WPC-@ 2B3T 3|C  )Times New Roman (TT)Times New Roman (Bold) (TT)Times New Roman (TT)pt_230_1HPLAS4.WRSSx  @,, PX@2)@ ZPZ43|X  HP LaserJet 4/4MtScript_230_1HPLAS4.WRSSX\  P6G;,, PPxxg9/9MS9ISISI9SS//S/SSSS9?/SSxSSIP!PZ9+ZM999+99999999S/xIxIxIxIxIlnIgIgIgIgI9/9/9/9/xSxSxSxSxSxSxSxSxSxSxIxSxRxSxSxS]SxIxIxInInInZnIxigIgIgIgIxSxSxSxZxSxZxS9/9S999Su]ZZxSg/gCg9g9g/xSbxSxSxSxSxn9n9n9]?]?]?]ZgFg/gMxSxSxSxSxSxSxxZgIgIgIxSg9xS]?g9xSi+SS88WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN` `  hh#(-@pp2 -ppp 2%0XXKR!K#x6X@7X@<6X9`(CourierXx6X@7X@<6X9`(CourierXsy.C8*XC\  P6QPt7PC2X DXP\  P6QXP.u7UC2XxXU4  pQXW!0(X h0\  P6QhPd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxd"i~'^:DpddȨDDDdp4D48ddddddddddDDpppd|Ld|pȐD8DtdDdpXpXDdp8Dp8pdppXLDpdddXP,PhD4htDDD4DDDDDDdDp8dddddȐXXXXXJ8J8J8J8pddddppppddpddddzpdddXXhXXXXXdddhdptL8LpLDLpphhp8ZDP8pppddƐXXXpLpLpLphfDtppppppȐhXXXpDppLDd4ddC6CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxHjdDdddddd8HH"&H>XHH8HB8>HH^HH>"".2",2,2,"222N2222"&22H22,006"6."""""""""""2H,H,H,H,H,XAB,>,>,>,>,""""H2H2H2H2H2H2H2H2H2H2H,H2H1H2H2H282H,H,H,B,B,B6B,H?>,>,>,>,H2H2H2H6H2H6H2""2"""2F866H2>>(>">">H2;H2H2H2H2XHB"B"B"8&8&8&86>*>>.H2H2H2H2H2H2^HH6>,>,>,H2>"H28&>"H2?22!!WFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN$<<$.2",2222`2 LL2 LL2L"",,2d""d<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddnddddddd2?@96@y9@<R"5@^2Coddȧ8CCdr2C28ddddddddddCCrrrdzNdzoȐC8CtdCdoYoYCdo8Co8odooYNCodddYO,Oh2CC!CCPRCdodddddȐYYYYYN8N8N8N8oddddooooddoddddzodddYYYYYYddddooPoNoNCNodo8RoodȐYYoNoNNF2ldCdddddd'ԍX See AT&T Opposition at 5.(#Y AT&T asserts that the cost study cited by ATN "does not provide a reasonable basis for challenging the Commission's  X 4conclusions" because the methodology was flawed.] H X yOP'ЍX See id. at 4.(#] Moreover, AT&T contends that the ITU  X4Study demonstrates that the benchmarks are reasonable.X yO'ЍXAT&T states that, using its $.12 settlement rate with Stentor in Canada as a conservative benchmark for a costbased rate, a settlement rate 2.08 times higher for developing countries would still be below the  yO 'benchmark settlement rates set by the Commission for developing countries. See id. at 5 n.3.(#Ɛ MCI comments generally that  Xy4ATN's arguments on reconsideration are baseless.cy yO"#'ԍXSee also infra para. 22.(#c 8. ATN replies that MCI offers no support for its comments. It also contends that it is arbitrary and misleading for AT&T and the Commission to judge the cost basis of all accounting rates in a region by comparing the lowest rate to the highest rate. It considers AT&T's position that transmission costs are relatively uniform and distance insensitive to be "0*((" directly at odds with the adoption of higher benchmarks for developed countries in Asia than for developed countries in Europe. AT&T's criticisms of the ITU study, according to ATN,  X4apply a fortiori to the Second Report and Order because the Commission did not collect cost data or devise any cost allocation methodology. ATN urges that, until we do so, we withdraw  X4any accounting rate benchmarks for developing countries.] yO'ԍXSee generally ATN Reply.(#]  Xx' 2.` ` Discussion  XJ49. In the Phase I Report and Order,JX yOS 'ЍXRegulation of International Accounting Rates, Phase I, Report and Order, 6 FCC Rcd 3552, 3556 (1991)  yO '(Phase I Report and Order), on recon., 7 FCC Rcd 8049 (1992).(# we stated that technological improvements and intraregional accounting rates suggest that "foreign carriers in the Asia and Europe regions may be maintaining accounting rates with the United States that either ignore relevant cost  X 4trends or are discriminating against the U.S. carriers...."K  yOf'ԍX6 FCC Rcd at 3556.(#K We therefore directed U.S. international carriers "to negotiate with their foreign correspondents accounting rates that are consistent with relevant cost trends and that eliminate any noncostbased differences between accounting rates applied by [a] foreign [correspondent] within its own region and those  X 4applied for the United States."L @ yO'ԍX Id. at 3555.