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(1) (a) (i) 1) a)%8=(%  H*%Fq Default Paragraph FoDefault Paragraph Font 2ܷtoc 1toc 1` hp x (#!(#B!(#B` hp x (#toc 2toc 2` hp x (#` !(#B` !(#B` hp x (#toc 3toc 3` hp x (#` !(# ` !(# ` hp x (#toc 4toc 4` hp x (# !(#  !(# ` hp x (#2,Jvh޾toc 5toc 5` hp x (#h!(# h!(# ` hp x (#toc 6toc 6` hp x (#!(#!(#` hp x (#toc 7toc 7 toc 8toc 8` hp x (#!(#!(#` hp x (#2.Ljtoc 9toc 9` hp x (#!(#B!(#B` hp x (#index 1index 1` hp x (#` !(# ` !(# ` hp x (#index 2index 2` hp x (#` !(#B` !(#B` hp x (#toatoa` hp x (#!(# !(# ` hp x (#2vlN9captioncaption _Equation Caption_Equation Caption head1 #'d#2p}wC@ # y_'#B7  PT6Q P#.us y_' # &I\  P6QD]&P#Federal Communications Commission`~(#cDA 991052 ă   yxdddy.   # &I\  P6QD]&P#Federal Communications Commission`~(#cDA 991052 ă   yxdddy  y_'Qb Before the Federal Communications Commission  y_H'&2Washington, D.C. 20554 ă  y_X '#&a\  P6G;D]&P#In the Matter of hhCq) ` `  hhCq)  y_ 'AT&T Corp.` `  hhCq)pp  *IB Docket No. 96261  y_ 'MCI WorldCom, Inc. hhCq)  y_ 'Sprint Communications Co. L.P.hhCq) ` `  hhCq)  y_h'Petition for Enforcement of Internationalq)  y_@'Settlements BenchmarkhhCq)  y_'Rates for Service with KuwaithhCq)  y_'m ORDER ă  y_P'Adopted: June 3, 1999hhCqppReleased: June 3, 1999 By the Chief, Telecommunications Division:  y_'[ Introduction ă  y_`'1.` ` In this Order, we approve the petition of AT&T Corp. ("AT&T"), MCI WorldCom, Inc. ("MCI WorldCom"), and Sprint Communications Company L.P. ("Sprint") (hereinafter referred to  y_'as ("Petitioners"). Zx4ԍ#X\  P6G; P#` ` Petition of AT&T, MCI WorldCom and Sprint for Enforcement of International Settlements ` ` Benchmark Rates for Service with Kuwait, IB Docket No. 96261, February 25, 1999. requesting enforcement of the benchmark settlement rate of 15 that the  y_'Commission adopted in its Benchmarks Orders; Z 4ԍ` ` #X\  P6G; P#International Settlement Rates, IB Docket 96261, Report and Order, 12 FCC Rcd 19806  nZ!'(1997) (Benchmarks Order), recon. pending, aff'd. sub nom., Cable and Wireless P.L.C. v.  nZn"'FCC, No. 971612, slip op. (D.C. Cir., January 12, 1999), 1888 WL 7824.(#` Ɛ for international message telephone service with Kuwait. Petitioners request this action so that they will be in compliance with the rules adopted by  y_'the Commission in the Benchmarks Order.  y_H'2.` ` In the Benchmarks Order, the Commission adopted benchmark settlement rates and a schedule of effective dates for these rates governing U.S. carriers in their settlement arrangements withX v0*0*0*H3'#wiyprus.ord*enforce.X  y_'foreign carriers.d Zh4ԍ#X\  P6G; P#` ` The current international accounting rate system was developed as part of a regulatory tradition in which international telecommunications services were supplied through a bilateral correspondent relationship between national monopoly carriers. An accounting rate is the price a U.S. facilitybased carrier negotiates with a foreign carrier for handling one minute of international telephone service. Each carrier's portion of the accounting rate is referred to as the settlement rate. In almost all cases, the settlement rate is equal to onehalf of the negotiated accounting rate.(#` Ʃ The settlement rates and their scheduled effective dates are based primarily on country income levels. For the upper income category, which includes Kuwait, the benchmark rate is  y_'15 per minute. Thus, the Commission's Benchmarks Order requires U.S. facilitiesbased carriers to negotiate a settlement rate with the carrier in Kuwait, the Ministry of Communications ("MOC"), that does not exceed 15 per minute. The rate applies to service provided from January 1, 1999. The settlement rate now in effect for service with Kuwait is 0.575 SDR (approximately 78 per minute), and it has not changed in fifteen years. We find that the Petitioners have been unsuccessful in their  y_'efforts to negotiate a settlement rate with MOC that complies with the Benchmarks Order. Therefore,  y_'to enforce the Benchmarks Order and ensure compliance by U.S. carriers, we grant the Petitioners' request. We direct all U.S. facilitiesbased carriers that provide service to Kuwait to conduct settlements with MOC for international message telephone service at a rate that does not exceed 15 per minute for service provided as of January 1, 1999. We also direct U.S. international carriers to use their best efforts to negotiate a settlement agreement with MOC that complies with the  y_ 'Commission's Benchmarks Order.  