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INTRODUCTION Đ\  X741.` ` In this Order, we grant BT North America Inc. (BTNA) authority, pursuant to  X 4Section 214 of the Communications Act of 1934, as amended,s > yO'#X\  P6G;P#эX47 U.S.C.  214.(#s to provide facilitiesbased international service between the United States and the United Kingdom. We deny, however, BTNA's request for reclassification as a nondominant carrier for international services between the United States and the United Kingdom. Instead, BTNA will continue to be regulated as a dominant carrier for all authorized services on the U.S.U.K. route.  X"'<g II. BACKGROUND Đ\  Xh$42.` ` BTNA, a Delaware corporation, is a whollyowned subsidiary of BT USA Holdings, Inc., (BT USA) a Delaware Corporation. BT USA is a whollyowned subsidiary of British Telecommunications plc (BT), a company organized under the laws of England and":&X0*0*0*\$" Wales. BT is the largest telecommunications operator in the United Kingdom, providing, among other things, local, longdistance and international telephone service and telecommunications equipment for customers' premises. BTNA is authorized to provide certain U.S. international switched, noninterconnected private line, interconnected private  X4line, and facilitiesbased services pursuant to Section 214 of the Act.4% {O'ԍ#W*f9 xr G;BZX#See#X\  P6G;P# BT North America Inc., Order and Certification, 9 FCC Rcd 6851 (Int'l Bur., 1994) (authority, as a dominant carrier, to resell switched services between the United States and various international points; to resell noninterconnected private line services between the United States and Australia, Canada, France, Germany, the  {Ow'Netherlands, Sweden and the United Kingdom); Memorandum Opinion, Order and Authorization, 10 FCC Rcd  yOA '3204 (Int'l Bur., 1995) (authority to resell interconnected private lines for the provision of switched services  {O 'between the United States and the United Kingdom and between the United States and Canada); Order and  {O 'Authorization, 10 FCC Rcd 4414 (Int'l Bur., Telecom. Div., 1995) (authority to resell noninterconnected private  {O 'line services between the United States and various overseas points); Public Notice, 11 FCC Rcd 11306 (1996) (authority to provide limited global facilitiesbased services to all points except the United Kingdom, Russia,  {O/ 'France, the Netherlands and Gibraltar); Order, Authorization and Certificate, 12 FCC Rcd 1985 (Int'l Bur., Telecom. Div., 1997) (authority to provide facilitiesbased services between the United States and France).  Xv43.` ` On August 2, 1996, BTNA filed two applications with the Federal Communications Commission (Commission or FCC). First, BTNA requests authority to acquire and operate up to the equivalent of 190 E1 halfcircuits on any and all U.S. common carrier and noncommon carrier facilities authorized by the FCC, for international service, including common carrier and noncommon carrier submarine cables landing in the United States, intergovernmental organization satellites (such as INTELSAT), U.S.licensed satellites,  X 4and the earth stations used to communicate with these satellites. 4 4% yO'#X\  P6G;P#эSection 214 Application of BT North America Inc., File No. ITC96439, at 23 (Aug. 2, 1996) (BTNA Section 214 Application). BTNA also requests  X 4authority to acquire and use any necessary domestic and foreign connecting facilities.E 4% {O'ԍId. at note 2.E BTNA seeks to provide international switched, private line, voice, video, data, television and business service on the U.S.U.K. route on a onehalf channel or endtoend basis. Second, BTNA requests that it be regulated as a nondominant carrier for all authorized services on the U.S. Xy4U.K. route.y4% yOH'#X\  P6G;P#эBTNA Motion to be Reclassified as a Nondominant Carrier for U.S.U.K. Service, File No. ISP96007ND, August 2, 1996 (BTNA nondominance motion). Currently, BTNA is regulated as a dominant carrier for its authorized services  Xb4on the U.S.U.K. route.xbv4% {O"'ԍSee BT North America Inc., 10 FCC Rcd 4414 (1995). x  X444.