(#L  X{4 10. In the Second Report and Order, we examined accounting rates for international traffic between the United States and Europe, Asia and countries outside Europe and Asia. We adopted benchmark settlement rates for Europe ($.23$.39 per minute) and for Asia and  X64all other regions ($.39$.60 per minute). We found in the Second Report and Order that regions outside of Europe and Asia are similar to Asia in that they contain a mix of developed  X4and developing countries. We affirm our conclusion in the Second Report and Order that the benchmark settlement rates of $.39$.60 per minute are reasonable and proper as a helpful target to be used in the negotiations process between U.S. carriers and foreign correspondents  X4from developing countries outside Europe.X yOD 'ԍX7 FCC Rcd at 8043. (#X  11. Direct information on the cost of providing telecommunication service in developing countries is largely unavailable to the Commission. A study published since the  Xg4Second Report and Order, however, concluded that the average cost of providing service  XP4between the United States and Australia is between $.30 and $.50 per minute for most calls.P`  yOa&' "" ԍXSee Martin Cave and Ian Martin, Regulation of International Trade in Telecommunications Services: The  yO)''Potential Benefit of an Accounting Separation Approach, October 1993, at 4.(# "P 0*((h" Even if we assume that the high end of this range is an accurate cost estimate, existing accounting rates for service between the United States and developing countries are between  X4two hundred and three hundred percent greater than the actual cost of service. yOK'ԍXThe minute weighted average accounting rate for developing countries was approximately $1.36 in 1992.(#Ƥ The study also suggests that the cost of service may be as high as $.70 per minute for calls between the United States and Australia to areas with low volumes. Even assuming that all traffic between the United States and developing countries is lowvolume (relative to the capacity of the facilities), accounting rates for such countries are nearly two hundred percent the cost of service computed by the Australian study. Moreover, we refer to and reaffirm the findings in  XH4the Second Report and Order that the benchmark range established for Asia is consistent with  X14the increasing trend in accounting rate reductions in Asia since 1988,x1X yO: 'ԍXSee Second Report and Order, 7 FCC Rcd at 8043. (#x and that, because regions outside Asia are comprised of a similar mix of developed and developing countries, this range is equally appropriate for developing countries in these regions. We find no evidence in this record on reconsideration to refute these findings.  X 4 12. Costreducing improvements in technology, as well as evidence of accounting rate discrimination in areas outside of Europe, buttress our finding that accounting rates for most of these countries remain significantly above unit costs and are not declining in pace with cost reductions. ATN argues that disparities in the accounting rates maintained by  Xb4GT&T with the United States and other countries are, in part, historical in nature.b yO'ЍXSee Letter, dated July 14, 1993, from G. White and R. Aamoth, Counsel for ATN, to William F. Caton, Acting Secretary, FCC ("ATN Letter"), at 3.(# Because no carrier can establish accounting rates unilaterally, ATN argues, it is unreasonable to infer purposeful discrimination from an accounting rate structure in which some countries have lower accounting rates with a particular country than with the United States. This explanation, however, does not justify requiring U.S. carriers to pay accounting rates that are not declining with costs. We have substantial, uncontroverted evidence that the cost of the international portion of facilities used for international telephone calling has decreased  X4significantly.