y_ '^ Background ă  y_X'3.` ` In its Benchmarks Order, the Commission set forth its enforcement policy to ensure  y_0'compliance with the benchmark settlement rates and their effective dates.0#d Z4ԍ#X\  P6G; P#` ` See Benchmarks Order at 185190. As part of the enforcement effort, the Commission stated that it would take appropriate steps to ensure compliance by U.S.  y_'carriers with the requirements of the Benchmarks Order. The enforcement effort includes the Commission identifying foreign carriers that are "reluctant" to make meaningful progress in reducing their settlement rates to benchmark levels. Once the Commission identifies such carriers, it will notify responsible foreign government authorities about its concern with continued high settlement rates and the lack of meaningful progress in achieving lower rates, and seek their support in bringing about  y_'settlement rate reductions.qd Z4ԍ#X\  P6G; P#` ` See id. at 185.q The Commission also provided procedures that U.S. carriers may follow in cases where foreign carriers fail to respond to a U.S. carrier's efforts to negotiate settlement rates that  y_'comply with the requirements of the Benchmarks Order. As outlined in the Benchmarks Order, a U.S. international carrier seeking relief may file a petition with the Commission demonstrating that it has not been able to negotiate a settlement rate that complies with the rules and policies adopted in the  y_P'Benchmarks Order. The U.S. carrier may request that the Commission take enforcement measures to ensure that no U.S. carrier pays the foreign carrier an amount exceeding the lawful benchmark"(y 0*&&``d"  y_'settlement rate.qd Zh4ԍ#X\  P6G; P#` ` See id. at 186.q  y_'4.` ` In the case of Kuwait, the International Bureau wrote a letter to MOC in which the Bureau reiterated its support for reform of the international accounting rate system through multilateral discussions and requested MOC's urgent assistance in lowering the settlement rate for service between  y_8'the United States and Kuwait.8sd ZK4ԍ#X\  P6G; P#` ` See letter from Regina M. Keeney, FCC, to Sami K. Alamer, MOC, December 10, 1998. The Bureau noted the wide disparity between Kuwait's settlement rate and the Commission's benchmark rate and informed MOC that the Commission would be required to take appropriate enforcement measures against U.S. international carriers if the settlement rate exceeded 15 on January 1, 1999. In response to this letter, MOC informed the Bureau that it had already rejected the Commission's benchmarks policy and therefore "cannot act in accordance with the  y_p'reductions proposed under Benchmark rules."pd Z.4ԍ` ` #X\  P6G; P#See letter from Jasem AlWazzan, MOC, to Regina M. Keeney, FCC, February 13, 1999.  y_ '5.` ` Subsequently, the Petitioners jointly filed their petition requesting enforcement of the  y_ 'rules and requirements of the Commission's Benchmarks Order on the U.S.Kuwait route. The Bureau  y_ 'issued a public notice on this petition.  d Z94ԍ#X\  P6G; P#` ` See Public Notice, Petitions for Enforcement of International Settlement Benchmark Rates, DA ` ` 99479, March 10, 1999. The Petitioners claim they have made good faith efforts to  y_ 'negotiate an agreement with MOC that complies with the Benchmarks Order, but that their attempts have failed to produce an agreement on a benchmark settlement rate. The petition includes affidavits of AT&T and MCI WorldCom employees with responsibility for their company's settlement arrangements with MOC. According to the affidavits, AT&T and MCI WorldCom notified MOC  y_'about the requirements that the Commission's Benchmarks Order imposes upon U.S. carriers. AT&T states that it informed MOC of the benchmark obligations during a meeting that took place in May 1998, and MOC's response was to propose a reduction in the settlement rate to 73.5. Additional  y_'efforts by AT&T to negotiate reductions with MOC proved unsuccessful. <d Zl4ԍ#X\  P6G; P#` ` See Affidavit of Thomas R. Luciano, AT&T, February 17, 1999. MCI WorldCom states that it was unable to negotiate a benchmark settlement agreement with MOC, despite numerous contacts  y_@'that included meetings and an exchange of letters. @ d Z4ԍ#X\  P6G; P#` ` See Affidavit of Donald H. deLaski, MCI WorldCom, February 23, 1999. MOC has not disputed the claims in the affidavits and, in fact, did not file comments in response to the petition. Instead, MOC simply informed the Commission that "[I]n accordance with the Ministerial Decree and on conformity with the decision taken during the recent Gulf Cooperation Council Minister's conference, Kuwait Administration rejects the application of FCC's Benchmark order by the U.S. Carriers in the USAKuwait telecommunications  y_x'relations." x d Z%4ԍ#X\  P6G; P#` ` See letter from Jasem AlWazzan, MOC, to Regina M. Keeney, FCC, April 5, 1999. "x= 0*&&``"Ԍ y_'  PbDiscussion  y_`' 6.` ` The Commission's benchmark policy requires U.S. carriers to negotiate settlement rates  y_8'with foreign carriers that do not exceed specific benchmark levels after specific dates.  8d Z4ԍ` ` #X\  P6G; P#The benchmark settlement rates and their effective dates are as follows: T ddx ! ddxK ""T  p _   nZ'Income Category _" nZ'iNBenchmark Rate _" nZ'\Effective Datep@K _8  Upper 8"15 8"'January 1, 1999@@  88  Upper Middle; 8"19; 8"'January 1, 2000@@  88  Lower Middle{ 8"19{ 8"'January 1, 2001@@;  88  Lower8"238"'January 1, 2002@p{  8_  Teledensity<1+_"23+_"'January 1, 2003p_  nZ'` ` See Benchmarks Order at 111 and 165. The Commission adopted the benchmarks policy because, despite its concerted action and repeated  y_'expressions of concern,v d Z34ԍ#X\  P6G; P#` ` See, e.g., Regulation of International Accounting Rates, CC Docket No. 90337 (Phase II), ` ` Second Further Notice of Proposed Rulemaking, 7 FCC Rcd 8040 (1992); Public Notice DA  nZ'` ` 96105, 11 FCC Rcd 3152 (1996); Policy Statement on International Accounting Rate Reform,  nZ'` ` 11 FCC Rcd 3146 (1996); Regulation of International Accounting Rates, (Phase II), Fourth  nZn'` ` Report and Order, 11 FCC Rcd 20063 (1996); and International Settlement Rates, IB Docket  nZ6'` ` No. 96261, Notice of Proposed Rulemaking, FCC No. 96484 (rel. December 19, 1996) (#(# nZ'` ` (Benchmarks Notice).v as well as efforts by the International Telecommunication Union,,sd Z4ԍ#X\  P6G; P#` ` See, e.g., ITUT Recommendation D.140, "Accounting Rate Principles for International Telephone Services," Geneva (1992) (calling for "costorientated" accounting rates, generally within five years).(#` , accounting rates continue to exceed foreign carriers' costs to terminate international message telephone service from the United States. The Commission remains committed to achieving more costbased accounting rates because high accounting rates inflate U.S. carriers' costs and, as a result, put upward pressure on the prices charged to U.S. consumers. The U.S. Court of Appeals for the D.C. Circuit  y_ 'upheld the Benchmarks Order and affirmed the Commission's authority to prescribe the maximum  y_ 'settlement rates U.S. international carriers may pay to foreign carriers. Ad Z"4ԍ#X\  P6G; P#` ` Cable and Wireless P.L.C. v. FCC et al., slip op. at 13.  y_ '7.` ` Foreign carriers have had ample time to make reasonable adjustments in the settlement rates they negotiate with U.S. international carriers. The Commission initially proposed its benchmark" 0*&&``[ "  y_'settlement rates in 1996.;d Zh4ԍ#X\  P6G; P#` ` Benchmarks Notice. We note that the Commission's benchmarks policy is consistent with a recommendation adopted by the ITU in 1992 calling for costoriented, nondiscriminatory,  nZ'transparent accounting rates to be implemented, generally over a five year period. See ITUT  nZ'Recommendation D.140, "Accounting Rate Principles for International Telephone Services," Geneva (1992). We note that the Commission had previously adopted benchmark ranges for  nZk'countries in Asia and Europe. See Regulation of International Accounting Rates, CC Docket  nZ3'90337, Report and Order, 6 FCC Rcd 3552 (1991), on recon., 7 FCC Rcd 8049 (1992).(#` ; After receiving comments from a wide range of interested parties, the  y_'Commission adopted the Benchmarks Order on August 7, 1997. Because the benchmark rate for upper income countries such as Kuwait did not take effect until January 1, 1999, MOC had nearly two years since the Commission adopted benchmark rates to make the transition from its settlement rate with U.S. carriers in 1996 to the benchmark rate of 15. Many foreign carriers providing international service in upper income countries made the transition to the benchmark rate during this period and  y_'several negotiated settlement rates well below the 15 benchmark rate.;#d Z 4ԍ#X\  P6G; P#` ` Examples of settlement rates that are currently below the benchmark level include: Canada ` ` (10), Denmark (10.8), France (10.1), Germany (10.1), Hong Kong (7), Ireland (10.8), ` ` Italy (10.8), the Netherlands (9.5), Norway (8.5), Sweden (5.4), and the United Kingdom ` ` (6.8). In fact, international carriers in twentynine countries have settlement rates with U.S. international carriers that comply with the  y_'Benchmarks Order and international carriers in another seventeen countries have negotiated settlement  y_'agreements with U.S. international carriers that will bring them into compliance with the Benchmarks  y_p'Order.  y_ '8.` ` We find that the Petitioners have made a good faith effort to negotiate settlement  y_ 'agreements with MOC that would comply with the Commission's Benchmarks Order. The affidavits filed by the Petitioners establish that they: (1) informed MOC about the requirements the FCC's  y_ 'Benchmarks Order imposes on U.S. carriers regarding the benchmark settlement rate for Kuwait and its effective date; (2) exchanged letters with MOC on issues related to negotiating a new settlement  y_X'rate agreement that would comply with the Benchmarks Order; and (3) convened meetings with MOC in an attempt to negotiate a new settlement agreement that would bring the U.S. carriers into  y_'compliance with the Benchmarks Order. MOC does not dispute the facts that are presented in the petition and, in response has simply informed the Commission that it refuses to negotiate the benchmark rate of 15 with U.S. carriers.  y_h'9.` ` To enforce the Commission's Benchmarks Order and to ensure that U.S. international carriers provide service with Kuwait under settlement terms that comply with the Commission's policy, we direct all U.S. facilitiesbased carriers to conduct settlements with MOC for international message telephone service at a rate that does not exceed 15 per minute for service provided as of January 1, 1999. We also direct U.S. international carriers to continue their efforts to negotiate a settlement  y_'agreement with MOC that complies with the Commission's Benchmarks Order. "P& 0*&&``z"  y_'3J Ordering Clauses ă  y_'10.` ` Accordingly, IT IS ORDERED that the petition of AT&T, MCI WorldCom, and Sprint  y_'for enforcement of the Commission's Benchmarks Order for service with MOC in Kuwait is GRANTED.  y_'11.` ` IT IS FURTHER ORDERED that all U.S. facilitiesbased international carriers providing service with MOC in Kuwait shall conduct settlements for service provided on and after January 1, 1999 at a rate that does not exceed the benchmark settlement rate of 15 per minute.  y_p'12.` ` IT IS FURTHER ORDERED that U.S. facilitiesbased international carriers negotiate a settlement rate with MOC in Kuwait that complies with the rules and requirements of the  y_ 'Commission's Benchmarks Order.  y_ '13.` ` 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 date of public notice of  y_X'this Order (see 47 C.F.R. Section 1.4(b)(2)). ` `  hhCFEDERAL COMMUNICATIONS COMMISSION ` `  hhCRebecca Arbogast ` `  hhCChief, Telecommunications Division  y_'` `  hhCInternational Bureaupp  *xxX