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INTRODUCTION Đ\  X41.` ` With this Order and Authorization (Order), we add Japan to the list of countries for which U.S. carriers may provide switched, basic telecommunications services on a resale basis over their authorized international private lines (ISR). Given our approval of the accounting rate reductions negotiated by AT&T and MCI with Kokusai Denshin Denwa  X#4Co., Ltd. (KDD) in Japan, we find that more than 50 percent of U.S. carriers' settlement rates on the U.S.Japan route are below the Commission's benchmark settlement rate. We therefore conclude that the public interest in cost-based telecommunications services would be served by permitting the above-referenced applicants, and other authorized carriers, to interconnect their private lines between the United States and Japan, a World Trade Organization (WTO)"%'0*o(o(qq,%"   Member country, for the provision of ISR. Our action today, in conjunction with the  X4Commission's new Foreign Participation rules adopted last November and Japan's decision in December to open its market to ISR, will permit U.S. and Japanese carriers to route traffic between the two countries outside the traditional settlements system. We expect that such activity will exert increased pressure to lower settlement rates and reduce consumer prices for international telecommunications services.   Xa'? II. BACKGROUND Đ\  X34 2.` ` Pacific Gateway Exchange, Inc. (PGE) and Cable & Wireless, Inc. (CWI) filed applications requesting Section 214 authority to provide ISR between the United States and Japan. Specifically, they asked the Commission to find that Japan offered resale opportunities  X 4equivalent to those in the United States. We placed their applications on public notice, and  X 4no party opposed them or submitted comments.h : OP4Ѝ#Xj\  P6G;9XP#` ` #X\  P6G; P#The application of Pacific Gateway Exchange, File No. ITC98308, was placed on public  yO('notice on April 24, 1998 (Report No. TEL149B ) (PGE Application). The application of Cable & Wireless,  yO'File No. ITC98353, was placed on public notice on May15, 1998 (Report No. TEL154B ) (CWI Application).# Xj\  P6G;9XP#  X 43.` ` After PGE and CWI filed their applications, AT&T and MCI filed accounting rate reductions they had negotiated with KDD, their Japanese counterpart. The accounting rates take effect upon the Commission's approval of ISR between the United States and Japan. The accounting rate agreements set an accounting rate that is below the relevant benchmark settlement rate level for the U.S.Japan route and cover more than 50 percent of the traffic on that route.  X'E III. DISCUSSION   X4\4.` ` PGE and CWI are authorized facilities-based private line carriers on the U.S. X4Japan route. Japan is a member of the WTO. In these circumstances, Section 63.18(e)(4) of the Commission's Rules permits PGE and CWI to use their authorized private lines for the provision of international simple resale services between the United States and Japan subject to the condition that (1) settlement rates for at least 50 percent of the settled U.S.-billed traffic between the United States and Japan are at or below the benchmark settlement rate adopted in  XP4the Benchmarks Order, or (2) Japan affords resale opportunities equivalent to those available  X;4under U.S. law.w;: O!4Ѝ#Xj\  P6G;9XP#` ` #X\  P6G; P#International Settlement Rates, Report and Order, 12 FCC Rcd 19806 (1997), recon. pending,  {O"'appeal filed, Cable & Wireless v. FCC, No. 971612 (D.C. Cir. filed Sept. 25, 1997) (Benchmarks Order). See  yO#'47 C.F.R. 63.18(e)(4) (as amended in Rules and Policies on Foreign Participation in the U.S.  {ON$'Telecommunications Market and Market Entry and Regulation of ForeignAffiliated Entities, Report and Order  {O%'and Order on Reconsideration, 12 FCC Rcd. 23891, 23927 & App. C (1997) (Foreign Participation Order). See  {O%'also Foreign Participation Order at 2393031 (concluding that, in cases where the benchmark condition is not"%0*&&%" met, carriers would have the option of demonstrating that the country affords U.S. carriers equivalent  yOX'opportunities to provide ISR).# Xj\  P6G;9XP#w PGE and CWI submitted information in their applications to attempt to"; 0*&&qq" show that Japan satisfies the equivalency criterion for ISR.  X45.` ` The Commission's benchmark settlement rate for U.S. carriers to reach with Japanese carriers is 15 cents. At the time PGE and CWI filed their ISR applications, U.S.  X4carriers' settlement rates for Japan were higher than the benchmark. : Ou4Ѝ#Xj\  P6G;9XP#` ` #X\  P6G; P#See Accounting Rates for International Message Telephone Service of the United States, Federal  yOM 'Communications Commission, International Bureau, Telecommunications Division (May 1, 1998).