation of this transaction.  Xb-x145.` ` IT IS FURTHER ORDERED that, pursuant to Section 218 of the Act, Sprint shall file with the Commission quarterly reports summarizing its records on the provisioning and maintenance of facilities and services by FT and DT to Sprint, including, but not limited to, correspondent or other basic services or facilities procured on behalf of customers of Joint Venture offerings, in France and Germany. These reports shall include information about any distribution or interconnection arrangements, including pricing, technical specifications, functional capabilities and other quality or operational characteristics, such as provisioning and maintenance times.  X-x146.` ` IT IS FURTHER ORDERED that, pursuant to Section 218 of the Act, Sprint shall file its circuit status reports for U.S.France and U.S.Germany circuits on a monthly basis and shall make such reports publicly available on a quarterly basis.  X7-x147.` ` IT IS FURTHER ORDERED that, pursuant to Section 218 of the Act, and Section 43.51 of the Commission's Rules, 47 C.F.R.  43.51, Sprint shall file with the Commission copies of all contracts, agreements, and arrangements with FT or DT that relate to the routing of traffic (including transiting traffic) and settlement of accounts on the U.S.France and U.S.Germany routes.  X!-x148.` ` IT IS FURTHER ORDERED, pursuant to Section 218 of the Act, 47 U.S.C.  218, Sprint shall obtain prior Commission approval before increasing FT's or DT's ownership or voting interest in Sprint.  XQ%-x149.` ` IT IS FURTHER ORDERED that, pursuant to Section 310 of the Act, Sprint shall conduct periodic surveys of its public shareholders to ensure continuing compliance with the maximum level of foreign ownership in Sprint found not to be inconsistent with the public"#'50*((%" interest pursuant to Section 310(b)(4) of the Act.  X-x150.` ` IT IS FURTHER ORDERED that, pursuant to our authority under Section 218 of the Act, 47 U.S.C.  218, Sprint shall file any and all substantive amendments or modifications to: (1) the Investment Agreement; (2) the Stockholders' Agreement; (3) the Joint Venture Agreement; (4) the Certificate of Amendment to Sprint's Articles of Incorporation; (5) the Proposed Amendments to Sprint's Bylaws; and (6) the Standstill Agreement with the Commission within 30 days of execution.  X1-x151.` ` IT IS FURTHER ORDERED that Sprint shall obtain a written commitment from FT to lower the accounting rate between the United States and France to the same range as the U.S.U.K. and U.S.Germany accounting rates. The written commitment should indicate that FT will implement these reductions in the near future and in no event later than two years from the effective date of this Order. A copy of the written commitment shall be filed with the Commission 15 days prior to the consummation of the transaction.  X-x152.` ` IT IS FURTHER ORDERED that, pursuant to Section 218 of the Act, 47 U.S.C.  218, Sprint shall file progress reports on liberalization developments in France and Germany no later than July 31 of each year, beginning in 1996. The report provided in 1998 shall be filed no later than March 31. These reports shall contain the information specified in  X4-paragraph  98.D129  of this Order.  X- x153.` ` IT IS FURTHER ORDERED that all references to Sprint, FT, DT and the Joint Venture in this Order shall also refer to their respective officers, directors and employees, as well as to any affiliated companies and their officers, directors and employees.  X-x154.` ` IT IS FURTHER ORDERED that Sprint shall file with the Secretary of this Commission, within 30 days of the effective date of this Order or prior to the consummation of this transaction, whichever is sooner, a letter accepting the terms and conditions of this Commission ruling.  X7- x155.` ` This Order is effective the day after all rules, regulations and policies adopted  X -in the #Xh*f9 xr G;`XX#Foreign Carrier Entry Order#Xj\  P6G;XXP# become effective. Petitions for reconsideration under Section 1.106 of the Commission's Rules may be filed within 30 days of the date of public notice of this Order (see Section 1.4(b)(2)).  X - x` `  hhFEDERAL COMMUNICATIONS COMMISSION  Xj$- x` `  hhWilliam F. Caton  XS%- x` `  hhActing Secretary