************************************************************************** NOTICE ********************************* *********************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect or Word version or Adobe Acrobat version, if available. Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) MCI International Inc. ) File Nos. ISP-97-W-066 AT&T Corp. ) ISP-97-W-132 ) Petitions 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) and deny the petition of MCI International Inc. (MCI) to waive the Commission's International Settlements Policy (ISP) to change their accounting rates for switched voice service with Chile. WorldCom had previously opposed these modifications because the foreign carriers in Chile, Empressa Nacional de Telecomunicaciones S.A. ("ENTEL"), offered a later effective date to WorldCom than it negotiated with other the U.S. carriers. 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 agreements between ENTEL and the U.S. carriers violate the ISP because they would result in a significant disparity in the effective dates of an accounting rate change offered to different U.S. carriers. Therefore, to enforce our ISP, to ensure equitable treatment of U.S carriers, and to protect U.S. consumers, we approve the modification request of AT&T, deny the modification request of MCI, and direct MCI and WorldCom to negotiate a nondiscriminatory agreement with ENTEL. Pending the conclusion of negotiations with ENTEL to establish a nondiscriminatory rate with all U.S. carriers, we direct all U.S. carriers to settle on an interim basis at the lowest rate ENTEL has negotiated with a U.S. carrier for service on the U.S.-Chile route during the relevant time period. Finally, having addressed the discrimination issues raised by WorldCom, we dismiss its opposition to the waivers of AT&T and MCI. Background 3. MCI filed a modification request of the Commission's ISP to reduce its accounting rate of $1.10 per minute with ENTEL to $1.00 on May 1, 1996. AT&T also filed a modification request of the Commission's ISP for service with ENTEL that would extend its accounting rate of $1.10 per minute from May 1, 1995 through September 30, 1995, and then reduce the rate to $1.00 for the period October 1, 1995 through June 30, 1996. WorldCom opposed the waivers of AT&T and MCI because ENTEL had offered a later effective date to WorldCom than it negotiated with AT&T and MCI. Discussion 4. The purpose of the ISP is to prevent foreign carriers such as ENTEL 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 a pattern of unfair discrimination by ENTEL against U.S. carriers. ENTEL has refused to offer the same effective dates to MCI and WorldCom that it negotiated with AT&T. Different effective dates for accounting rate reductions among U.S. carriers, unrelated to underlying cost differences, 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. Because the agreement between AT&T and ENTEL would result in a reduction of the accounting rate, we approve AT&T's waiver request. However, the Commission's policy is to enforce the ISP in order to protect the U.S. market from competitive distortions. We find that ENTEL's refusal to negotiate comparable terms and conditions with all U.S. carriers for service on the U.S.-Chile route violates the ISP. To eliminate this violation, we deny the modification request of MCI, and direct MCI and WorldCom to negotiate a nondiscriminatory agreement with ENTEL. Pending the conclusion of negotiations with ENTEL 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 ENTEL has negotiated with a U.S.carrier for service on the U.S.-Chile route from May 1, 1995 through June 30, 1996. 6. We also note that, although the modification requests at issue would move the accounting rates between AT&T and MCI and ENTEL in the right direction by reducing their rates with ENTEL, the new 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 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 ENTEL 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 AT&T's modification request is APPROVED. 8. IT IS FURTHER ORDERED that MCI's modification request is DENIED. 9. IT IS FURTHER ORDERED that all U.S. carriers shall, pending the conclusion of negotiations with ENTEL to establish a nondiscriminatory rate for all U.S. carriers, settle on an interim basis at the lowest rate ENTEL has negotiated with a U.S. carrier for service on the U.S.-Chile route during the period May 1, 1995 through June 30, 1996. 10. IT IS FURTHER ORDERED that WorldCom's oppositions to the filing of MCI and AT&T are 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