[Federal Register Volume 62, Number 116 (Tuesday, June 17, 1997)]
[Proposed Rules]
[Pages 32966-32971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15703]
Federal Register / Vol. 62, No. 116 / Tuesday, June 17, 1997 /
Proposed Rules
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 63
[IB Docket No. 97-142, FCC 97-195]
Rules and Policies on Foreign Participation in the U.S.
Telecommunications Market, Order and Notice of Proposed Rulemaking
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: On June 4, 1997, the Federal Communications Commission
(Commission) released a Notice of Proposed Rulemaking (NPRM) that
proposes changes to the effective competitive opportunities (ECO) test
and related rules adopted in the Foreign Carrier Entry Order, 60 FR
67332 (December 29, 1995). The NPRM also proposes conforming changes to
the Commission's framework for permitting flexible settlement
arrangements between U.S. and foreign carriers. The Commission believes
that it is time to revisit its rules in light of an agreement by the
United States and 68 other countries negotiated under the auspices of
the World Trade Organization (WTO) to open markets for basic
telecommunications services.
DATES: Comments are due on or before July 9, 1997, and reply comments
are due on or before August 12, 1997. Written comments by the public on
the proposed and/or modified information collections are due August 18,
1997.
ADDRESSES: Federal Communications Commission, 1919 M Street, N.W., Room
222, Washington, D.C. 20554.
FOR FURTHER INFORMATION CONTACT: Doug Klein, Attorney-Advisor, Policy
and Facilities Branch, Telecommunications Division, International
Bureau, (202) 418-0424; Susan O'Connell, Attorney-Advisor, Policy and
Facilities Branch, Telecommunications Division, International Bureau,
(202) 418-1484. For additional information concerning the information
collections contained in this NPRM contact Judy Boley at 202-418-0214,
or via the Internet at [email protected].
SUPPLEMENTARY INFORMATION:
1. On June 4, 1997, the Commission released a Notice of Proposed
Rulemaking in Rules and Policies on Foreign Participation in the U.S.
Telecommunications Market, IB Docket No. 97-142 (FCC 97-195) (NPRM)
that proposes changes to the rules and policies governing foreign
participation in the U.S. market for basic telecommunications services.
These rules and policies were adopted by the Commission in the Foreign
Carrier Entry proceeding, 60 FR 67332 (December 29, 1995). The NPRM
also proposes changes to the Commission's framework for permitting
flexible settlement arrangements between U.S. and foreign carriers.
2. The NPRM proposes rules that the Commission believes would be
more appropriate in the liberalized competitive environment that will
exist when the recent World Trade Organization (WTO) agreement on basic
telecommunications services takes effect on January 1, 1998. The WTO
agreement was concluded on February 15, 1997, when 69 countries,
including the United States and virtually all of its major trading
partners, agreed to open their markets for basic telecommunications
services to competition from foreign carriers. This agreement covers 95
percent of the global market for basic telecommunications services.
Sixty-five of these countries, including the United States, have
committed to enforce fair rules of competition for basic
telecommunications services that are modeled on U.S. law and
regulations. Fifty-two of these countries, which account for
approximately 90 percent of telecommunications revenues in WTO Member
countries, have granted market access for international services. Thus,
most of the world's major trading nations have made binding commitments
to transition rapidly from monopoly provision of basic
telecommunications services to open entry and procompetitive regulation
of these services. Due to these changed circumstances, the Commission
believes that it is time to revisit its rules governing foreign
participation in the U.S. telecommunications market. The Commission
seeks comments on a number of tentative conclusions and proposals.
3. The NPRM tentatively concludes that it is no longer necessary to
apply an ``effective competitive opportunities'' (ECO) analysis to
Section 214 applications filed by carriers from WTO Member countries
that seek to provide U.S. international services. The NPRM proposes to
afford streamlined processing to these applications. The NPRM also
proposes to adopt measures to improve the Commission's ability to
detect, deter and remedy anticompetitive conduct by foreign carriers
that have market power in particular destination countries.