@ yO' "I ԍXThe cost per onehalf 64 kilobit per second (Kbs) voice circuit in transatlantic cable systems, for example,  yOz' " was projected to decrease from approximately $22,000 in 1984 (TAT8, American Telephone and Telegraph  yOB ' " Company, 98 FCC 2d 440, 447 (1984)) to $8,991 in 1992 (TAT10, American Telephone and Telegraph  yO !' " Company, 7 FCC Rcd 445, 447 (1992)) and to $6,300 in 1993 (TAT12/TAT13, American Telephone and  yO!' " Telegraph Company, 8 FCC Rcd 4810, 4813 (Com. Car. Bur. 1993)). The price per circuit for satellite  " communications also has decreased significantly. For instance, Comsat's tariffed rate for a 64Kbps  " INTELSAT digital bearer circuit using a Standard A & C earth station decreased from $715 per month prior  " to January 1, 1992 to $515 per month on or after that date for a tenyear commitment. Volume discounts  yO$' "E and 15year rates are also available at even lower rates. See Comsat Tariff FCC No. 1 (Issued: June 30,  yO%'1990, pp. 128130).(# In addition, while we agree with ATN to the extent it argues that different countries may have different costs for the national extension of the international call, any such differences in cost do not explain the marked disparity in accounting rates maintained by"0*(("  X4individual countries with different correspondents.)`  yOy'ÍXFor instance, AT&T states that in 1993 GT&T maintained an accounting rate with Canada of $1.12,  yOA'with Trinidad and Tobago of $.74 per minute and with AT&T of $1.70 per minute. See AT&T Supplemental Comments at 3. Although there may be differences in the distances of each of these routes, those differences cannot reasonably explain the wide disparity in accounting rates between  yO'Guyana and each of these countries and between Guyana and the United States. See also AT&T Progress Report (1994) (reporting discrimination with respect to four other countries in the Caribbean and South America, four countries in Asia and four countries in Africa). According to AT&T, GT&T insists that AT&T is discriminating against it because AT&T has a higher accounting rate with other  yO'correspondents than it does with Guyana. See AT&T Supplemental Comments at 3 n.4. Based on  yO 'AT&T's success in reducing accounting rates since our Phase I Report and Order, we are confident that AT&T would be willing to reduce its accounting rate with these other correspondents, should they agree. We would welcome the opportunity to hear of any instance to the contrary.(#)  X4 13. Moreover, even assuming that developing countries on average have higher costs for the national extension, such costs would not justify the consistently high level of  X4accounting rates maintained by some developing countries.9 X  yOE'ÍXAT&T states, for example, that its accounting rate with Guyana has been $1.70 since 1987. ATN  yO 'maintains that costs for the U.S.Guyana route remain at $1.70 per minute. See ATN Letter, supra note 29, at 3. (#9 The unit cost of operating a country's telephone network should decrease as the country adds modern capital equipment incorporating technological advances, replaces facilities, expands the capacity of the network, improves the quality of service, increases access to telephone service and otherwise encourages increased use of the network. CANTO states that its members are reinvesting the vast majority of settlement revenues received from foreign correspondents to expand and modernize their basic telecommunications networks. Additional investment in a country's telephone network should reduce costs.  X 4 14. International accounting rates have been, and remain, high in the face of declining costs of terminating traffic. In view of this fact, and the other evidence discussed above, we affirm our conclusion that accounting rates for developing countries outside Europe have not  X4followed relevant cost trends (i.e., they remain significantly above, and have failed to decline  Xy4with, unit costs); and that the benchmark rates adopted in the Second Report and Order constitute a reasonable and useful target for U.S. carriers in their negotiations with foreign correspondents in these countries. ATN's petition does not undermine this conclusion. The benchmark range for countries outside Europe is broad enough to cover both developed and developing countries in the region and sufficiently flexible to allow developing countries to bring their accounting rates within the benchmarks within the ITUset timeline of one to five  X4years.!X yO$'ÍXIn the Second Report and Order, the Commission stated its expectation that countries outside of Europe and Asia ideally should reduce their accounting rates by about 50 percent within two years, but in any  yO@&'case within the one to five year period set forth in Recommendation D.140. 