# Xj\  P6G;9XP#ф However, given our approval of the accounting rate reductions negotiated by AT&T and MCI with KDD in Japan, more than 50 percent of the traffic on the U.S.Japan route will be settled at or below the benchmark. We therefore find that the benchmark condition for ISR has been satisfied on the U.S.Japan route. Thus, the Commission need not conduct an analysis into whether Japan provides equivalent resale opportunities to U.S. carriers at this time. Accordingly, we grant the applications of PGE and CWI and authorize them to provide international simple resale services using their international private lines between the United States and Japan. We will add Japan to the list of countries for which U.S. carriers may provide ISR over their  X 4authorized facilities-based or resold private lines.Bx : O4Ѝ#Xj\  P6G;9XP#` ` #X\  P6G; P#Our rules automatically expand the Section 214 authority of carriers authorized to resell interconnected private lines to include an additional country at the time the Commission determines that the country satisfies the Commission's requirements for providing switched services over private lines. This rule is subject to one exception: if the carrier is affiliated with a carrier in the country at the foreign end of the private line, and the Commission has not determined that the foreign carrier lacks sufficient market power to affect competition adversely in the U.S. market. In such a case, the U.S. carrier must seek specific Section 214  {O'authority to resell private lines for the provision of switched service to that country. See Streamlining the  {O'International Section 214 Authorization Process and Tariff Requirements, Report and Order, 11 FCC Rcd 12884,  {Ob'1289812900 (1996); see also 47 C.F.R. 63.18(e)(2)(ii)(A)(2) (as amended by the Foreign Participation Order,  yO,'Appendix C). The Commission's Rules also permit U.S. facilitiesbased private line carriers to use their authorized private lines to provide switched, basic services to designated countries subject to the same exception.  {O'47 C.F.R. 63.18(e)(4) (as amended by the Foreign Participation Order, Appendix C).# Xj\  P6G;9XP#B  X 46.` ` In its application, CWI requests nondominant regulatory treatment for the  X4provision of ISR to Japan.: O 4ԍ#Xj\  P6G;9XP#` ` #X\  P6G; P#CWI Application at 10.# x6X@`7iX@#Ѽ Under the Commission's rules, a U.S. carrier that is affiliated with a foreign carrier that is not a monopoly in a destination country must demonstrate that it  Xb4lacks sufficient market power to affect competition adversely in the U.S. market.bh: O{#4ԍ#Xj\  P6G;9XP#` ` #X\  P6G; P#47 C.F.R. 63.10(a)(3).# Xj\  P6G;9XP#Ѽ We have"b0*&&qq"  X4previously determined that CWI is nondominant on the U.S.Japan route,: Oy4Ѝ` ` #Xj\  P6G;9XP##X\  P6G; P#See Cable & Wireless, Inc., Order and Authorization, 11 FCC Rcd. 21027 (Int.Bur. 1996).# Xj\  P6G;9XP# and CWI's ownership interests in Japanese carriers have not changed since that decision. Moreover, CWI's affiliate in Japan, C&W Communications Service Limited (Japan CSL), still does not own or control any Japanese telecommunications facilities. We therefore find that CWI lacks sufficient market power to affect competition in the U.S. market adversely and will continue to treat it as nondominant on the U.S.Japan route.  X_'$1 IV. ORDERING CLAUSES \  X147.` ` Accordingly, IT IS ORDERED, pursuant to Sections 1, 2, 4(i), 214 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  151, 152, 154(i), 214 and 303(r), and Section 63.18 of the Commissions Rules, 47 C.F.R. 63.18, that the applications of Pacific Gateway Exchange, Inc. and Cable & Wireless, Inc. (File Nos. ITC98308 and ITC98353, respectively) ARE GRANTED, and PGE and CWI are authorized to provide resale services using their authorized international private lines interconnected to the public switched network at one or both ends between the United States and Japan.  Xy48.` ` IT IS FURTHER ORDERED that the authority granted herein to provide switched, basic telecommunications services using international private lines between the United States and Japan for the provision of switched services is limited to the provision of such services between the United States and Japan. This restriction is subject to the following exceptions: (a) the applicants may engage in "switched hubbing" through Japan consistent with Section 63.17 of the Commission's Rules, 47 C.F.R.  63.17; and (b) the applicants may provide U.S. inbound or outbound switched, basic services over their authorized private lines  X4extending between the United States and Japan, as well as other nations to which the Commission has authorized the provision of simple resale services over international private lines, provided the applicants are authorized to offer switched services over private lines between the United States and those countries.  Xe49.` ` IT IS FURTHER ORDERED that applicants shall comply with Section 63.21 of the Commission's Rules, 47 C.F.R. 63.21.  X 4 10.` ` IT IS FURTHER ORDERED that CWI qualifies for nondominant regulatory treatment for the provision of resale services using their authorized international private lines interconnected to the public switched network at one or both ends between the United States and Japan.  X!4 11.` ` 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""h0*&&qq " review under Section 1.115 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)).  X4 ` `  hhCqFEDERAL COMMUNICATIONS COMMISSION  XH4 ` `  hhCqDiane J. Cornell  X14 ` `  hhCqChief, Telecommunications Division  X 4 ` `  hhCqInternational Bureau#x6X@B iX@#