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Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) MCI International Inc. ) ISP-98-M-049 ) Petition for Waiver of the ) International Settlements Policy ) to Change the Accounting Rate ) for Switched Voice Service with ) El Salvador ) ORDER Adopted: December 22, 1999 Released: December 23, 1999 By the Chief, Telecommunications Division: Introduction 1. In this Order we deny the petition of MCI International (MCI) to waive the Commission's International Settlements Policy (ISP) to change the accounting rate for switched voice service with El Salvador. The International Bureau had previously suspended this modification request because the foreign carrier in El Salvador, Administration Nacional de Telecomunicaciones ("ANTEL"), had offered a later effective date to MCI than it had negotiated with another U.S. carrier. 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 ANTEL and MCI violates the ISP because it would result in a significant disparity in the effective dates of an accounting rate change offered to U.S. carriers. Therefore, to enforce our ISP, to ensure equitable treatment of U.S. carriers, and to protect U.S. consumers, we deny MCI's modification request and direct MCI to negotiate a nondiscriminatory agreement with ANTEL. Pending the conclusion of negotiations with ANTEL 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 ANTEL has negotiated with a U.S. carrier for service on the U.S.-El Salvador route during the relevant time period. Background 3. MCI filed a petition for modification of the Commission's ISP for service with ANTEL that would reduce its accounting rate from $1.00 per minute to 88› on August 1, 1997. There would also be surcharges of $1.30 per call for "received collect" service and 22› per call for "home country direct" service. The International Bureau suspended MCI's modification request because ANTEL had previously entered into an agreement with AT&T to implement the same accounting rate, 88› per minute, but with an effective date of July 1, 1997. Discussion 4. The purpose of the ISP is to prevent foreign carriers such as ANTEL from taking advantage of their market positions in accounting rate negotiations with U.S. carriers by engaging in discriminatory behavior that favors selected carriers at the expense of others. The Commission has stated that the ISP requires accounting rate changes to be made available to all U.S. carriers with the same effective date. We have before us clear evidence of unfair discrimination by ANTEL against a U.S. carrier. ANTEL has refused to offer the same effective date to MCI that it has negotiated with AT&T. Different effective dates for accounting rate reductions among U.S carriers, unrelated to underlying costs, raise the costs of one or several U.S. carriers above the costs of others. These disparities impair the ability of those U.S. carriers that are the target of discrimination to compete on an equal footing in the U.S. market for international services. 5. We find that ANTEL's refusal to negotiate comparable terms and conditions with all U.S. carriers for service on the U.S.-El Salvador route violates the ISP. We therefore deny MCI's modification request and direct MCI to negotiate a nondiscriminatory agreement with ANTEL. Pending the conclusion of negotiations with ANTEL to establish a nondiscriminatory rate for all carriers, we direct all U.S. carriers to settle on an interim basis at the lowest rate ANTEL has negotiated with a U.S. carrier on the U.S.-El Salvador route from July 1, 1997 through June 30, 1998. 6. We also note that, although the modification request at issue would move the accounting rate between MCI and ANTEL in the right direction by reducing MCI's rate for service with ANTEL, the rate still significantly exceeds the benchmark settlement rate we expect U.S. carriers to reach with carriers from countries like El Salvador by January 1, 2001. High accounting rates artificially inflate U.S. carriers' costs, which places upward pressure on U.S. calling prices and thereby harms U.S. consumers. We expect U.S. carriers to continue to negotiate actively with ANTEL to reduce further the accounting rate to a more cost-based level and to achieve the benchmark settlement rate of 19› on schedule. Ordering Clauses 7. Accordingly, IT IS ORDERED that MCI's modification request IS DENIED. 8. IT IS FURTHER ORDERED that MCI negotiate a nondiscriminatory accounting rate arrangement with ANTEL for service on the U.S.-El Salvador route. 9. IT IS FURTHER ORDERED that all U.S. carriers shall, pending the conclusion of negotiations with ANTEL to establish a nondiscriminatory rate for all U.S. carriers, settle on an interim basis at the lowest rate ANTEL has negotiated with a U.S. carrier for service on the U.S.-El Salvador route during the period July 1, 1997 through June 30, 1998. 10. 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