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Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) AT&T Corp. ) ISP-96-W-374 ) Petition for Waiver of the ) International Settlements Policy ) to Change the Accounting Rate ) for Switched Voice Service with ) Chile ) ORDER Adopted: December 22, 1999 Released: December 23, 1999 By the Chief, Telecommunications Division: Introduction 1. In this order we approve the petition of AT&T Corporation (AT&T) to waive the Commission's International Settlements Policy (ISP) to change the accounting rate for switched voice service with Chile. Sprint opposed this modification because the foreign carrier in Chile, VTR Telecommunications ("VTR"), had offered different accounting rates and later effective dates to Sprint than it negotiated with AT&T. 2. We reiterate that this Commission will protect U.S. consumers from the effects of harmful discrimination through enforcement of its ISP. We find that the agreement between VTR and AT&T results in a violation of the ISP as it was in effect at the time the agreement was filed. Therefore, to enforce our ISP, to ensure equitable treatment of U.S. carriers, and to protect U.S. consumers, we approve AT&T's modification request and direct Sprint to negotiate a nondiscriminatory agreement with VTR. Pending the conclusion of negotiations with VTR to establish a nondiscriminatory rate for all U.S. carriers, we direct all U.S. carriers to settle on an interim basis at the lowest rate VTR has negotiated with a U.S. carrier for service on the U.S.-Chile route during the relevant period. Finally, having addressed the discrimination issues raised by Sprint, we dismiss its opposition to AT&T's modification request. Background 3. AT&T filed a petition for modification of the Commission's ISP for service with VTR that would reduce its accounting rate from $1.10 per minute to $1.00 on January 1, 1996, and then to 90› for the period July 1, 1996 through March 31, 1997. Sprint opposed AT&T's modification request because VTR had refused to offer the same accounting rates and effective dates to Sprint that VTR negotiated with AT&T. Discussion 4. When AT&T filed its modification request, the ISP prohibited discrimination among U.S. carriers in all accounting rate agreements. The Commission applied its ISP to all accounting rate agreements at that time because it was concerned that foreign carriers had the ability to "whipsaw" U.S. carriers in the course of accounting rate negotiations, to the detriment of U.S. consumers. Subsequently, the Commission determined that market conditions on many international routes had changed sufficiently to allow a more limited application of the ISP. We evaluate AT&T's modification request under the rules that were in effect at the time the request was filed. We believe this is appropriate, as the Commission had determined that market conditions at that time warranted strict application of the ISP on all routes in order to protect U.S. consumers from the harmful effects of discrimination. 5. Because the agreement between AT&T and VTR would result in a reduction of the accounting rate, we approve AT&T's waiver request. However, the Commission's rules in effect at the time that the agreement between AT&T and VTR was filed required accounting rate changes to be made available to all U.S. carriers with the same effective date. We find that VTR's refusal to negotiate comparable terms and conditions with all U.S. carriers for service on the U.S.-Chile route violates the ISP as it was applied at the time the agreement between VTR and AT&T was filed. To eliminate this violation, we approve AT&T's modification and direct Sprint to negotiate a nondiscriminatory agreement with VTR. Pending the conclusion of negotiations with VTR to establish a nondiscriminatory rate for all U.S. carriers, we direct all U.S. carriers to settle on an interim basis at the lowest rate VTR has negotiated with a U.S. carrier for service on the U.S.-Chile route during the period covered by AT&T's agreement with VTR. 6. We also note that, although the modification request at issue would move the accounting rate between AT&T and VTR in the right direction by reducing AT&T's rate for service with VTR, the rate still significantly exceeds the benchmark settlement rate we expect U.S. carriers to reach with carriers from countries like Chile by January 1, 2000. High accounting rates artificially inflate U.S. carriers' costs which place upward pressure on U.S. calling prices and thereby harm U.S. consumers. We expect U.S. carriers to continue to negotiate actively with VTR to further reduce the accounting rate to a more cost-based level and to achieve the benchmark rate on schedule. Ordering Clauses 7. IT IS ORDERED that AT&T's modification request is APPROVED. 8. IT IS FURTHER ORDERED that Sprint negotiate a nondiscriminatory accounting rate arrangement with VTR for service on the U.S.-Chile route. 9. IT IS FURTHER ORDERED that all U.S. carriers shall, pending the conclusion of negotiations with VTR to establish a nondiscriminatory rate for all U.S. carriers, settle on an interim basis at the lowest rate VTR has negotiated with a U.S. carrier for service on the U.S.-Chile route during the period January 1, 1996, through March 31, 1997. 10. IT IS FURTHER ORDERED that Sprint's opposition to AT&T's modification request is dismissed. 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 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 C.F.R. Section 1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Rebecca Arbogast Chief, Telecommunications Division International Bureau