` ` On December 2, 1996, BT and MCI Communications Corp. (MCI) (collectively, BT/MCI) filed applications requesting Commission approval of the transfer of"0*(("  X4control from MCI to BT of licenses and authorizations held by subsidiaries of MCI.GZ4% yOy'ԍBT/MCI Merger Application, GN Docket 96245 (filed Dec. 2, 1996). BT/MCI requested grant of the BTNA applications at issue here, independent of any action the Commission may take with respect to the  {O 'BT/MCI merger applications. Id., Vol. 1 at note 22.G BT/MCI sought approval for this transfer in connection with the proposed merger of MCI and BT, under which MCI would be merged into a U.S. subsidiary of BT, and would become a subsidiary of a newly created U.K. company, Concert plc. At the same time, BT's U.K.  X4operations would be placed into a subsidiary of Concert.(4% {O? 'ԍSee "FCC Approves MCI/British Telecom Merger Subject to Certain Conditions," Report No. IN 9725  {O '(Aug. 21, 1997). See also Merger of MCI Communications Corporation and British Telecommunications plc,  {O 'Memorandum Opinion and Order, GN Docket No. 96245, FCC 97302 at  1, 22 (rel. Sept. 24, 1997)  {O '(BT/MCI Order). On August 21, 1997, the Commission approved the merger of BT and MCI, subject to certain conditions and  Xv4safeguards.H v4% {O'ԍXId.(#H   XH45.` ` We placed BTNA's U.S.U.K. route applications on public notice on August 9, 1996. Frontier Communications Services Inc. (Frontier) filed comments concerning BTNA's  X 4Section 214 application.  l 4% yO7'#X\  P6G;P#эXFrontier comments, File No. ITC96439, filed Sept. 6, 1996. (#Ɲ MCI Telecommunications Corporation (MCI) filed comments in  X 4opposition to BTNA's motion for reclassification as a nondominant carrier.  4% yO'#X\  P6G;P#эXMCI comments, File No. ISP96007, filed Sept. 6, 1997.(#Ɨ BTNA and the  X 4British Embassy filed reply comments in response to Frontier's and MCI's comments.   4% yO)'ԍBTNA reply comments, File No. ISP96007ND (filed Sept. 20, 1996) (BTNA reply comments on nondominance motion); U.K. Government reply comments, File No. ISP96007ND (filed Sept. 20, 1996) (U.K. Government reply comments on nondominance motion); BTNA reply comments, File No. ITC96439 (filed Sept. 20, 1996) (BTNA Section 214 reply comments), and U.K. Government reply comments, File No. ITC96439 (filed Sept. 20, 1996) (U.K. Government Section 214 reply comments).   X 'C III. DISCUSSION \  X' A. BTNA Section 214 Application  Xy4  Xb46.` ` BTNA's affiliation with a foreign carrier requires us to review its Section 214 application to the United Kingdom under the framework established in the Commission's  X44Foreign Carrier Entry Order. &4<4% {O!%'#X\  P6G;P#эMarket Entry and Regulation of Foreignaffiliated Entities, Report and Order, 11 FCC Rcd 3873, 3912  {O%'(1995), recon. pending (Foreign Carrier Entry Order). The Commission defined affiliation to include an ownership interest of greater than 25 percent, or a controlling interest at any level, in a U.S. carrier by a foreign  {O}''carrier. Id. at 390006 and 47 CFR  63.18(h)(1)(i)(B). In that Order, the Commission stated that carriers seeking to"4* 0*((" provide international services to countries in which they have an affiliate with market power must demonstrate that the affiliated market offers effective competitive opportunities (ECO)  X4for U.S. carriers seeking to offer like services.4% {OK'#X\  P6G;P#эXForeign Carrier Entry Order, 11 FCC Rcd at 392630 and 47 C.F.R.  63.18 (h)(6)(i).(#Ƽ The Foreign Carrier Entry Order defines market power as the ability of the carrier to act anticompetitively against unaffiliated U.S. carriers through the control of bottleneck services or facilities on the foreign end. Bottleneck services or facilities are those that are necessary for the provision of international services,  Xx4including intercity or local access facilities on the foreign end. xZ4% {O '#]\  PCP#эXForeign Carrier Entry Order, 11 FCC Rcd at 3917.(#Ɯ Alternatively, if an applicant can demonstrate that its foreign affiliate does not have market power in the  XJ4destination market, we do not conduct an ECO analysis.J4% {O '#X\  P6G;P#эXId., 11 FCC Rcd at 3912 and 47 C.F.R.  63.18(h)(6)(ii).