7 FCC Rcd at 8043.(#Ɣ Finally, we emphasize that the benchmarks are only negotiating guidelines, not mandatory requirements."0!0*(("Ԍ X4ԙ15. We agree with ATN that U.S. callers should expect to pay the costs incurred by  X4the foreign correspondent for providing its part of the international service." yOb'ÍXSee ATN Letter, supra note 29, at 3.(#ƅ But, U.S.  X4carriers and users should pay only those costs associated with such service. U.S. carriers and users should not be required to subsidize the cost of nontelecommunicationsrelated infrastructure in the foreign country. Nor should they be required to bear the cost incurred by foreign carriers to use the foreign network for purely domestic services, or for international  Xv4calling between the foreign country and a country other than the United States.# vX yO 'ÍXWhile we are encouraged by CANTO's statement that the "vast majority" of funds from accounting rates "are being reinvested in the region to expand and modernize the basic telecommunications network...," we remain concerned that U.S. ratepayers are bearing costs that are entirely unrelated to the provision of  yO 'U.S. international service. See CANTO Letter, supra note 10, at 2.(#  XH416. The ITU Study, on which ATN relies, was based on cost information dating from  X14as early as 1986. While it was a significant step towards addressing these issues, the ITU  X 4Study is not a reliable source of cost data for assessing the benchmark ranges.*$ @ yO 'ÍXThe ITU Study contains serious flaws that raise questions about its reliability. For example, the study does not identify the 27 countries that participated. And, some of the costs reflected in the ITU study for developing countries were lower than those for industrialized countries. In addition, the study indicated problems in validating the costs associated with the local distribution facilities within  yO+'countries. See ITU Study, at 22. (#* Demand for  X 4international telecommunications service is growing rapidly&%  yO'ÍXFor example, international outgoing telephone calls from reporting developing countries increased  yOl'approximately 16.5 percent between 1990 and 1991. See AT&T, The World's Telephones (1993).(#& and costs have continued to fall  X 4since 1986.d& H  yO'ÍXCompare cost figures in International Accounting Rates and The Balance of Payments Deficit in  yO'Telecommunications Services, Report of the Common Carrier Bureau to the Federal Communications  yOu'Commission, December 12, 1988 (Bureau Report) at Table 19, "Comparison of Accounting Rates and Service Costs: 1985" (AT&T forecast of its per minute cost of service between the United States and  yO'various countries) with figures contained in paras. 1112, supra.(#d The ITU Telecommunication Standardization Sector ("ITUT") in 1995 completed its work on Recommendation D.140, "Accounting Rate Principles for International Telephone Service." That recommendation sets guidelines for deriving costoriented accounting rates, including what cost elements to take into account and methodologies for determining individual parties' costs. We will consider using these guidelines as we modify  Xy4and update our settlement benchmark ranges.'y yO"#'ԍXSee Policy Statement on International Accounting Rate Reform, 11 FCC Rcd 3146 (1996) at  4243.(#Ƭ And, as we indicated in our recent Policy  Xb4Statement on international accounting rates, we will soon consider alternative ways for U.S. carriers to work with foreign governments and carriers to facilitate the transition to lower accounting rates. We recognize that foreign carriers in developing countries need to ensure"4'0*(("  X4that they derive meaningful benefits from costbased accounting rates.( yOy'ԍXSee Policy Statement, supra note 39, at  3641.