4. The NPRM also tentatively concludes that it is no longer
necessary to apply an equivalency analysis as the basis for authorizing
all U.S. carriers to provide switched services over resold or
facilities-based private lines between the United States and WTO Member
countries. In addition, the NPRM tentatively concludes that it is no
longer necessary to apply an ECO test for cable landing licenses for
cables between the United States and other WTO Member countries. The
NPRM also tentatively concludes that the Commission should eliminate
the ECO test as part of its Sec. 310(b)(4) public interest analysis of
Title III applications for common carrier radio licenses filed by
carriers with indirect foreign ownership from WTO Member countries.
5. The NPRM tentatively concludes that the Commission should retain
the existing ECO test for Section 214, Title III common carrier, and
cable landing license applications from entities from non-WTO Member
countries. The NPRM proposes that the Commission deny Section 214,
Title III common carrier, and cable landing license applications from
entities from WTO Member countries if a grant of the application would
pose a very high risk to competition in the U.S. telecommunications
market that could not be addressed by conditions that we could impose
on the authorization.
6. The NPRM tentatively concludes that, if the Commission
eliminates the ECO test for Section 214 purposes, it should also
eliminate the test as the basis for permitting U.S. carriers to
negotiate alternative settlement arrangements with carriers from WTO
Member countries. The NPRM proposes to adopt a presumption in favor of
permitting flexibility for carriers from WTO Member countries. The NPRM
proposes that this presumption may be rebutted by a showing that market
conditions in the country in question are not sufficient to prevent a
carrier with market power in that country from discriminating against
U.S. carriers. The NPRM also proposes to continue to apply the ECO test
as the threshold standard for permitting flexibility with carriers that
are from countries that are not WTO Members.
7. The NPRM proposes changes to the Commission's regulation of U.S.
carriers classified as dominant on particular U.S. international routes
due to an affiliation with a foreign carrier that has market power in
the destination country. The NPRM proposes to adopt dominant carrier
safeguards that would apply to dominant foreign-affiliated carriers
depending on the risk of competitive harm the carrier poses. The basic
dominant carrier regulations would consist of a minimal set of
safeguards that would apply to U.S.
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carriers affiliated with foreign carriers that have market power in a
destination country that has eliminated legal barriers to international
facilities-based entry and authorized multiple international
facilities-based carriers. The supplemental safeguards provide for
greater oversight of carrier conduct and would apply to foreign
carriers with market power that cannot meet this standard.
8. The proposed basic dominant carrier safeguards would require
such carriers to notify the Commission quarterly of the addition of
circuits on the dominant route, specifying the joint owner of the
circuit. Such carriers would also be required to file with the
Commission quarterly traffic and revenue reports for the dominant
route. They would also be required to maintain complete records of the
provisioning and maintenance of basic network facilities and services
they procure from the foreign carrier affiliate. The NPRM also seeks
comment on whether the Commission should require some level of
structural separation between such carriers and their affiliated
foreign carriers.
9. The Commission proposed that carriers subject to supplemental
dominant carrier regulation on particular routes would be required to
obtain Section 214 approval to add circuits on the affiliated route.
These carriers would also be required to file quarterly circuit status
reports for that route with the Commission, which would be made
publicly available. In addition, they would be required to file an
electronic summary of contracts submitted under Sec. 43.51 of the
Commission's rules, 47 CFR 43.51. They would also be required to file
quarterly reports summarizing their records on the provisioning and
maintenance of basic network facilities and services procured from
their affiliated foreign carriers. These U.S. carriers would also be
required to comply with stricter limits on certain arrangements for the
sharing of information, customers and joint marketing. The basic
dominant carrier safeguards would also apply to carriers that are
subject to supplemental safeguards, to the extent the basic safeguards
do not conflict with them. The NPRM also seeks comment on whether the
Commission should require some level of separation between a carrier
subject to supplemental dominant carrier regulation and its affiliated
foreign carrier. The Commission expresses the belief that it may be
appropriate to apply stricter separation requirements to these U.S.
carriers than to carriers with foreign affiliates that face competition
in their markets. The NPRM proposes to allow all U.S. carriers
regulated as dominant due to an affiliation with a foreign carrier to
file tariffs on one days' notice and to accord such tariffs a
presumption of lawfulness.
10. The NPRM also proposes to delineate the types of arrangements
the Commission considers to be prohibited by the Sec. 63.14 ``no
special concessions'' rule, which applies generally to arrangements
between U.S. and foreign carriers. It additionally proposes to modify
the rule to apply only to concessions granted to U.S. carriers by
foreign carriers with market power in a destination country, as opposed
to all foreign carriers.