(#Ƨ The Commission also stated in the  X34Foreign Carrier Entry Order that it will continue to consider other public interest factors that may weigh in favor of, or against, granting the application. These factors include the general significance of the proposed entry to the promotion of competition in the U.S. communications market, any national security, law enforcement, foreign policy, or trade  X 4concerns raised by the Executive Branch, and the presence of costbased accounting rates.g ~4% {O'ԍForeign Carrier Entry Order, 11 FCC Rcd at 3897.g  X 4  X 47.` ` BTNA asserts that its foreign affiliate, BT, lacks the ability to discriminate  X4against unaffiliated U.S. carriers through control of bottleneck facilities or services.y4% {OU'ԍBTNA application at 14. See also BTNA nondominance motion.y BTNA also asserts that the United Kingdom satisfies each of the four factors of the Commission's  Xf4ECO test.2f4% yO'ԍBTNA Section 214 application at 312. The four factors of the ECO test for facilitiesbased entry are  {O'1) the legal, or de jure, ability of U.S. carriers to enter the destination foreign country and provide international facilitiesbased service; 2) reasonable and nondiscriminatory interconnection charges, terms and conditions; 3)  {O'adequacy of competitive safeguards; and 4) independent regulatory framework. Foreign Carrier Entry Order, 11 FCC Rcd. at 3890.2 In addition, BTNA concludes that grant of its application is in the public  XO4interest.WOV 4% yOV 'ԍBTNA Section 214 application at 1921.W  X!48.` ` Frontier does not oppose BTNA's application but raises questions about whether BT offers reasonable and nondiscriminatory charges, terms and conditions for  X4interconnection to its domestic facilities as required by the Foreign Carrier Entry Order.H4% yO%'ԍFrontier comments at 1.H Frontier asserts that BT does not provide timely and reasonably priced access to BT's"v0*(("  X4backhaul facilities and services.B4% {Oy'ԍId. at 24.B The U.K. Government and BTNA respond that BT is required by OFTEL to offer international facilitiesbased competitors reasonably priced access to BT's backhaul facilities and services. In addition, the U.K. Government and BTNA state that competitive alternatives to BT for backhaul will allow carriers such as Frontier's U.K.  X4affiliate to bypass BT altogether.Z4% yO'ԍU.K. Government Section 214 reply comments at 1; BTNA Section 214 reply comments at 23.  Xv49.` ` We disagree with BTNA that its affiliate lacks market power in the U.K. international services market. In the BT/MCI merger decision, the Commission found, among other things, that BTNA's U.K. affiliate, BT, possessed market power in the U.K. market through its ownership of the only ubiquitous local access network in the United Kingdom. As a result, the Commission applied the "effective competitive opportunities" analysis to the U.K.  X 4market.^ 4% {O'ԍBT/MCI Order at  178, 181, 214.^  X 4 10.` ` In applying the ECO analysis under Section 214 to the U.K. market, the Commission found that the United Kingdom offers U.S. entities effective competitive opportunities to provide international facilitiesbased services in the United Kingdom. The  X4Commission concluded that, under the framework established in the Foreign Carrier Entry  X{4Order, BT's entry into the U.S. market was in the public interest.G{|4% {O'ԍId. at  277.G Consistent with the  Xf4Commission's decision in the BT/MCI Merger decision, we find that direct entry into the U.S. market by BT's U.S. affiliate, BTNA, is consistent with the public interest.  X#4 11.` ` With respect to Frontier's concerns, we note that in the BT/MCI Merger  X4decision, the Commission found that BT offered reasonable and nondiscriminatory charges, terms and conditions for interconnection to BT's domestic facilities for termination and  X4origination of international services.G4% {O'ԍId. at  227.G We therefore find that Frontier's concerns regarding  X4BT's interconnection obligations have been adequately addressed.