(#Ƃ  X417. In the meantime, we are willing to consider any evidence that accounting rates for a particular country are costbased, or that our benchmarks are inappropriate for a  X4particular country.))XX yO'ЍXWe do not dispute ATN's statement that developing countries do not develop at the same speed. See ATN Reply at 5. We believe, however, that the benchmark ranges we have established are broad enough to account for this fact.(#) In the absence of direct evidence that our benchmark range is inappropriate for any particular country, we find it both reasonable and necessary to affirm the benchmark rates that apply to developing countries on the basis of the best evidence available to us. In so doing, we affirm our commitment to reduce accounting rates to more costbased levels.  X 418. We emphasize that our main concern in the Second Report and Order is accounting rates that exceed the cost of providing service. We do not disagree with ATN that there may be other factors that contribute to the current 4.3 billion net settlements deficit which adds significantly to the overall U.S. trade deficit. Nevertheless, a significant portion  X 4of the settlements deficit results from abovecost accounting rates.* x yO'ЍXSee, e.g., Bureau Report, supra note 38, at 42.(#Ɗ As we have stated in this proceeding, abovecost accounting rates are a primary reason for U.S. consumers paying high  X4collection rates for their international telephone calls.B+X yOI'ЍXSee Regulation of International Accounting Rates, Phase I, Notice of Proposed Rulemaking, 5 FCC Rcd  yO'4948, 4949 (1990) (Phase I NPRM). A collection rate is the rate that a caller pays to a carrier for placing a call.(#B Abovecost accounting rates are also  Xy4inconsistent with other U.S. regulatory goals, such as increased use of the telephone networkO,Xy(  yOR'ЍXFor instance, abovecost accounting rates deter optimal use of network facilities by artificially raising the cost of providing international telephone service. These rates can also deter the introduction of new services which might increase the usage of the network.(#O and universal service.  W44 B.Proportionate Return   X419. In the Phase II Further Notice in this proceeding, we invited comment on alternative regulatory actions which could encourage lower, more costbased accounting rates. We sought comment on several proposals, including proposals to depart from the practice of  X4proportionate allocation of return traffic (i.e., traffic destined for the United States) among" H ,0*(($"  X4U.S. carriers, to serve the infrastructure needs of developing countries.q-X yOy'ЍXSee Regulation of International Accounting Rates, Phase II, Further Notice of Proposed Rulemaking, 6  yOA'FCC Rcd 3434, 3436 n.28 (1991) (Phase II Further Notice). See supra note 4 for an explanation of proportionate allocation of return traffic. (#q After reviewing the  X4submissions, in the Second Report and Order we determined that we would continue to require U.S. carriers to "accept only their proportionate share of return traffic" as a "necessary  X4safeguard[ ] that limit[s] the possibilities for discrimination against U.S. carriers."t. yOT'ЍXSecond Report and Order, 7 FCC Rcd at 8045.(#t  X'1.` ` Pleadings  X_420. ATN argues that the Commission "has never adopted or enforced a rigid policy requiring carriers to accept only that amount of return traffic which corresponds to the  X14proportion of traffic originated by each carrier on a particular route."K/1x yOZ'ԍXATN Petition at 1.(#K According to ATN, the Commission previously proposed adoption of such a policy in CC Docket No. 86494, but concluded that proceeding without adopting the policy. ATN believes, therefore, that the Commission incorrectly endorsed proportionate return as a continuation of existing policy  X 4rather than as a brand new policy which must be adopted and justified, if at all, on a de novo  X 4basis.B0  yOw'ԍXId.