11. Finally, the Commission proposes changes to its rules that
afford streamlined processing to certain international Section 214
applications.
Initial Regulatory Flexibility Analysis
12. Pursuant to the Regulatory Flexibility Act of 1990, 5 U.S.C.
Secs. 601-612, the Commission's Initial Regulatory Flexibility Analysis
with respect to the NPRM is as follows:
13. Reason for Action. The Commission is issuing this Notice of
Proposed Rulemaking to seek comment on possible changes to our rules
and policies for allowing foreign-affiliated entities to participate in
the U.S. telecommunications market. In light of the recent agreement
reached by Members of the World Trade Organization to liberalize the
provision of basic telecommunications services, we believe it is
appropriate to relax our scrutiny of applications filed by affiliates
of entities from WTO Member countries for authority pursuant to
Sec. 214 of the Communications Act, 47 U.S.C. Sec. 214, and the Cable
Landing License Act, 47 U.S.C. Secs. 34-39; and to relax our scrutiny
of indirect foreign investment in holders of common carrier radio
licenses under Sec. 310(b)(4) of the Communications Act, 47 U.S.C.
Sec. 310(b)(4). We also believe that other changes to our regulation of
foreign-affiliated entities are appropriate in light of the WTO
agreement and our experience applying our current rules.
14. Objectives. The objective of this proceeding is to increase
competition in the U.S. market for basic telecommunications services
while minimizing the risk of anticompetitive harm. In light of the
changed circumstances that will result from the WTO agreement on basic
telecommunications and our nearly two years of experience with our
current rules on market entry, we believe that reducing entry barriers
for applicants affiliated with entities from WTO Member countries is
the appropriate way to accomplish that objective. The Commission
believes that the ``effective competitive opportunities'' test
developed in its Foreign Carrier Entry Order is no longer necessary as
applied to countries that are members of the WTO. Instead, we propose
to rely primarily on regulatory safeguards and settlement-rate
benchmarks to prevent anticompetitive conduct in the U.S.
telecommunications marketplace. We propose some revisions to those
regulatory safeguards in this Notice.
15. Legal basis. This Notice of Proposed Rulemaking is adopted
pursuant to Secs. 1, 4(i), 201(b), 214, 303(r), 307, 309(a), 310 of the
Communications Act of 1934, as amended, 47 U.S.C. Secs. 151, 154(i),
214, 303(r), 307, 309(a), 310.
16. Description, potential impact, and number of small entities
affected. The RFA generally defines small entity as having the same
meaning as the terms small business, small organization, and small
governmental jurisdiction and defines small business as having the same
meaning as the term small business concern under Sec. 3 of the Small
Business Act unless the Commission has developed one or more
definitions that are appropriate for its activities. The Small Business
Act defines small business concern as one that (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA).
17. The rules proposed in this Notice apply only to entities
providing international common carrier services pursuant to Section 214
of the Communications Act; entities providing domestic or international
wireless common carrier services under Sec. 309 of the Act; and
entities licensed to construct and operate submarine cables under the
Cable Landing License Act.
18. Because the small incumbent local exchange carriers (LECs)
subject to these rules are either dominant in their fields of
operations or are not independently owned and operated, consistent with
our prior practice, they are excluded from the definitions of small
entity and small business concern. Accordingly, our use of the terms
small entities and small businesses does not encompass small incumbent
LECs. Out of an abundance of caution, however, for the purposes of this
initial regulatory flexibility analysis, we will consider small
incumbent LECs to be within this analysis, where a small incumbent LEC
is any incumbent LEC that arguably might be defined by the SBA as a
``small business concern.''
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19. Section 214 International Common Carrier Services. Entities
providing international common carrier service pursuant to Section 214
of the Act fall into the SBA's Standard Industrial Classification (SIC)
categories for Radiotelephone Communications (SIC 4812) and Telephone
Communications, Except Radiotelephone (SIC 4813). The SBA's definition
of small entity for those categories is one with fewer than 1,500
employees. We discuss below the number of small entities falling within
these two subcategories that may be affected by the rules proposed in
this Notice.
