NEWSReport No. IN 96-27                INTERNATIONAL ACTION        December 31, 1996


INTERNATIONAL BUREAU FINDS THAT NEW ZEALAND PROVIDES U.S.
 CARRIERS EFFECTIVE COMPETITIVE OPPORTUNITIES 

     In companion orders released today, the International Bureau takes two actions that
advance competition in international services.  The Bureau finds that New Zealand provides
U.S. carriers effective competitive opportunities ("ECO") to: (1) provide international
facilities-based services in New Zealand; and (2) resell private lines for the provision of
switched services in New Zealand.  These actions are part of the Commission's continuing
efforts to encourage more efficient and innovative services at lower prices, and reduce
foreign collection and accounting rates.  

     On the basis of its findings, the Bureau granted Telecom New Zealand Limited
(TNZL) authority to acquire and operate facilities to provide international switched, private
line and other authorized services between the United States and New Zealand.  TNZL,
which is wholly owned by Telecom Corporation of New Zealand Limited (TCNZ), is the
incumbent provider of international and domestic telecommunications services in New
Zealand.  Because the Bureau found that TNZL has the only ubiquitous local network in that
country, it classified TNZL as a dominant international carrier on the U.S.-New Zealand
route.  

    The Bureau's finding that New Zealand satisfies the interconnection factor of the ECO
test is based in significant measure on the availability of favorable toll interconnection rates
as well as the actual entry of multiple facilities-based international carriers into the New
Zealand market.  Because the Bureau has concerns about the effectiveness of the New
Zealand interconnection regime, however, it conditioned TNZL s authorization on the prompt
provision of reasonable and nondiscriminatory interconnection to TNZL s domestic network
for international carriers.
    
    The Bureau also found that TNZL is affiliated with the Bell Atlantic and Ameritech
telephone operating companies within the meaning of Section 3 of the Communications Act
of 1934, as amended ("Act"), 47 U.S.C.  153.  Bell Atlantic Corporation and Ameritech
Corporation each owns just under 25 percent of TCNZ.  The Bureau therefore prohibited
TNZL from providing any international telecommunications services that originate in Bell
Atlantic s or Ameritech s in-region states until and only to the extent the Commission grants
each of their respective operating companies  applications to provide in-region interLATA
services pursuant to Section 271 of the Act.
                                  (over)
     Based on its ECO finding for private line resale, the Bureau granted Communications
TeleSystems International (CTS) authority to resell international private lines that are
interconnected to the public switched networks in the United States and New Zealand for the
provision of switched services.  The Bureau's ECO (or "equivalency") finding for the resale
of interconnected private lines means that other authorized U.S. private line resellers and
facilities-based carriers may, with certain exceptions, also use private lines extending
between the United States and New Zealand to carry switched traffic in and out of the United
States.  

     The Bureau based both of these decisions on the Commission's 1995 Foreign Carrier
Entry Order.  In that order, the Commission determined that an important element of a
foreign carrier's entry into the U.S. international services market is whether U.S. carriers
have effective competitive opportunities to compete for like services in the destination
countries where the foreign carrier has market power.  The Commission also stated that it
would examine other public interest factors that may weigh in favor of, or against, entry.  

     The Commission's ECO test for facilities-based entry requires that the destination
country provide U.S. carriers with:  (1) the legal right to enter the destination country and
provide international facilities-based service; (2) reasonable and nondiscriminatory charges,
terms and conditions for interconnection; (3) competitive safeguards to protect against
anticompetitive practices; and (4) fair and transparent regulatory procedures, including
separation between the foreign regulator and the operator of international facilities-based
services.  

     The  Foreign Carrier Entry Order also restated the Commission's equivalency criteria
for authorizing switched services via international private lines in the same manner as the
ECO criteria for facilities-based entry by foreign carriers with market power.  That is, a
finding of "equivalent resale opportunities" is a finding of effective competitive opportunities
to resell international private lines for the provision of switched services.  The equivalency
criteria must be met before the Commission will authorize the use of resold private lines to
carry switched traffic, regardless of whether the applicant is a U.S.-based or a foreign
carrier.  New Zealand is the fourth country -- in addition to Canada, the United Kingdom
and Sweden -- which the Commission has found to offer equivalent resale opportunities to
U.S. carriers.      

     The Bureau anticipates that the additional competition on the U.S.-New Zealand route 
provided by TNZL in the facilities-based market and by private line resellers providing
switched telecommunications services will promote new entry into the international
telecommunications market and advance the goal of a robust global information
infrastructure.  It should foster the introduction of new international telecommunications
services at lower prices and put pressure on above-cost international accounting rates. 
Significantly, in finding TNZL's authorization to be in the public interest, the Bureau noted
TNZL has demonstrated a commitment to cost-based, nondiscriminatory and transparent
accounting rates by notifying the Commission of its intention voluntarily to make public its
accounting rates with foreign correspondents on all of New Zealand's international routes. 


     
     Actions by the International Bureau December 17, 1996 by Order, Authorization and
Certificate (DA 96-96-2182) [ITC-96-097, Telecom New Zealand Limited]; and
Memorandum Opinion, Order and Certification (DA 96-2183) [File No. ITC-95-444,
Communications TeleSystems International].

     For further information contact Helene Schrier Nankin, International Bureau,
Telecommunications Division, 418-1466; Robert Calaff, International Bureau 418-1467;
Susan O'Connell, International Bureau 418-1484. 

                                  - FCC -