|4% yO!'ԍWith respect to Frontier's concerns regarding access to BT's backhaul facilities and services, the  {O!'BT/MCI Order also found that a number of carriers have quickly entered the U.K. backhaul market in competition with BT. The Commission found that due to the apparent ease of entry into this market, BT will not be able to use its provision of U.K. backhaul to discriminate against rivals to the detriment of U.S.  {O<$'consumers. BT/MCI Order at  171. Thus, to the extent that Frontier is not satisfied with BT's provision of backhaul, Frontier's U.K. affiliate has the option of purchasing backhaul facilities and services from other competitive backhaul providers.  X4 12.` ` In addition to our ECO analysis, our Foreign Carrier Entry Order cites other"0*((" factors that may be considered as part of our overall public interest analysis for foreign carrier entry. These factors include costbased accounting rates, and any national security or law enforcement issues, foreign policy, or trade concerns raised by the Executive Branch.  X4 13.` ` In the BT/MCI Merger Order, we concluded that BT's settlement rate on the U.S.U.K. route was a positive public interest factor in favor of BT's entry into the United  Xx4States market.$x4% {O'ԍBT/MCI Order at  270 (noting that the current settlement rate of $0.07 on the U.S.U.K. route falls  {O'below the relevant benchmark and is one of the lowest in the world. The BT/MCI Order also noted that, like the FCC, OFTEL publishes U.K. carrier accounting rates for all U.K. international routes, promoting greater transparency in the international accounting rate process). Consistent with that finding, we also conclude that the U.S.U.K. settlement rate is a positive public interest factor in favor of BTNA's entry into the United States market.  X 4 14.` ` Finally, we note that the Executive Branch did not raise any national security or law enforcement issues, foreign policy, or trade concerns. We therefore conclude that BTNA's entry into the U.S. market is in the public interest.  X ' B. BTNA Request for Nondominant Regulatory Treatment  X 4  X415.` ` Under the Commission's rules, a carrier that is affiliated with a foreign carrier that is not a monopoly in a destination market and that seeks to be regulated as a nondominant carrier on that route bears the burden of demonstrating that its foreign affiliate lacks the ability to discriminate against unaffiliated U.S. international carriers through control of  X64bottleneck services or facilities in the destination country.64% yO'ԍ47 C.F.R.  63.10(a)(3). Carriers regulated as dominant on a particular route due to a foreign carrier affiliation are required, under Section 63.10 of our rules, to do the following: (1) file tariffs on no less than 14days notice; (2) maintain complete records of the provisioning and maintenance of basic network facilities and services procured from the foreign carrier affiliate; (3) obtain Commission approval pursuant to  63.18 before adding or discontinuing circuits; and (4) file quarterly reports of revenue, number of messages, and number of minutes of both originating and terminating traffic. 47 C.F.R.  63.10(c). In brief, the applicant must demonstrate that its foreign affiliate lacks market power.  X416.` ` BTNA asserts that BT does not have market power in the United Kingdom and that dominant carrier regulation of BTNA's services on the U.S.U.K. route is no longer justifiable. It argues that growing competition in the U.K. local, domestic longdistance, and  X4international markets prevents BT from controlling bottleneck services or facilities.Y, 4% yO#'ԍBTNA non-dominance motion at 319.Y Even if BT did maintain market power, BTNA states that BT would be prevented by OFTEL's" 0*(("  X4effective regulation of BT from exercising such market power against unaffiliated carriers.4% {Oy'ԍId. at 2025. As noted in the BT/MCI Order, OFTEL is the U.K. governmental agency responsible for the administration of the U.K.'s regulatory policies. OFTEL is an independent regulatory body with no connection to any U.K. operator. OFTEL's Director General has the statutory duty to ensure that licensees comply with the conditions incorporated into their licenses. OFTEL's responsibility for the daytoday administration of the regulatory regime has established it as the primary agency in implementing competition  {Oc'policy in the U.K. telecommunications market. BT/MCI Order at  243.  