20. The most reliable source of information regarding the number of
international common carriers is the data that we collect annually in
connection with the Telecommunications Industry Revenue:
Telecommunications Relay Service Fund Worksheet Data (TRS Worksheet).
In 1995, 445 toll carriers filed TRS fund worksheets. We believe that
between 50 and 200 carriers failed to file TRS fund worksheets. We
believe also that fewer than 10 toll carriers had 1,500 or more
employees. Thus, at most 635 international carriers would be classified
as small entities. Many TRS filers, however, are affiliated with other
carriers, and therefore the number of aggregated carriers is far fewer
than the preceding estimate. Of the 445 toll filers, 239 reported no
carrier affiliates. Adding 50 non-filers gives a lower estimate of 289
international carriers that would be classified as small entities.
Thus, our best estimate of the total number of small entities is
between 289 and 635. We are unable at this time to estimate with
greater precision the number of international carriers that would
qualify as small business entities under the SBA's definition. While
not all of these entities may have provided international service in
1995, we expect that many of these entities will seek to do so in the
future, as will additional entrants into the market.
21. Title III Common Carrier Services. Cellular licensees. Neither
the Commission nor the SBA has developed a definition of small entities
applicable to cellular licensees. The closest applicable definition of
small entity is the definition under the SBA rules applicable to
radiotelephone (wireless) companies (SIC 4812). The most reliable
source of information regarding the number of cellular services
carriers nationwide of which we are aware appears to be the data that
the Commission collects annually in connection with the TRS Worksheet.
According to the most recent data, 792 companies reported that they
were engaged in the provision of cellular services. Although it seems
certain that some of these carriers are not independently owned and
operated, or have more than 1,500 employees, we are unable at this time
to estimate with greater precision the number of cellular services
carriers that would qualify as small business concerns under the SBA's
definition. Consequently, we estimate that there are fewer than 792
small cellular service carriers.
22. 220 MHz Radio Services. Because the Commission has not yet
defined a small business with respect to 220 MHz radio services, we
will utilize the SBA's definition applicable to radiotelephone
companies--i.e., an entity employing less than 1,500 persons. With
respect to the 220 MHz services, the Commission has proposed a two-
tiered definition of small business for purposes of auctions: (1) for
Economic Area (EA) licensees, a firm with average annual gross revenues
of not more than $6 million for the preceding three years, and (2) for
regional and nationwide licensees, a firm with average annual gross
revenues of not more than $15 million for the preceding three years.
Since this definition has not yet been approved by the SBA, we will
utilize the SBA's definition applicable to radiotelephone companies.
Given the fact that nearly all radiotelephone companies employ fewer
than 1,500 employees, with respect to the approximately 3,800 incumbent
licensees in this service, we will consider them to be small businesses
under the SBA definition.
23. Common Carrier Paging. The Commission has proposed a two-tier
definition of small businesses in the context of auctioning licenses in
the Common Carrier Paging services. Under that proposal, a small
business would be either (1) an entity that, together with its
affiliates and controlling principals, has average gross revenues for
the three preceding years of not more than $3 million, or (2) an entity
that, together with affiliates and controlling principals, has average
gross revenues for the three preceding calendar years of not more than
$15 million. Since the SBA has not yet approved this definition for
paging services, we will utilize the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing fewer than 1,500
persons. At present, there are approximately 74,000 Common Carrier
Paging licensees. We estimate that the majority of common carrier
paging providers would qualify as small businesses under the SBA
definition.
24. Mobile Service Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
mobile service carriers such as paging companies. The closest
applicable definition under the SBA rules is for radiotelephone
(wireless) companies. The most reliable source of information regarding
the number of mobile service carriers nationwide of which we are aware
appears to be the data that the Commission collects annually in
connection with the TRS Worksheet. According to the most recent data,
117 companies reported that they were engaged in the provision of
mobile services. Although it seems certain that some of these carriers
are not independently owned and operated, or have more than 1,500
employees, we are unable at this time to estimate with greater
precision the number of mobile service carriers that would qualify
under the SBA's definition. Consequently, we estimate that fewer than
117 mobile service carriers are small entities.
25. Broadband Personal Communications Services (PCS). The broadband
PCS spectrum is divided into six frequency blocks designated A through
F, and the Commission has held auctions for each block. The Commission
has defined small entity in the auctions for Blocks C and F as an
entity that has average gross revenues of less than $40 million in the
three previous calendar years. For Block F, an additional
classification for ``very small business'' was added and is defined as
an entity that, together with its affiliates, has average gross revenue
of not more than $15 million for the preceding three calendar years.
These regulations defining small entity in the context of broadband PCS
auctions have been approved by the SBA. No small business within the
SBA-approved definition bid successfully for licenses in Blocks A and
B. There were 90 winning bidders that qualified as small entities in
the Block C auctions. A total of 93 small and very small businesses won
approximately 40 percent of the 1,479 licenses for Blocks D, E, and F.
However, licenses for Blocks C through F have not been awarded fully;
therefore, there are few, if any, small businesses currently providing
PCS services. Based on this information, we conclude that the number of
small broadband PCS licensees will include the 90 winning bidders and
the 93 qualifying bidders in the D, E, and F Blocks, for a total of 183
small PCS providers as defined by the SBA and the Commission's auction
rules.
26. Narrowband PCS. The Commission does not know how many
narrowband PCS licenses will be
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granted or auctioned, as it has not yet determined the size or number
of such licenses. Two auctions of narrowband PCS licenses have been
conducted for a total of 41 licenses, out of which 11 were obtained by
small businesses owned by members of minority groups and/or women.
Small businesses were defined as those with average gross revenues for
the prior three fiscal years of $40 million or less. For purposes of
this initial regulatory flexibility analysis, the Commission is
utilizing the SBA definition applicable to radiotelephone companies,
i.e., an entity employing less than 1,500 persons. Not all of the
narrowband PCS licenses have yet been awarded. There is therefore no
basis to determine the number of licenses that will be awarded to small
entities in future auctions. Given the facts that nearly all
radiotelephone companies have fewer than 1,000 employees and that no
reliable estimate of the number of prospective narrowband PCS licensees
can be made, we assume, for purposes of the evaluations and conclusions
in this Initial Regulatory Flexibility Analysis, that all the remaining
narrowband PCS licenses will be awarded to small entities.
27. Rural Radiotelephone Service. The Commission has not adopted a
definition of small business specific to the Rural Radiotelephone
Service, which is defined in Sec. 22.99 of the Commission's Rules. A
significant subset of the Rural Radiotelephone Service is BETRS, or
Basic Exchange Telephone Radio Systems (the parameters of which are
defined in Sec. Sec. 22.757 and 22.759 of the Commission's Rules).
Accordingly, we will use the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing fewer than 1,500
persons. There are approximately 1,000 licensees in the Rural
Radiotelephone Service, and we estimate that almost all of them have
fewer than 1,500 employees.
28. Air-Ground Radiotelephone. The Commission has not adopted a
definition of small business specific to the Air-Ground Radiotelephone
Service, which is defined in Sec. 22.99 of the Commission's Rules.
Accordingly, we will use the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing fewer than 1,500
persons. There are approximately 100 licensees in the Air-Ground
Radiotelephone Service, and we estimate that almost all of them qualify
as small under the SBA definition.
29. Specialized Mobile Radio Licensees (SMR). Pursuant to
Sec. 90.814(b)(1) of our rules, the Commission awards bidding credits
in auctions for geographic area 800 MHz and 900 MHz Specialized Mobile
Radio (SMR) licenses to firms that had revenues of less than $15
million in each of the three previous calendar years. This regulation
defining ``small entity'' in the context of 800 MHz and 900 MHz SMR has
been approved by the SBA. We do not know how many firms provide 800 MHz
or 900 MHz geographic area SMR service pursuant to extended
implementation authorizations or how many of these providers have
annual revenues of less than $15 million. We do know that one of these
firms has over $15 million in revenues. We assume that all of the
remaining existing extended implementation authorizations are held by
small entities, as that term is defined by the SBA. The Commission
recently held auctions for geographic area licenses in the 900 MHz SMR
band. There were 60 winning bidders who qualified as small entities in
the 900 MHz auction. Based on this information, we conclude that the
number of geographic area SMR licensees affected includes these 60
small entities.
30. Microwave Video Services. Microwave services includes common
carrier, private operational fixed, and broadcast auxiliary radio
services. At present, there are 22,015 common carrier licensees.
Inasmuch as the Commission has not yet defined small business with
respect to microwave services, we will utilize the SBA's definition
applicable to radiotelephone companies--i.e., an entity with less than
1,500 employees. Although some of these companies may have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of common carrier microwave service providers that
would qualify under the SBA's definition. We therefore estimate that
there are fewer than 22,015 small common carrier licensees in the
microwave video services.
31. Offshore Radiotelephone Service. This service operates on
several UHF TV broadcast channels that are not used for TV broadcasting
in the coastal area of the states bordering the Gulf of Mexico. At
present, there are approximately 55 licensees in this service. Some of
those licensees are common carriers. We are unable at this time to
estimate the number of licensees that would qualify as small under the
SBA's definition.
32. Local Multipoint Distribution Service (LMDS). The Commission
has so far licensed only one licensee in this service, and that
licensee is not providing service as a common carrier. There will be a
total of 986 LMDS licenses. Licensees will be permitted to decide
whether to provide common carrier service, and we have no way of
estimating how many will choose to do so. Because there will be no
restrictions on the number of licenses a given entity may acquire, we
have no way of estimating how many total licensees there will be. We
also cannot estimate the number of common carrier licensees that will
qualify as small entities.
33. Space Stations (Geostationary). Very few systems are currently
operated on a common carrier basis. Because we do not collect
information on annual revenue or number of employees of all these
licensees, we cannot estimate with precision the number of such
licensees that may constitute a small business entity. It is likely
that no more than one such entity that is currently operating as a
common carrier would constitute a small business entity. There may be a
small increase in the number of such entities in the future as a result
of recent licensing action in the Ka-band.
34. Space Stations (Non-geostationary). These systems by and large
do not operate as common carriers. Because we do not collect
information on annual revenue or number of employees, we cannot
estimate with precision whether any carrier that may choose to operate
on a common carrier basis constitutes a small business entity. The
trend is for such systems to operate on a non-common carrier basis.
These systems, of which there will be a limited number, by and large
are not yet operational and are still being licensed and constructed.
35. Earth Stations. The vast majority of earth stations licensed by
the Commission are not operated on a common carrier basis. Earth
stations that communicate with non-geostationary and Ka-band satellite
systems may operate on a common carrier basis but these systems are not
yet operational and are still being licensed and constructed. We are
unable to estimate at this time the number of earth stations
communicating with such systems that may operate on a common carrier
basis and, of those, the number that will be licensed to small business
entities.
36. Submarine Cable Landing Licenses. Our proposals would affect
all holders of and future applicants for cable landing licenses,
whether or not they operate their cables as common carriers. We have no
way of knowing how many applications for cable landing licenses will be
filed in coming years, but that number will likely increase if we adopt
our proposal to lower the barriers to granting licenses
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for cables to WTO Member countries. Since 1992, there have been
approximately 35 applications for cable landing licenses. The total
number of licensees is difficult to determine, because many licenses
are jointly held by several licensees. Our rules will also permit more
current licensees to accept additional investment from entities from
WTO Member countries.
37. Reporting, recordkeeping, and other compliance requirements.
The actions contained in this Notice of Proposed Rulemaking may affect
large and small carriers. We propose to require that U.S. carriers
whose foreign affiliates have market power maintain or provide certain
records regarding their foreign affiliates. Our proposals would in most
cases reduce the burdens that are currently imposed on such carriers,
and we anticipate that the remaining requirements would not impose a
significant economic burden on small entities. A variety of skills may
be required to comply with the proposed requirements, but all of the
skills that may be required are of the type needed to conduct a
carrier's normal course of business. No additional outside professional
skills should be required, with the possible exception of preparing an
initial Section 214 or cable landing license application and of
preparing a submission for our consideration under Sec. 310(b)(4), all
of which would be simplified by our proposals.
38. Section 214 and the Cable Landing License Act. The proposed
revisions to our rules and policies pursuant to Section 214 and the
Cable Landing License Act would significantly reduce the burdens on
international common carriers. Our proposal would reduce the burden on
foreign-affiliated carriers seeking to enter the market by requiring
only that they show that their foreign affiliate is from a country that
is a Member of the World Trade Organization. We believe this to be a
minimal burden for most small entities and a significant reduction of
burdens relative to our current application requirements.
39. The proposed ``basic dominant carrier safeguards'' would be
less burdensome to most international common carriers than our current
regulations. Carriers would no longer be required to obtain approval
before adding or discontinuing circuits. Instead, they would be
required only to file quarterly notification of additions of circuits.
We propose to eliminate the requirement that dominant carriers file
their international service tariffs on no less than 14 days' notice.
Instead, we would allow those carriers to file their international
service tariffs on one day's notice and accord them a presumption of
lawfulness. This change would reduce regulatory burdens and increase
the ability of carriers to innovate and efficiently respond to changes
in demand and cost. We propose to retain the requirements that carriers
file quarterly traffic and revenue reports and keep records of
provisioning and maintenance of basic network facilities and services
procured from the foreign affiliate. We anticipate that most of the
entities subject to dominant carrier regulation would not be small
entities, but we seek comment on that tentative conclusion.
40. This Notice proposes to impose supplemental dominant carrier
regulation on U.S. carriers whose foreign affiliates do not face
facilities-based competition for international services in the
destination countries in which they have market power. We believe that
additional regulation of those carriers is necessary to ensure that the
foreign carrier does not discriminate in favor of its U.S. affiliate.
These additional requirements may include stricter structural
separation between the U.S. carrier and its foreign affiliate; stricter
limits on certain arrangements for the sharing of information,
customers, and joint marketing; prior approval for addition of
circuits; quarterly circuit status reports; filing an electronic
summary of Sec. 43.51 contracts; and quarterly provisioning and
maintenance reports. We anticipate that few if any small entities would
be subject to supplemental regulation, but we seek comment on that
tentative conclusion.
41. The Notice also seeks comment on whether, in light of our
proposal to liberalize our rules on market entry, we need to impose as
a dominant carrier safeguard some level of structural separation
between the U.S. carrier and its foreign affiliate.
42. We have considered the impact on small and large entities in
developing these proposals, and we view these proposed regulations as
critical to preventing anticompetitive conduct. We also believe that
these safeguards would protect small entities from entities that are
affiliated with large foreign carriers by preventing foreign affiliates
from leveraging their market power to the disadvantage of small,
independent entities. We seek comment on whether we can further reduce
the burdens on small entities and still achieve our goal of preventing
anticompetitive behavior in the U.S. market.
43. Section 310(b)(4). We also propose to reduce the burdens on
common carrier licensees with foreign investment from WTO Member
countries. Section 310(b)(4) of the Communications Act has always
required that we make a finding about whether indirect foreign
investment in excess of 25 percent would serve the public interest. Our
proposal here would, in many cases, greatly simplify the required
showing by licensees or potential licensees. An applicant that could
show that its foreign investor's principal place of business is in a
country that is a Member of the WTO would in most cases have to make no
further showing. An applicant whose foreign investment comes from a
country that is not a WTO Member would still have to show that it
satisfies the effective competitive opportunities test, but that burden
would not be greater than that imposed by our current requirements.
44. This Notice asks for comment on whether we should adopt
specific criteria for denial of Title III common carrier (and Section
214) applications that present such an unusual danger of
anticompetitive effects that they should be denied even though the
foreign investment is from WTO Member countries. We also ask whether we
can further reduce regulatory burdens by eliminating our review of
increases in foreign ownership by licensees that already have more than
25 percent foreign ownership. We also seek comment on other ways in
which the consideration of foreign investment under Sec. 310(b)(4)
could be made less burdensome for small entities.
45. Accounting Rate Flexibility. We propose to reduce the burden on
U.S. carriers that seek approval of alternative settlement rate
arrangements with foreign carriers from WTO Member countries.
Currently, a carrier seeking such approval must file a detailed
petition for declaratory ruling showing that the alternative
arrangement is permitted under the criteria adopted in our Flexibility
Order, Regulation of International Accounting Rates, Docket No. CC 90-
337, Phase II, Fourth Report and Order, 62 FR 5535, February 6, 1997)
(Flexibility Order). We propose here to require only that an applicant
show that the foreign carrier is operating in a country that is a
Member of the WTO. An opposing party would have the burden of showing
that market conditions in the country in question are not sufficient to
prevent a carrier with market power from discriminating against U.S.
carriers.
46. Federal rules that overlap, duplicate, or conflict with the
Commission's proposal. None.
47. Any significant alternatives minimizing impact on small
entities and consistent with stated objectives. In
[[Page 32971]]
developing the proposals contained in this Notice, we have attempted to
minimize the burdens on all entities in order to allow maximum
participation in the U.S. telecommunications markets while achieving
our other objectives. We seek comment on the impact of our proposals on
small entities and on any possible alternatives that could minimize the
impact of our rules on small entities. In particular, we seek comment
on alternatives to the reporting, recordkeeping, and other compliance
requirements discussed above. We also seek specific comment on the
impact on small entities of our proposals to modify our dominant
carrier safeguards.
48. Comments are solicited Written comments are requested on this
Initial Regulatory Flexibility Analysis. These comments must be filed
in accordance with the same filing deadlines set for comments on the
other issues in this Notice of Proposed Rulemaking, but they must have
a separate and distinct heading designating them as responses to the
Regulatory Flexibility Analysis. The Secretary shall send a copy of
this Notice to the Chief Counsel for Advocacy of the Small Business
Administration in accordance with Sec. 603(a) of the Regulatory
Flexibility Act.
Initial Paperwork Reduction Act of 1995 Analysis
49. This Notice of Proposed Rulemaking contains either a proposed
or a modified information collection. As part of our continuing effort
to reduce paperwork burdens, we invite the general public and the
Office of Management and Budget (OMB) to comment on the information
collections contained in this NPRM, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due August 18, 1997. Comments should address: (a) whether the
proposed collection of information is necessary for the proper
performance of the functions of the Commission, including whether the
information shall have practical utility; (b) the accuracy of the
Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology.
50. We do not anticipate that the proposed rules will have any
impact on the paperwork burden imposed under the Commission's
Flexibility Policy established in the Fourth Report and Order, CC
Docket No. 90-337, Phase I [62 FR 5535, February 6, 1997]; [OMB Control
Nos. 3060-0160 and 3060-0764].
51. The rule changes proposed here have been analyzed with respect
to the Paperwork Reduction Act of 1980 and found to impose no new or
modified requirements or burdens on the public. Accordingly, their
implementation is not subject to approval by the Office of Management
and Budget under that Act.
OMB Approval Number: 3060-0686.
Title: Streamlining the International Section 214 Authorization
Process and Tariff Requirements.
Type of Review: Revision of existing collection.
Respondents: Business or other For-Profit.
Number of Respondents: 3,238.
Estimated Time Per Response: 14 hours.
Total Annual Burden: 23,603 hours.
Estimated costs per respondent: $263.
Needs and Uses: The information collections are necessary largely
to determine the qualifications of applicants to provide common carrier
international telecommunications services, or to construct and operate
submarine cables, including applicants that are affiliated with foreign
carriers, and to determine whether and under what conditions the
authorizations are in the public interest, convenience, and necessity.
The information collections are necessary for the Commission to
maintain effective oversight of U.S. carriers that are affiliated with,
or involved in certain co-marketing or similar arrangements with,
foreign carriers that have market power. The information collected is
necessary for the Commission to ensure that rates, terms and conditions
for international service are just and reasonable, as required by the
Communications Act of 1934.
52. The information collections under Sec. 310(b)(4) of the Act are
necessary to determine, under that section, whether a greater than 25
percent indirect foreign ownership interest in a U.S. common carrier
ratio licensee would be inconsistent with the public interest.
Ordering Clauses
53. Accordingly, it is ordered that, pursuant to Secs. 1, 4(i),
201(b), 214, 303(r), 307, 309(a), and 310 of the Communications Act of
1934, as amended, 47 U.S.C. Secs. 151, 154(i), 214, 303(r), 307,
309(a), 310, this notice of proposed rulemaking is hereby adopted.
54. The Commission's decision also included minor changes to part
63 of the Commission's rules, which are published elsewhere in this
issue.
55. It is further ordered that the Secretary shall send a copy of
this notice of proposed rulemaking, including the regulatory
flexibility certification, to the Chief Counsel for Advocacy of the
Small Business Administration, in accordance with paragraph 603(a) of
the Regulatory Flexibility Act, 5 U.S.C. Secs. 601 et seq.
List of Subjects in 47 CFR Part 63
Communications common carriers, Reporting and recordkeeping
requirements.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-15703 Filed 6-16-97; 8:45 am]
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