(#B  X421. ATN also takes issue with the Commission's finding that there was insufficient information in the record to demonstrate how we could deviate from proportionate return  Xb4while adequately protecting against whipsawing of U.S. carriers by foreign carriers.1Xb yO'ЍX"Whipsawing" refers to a foreign carrier's exercise of its market power in a foreign market to, inter alia,  yOs'extract concessions from competing U.S. carriers, to the detriment of U.S. carriers and ratepayers. See,  yO;'e.g., Second Report and Order, 7 FCC Rcd at 8046 n.62. (#Ɩ ATN states that it furnished the Commission with a mechanism for justifying a departure from proportionate return without creating any risk of whipsawing. In its comments in this proceeding, ATN urged the Commission to permit its monopoly telecommunications subsidiary, Guyana Telephone and Telegraph Company ("GT&T"), to route to ATN all "growth" traffic from Guyana to the United States during ATN's fiveyear investment program in GT&T. ATN claimed an equitable right to carry this traffic in light of its  X4commitment to spend over $50 million upgrading Guyana's communications infrastructure.b2X  yO*$'ЍXSee Letter to R. Firestone, FCC, from G. White & R. Aamoth, Counsel for ATN, filed February 12,  yO$'1991 in File No. ITC90153. See also Comments of Atlantic TeleNetwork, Inc., CC Docket No. 90337, Phase II, filed August 16, 1991 ("ATN Comments").(#b Under this proposal, GT&T would route to AT&T only its proportionate share of the existing amount of traffic. ATN subsequently explained that it considered "growth traffic" as all" 20*(("  X4traffic exceeding a chosen benchmark year.3 yOy'ЍXATN Supplemental Comments, filed January 11, 1993 in File No. ITC90153 at 2 n.1. (#ƞ ATN also proposed that, if GT&T entered into operating agreements with other U.S. carriers, GT&T would divide the benchmark traffic proportionately among the U.S. carriers.  X422. ATN asserted that its proposal would permit new entry and increase competition in the U.S. market; improve service quality and increase traffic volume in the Guyana market (and on the U.S.Guyana route); and reduce the international trade deficit by encouraging  X_4foreign investment by U.S. entities.Y4_X yOh 'ЍXATN Comments at 1117.(#Y To counter concerns about whipsawing of U.S. carriers by GT&T, ATN offered to have the Commission require adherence to the growth traffic proposal and to the current accounting rates on the U.S.Guyana route as conditions of ATN's  X 4Section 214 authorization.X5  yO'ЍXId. at 4.(#X ATN argued that these conditions would prevent GT&T from whipsawing U.S. carriers, which ATN defines as altering the flow of return traffic in exchange for concessions from other U.S. carriers serving the U.S.Guyana route. ATN argued further that its proposed traffic allocation did not constitute whipsawing, because  X 4GT&T had not tried to play U.S. carriers off each other.6 x yO'ЍXATN correctly noted that at the time of its proposal, there was only one carrier on the U.S. end of the  yO'U.S.Guyana route. See ATN Comments at 12.(# On reconsideration, ATN reiterates its position that the Section 214 conditions it proposed are sufficient to prevent whipsawing without requiring proportionate return.  Xb423. AT&T supports our determination that the FCC has a longstanding policy of proportionate return and that proportionate return is a vital means to prevent whipsawing. MCI commented generally that ATN's arguments on reconsideration are baseless; MCI has been unable to obtain a standard operating agreement with GT&T; and ATN could more  X4productively devote its time to finalizing an operating agreement with MCI.7 yO'ЍXSee Letter, dated May 28, 1993, from Jodi L. Cooper, MCI, to Donna R. Searcy, Secretary, FCC. (#Ƨ We note that,  X4since filing its comments, MCI has obtained an operating agreement with GT&T.8`  yO ' " ԍX See International Telephone Service Agreement, dated November 30, 1993, between Guyana Telephone and Telegraph Company and MCI International, Inc.(#  X4 2.` ` Discussion  X424. The Commission has long been concerned with the ability of foreign administrations to discriminate among U.S. carriers by manipulating return traffic flows. Although this Commission has not applied a rigid rule of proportionate return, our policy has been to include this safeguard against discrimination where appropriate. Since the 1950's, one"N 80*((" of the guiding principles in our scrutiny of international traffic relations has been that U.S. carriers "should be permitted to share proportionately in ... inbound traffic in order to be able  X4to compete effectively."9 yOK'ÍXMackay Radio, 19 FCC 1321, 1340 (1954); Atlantic TeleNetwork Inc. v. FCC, 59 F.3d 1384, 1387 (D.C. Cir. 1995)(proportionate return is "imbedded" in the FCC's international settlements policy). (# We have consistently applied this principle,:X  yO'ÍXSee, e.g., Telefonica Larga Distancia de Puerto Rico, 8 FCC Rcd 106 (1992); FTC Communications,  yOk'Inc., 4 FCC Rcd 5633 (Com. Car. Bur. 1989); U.S. Sprint, 3 FCC Rcd 1484 (Com. Car. Bur. 1988);  yO3'American Tel. & Tel. Co., 2 FCC Rcd 6409 (Com. Car. Bur. 1987).(#Ɠ deviating from it only where required by the public interest, as for example, when a foreign administration lacked  X4technology capable of providing proportionate return.;@ yO 'ÍXSee TRT Telecommunications Corp., 49 FCC 2d 1408 (1974); TRT Telecommunications Corp., 46 FCC 2d 1042 (1974).(#  Xv425. Contrary to ATN's petition, the Commission's rulemaking in CC Docket No. 86494 does not suggest otherwise. In that proceeding, the Commission solicited comments concerning the development of a proposed "international model" representing an "ideal"  X14regulatory regime for international communications.<1 yOz'ÍXRegulatory Policies and International Telecommunications, Notice of Proposed Rulemaking, 2 FCC Rcd 1022 (1986).(# As part of its proposal, the Commission suggested three alternative proposals to combatting discrimination or "whipsawing" in the allocation of return traffic. One of these proposals required a  X 4proportionate return of traffic to each U.S. carrier serving a given country.=  yO'ÍXId. at 1027. The other two proposals were customer choice of the carrier and "sender keep all."(#Ư  X 426. In asking for comment on this proposal, the Commission did not suggest that requiring a proportionate return of traffic was a new idea. Indeed, the Commission had recognized the principle of proportionate return for many years and had applied that principle  Xy4on a casebycase basis where necessary to achieve its regulatory objectives.t>y  yO'ÍXSee para. 24 and cases cited therein.(#t Nor, in declining to adopt an "international model," did the Commission eschew the continued use of proportionate return as a regulatory device in appropriate circumstances. Rather, in a series of orders issued both during the pendency of the proceeding and thereafter, the Commission responded to perceived opportunities for anticompetitive conduct by requiring adherence to  X4the principle of proportionate return.? yO#'ЍXSee, e.g., cases cited supra note 58.(#Ɔ  X427. Any remaining doubt about our policy should have been removed as a result of Commission action in this docket. In Phase I of this proceeding, we expressly reaffirmed our "longstanding U.S. regulatory policy that U.S. carriers should be afforded nondiscriminatory" ?0*((" treatment in their traffic relations with a given country and therefore receive a proportionate  X4share of return traffic."@ yOb'ЍXPhase I Report and Order, 6 FCC Rcd at 3554; see also id. at 3555.(#Ɲ We in fact required that carriers filing either notifications of, or waivers for, changes in the accounting rates on a given U.S. international route certify that they had not bargained for, nor received any indication that they would receive, more than  X4their proportionate share of return traffic.mAX yO'ЍXSee 47 C.F.R. Section 64.1001(g)(2).(#m We therefore reject ATN's argument on reconsideration that we were incorrect in endorsing proportionate return as a continuation of an existing policy.  XH428. Moreover, we have previously rejected the scheme ATN proposed in its initial comments in this proceeding as inadequate to prevent ATN from abusing its monopoly power to the detriment of other U.S. carriers. ATN made the same proposal in its Section 214 application to provide facilitiesbased service between the United States and Guyana. We rejected ATN's proposal when we granted its Section 214 application, and the District of  X 4Columbia Circuit recently denied ATN's petition for review of our decision. B  yOn' "8 ԍXSee Atlantic TeleNetwork Inc., 8 FCC Rcd 4776 (1993), pet. for review denied sub nom. Atlantic Tele yO6'Network Inc. v. FCC, 59 F.3d 1384 (D.C. Cir. 1995). (#  ATN's petition made the same arguments it raises here in favor of its return traffic proposal. Neither the court's decision, nor the record in this reconsideration proceeding, provides us with a reason to revisit our conclusion in this proceeding that adopting ATN's proposal would erode our  Xy4goal to prevent discrimination among U.S. carriers.tCy@ yOj'ԍXSee Second Report and Order, 7 FCC Rcd at 8046.(#t We reaffirm our decision for the  Xb4reasons stated in our Second Report and Order.  X4429. We acknowledged in the Second Report and Order that deviations from proportionate return might help developing countries improve their telecommunications   infrastructures, but concluded that it would not serve the U.S. public interest overall. We find  X4no reason in this record to reverse or modify that determination as it applies to ATN. We note that many of the public interest goals cited by ATN can be achieved without deviating from our policy in favor of proportionate return. For instance, competition on the U.S.Guyana route can be achieved by GT&T entering into operating agreements with other U.S. carriers. And, although U.S. investment in foreign telecommunications networks may be beneficial, ATN has not demonstrated to our satisfaction that privatization initiatives warrant special treatment in the settlements process for U.S. carriers such as ATN that are affiliated  XN4with a monopoly foreign carrier.zDN yO$'ЍXSee ATN Order on Review, 8 FCC Rcd at 4780.(#z We recently recognized, in our Policy Statement on international accounting rates, that a requirement of proportionate return of traffic may impede"7 ` D0*((E"  X4competitive behavior in markets where competitive entry is occurring.wE yOy'ԍXPolicy Statement, supra note 39 at  3132.(#w It may, for example, deter U.S. terminating carriers from offering innovative pricing and supply arrangements. As  X4we indicated in our Policy Statement, we are willing to work with U.S. carriers to facilitate alternative settlement arrangements in markets where the legal, regulatory, and economic conditions support competition. To this end, we have issued a Public Notice inviting parties to file supplemental comments in this docket to address the framework for alternative  Xv4settlement arrangements for effectively competitive markets.+F vX yO ' " ԍX See Public Notice, Report No. I8152, released March 5, 1996. See also Policy Statement, supra note 39  yOG ' " at  3335 & id. at  29 (encouraging U.S. carriers also to submit waivers of the ISP where a foreign  "+ carrier's ability to abuse its market power in a highly concentrated market is constrained by its market position or market conditions generally). (#+  XH' ePIV. Conclusion ă  X 430. In this order, we affirm our determination that the benchmark settlement rates applied for developing countries outside Europe are reasonable and necessary to assist U.S. carriers in negotiating accounting rates that are more costbased. We continue to believe that our decision provides significant flexibility to allow developing countries to bring their accounting rates within the established benchmarks within a reasonable period of time. While we agree with ATN that phenomena other than high accounting rates may contribute to the net settlements deficit, our focus in this proceeding is on abovecost, discriminatory accounting rates, which contribute substantially to the U.S. net settlements deficit.  XK431. In addition, we affirm our conclusion that we should not deviate from our proportionate return policy in the manner proposed by ATN. We do not believe that ATN's proposed scheme for allocating return traffic would adequately protect against anticompetitive effects in the provision of U.S. international services. Nor do we believe that the other public interest considerations cited by ATN outweigh this public interest concern. "@F\+))"  X4q; V. Ordering Clauses ă  X432. Accordingly, IT IS HEREBY ORDERED that the petition for reconsideration filed by ATN IS DENIED. ` `  Xv4 33. IT IS FURTHER ORDERED that ATN's Motion for Leave to File Reply Out of Time is hereby GRANTED.  ` ` hhCFEDERAL COMMUNICATIONS COMMISSION ` ` hhCWilliam F. Caton ` ` hhCActing Secretary