8#zL   X417.` ` MCI opposes BTNA's request for nondominant regulatory treatment on the grounds that nothing has changed with respect to BT's market power in the U.K. telecommunications market since the Commission decided to regulate BTNA as a dominant  X4carrier.t D4% yO '#X\  P6G;P#эXMCI comments at 24.(#t MCI further argues that while BT may be subject to stringent regulation, regulation  Xv4alone is not a substitute for effective competition.@!v4% {O'ԍId. at 3.@ BTNA responds that substantial changes have occurred in the U.K. telecommunications market since the Commission decided in 1995 to regulate BTNA as dominant on the U.S.U.K. route. In particular, BTNA points to the U.K.'s Department of Trade and Industry (DTI) decision to end BT's and Mercury's duopoly on facilitiesbased international services and issue additional international facilities licenses to competing carriers. In addition, BTNA reiterates that, because BT faces effective competition in all segments of the U.K. telecommunications market, and because it is subject to effective  X 4regulation by OFTEL, BT cannot discriminate against unaffiliated U.S. carriers.d" f 4% yO'ԍBTNA reply comments on nondominance motion at 29.d In response to MCI's comments, the U.K. Government filed reply comments supporting BTNA's request  X 4for non-dominant regulatory treatment.h# 4% yON'ԍU.K. Government reply comments on nondominance motion.h  Xy418.` ` As noted above, the Commission found in the BT/MCI merger decision that BTNA's U.K. affiliate, BT, retains market power in the United Kingdom through its ownership of the only ubiquitous local access network in the United Kingdom. The Commission also found that, while OFTEL plays an active role in protecting against abuse of market power by BT, OFTEL's regulation of BT alone is not sufficient to justify non X4dominant regulation on the U.S.U.K. route.$ 4% {O="'ԍBT/MCI Merger at  288. We note that the Commission recently proposed in the Foreign Participation  {O#'Notice that, in determining whether to classify a foreignaffiliated U.S. carrier as dominant, we should not  {O#'consider the effectiveness of foreign regulation in the destination market as a relevant factor. See Rules and  {O$'Policies on Foreign Participation in the U.S. Telecommunications Market, Notice of Proposed Rulemaking, IB  {Oe%'Docket No. 97142, FCC 97195 at  87 (rel. June 4, 1997) (Foreign Participation Notice). ij Thus, consistent with the BT/MCI merger"@$0*(("  X4decision, we regulate BTNA as a dominant carrier.%4% yOy'ԍWe note, however, that BTNA will be subject to any streamlined dominant carrier regulations adopted  {OA'in the Foreign Participation proceeding. See BT/MCI Order at  284, 286.  X'! IV. ORDERING CLAUSES Đ\  X419.` ` Accordingly, IT IS HEREBY CERTIFIED that the present and future public interest, convenience and necessity require a grant of the present application and IT IS ORDERED that application File No. ITC 96439 is granted, and BTNA is authorized to provide international facilitiesbased switched and private line services between the United States and the United Kingdom.  X 420.` ` IT IS FURTHER ORDERED that BTNA shall be regulated as a dominant carrier for the provision of all its authorized international switched and private line services between the United States and the United Kingdom.  X 421.` ` This order is issued under Section 0.261 of the Commission's Rules and is effective upon adoption. Petitions for reconsideration under Section 1.106 or applications for review under Section 1.115 of the Commission's Rules may be filed within 30 days of the  Xy4public notice of this order (see Section 1.4(b)(2)).  ` ` X` hp x (#%'0*,.8135@8: