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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) 1998 Biennial Regulatory Review ) IB Docket No. 98-118 Review of International Common Carrier) Regulations ) NOTICE OF PROPOSED RULEMAKING Adopted: July 6, 1998 Released: July 14, 1998 Comment Date: August 13, 1998 Reply Date: August 28, 1998 By the Commission: Commissioner Furchtgott-Roth issuing a separate statement. Table of Contents Topic Paragraph No. I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 II. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 III.Discussion of Proposed Rule Changes. . . . . . . . . . . . . . . . . 7 A. Blanket Section 214 Authorization for International Service to Unaffiliated Points 7 B. Forbearance from Pro Forma Assignments and Transfers of Control 12 C. Provision of Service by Wholly Owned Subsidiaries. . . . . . . . 22 D. Authorization to Use All Non-U.S.-Licensed Submarine Cables and Simplification of the International Section 214 Exclusion List. . . . . . . . . 23 E. Section 214 Authorizations for Construction of New Submarine Cable Facilities 29 F. Reorganization of Part 63 Rules. . . . . . . . . . . . . . . . . 34 IV. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 V. Procedural Matters . . . . . . . . . . . . . . . . . . . . . . . . . 47 Appendix A: Proposed Rules I. Introduction 1. The Telecommunications Act of 1996 directs the Commission to undertake, in every even- numbered year beginning in 1998, a review of all regulations issued under the Communications Act that apply to operations or activities of any provider of telecommunications service and to repeal or modify any regulation it determines to be "no longer necessary in the public interest." In particular, the Act directs the Commission to determine whether any such regulation is no longer necessary "as the result of meaningful economic competition between providers of such service." Accordingly, the Commission has begun a comprehensive 1998 biennial review to identify regulations that are overly burdensome or no longer serve the public interest. 2. In keeping with the objectives of the Act, we initiate this proceeding to review and revise our rules governing international common carriers. The proposals in this Notice would streamline and simplify the international Section 214 application rules and eliminate several categories of international Section 214 applications. Specifically, we propose to: (1) Grant a blanket Section 214 authorization for telecommunications services to unaffiliated international points. (2) Eliminate the requirement for prior approval of pro forma assignments and transfers of control of international Section 214 authorizations. (3) Allow any carrier with global Section 214 authorization to use any non-U.S.-licensed submarine cable system without specific approval, and clarify the exclusion list for international Section 214 authorizations. (4) Eliminate the need to apply for a separate Section 214 authorization when applying for a common carrier cable landing license. (5) Reorganize and simplify the rule on contents of international Section 214 applications and list the obligations of each category of carrier in a separate rule section. (6) Authorize the provision of switched services over private lines by declaratory ruling instead of requiring a Section 214 application. (7) Eliminate the requirement that applicants inform the Commission of every 10 percent or greater shareholder, and require only that applicants provide a list of every greater-than-25- percent shareholder. 3. We have identified a number of ways that we can facilitate the authorization of international telecommunications services while eliminating unnecessary regulations. We seek comment on the proposals and tentative conclusions contained in this Notice. These are not the only deregulatory steps we plan to propose in the area of international telecommunications. Rather, they are steps that we believe can and should be taken expeditiously while other steps are being considered. II. Background 4. When the International Bureau was created in 1994, it undertook a review of all of its operations with a goal of eliminating unnecessary, outdated regulations and burdens imposed on the public and the industry, as well as clarifying and codifying requirements where necessary. The Bureau implemented many deregulatory initiatives quickly, without rule changes. In addition, the Commission overhauled many of its international rules. For example, in the 1996 Streamlining Order we created global Section 214 authorizations, reduced paperwork obligations, streamlined tariff requirements for non-dominant international carriers, and ensured that essential information is readily available to all carriers and users. In the Part 25 Streamlining Order, we modified our rules to streamline application and licensing procedures and requirements for satellite space and earth stations under Part 25 of the rules. We also streamlined our rules for international and domestic satellite service to permit greater flexibility and more competition in fixed, mobile and direct broadcast satellite services. 5. In our recent Foreign Participation Order, we expanded our streamlining measures by broadening the class of foreign-affiliated applicants eligible for streamlined processing. The new competitive conditions created by the World Trade Organization basic telecommunications agreement and the rules adopted in the Foreign Participation Order significantly reduced the possibility of market distortion, thereby providing us with an opportunity to further reduce our scrutiny of many applications and afford those applications streamlined processing. The WTO agreement also afforded us an opportunity to adopt policies that permit non-U.S.-licensed satellites to provide services in the United States. 6. During this time, the International Bureau has taken many additional informal steps, such as conducting public briefings on its streamlining efforts, including a public forum on the international Section 214 and Cable Landing License authorization process and other issues. The Bureau also recently has held three regulatory workshops with foreign regulators to promote effective pro- competitive regulatory regimes in other countries as prescribed by the WTO agreement and to promote increased competition in the worldwide market for telecommunications services. III. Discussion of Proposed Rule Changes A. Blanket Section 214 Authorization for International Service to Unaffiliated Points 7. In this proceeding, we focus on streamlining, and when appropriate eliminating, many of the rules for seeking authorization pursuant to Section 214. Currently, the great majority of international Section 214 applications are granted on a streamlined basis. Streamlined applications, if not opposed, are deemed granted 35 days after public notice, and the carrier may commence operations on the 36th day. This streamlined process allows the Commission to identify whole categories of applications that we expect not to raise any public interest concerns and to grant those applications without individual formal written orders. In the Foreign Participation Order, we recognized that changed market conditions had further reduced our need to review many applications, and we identified additional categories of applications that could be included in the streamlined process. The great majority of streamlined applications are unopposed. Generally, the oppositions we have received have involved concerns about a carrier's foreign affiliations, based on our rules prior to adoption of the Foreign Participation Order. It appears that there now are few if any grounds that would warrant denial or conditioning of an authorization to serve a route where the applicant is not affiliated with a carrier operating in the destination market. 8. We tentatively conclude that our regulatory safeguards are sufficient so that in no case would we need to deny, in the first instance, an application to provide services on unaffiliated routes. We therefore believe that it is appropriate to consider granting a blanket Section 214 authorization for the provision of international telecommunications services on unaffiliated routes. The blanket authorization would certify that it would serve the public interest, convenience, and necessity to allow any entity that would be a non-dominant carrier to provide facilities-based service, or to resell the international services of other carriers, to any international point except a market in which an affiliated carrier operates. Such a step would eliminate the delay that many new carriers face before commencing service and would also significantly reduce processing burdens on Commission staff. Carriers providing service pursuant to this blanket authorization would continue to be subject to all of the Commission's rules and policies governing international service. Our proposed rule, Section 63.25, is intended to implement this blanket authorization. 9. We seek comment on the scope of the proposed blanket Section 214 authorization. In particular, we seek comment on whether there is a smaller or larger class of carriers or services for which a blanket authorization would be appropriate. For example, should the blanket authorization be limited to the resale of other carriers' services instead of also authorizing the provision of facilities- based services? Commenters should address whether there remain any public interest considerations that might warrant denying an authorization to provide facilities-based service to a foreign market where the applicant has no affiliate. Furthermore, is it possible to identify a class of affiliations that can be included in a blanket authorization? Commenters should address whether there is a way to include within the blanket authorization a carrier's provision of facilities-based or resold service on routes where it has an affiliation with a carrier that, for example: (1) we have previously found (in some other context) to lack market power in the foreign destination market; (2) has no telecommunications facilities in that market; or (3) has only mobile wireless facilities in that market. We anticipate that, as telecommunications markets become more global, affiliations with foreign carriers will become more common, and many of those affiliations will not raise competitive concerns. Although our proposed rule would authorize the provision of service only on unaffiliated routes, we seek comment on ways to identify affiliations that are equally unlikely to raise public interest concerns and therefore should not require prior Commission review. 10. We tentatively conclude that granting a blanket Section 214 authorization would be a better approach than forbearing from requiring international Section 214 authorizations for any class of applicants. We believe that it is important to continue to require that service be provided only pursuant to an authorization that can be conditioned or revoked. This is consistent with the approach we followed in the Foreign Participation Order: to prevent anticompetitive effects in a more competitive marketplace, we no longer rely, in most cases, on restricting entry of any class of carriers; rather, we rely for the most part on additional competition along with reporting requirements and enforcement mechanisms to detect, deter, and penalize anticompetitive conduct. We tentatively conclude, therefore, that we must maintain a requirement that carriers notify the Commission that they are providing international service pursuant to the blanket authorization, and that we must be able to condition or revoke an authorization if necessary to prevent anticompetitive effects. The notification requirement is necessary to enable us to enforce our other reporting requirements and bring enforcement action if necessary, as well as to review carriers' determinations as to whether they have affiliations. We may also need to review (in consultation with Executive Branch agencies) any given carrier's authorization for national security, law enforcement, foreign policy, and trade concerns. Nevertheless, we seek comment on whether there is any class of carriers for which forbearance from the international Section 214 authorization requirement would meet the statutory forbearance standard. 11. We seek particular comment on the applicability of our tentative conclusions to commercial mobile radio services (CMRS) licensees. We note that the Commission has forborne from exercising its Section 214 authority for domestic CMRS service. We recently declined to forbear from requiring CMRS providers to obtain international Section 214 authorizations in order to provide international service directly to their customers. We seek comment on whether forbearance, or a blanket international Section 214 authorization, or some combination of forbearance with safeguards, is more appropriate for CMRS providers than for other carriers seeking to provide international services. B. Forbearance from Pro Forma Assignments and Transfers of Control 12. Pro forma assignments of international Section 214 authorizations and transfers of control of entities holding international Section 214 authorizations currently must be approved in advance by the Commission. In 1997, the International Bureau authorized approximately 40 pro forma assignments and transfers of control, and it is possible that more transactions that might otherwise have been undertaken for valid business reasons were not consummated because of the prior-approval requirement. None of those applications raised any issues relevant to serving the public interest by promoting competition or preventing anticompetitive conduct. Nevertheless, under current Commission rules, carriers must file a formal application pursuant to Section 63.18 and an application fee of $745. Each application that is filed requires an expenditure of time and resources by carriers, their lawyers, and the Commission. Furthermore, each transaction is delayed pending Commission review. In practice, the applications are generally granted by a rubber stamp within a few days of filing and announced by public notice within a week of being granted. 13. In response to two petitions for forbearance filed under Section 10 of the Communications Act, the Commission recently adopted rules forbearing from the prior notification and approval requirements of Section 310(d) for pro forma assignments and transfers of control as it relates to wireless telecommunications carriers. We tentatively conclude that the Section 10 forbearance standard is met as well in the context of international Section 214 authorizations. Section 10 provides that the Commission must forbear from applying any regulation or provision of the Act to a telecommunications carrier if the Commission determines that (1) enforcement is not necessary to ensure that charges, practices, classifications, or regulations are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest. 14. We propose to define pro forma using the standard that is set forth in Section 73.3540(f) of our broadcast rules, which identifies common categories of transactions that are considered non-substantial and therefore are eligible for pro forma treatment: (1) assignment from an individual or individuals (including partnerships) to a corporation owned or controlled by such individuals or partnerships without any substantial change in their relative interests; (2) assignment from a corporation to its individual stockholders without effecting any substantial change in the disposition of their interests; (3) assignment or transfer by which certain stockholders retire and the interest transferred is not a controlling one; (4) corporate reorganization that involves no substantial change in the beneficial ownership of the corporation; (5) assignment or transfer from a corporation to a wholly owned subsidiary thereof or vice versa, or where there is an assignment from a corporation to a corporation owned or controlled by the assignor stockholders without substantial change in their interests; or (6) assignment of less than a controlling interest in a partnership. In general, a change in ownership or control is "substantial" if 50 percent or more of the stock of the licensee is transferred or if, as a result of the transaction, the licensee will be controlled by persons who were not previously in control of the licensee. "Control" can be either de jure, which refers to ownership of 50 percent or more of a company, or de facto, which can exist regardless of the amount of ownership. 15. We tentatively conclude that prior review of pro forma transfers and assignments is not necessary to ensure that carriers' charges, practices, classifications, and services are just and reasonable and not unjustly or unreasonably discriminatory. Because pro forma transactions do not affect actual control of the carrier, they are unlikely to have an impact on the licensees' charges, practices, classifications, or services. Thus, it has not been necessary to consider these issues in our review of pro forma transactions. Given the existence of other mechanisms to deal with these issues and the fact that we have had no need to consider them in the context of pro forma transactions, we tentatively conclude that the first prong of the forbearance standard is met. 16. We also tentatively conclude that prior approval of pro forma transfers and assignments is not necessary for the protection of consumers. Based on our experience reviewing pro forma applications, we believe that pro forma transfers and assignments rarely, if ever, raise issues of consumer protection, because the ultimate control of the carrier which has already been subject to Commission review and approval does not change as a result of the transaction. We therefore tentatively conclude that the second prong of the forbearance standard is met. 17. Finally, we tentatively conclude that the third prong of the forbearance standard is met. We tentatively conclude that pro forma assignments and transfers of control of international Section 214 authorizations do not raise public interest concerns and that we should therefore cease requiring carriers to obtain prior Commission approval of such transactions. Paragraph (b) of Section 10 directs us to consider whether forbearance would promote competitive market conditions. We tentatively conclude that eliminating the requirement for prior approval would promote competitive market conditions by allowing carriers to change their ownership structure or internal organization as business needs require without undue regulatory burdens. 18. Assignments and transfers of control that do not fall into the categories that we propose to define as pro forma would continue to require prior approval. Furthermore, carriers would remain subject to Section 63.11 of our rules, which requires notification of affiliations with foreign carriers, notwithstanding this relaxation of our rules on pro forma assignments and transfers of control. Thus, for example, if an otherwise pro forma transaction nevertheless results in acquisition by a foreign carrier of more than 25 percent of an authorized carrier, the carrier must seek prior Commission approval of the transaction. 19. Because the Commission needs to maintain complete and current records of the identities of authorized international carriers, we propose to require that authorized carriers that undertake a pro forma assignment notify the Commission by letter within 30 days after consummation of the transaction. Such a letter must contain the carrier's certification that the subject assignment is non-substantial and within the definition of pro forma that we propose to adopt in Section 63.24(a). We tentatively conclude that we need not place those letters on public notice because they will raise no substantial public interest issues upon which public comment would be necessary. 20. We tentatively conclude that we need not require that carriers notify us of pro forma transfers of control. Where a transaction affects neither the identity of the legal entity holding the Section 214 authorization nor the ultimate control of that entity, there is no need to update the Commission's records. 21. We therefore propose to add a new Section 63.24 to define pro forma and to allow carriers to undertake pro forma assignments and transfers of control of international Section 214 authorizations without Commission approval. As proposed, new Section 63.24 of our rules would apply to all authorized international carriers. We seek comment on the scope of our proposed exception to the requirement for prior approval of assignments and transfers of control of international Section 214 authorizations. C. Provision of Service by Wholly Owned Subsidiaries 22. We also propose to amend Section 63.21 of our rules to provide that an international Section 214 authorization effectively authorizes the carrier to provide services through its wholly owned subsidiaries. This provision would make clear that, for example, a carrier that operates in multiple markets with a separate subsidiary in each market needs only a single international Section 214 authorization to cover all of those subsidiaries. It is important to note that this flexibility must not be used to circumvent any structural-separation provision in the Commission's rules, such as the rule in Section 63.10 that dominant international carriers must provide service through an entity that is separate from its affiliated foreign carrier. We seek comment on whether our proposed rule (Section 63.21(i) in Appendix A) would defeat any of the Commission's structural-separation requirements. D. Authorization to Use All Non-U.S.-Licensed Submarine Cables and Simplification of the International Section 214 Exclusion List 23. In the 1996 Streamlining Order, the Commission greatly reduced the number of international Section 214 applications that must be filed by adopting rules creating global Section 214 authorizations for facilities-based carriers. A global Section 214 authorization authorizes a carrier to serve all markets except those where it is affiliated with a foreign carrier that has sufficient market power to affect competition adversely in the U.S. market or that the Commission has yet to determine does not have such market power. Global facilities-based authorizations are subject to an "exclusion list" maintained by the International Bureau. The exclusion list indicates any countries and facilities for which a facilities-based carrier must obtain specific Section 214 authorization. The list may be changed from time to time when modification would serve the public interest. 24. Any facilities-based carrier desiring to serve a market or use a facility listed on the exclusion list must file a separate Section 214 application for that purpose. The exclusion list is included as part of each public notice that lists granted streamlined applications and is available in the International Bureau's Reference Center. Currently, the list includes Cuba, all non-U.S.-licensed satellite systems, and all non-U.S.-licensed submarine cable systems except for specifically listed non- U.S.-licensed submarine cable systems. The International Bureau recently modified the exclusion list to add several non-U.S.-licensed cable systems, but until then it had not been modified since October 1996. 25. The Commission's rules currently provide that a carrier with a global facilities-based authorization may not use non-U.S.-licensed facilities unless and until it has received specific prior approval or the Commission generally approves their use and so indicates on the exclusion list. It thus sets up a presumption against the use of non-U.S.-licensed facilities. We anticipate that, in a more competitive marketplace with more facilities-based carriers operating in all parts of the world, carriers will wish to use more non-U.S.-licensed facilities for routing U.S. traffic. We believe that there is no longer any reason for a blanket prohibition on the use of non-U.S.-licensed submarine cable systems. In the two years since we adopted the Streamlining Order, no one has brought to our attention any public interest reason to prohibit the use of any particular cable systems for the provision of U.S. international traffic. We therefore believe that the presumption should now favor permitting the use of non-U.S.-licensed cable systems. 26. We therefore propose to amend our rules to remove all non-U.S.-licensed cable systems from the exclusion list and to allow any facilities-based carrier to use any foreign cable system in its provision of U.S. international service. If it becomes necessary to prohibit the use of any specific cable system (whether one that lands on U.S. shores or one that does not), we may add it to the exclusion list. In such a case, we will amend the exclusion list only after providing public notice and an opportunity for affected parties to comment on the amendment. We envision such exclusions taking place only in the most imperative of circumstances. If the President duly issues an Executive Order to prohibit or restrict service to a particular country or to prohibit or restrict use of particular facilities, however, we will amend the exclusion list and issue a public notice to that effect without opportunity for comment or hearing. 27. Accordingly, we tentatively conclude that we should amend the provisions currently contained in Sections 63.18(e)(1) and 63.15(a) of our rules and the exclusion list maintained by the International Bureau. The exclusion list would then provide that carriers with global Section 214 authorizations to provide facilities-based service will be authorized to use any facilities except non- U.S.-licensed satellite systems that are not specifically identified. 28. We tentatively conclude that we should not modify our current practice of requiring specific Section 214 authority for the use of all non-U.S.-licensed satellite systems unless otherwise indicated on the exclusion list. We tentatively conclude that a decision whether to permit a particular facilities-based carrier to use a non-U.S.-licensed satellite system or whether generally to permit use of a non-U.S.-licensed satellite system by all facilities-based carriers should be made pursuant to the policies adopted in the DISCO II Order. E. Section 214 Authorizations for Construction of New Submarine Cable Facilities 29. Applicants for common carrier cable landing licenses currently must file two applications: a cable landing license application pursuant to Section 1.767 of the Commission's rules and a Section 214 application for the construction of new lines pursuant to Section 63.18(e)(6) of the Commission's rules. Applicants for non common carrier cable landing licenses need only file an application for a cable landing license and must justify, in the application, our granting the license on a non common carrier basis. We tentatively conclude that no useful purpose is served by requiring a carrier that is authorized to serve a given route on a facilities basis to apply for additional Section 214 authority for the construction of a new undersea cable on that route. We therefore propose to eliminate this requirement. 30. By contrast, the Submarine Cable Landing License Act, 47 U.S.C.  34 39, requires that a cable landing license be obtained for any undersea cable directly or indirectly connecting the United States with any foreign country. Pursuant to Executive Order No. 10,530, the Commission has been delegated the President's authority under that act to grant cable landing licenses but must obtain the approval of the State Department and advice from other Executive Branch agencies before granting any cable landing license. Because it is not a part of the Communications Act, we cannot use our Section 10 forbearance authority to forbear from requiring cable landing licenses. Therefore, we must continue to require any party seeking to construct an undersea cable to file a cable landing license application pursuant to Section 1.767. 31. In order to eliminate the need to apply for separate Section 214 authority to build a new common carrier cable system, we propose to include the authorization to construct new lines among the rights granted to all authorized facilities-based carriers. A carrier seeking to construct and operate a new common carrier cable system between the United States and foreign points for which it is already authorized to provide facilities-based service would not need to seek additional Section 214 authorization for that purpose. Only a cable landing license would be required. We thus propose to amend Section 63.18(e)(1) by striking the reference to "facilities previously authorized by the Commission" and including in the new Section 63.22 a provision stating that a facilities-based carrier may construct, acquire, and operate lines in any new common carrier facility between the United States and all international points that the carrier is authorized to serve on a facilities basis. In order to ensure compliance with environmental statutes, we tentatively conclude that we must limit this grant of authority by stating that it does not authorize the construction or extension of lines that may have a significant effect on the environment as defined in our environmental rules. 32. We also tentatively conclude that our environmental rules should provide that the construction of new submarine cables in particular (as opposed to the construction or extension of other international lines) will not have a significant effect on the environment. Section 1.1306 of our rules categorically excludes from environmental processing Commission actions on certain facilities or equipment that "are deemed individually and cumulatively to have no significant effect on the quality of the human environment." In 1974, the Commission concluded that any action on an application for a submarine cable landing license would be categorically excluded from environmental processing. In reaching this conclusion, the Commission noted that, "[a]lthough laying transoceanic cable obviously involves considerable activity over vast distances, the environmental consequences for the ocean, the ocean floor, and the land are negligible." The Commission went on to describe how, "[i]n shallow water, the cable is trenched and immediately covered; in deep water, it is simply laid on the ocean floor"; and "[i]n the landing area, it is trenched for a short distance between the water's edge and a modest building housing facilities." In revising its environmental rules in 1984, the Commission did not specifically address submarine cable systems or otherwise exempt action on such facilities from environmental processing. We have no reason to believe that the facts that supported our 1974 decision have changed since that time. We therefore tentatively conclude that, as we decided in 1974, the construction of new submarine cable systems, individually and cumulatively, will not have a significant effect on the environment. Accordingly, we seek comment on amending our environmental rules to reflect a new categorical exclusion for the construction of new submarine cable systems. We direct the Office of Public Affairs to send a copy of this Notice to the Council on Environmental Quality. 33. This proposal may necessarily be subject to a change in the application fees for cable landing licenses and Section 214 authorizations. Application fees are set by statute and may not be changed by the Commission. Currently, the application fee for a non common carrier cable landing license is $12,335, while the fee for a common carrier cable landing license is only $1,250. The application fee for a Section 214 authorization for "overseas cable construction" is $11,090, bringing the total for a common carrier submarine cable to $12,335. We believe Congress's intent was that the application fees be the same whether an applicant intends to construct a common carrier or non common carrier cable system. If we were to eliminate the requirement that carriers apply for the accompanying Section 214 authorization, then the application fee for a common carrier cable landing license would be approximately one-tenth of the fee for a non common carrier cable landing license. The Commission will consider asking Congress to consolidate the application fees for cable landing licenses, and we may not be able to adopt our proposal without such a fee change. F. Reorganization of Part 63 Rules 34. In addition to the above proposed changes to our rules, we also seek to simplify our existing rules. We tentatively conclude that we should reorganize Section 63.18, which describes the contents of applications for international Section 214 authorizations. Applicants have often complained that the rules, as currently arranged, are confusing. They state that Section 63.18 is too long and difficult to follow. One complaint is that it contains information that is not relevant to the processing of the application, such as conditions the carrier would be subject to after grant of its authorization. We propose to remedy this by creating new sections of the rules that will contain authorized carriers' ongoing obligations. Such reorganization would allow us to shorten the section on contents of applications and make it easier for authorized carriers to find the requirements that apply to them. We also propose to create new sections for definitions and for our policy on the provision of switched services over international private lines. Most of the changes we propose in this section of the Notice are not substantive, but would serve to simplify the process of applying for an authorization and clarify the obligations of authorized carriers. The substantive changes and the major non- substantive changes are discussed below. No substantive changes are intended other than those discussed below. Commenters are encouraged to review the proposed rules contained in Appendix A and to comment on the extent to which they could be further simplified as well as to ensure that no inadvertent substantive changes would result. 35. We propose to create a separate Section 63.09 of the rules to contain definitions applicable to Sections 63.09 through 63.24. The new section would contain definitions of terms that are used throughout those sections and would eliminate the need for those rules to refer to definitions given in other sections, particularly the definitions of affiliation and foreign carrier currently in Section 63.18(h)(1)(i). 36. We propose to create two new sections of the rules, Sections 63.22 and 63.23, which will contain the obligations of, respectively, facilities-based carriers and resale carriers. We propose to move paragraphs 63.18(e)(1)(ii)(A) (E), which currently contain the obligations of facilities-based carriers, to Section 63.22. Applicants for facilities-based authorizations will be required to certify that they will comply with the requirements of Section 63.22 but will not have to repeat the text of those requirements. Likewise, we propose to move paragraphs 63.18(e)(2)(ii)(A) (C) to the new Section 63.23. These rearrangements will also give authorized carriers an easier place to find the Commission rules that apply to them on an ongoing basis. 37. We propose to include in the new Section 63.22 a provision codifying the benchmark settlement rate condition that we adopted in the recent Benchmarks Order. In that order, we created a general obligation that all authorized facilities-based carriers may provide service to a market served by an affiliate that terminates U.S. international traffic only if that affiliate has in effect a settlement rate with U.S. international carriers that is at or below the Commission's relevant benchmark for that market. We tentatively conclude that it would serve to clarify carriers' general obligations to include that already-existing obligation in Section 63.22(f) of the Commission's rules. 38. The revised, and much shorter, Section 63.18 would make clear that there are two categories of international carriers facilities-based carriers and resale carriers. Further, there would be four main categories of applications to become a facilities-based carrier, to become a resale carrier, to transfer control of a carrier or assign an authorization, and to serve a route not covered by a global authorization. The latter category of application would include applications to serve affiliated routes and applications to serve countries or to use facilities listed on the exclusion list. We propose to add subheadings to paragraphs (e)(1) through (e)(4) to clarify those categories of applications. 39. In the Foreign Participation Order, we found that it is no longer necessary to scrutinize investments in or by foreign carriers that do not result in affiliations that is, non-controlling investments of 25 percent or less. We believe that non-controlling investments of 25 percent or less very rarely raise any public interest issues that require Commission scrutiny. In the Foreign Participation Order, we amended Section 63.11, which applies to authorized carriers, to increase from 10 percent to greater than 25 percent the level of investment that must be reported to the Commission. Section 63.18, however, still provides that applicants must list all of their 10 percent or greater direct and indirect shareholders in support of their certifications as to whether they are affiliated with any foreign carrier. We propose to modify that provision so that applicants will be required to list only the direct and indirect shareholders with interests greater than 25 percent. We seek comment on whether it remains necessary to scrutinize direct and indirect investments in applicants at a greater level of detail than we require after the carrier is authorized. 40. It is important to note that we do not propose to change our standard for affiliation. This standard includes investments in a carrier by two or more foreign carriers in circumstances where the foreign carriers are parties to, or the beneficiaries of, a contractual relation affecting the provision or marketing of basic international telecommunications services in the United States. We will continue to require that each applicant certify whether it is a foreign carrier or is affiliated with one or more foreign carriers. An applicant that is uncertain as to whether its relationship with one or more foreign carriers qualifies as an affiliation should include the relevant information in its application so that the Commission can evaluate the relationship under the affiliation standard. 41. We propose to create a new Section 63.16 containing the Commission's policy on the provision of switched services over international private lines interconnected to the public switched network. When the Commission authorizes the provision of switched services over private lines to a particular country, that determination affects all authorized carriers, not just the applicant. In recognition of that fact, Section 63.16 would simplify the process of requesting such a determination. Any authorized carrier would be able to request such a determination in a petition for declaratory ruling and would no longer be required to provide the detailed carrier-specific information required by Section 63.18. This would also remove a category of application from Section 63.18(e). An applicant for international Section 214 authorization would still be able to request the determination in its application by including the showing described in Section 63.16. 42. Before we adopted the Foreign Participation Order, dominant carriers were required to obtain prior Commission approval before adding circuits, and non-dominant resellers of international private lines were required to file annual reports of their circuit additions. In the Foreign Participation Order, we removed the prior-approval requirement for dominant carriers but neglected to amend Section 63.15(b) to provide that dominant resellers of international private lines are nevertheless subject to the annual reporting requirement. We accordingly propose to strike the word non-dominant from that provision. We also propose to move that provision to the new Section 63.23, which contains obligations generally applicable to resellers. Because we also propose to eliminate the need to file a separate Section 214 application for the construction of new international common carrier facilities, we would be able to delete Section 63.15 entirely. 43. We are aware that not every assignment that we authorize is ultimately consummated. Because the Commission needs to maintain complete and current records of the identities of authorized international carriers, we propose to require that carriers authorized to undertake an assignment notify the Commission by letter within 30 days after either consummation of the assignment or a decision not to go forward with the assignment. For the same reason, we propose to clarify in Section 63.21(j) that a carrier that changes its name need only notify the Commission by letter within 30 days after the name change. 44. Our proposed rules also contain a simplified paragraph (h) of Section 63.18. We believe we can significantly shorten and clarify the rule by moving the definitions of affiliation and foreign carrier to Section 63.09 and consolidating the two subparagraphs that describe our standard for evaluating applications by foreign-affiliated carriers. No substantive changes are intended, and we seek comment on whether any inadvertent substantive changes might result from these proposed amendments. 45. We tentatively conclude that the reorganized rule sections should make it easier for applicants to determine the precise information needed in an application for Section 214 authority. In addition, by consolidating the obligations into Sections 63.22 and 63.23, we would enable authorized carriers readily to identify those obligations that apply to their authorizations. Furthermore, expressly codifying the obligations of each class of carriers would facilitate changing those obligations as necessary. We believe that these rule changes should reduce delays in the processing of applications by reducing the number of applications that are incomplete when submitted. We seek comment on the proposed non-substantive changes to Section 63.18 and whether any inadvertent substantive changes might result. IV. Conclusion 46. In this Notice, we propose to eliminate unneeded regulatory requirements and decrease unnecessary paperwork for carriers while advancing the objectives of the Communications Act. We propose to clarify and codify requirements where necessary to pursue a common-sense approach to regulation. We have examined our rules with a view toward further reducing regulatory and administrative burdens on carriers and have developed the proposals contained in this Notice. We tentatively conclude that the measures proposed herein will benefit consumers and will create significant processing and operational efficiencies for the Commission. V. Procedural Matters A. Ex Parte Presentations 47. This is a permit-but-disclose notice-and-comment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they are disclosed as provided in the Commission's rules. See generally 47 C.F.R.  1.1202, 1.1203, 1.1206. B. Initial Regulatory Flexibility Analysis 48. The Regulatory Flexibility Act of 1990, 5 U.S.C.  601 612, (RFA) as amended by the Contract with America Advancement Act of 1996, Pub. L. No. 104-121, 110 Stat. 847, requires an initial regulatory flexibility analysis in notice-and-comment rulemaking proceedings, unless we certify that "the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities." The purposes of this proceeding are to eliminate some regulatory requirements and to simplify and clarify other existing rules. The proposals do not impose any additional compliance burden on small entities dealing with the Commission. In fact, we anticipate that the rule changes we propose will reduce regulatory and procedural burdens on small entities. Accordingly, we certify, pursuant to Section 605(b) of the RFA, that the rules, if promulgated, would not have a significant economic impact on a substantial number of small business entities, as defined by the RFA. The Office of Public Affairs, Reference Operations Division, will send a copy of this Notice to the Chief Counsel for Advocacy of the Small Business Administration in accordance with Section 603(a) of the Regulatory Flexibility Act. We will analyze the information submitted during the comment period, and if it is determined at the final rule stage that the rule changes will have a significant economic impact on a substantial number of small entities, a final regulatory flexibility analysis will be prepared. C. 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 Notice, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 104-13. Public and agency comments are due 60 days from publication of this Notice in the Federal Register. Comments should address the following: (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. D. Comment Filing Procedures 50. Comments and reply comments should be captioned in IB Docket No. 98-118. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R.  1.415, 1.419, interested parties may file comments on or before August 13, 1998, and reply comments on or before August 28, 1998. To file formally in this proceeding, you must file an original and four copies of all comments, reply comments, and supporting comments. If you want each Commissioner to receive a personal copy of your comments, you must file an original and nine copies. Please note, however, that comments and reply comments may be filed electronically, as described below. Comments and reply comments should be sent to Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222, Washington, D.C. 20554, with a copy to Douglas Klein of the International Bureau, 2000 M Street, N.W., Suite 800, Washington, D.C. 20554. Parties should also file one copy of any documents filed in this docket with the Commission's copy contractor, International Transcription Services, Inc., 1231 20th Street, N.W., Washington, D.C. 20036. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. Parties are also encouraged to file a copy of all pleadings on a 3.5-inch diskette in WordPerfect 5.1 format. 51. For purposes of this proceeding, we hereby waive those provisions of our rules that require formal comments to be filed on paper, and we encourage parties to file comments electronically. Electronically filed comments that conform to the following guidelines will be considered part of the record in this proceeding and accorded the same treatment as comments filed on paper pursuant to our rules. To file electronic comments in this proceeding, you must use the electronic filing interface available on the FCC's World Wide Web site at http://dettifoss.fcc.gov:8080/cgi-bin/ws.exe/beta/ecfs/upload.hts. Further information on the process of submitting comments electronically is available at that location and at http://www.fcc.gov/e-file/. 52. Written comments by the public on the proposed and/or modified information collections are due on or before sixty days after publication of this Notice in the Federal Register. In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to jboley@fcc.gov. E. Ordering Clauses 53. Accordingly, IT IS ORDERED that, pursuant to Sections 1, 4(i), 10, 11, 201(b), 214, 303(r), 307, 309(a), and 310 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 160, 161, 201(b), 214, 303(r), 307, 309(a), 310, this NOTICE OF PROPOSED RULEMAKING is hereby ADOPTED. 54. IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference Operations Division, 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.  601 et seq. 55. IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference Operations Division, shall send a copy of this NOTICE OF PROPOSED RULEMAKING to the Council on Environmental Quality. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary APPENDIX A Proposed Rules Parts 1, 43, and 63 of the Commission's Rules and Regulations (Chapter I of Title 47 of the Code of Federal Regulations) are amended as follows: PART 1 PRACTICE AND PROCEDURE 1. The authority citation for part 1 continues to read as follows: Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(i), 154(j), 155, 225, and 303(r). 2. Section 1.767 is amended by revising paragraphs (a)(6) and (a)(7) and adding new paragraphs (a)(8) and (a)(9) to read as follows:  1.767 Cable landing licenses. (a) *** (6) A statement as to whether the cable will be operated on a common carrier or non- common carrier basis; (7) A list of the proposed owners of the cable system, their voting interests, and their ownership interests by segment in the cable; (8) For each proposed owner of the cable system, a certification as to whether the proposed owner is, or has an affiliation with, a foreign carrier. Include the information and certifications required in  63.18(h)(1) and (2) of this chapter; and (9) Any other information that may be necessary to enable the Commission to act on the application. ***** 3. Section 1.1306 is amended by adding the following sentence to the end of Note 1:  1.1306 Actions which are categorically excluded from environmental processing. ***** Note 1: *** The provisions of  1.1307(a) and (b) of this part do not encompass the construction of new submarine cable systems. PART 43 REPORTS OF COMMUNICATION COMMON CARRIERS AND CERTAIN AFFILIATES 4. The authority citation for part 43 continues to read as follows: Authority: 47 U.S.C. 154; Telecommunications Act of 1996, Pub. L. 104-104, secs. 402 (b)(2)(B), (c), 110 Stat. 56 (1996) as amended unless otherwise noted. 47 U.S.C. 211, 219, 220 as amended. 5. Section 43.61 is amended by revising the last sentence of paragraph (c) to read as follows:  43.61 Reports of international telecommunications traffic. ***** (c) *** For purposes of this paragraph, affiliation and foreign carrier are defined in  63.09 of this chapter. PART 63 EXTENSION OF LINES AND DISCONTINUANCE, REDUCTION, OUTAGE AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF RECOGNIZED PRIVATE OPERATING AGENCY STATUS 6. The authority citation for Part 63 is revised to read as follows: Authority: 47 U.S.C. 151, 154(i), 154(j), 160, 201 205, 218, 403, 533 unless otherwise noted. 7. Section 63.09 is added to read as follows:  63.09 Definitions applicable to international Section 214 authorizations. The following definitions shall apply to  63.09 63.24 of this part, unless the context indicates otherwise: (a) Facilities-based carrier means a carrier that holds an ownership, indefeasible-right-of-user, or leasehold interest in bare capacity in the U.S. end of an international facility, regardless of whether the underlying facility is a common carrier or non-common carrier submarine cable or an INTELSAT or separate satellite system. (b) Control includes actual working control in whatever manner exercised and is not limited to majority stock ownership. (c) Special concession is defined as in  63.14(b). (d) Foreign carrier is defined as any entity that is authorized within a foreign country to engage in the provision of international telecommunications services offered to the public in that country within the meaning of the International Telecommunication Regulations, see Final Acts of the World Administrative Telegraph and Telephone Conference, Melbourne, 1988 (WATTC-88), Art. 1, which includes entities authorized to engage in the provision of domestic telecommunications services if such carriers have the ability to originate or terminate telecommunications services to or from points outside their country. (e) An affiliation with a foreign carrier includes the following: (1) A greater than 25 percent ownership of capital stock, or controlling interest at any level, by the carrier, or by any entity that directly or indirectly controls or is controlled by it, or that is under direct or indirect common control with it, in a foreign carrier or in any entity that directly or indirectly controls a foreign carrier; or (2) A greater than 25 percent ownership of capital stock, or controlling interest at any level, in the carrier by a foreign carrier, or by any entity that directly or indirectly controls or is controlled by a foreign carrier, or that is under direct or indirect common control with a foreign carrier; or by two or more foreign carriers investing in the carrier in the same manner in circumstances where the foreign carriers are parties to, or the beneficiaries of, a contractual relation (e.g., a joint venture or market alliance) affecting the provision or marketing of basic international telecommunications services in the United States. A U.S. carrier also will be considered to be affiliated with a foreign carrier where the foreign carrier controls, is controlled by, or is under common control with a second foreign carrier that is affiliated with that U.S. carrier under this section. (f) An affiliation with a U.S. facilities-based international carrier is defined as in paragraph (e), except that the phrase "U.S. facilities-based international carrier" shall be substituted for the phrase "foreign carrier." Note 1: The assessment of "capital stock" ownership will be made under the standards developed in Commission case law for determining such ownership. See, e.g., Fox Television Stations, Inc., 10 FCC Rcd 8452 (1995). "Capital stock" includes all forms of equity ownership, including partnership interests. Note 2: Ownership and other interests in U.S. and foreign carriers will be attributed to their holders and deemed cognizable pursuant to the following criteria: Attribution of ownership interests in a carrier that are held indirectly by any party through one or more intervening corporations will be determined by successive multiplication of the ownership percentages for each link in the vertical ownership chain and application of the relevant attribution benchmark to the resulting product, except that wherever the ownership percentage for any link in the chain exceeds 50 percent, it shall not be included for purposes of this multiplication. For example, if A owns 30 percent of company X, which owns 60 percent of company Y, which owns 26 percent of "carrier," then X's interest in "carrier" would be 26 percent (the same as Y's interest because X's interest in Y exceeds 50 percent), and A's interest in "carrier" would be 7.8 percent (0.30 x 0.26). Under the 25 percent attribution benchmark, X's interest in "carrier" would be cognizable, while A's interest would not be cognizable. 8. Section 63.10 is amended by removing the third sentence of paragraph (a) introductory text, the last sentence of paragraph (a)(4), and the last sentence of paragraph (c)(5). 9. Section 63.11 is amended by revising paragraphs (a)(1) and (a)(2) and by removing the last sentence of paragraph (c)(1) to read as follows:  63.11 Notification by and prior approval for U.S. international carriers that have or propose to acquire an affiliation with a foreign carrier. (a) *** (1) acquisition of a direct or indirect controlling interest in a foreign carrier by the authorized carrier, or by any entity that directly or indirectly controls the authorized carrier, or that directly or indirectly owns more than 25 percent of the capital stock of the authorized carrier; or (2) acquisition of a direct or indirect interest in the capital stock of the authorized carrier by a foreign carrier or by an entity that directly or indirectly controls a foreign carrier where the interest would create an affiliation within the meaning of  63.09(e)(2). ***** 10. Section 63.14 is amended by removing the last sentence of paragraph (a). 11. Section 63.15 is removed.  63.15 [removed] 12. Section 63.16 is added to read as follows:  63.16 Switched services over private lines. (a) Except as provided in  63.22(g)(2), a carrier may provide switched basic services over its authorized private lines if and only if the country at the foreign end of the private line appears on a Commission list of countries to which the Commission has authorized the provision of switched services over private lines. (b) An authorized carrier seeking to add a foreign market to the list of markets to which carriers may provide switched services over private lines must make the following showing in a Section 214 application filed pursuant to  63.18 or in a petition for declaratory ruling: (i) If seeking a Commission ruling to permit the provision of international switched basic services over private lines between the United States and a WTO Member country, the applicant shall demonstrate either that settlement rates for at least 50 percent of the settled U.S.-billed traffic between the United States and the country at the foreign end of the private line are at or below the benchmark settlement rate adopted for that country in IB Docket No. 96-261 or that the country affords resale opportunities equivalent to those available under U.S. law. (ii) If seeking a Commission ruling to permit the provision of international switched basic services over private lines between the United States and a non-WTO Member country, the applicant shall demonstrate that settlement rates for at least 50 percent of the settled U.S.-billed traffic between the United States and the country at the foreign end of the private line are at or below the benchmark settlement rate adopted for that country in IB Docket No. 96-261 and that the country affords resale opportunities equivalent to those available under U.S. law. (c) With regard to showing under paragraph (b) of this section that a destination country affords resale opportunities equivalent to those available under U.S. law, an applicant shall include evidence demonstrating that equivalent resale opportunities exist between the United States and the subject country, including any relevant bilateral or multilateral agreements between the administrations involved. The applicant must demonstrate that the foreign country at the other end of the private line provides U.S.-based carriers with: (i) The legal right to resell international private lines, interconnected at both ends, for the provision of switched services; (ii) Reasonable and nondiscriminatory charges, terms and conditions for interconnection to foreign domestic carrier facilities for termination and origination of international services, with adequate means of enforcement; (iii) Competitive safeguards to protect against anticompetitive and discriminatory practices affecting private line resale; and (iv) Fair and transparent regulatory procedures, including separation between the regulator and operator of international facilities-based services. Note 1 to  63.16: The Commission's benchmark settlement rates are available in International Settlement Rates, Report and Order, 12 FCC Rcd 19,806, 62 FR 45758 (August 29, 1997). 13. Section 63.17 is amended by changing "(e)(6)" to "(e)(4)" at the end of paragraph (b)(4). 14. Section 63.18 is amended by revising paragraphs (e), (f), (g), (h), and (i) to read as follows:  63.18 Contents of applications for international common carriers. ***** (e) One or more of the following statements, as pertinent: (1) Global Facilities-Based Authority. If applying for authority to become a facilities-based international common carrier subject to  63.22, the applicant shall: (i) State that it is requesting Section 214 authority to operate as a facilities-based carrier pursuant to  63.18(e)(1) of the Commission's rules (ii) List any countries for which the applicant does not request authorization under this paragraph (see  63.22(a)); and (iii) Certify that it will comply with the terms and conditions contained in  63.21 and 63.22. (2) Global Resale Authority. If applying for authority to resell the international services of authorized U.S. common carriers subject to  63.23, the applicant shall: (i) State that it is requesting Section 214 authority to operate as a resale carrier pursuant to  63.18(e)(2) of the Commission's rules; (ii) List any countries for which the applicant does not request authorization under this paragraph (see  63.23(a)); and (iii) Certify that it will comply with the terms and conditions contained in  63.21 and 63.23. (3) Transfer of Control or Assignment. If applying for authority to acquire facilities through the transfer of control of a common carrier holding international Section 214 authorization, or through the assignment of another carrier's existing authorization, the applicant shall complete paragraphs (a) through (d) of this section for both the transferor/assignor and the transferee/assignee. Only the transferee/assignee needs to complete paragraphs (h) through (k) of this section. At the beginning of the application, the applicant should also include a narrative of the means by which the transfer or assignment will take place. The Commission reserves the right to request additional information as to the particulars of the transaction to aid it in making its public interest determination. An assignee shall notify the Commission no later than 30 days after either consummation of the assignment or a decision not to consummate the assignment. The notification may be by letter and shall identify the file numbers under which the initial authorization and the authorization of the assignment were granted. See also  63.24 (pro forma assignments and transfers of control). (4) Other Authorizations. If applying for authority to acquire facilities or to provide services not covered by paragraphs (e)(1) through (e)(3), the applicant shall provide a description of the facilities and services for which it seeks authorization. The applicant shall certify that it will comply with the terms and conditions contained in  63.21 and  63.22 and/or  63.23, as appropriate. Such description also shall include any additional information the Commission shall have specified previously in an order, public notice or other official action as necessary for authorization. ***** (g) Where the applicant is seeking facilities-based authority under paragraph (e)(4) of this section, a statement whether an authorization of the facilities is categorically excluded as defined by  1.1306 of this chapter. If answered affirmatively, an environmental assessment as described in  1.1311 of this chapter need not be filed with the application. (h) A certification as to whether or not the applicant is, or has an affiliation with, a foreign carrier, supported by the following information: (1) In support of the required certification, each applicant shall also provide the name, address, citizenship and principal businesses of its greater-than-25-percent direct and indirect shareholders or other equity holders and identify any interlocking directorates. (2) The certification shall state with specificity each foreign country in which the applicant is, or has an affiliation with, a foreign carrier. (3) Any applicant that seeks to provide international telecommunications services to a particular country and that is a foreign carrier in that country, or directly or indirectly controls a foreign carrier in that country, or has an affiliation within the meaning of paragraph (h)(1)(i)(B) of this section with a foreign carrier in that country shall make one of the following showings: (i) The named foreign country (i.e., the destination foreign country) is a Member of the World Trade Organization; or (ii) The applicant's affiliated foreign carrier lacks sufficient market power in the named foreign country to affect competition adversely in the U.S. market; or (iii) The named foreign country provides effective competitive opportunities to U.S. carriers to compete in that country's market for the service that the applicant seeks to provide (facilities-based, resold switched, or resold non-interconnected private line services). An effective competitive opportunities demonstration should address the following factors: (A) If the applicant seeks to provide facilities-based international services, the legal ability of U.S. carriers to enter the foreign market and provide facilities-based international services, in particular international message telephone service (IMTS); (B) If the applicant seeks to provide resold services, the legal ability of U.S. carriers to enter the foreign market and provide resold international switched services (for switched resale applications) or non-interconnected private line services (for non-interconnected private line resale applications); (C) Whether there exist reasonable and nondiscriminatory charges, terms and conditions for interconnection to a foreign carrier's domestic facilities for termination and origination of international services or the provision of the relevant resale service; (D) Whether competitive safeguards exist in the foreign country to protect against anticompetitive practices, including safeguards such as: (1) Existence of cost-allocation rules in the foreign country to prevent cross-subsidization; (2) Timely and nondiscriminatory disclosure of technical information needed to use, or interconnect with, carriers' facilities; and (3) Protection of carrier and customer proprietary information; (E) Whether there is an effective regulatory framework in the foreign country to develop, implement and enforce legal requirements, interconnection arrangements and other safeguards; and (F) Any other factors the applicant deems relevant to its demonstration. (4) Any applicant that proposes to resell the international switched services of an unaffiliated U.S. carrier for the purpose of providing international telecommunications services to the named foreign country and that is a foreign carrier in that country or has an affiliation with a foreign carrier in that country shall either provide in its application a showing that would satisfy  63.10(a)(3) or state that it will file the quarterly traffic reports required by  43.61(c) of this chapter. (5) With respect to regulatory classification under  63.10, any applicant that certifies that it is or has an affiliation with a foreign carrier in a named foreign country and that desires to be regulated as non-dominant for the provision of particular international telecommunications services to that country should provide information in its application to demonstrate that it qualifies for non-dominant classification pursuant to  63.10. (i) Each applicant shall certify that the applicant has not agreed to accept special concessions directly or indirectly from any foreign carrier with respect to any U.S. international route where the foreign carrier possesses sufficient market power on the foreign end of the route to affect competition adversely in the U.S. market and will not enter into such agreements in the future. ***** 15. Section 63.21 is amended by revising the section heading, revising paragraph (a), and adding new paragraphs (i) and (j) to read as follows:  63.21 Conditions applicable to all international Section 214 authorizations. *** (a) Each carrier is responsible for the continuing accuracy of the certifications made in its application. Whenever the substance of any such certification is no longer accurate, the carrier shall as promptly as possible and in any event within thirty days file with the Secretary in duplicate a corrected certification referencing the FCC File No. under which the original certification was provided. The information may be used by the Commission to determine whether a change in regulatory status may be warranted under  63.10. See also  63.11. ***** (i) Subject to the requirement of  63.10 that a carrier regulated as dominant along a route must provide service as an entity that is separate from its foreign carrier affiliate, and subject to any other structural-separation requirement in Commission regulations, an authorized carrier may provide service through any wholly owned subsidiaries without seeking additional Commission authorization, provided that this provision shall not be construed to authorize the provision of service by any entity barred by statute or regulation from itself holding an authorization or providing service. (j) An authorized carrier that changes its name shall notify the Commission by letter filed with the Secretary in duplicate within 30 days of the name change. Such letter shall reference the FCC File No. under which the carrier's authorizations were granted. 16. Section 63.22 is added to read as follows:  63.22 Facilities-based international common carriers. The following conditions apply to authorized international facilities-based carriers: (a) A carrier authorized under  63.18(e)(1) may provide international facilities-based services to international points for which it qualifies for non-dominant regulation as set forth in  63.10, except in the following circumstance: If the carrier is or is affiliated with a foreign carrier in a destination market and the Commission has not determined that the foreign carrier lacks sufficient market power in the destination market to affect competition adversely in the U.S. market (see  63.10(a)), the carrier shall not provide service on that route unless it has received specific authority to do so under  63.18(e)(4). (b) The carrier may provide service using half-circuits on any appropriately licensed U.S. common carrier and non-common carrier facilities (under either Title III of the Communications Act of 1934, as amended, or the Submarine Cable Landing License Act, 47 U.S.C.  34-39) that do not appear on an exclusion list published by the Commission. Carriers may also use any necessary non- U.S.-licensed facilities, including any submarine cable systems, that do not appear on the exclusion list. Carriers may not use U.S. earth stations to access non-U.S.-licensed satellite systems unless the Commission has specifically approved the use of those satellites and so indicates on the exclusion list, and then only for service to the countries indicated thereon. The exclusion list is maintained on the Commission's World Wide Web site at http://www.fcc.gov/ib/td/pf/exclusionlist.html. (c) The carrier may not provide service to any country listed on an exclusion list published by the Commission unless it has received specific authority under  63.18(e)(4). (d) The carrier may provide international basic switched, private line, data, television and business services. (e) Subject to the requirements of the Submarine Cable Landing License Act, 47 U.S.C. 34- 39, the carrier is authorized to construct, acquire, or operate lines in any new major common carrier facility project between the United States and all international points that it is authorized to serve on a facilities basis. This paragraph shall not authorize the carrier to engage in any construction or extension of lines that may have a significant effect on the environment as defined in  1.1307 of this chapter. See  1.1312 of this chapter. The carrier must seek specific Section 214 authority and comply with the Commission's environmental rules before any such construction or extension. (f) Except as otherwise ordered by the Commission, the carrier may provide facilities-based service to a market served by an affiliate that terminates U.S. international switched traffic only if that affiliate has in effect a settlement rate with U.S. international carriers that is at or below the Commission's relevant benchmark adopted in IB Docket No. 96-261. See FCC 97-280 (rel. Aug. 18, 1997) (available at the FCC's Reference Operations Division, Washington, D.C. 20554, and on the FCC's World Wide Web Site at http://www.fcc.gov). (g)(1) Except as provided in paragraph (g)(2) of this section, the carrier may provide switched basic services over its authorized facilities-based private lines if and only if the country at the foreign end of the private line appears on a Commission list of countries to which the Commission has authorized the provision of switched services over private lines. See  63.16. If at any time the Commission finds that the country no longer provides equivalent resale opportunities or that market distortion has occurred in the routing of traffic between the United States and that country, the carrier shall comply with enforcement actions taken by the Commission. (2) The carrier may use its authorized private line facilities to provide switched basic services in circumstances where the private line facility is interconnected to the public switched network on only one end either the U.S. end or the foreign end and where the carrier is not operating the facility in correspondence with a carrier that directly or indirectly owns the private line facility in the foreign country at the other end of the private line. (h) The carrier shall file annual international circuit status reports as required by  43.82 of this chapter. (i) The authority granted under this part is subject to all Commission rules and regulations and any conditions or limitations stated in the Commission's public notice or order that serves as the carrier's Section 214 certificate. See  63.12. 17. Section 63.23 is added to read as follows:  63.23 Resale-based international common carriers. The following conditions apply to carriers authorized to resell the international services of other authorized carriers: (a) A carrier authorized under  63.18(e)(2) may provide resold international services to international points for which the applicant qualifies for non-dominant regulation as set forth in  63.10, except that the carrier may not provide either of the following services unless it has received specific authority to do so under  63.18(e)(4): (i) Switched resold services to a non-WTO Member country where the applicant is or is affiliated with a foreign carrier; and (ii) Switched or private line services over resold private lines to a destination market where the applicant is or is affiliated with a foreign carrier and the Commission has not determined that the foreign carrier lacks sufficient market power in the destination market to affect competition adversely in the U.S. market (see  63.10(a)). (b) The carrier may not resell the international services of an affiliated carrier regulated as dominant on the route to be served unless it has received specific authority to do so under  63.18(e)(4). (c) Except as provided in paragraph (b) of this section, the carrier may resell the international services of any authorized common carrier, pursuant to that carrier's tariff or contract duly filed with the Commission, for the provision of international basic switched, private line, data, television and business services to all international points. (d) The carrier may provide switched basic services over its authorized resold private lines if and only if the country at the foreign end of the private line appears on a Commission list of countries to which the Commission has authorized the provision of switched services over private lines. See  63.16. If at any time the Commission finds that the country no longer provides equivalent resale opportunities or that market distortion has occurred in the routing of traffic between the United States and that country, the carrier shall comply with enforcement actions taken by the Commission. (e) Any party certified to provide international resold private lines to a particular geographic market shall report its circuit additions on an annual basis. Circuit additions should indicate the specific services provided (e.g., IMTS or private line) and the country served. This report shall be filed on a consolidated basis not later than March 31 for the preceding calendar year. (f) The authority granted under this part is subject to all Commission rules and regulations and any conditions or limitations stated in the Commission's public notice or order that serves as the carrier's Section 214 certificate. See  63.12, 63.21. 18. Section 63.24 is added to read as follows:  63.24 Pro forma assignments and transfers of control. (a) Definition. An assignment of an authorization granted under this part or a transfer of control of a carrier authorized under this part to provide an international telecommunications service is a pro forma assignment or transfer of control if it falls into one of the following categories and, together with all previous pro forma transactions, does not result in a change in the carrier's ultimate control: (1) Assignment from an individual or individuals (including partnerships) to a corporation owned and controlled by such individuals or partnerships without any substantial change in their relative interests; (2) Assignment from a corporation to its individual stockholders without effecting any substantial change in the disposition of their interests; (3) Assignment or transfer by which certain stockholders retire and the interest transferred is not a controlling one; (4) Corporate reorganization that involves no substantial change in the beneficial ownership of the corporation; (5) Assignment or transfer from a corporation to a wholly owned subsidiary thereof or vice versa, or where there is an assignment from a corporation to a corporation owned or controlled by the assignor stockholders without substantial change in their interests; or (6) Assignment of less than a controlling interest in a partnership. (b) A pro forma assignment or transfer of control of an authorization to provide international telecommunications service is not subject to the requirements of  63.18. A pro forma assignee or a carrier that is the subject of a pro forma transfer of control is not required to seek prior Commission approval for the transaction. A pro forma assignee must notify the Commission no later than 30 days after the assignment is consummated. The notification may be in the form of a letter, and it must contain a certification that the assignment was pro forma as defined in paragraph (a) of this section and, together with all previous pro forma transactions, does not result in a change of the carrier's ultimate control. A single letter may be filed for an assignment of more than one authorization if each authorization is identified by the file number under which it was granted. 19. Section 63.25 is added to read as follows:  63.25 Special procedures for non-dominant international common carriers. (a) Any party that would be a non-dominant international communications common carrier is authorized to provide facilities-based international services, subject to  63.22, between the United States and all international points, except that this paragraph shall not authorize the party to provide service between the United States and any country where an affiliated foreign carrier operates. (b) Any party that would be a non-dominant international communications common carrier is authorized to provide resold international services, subject to  63.23, between the United States and all international points, except that this paragraph shall not authorize the party to provide service between the United States and any country where an affiliated foreign carrier operates. (c) Within 30 days of commencing service pursuant to paragraph (a) or (b), the party shall notify the Commission by letter addressed to the Chief, International Bureau, that it has commenced providing service pursuant to  63.25 of the Commission's rules. Such letter shall include the applicable information and certifications described in  63.18. (d) Notwithstanding paragraphs (a) and (b), the Commission reserves the right to condition or revoke the authorization of any entity for a violation of the Commission's rules or policies, and such condition or revocation shall be effective against all successors, transferees, or assigns, as ordered by the Commission. Separate Statement of Commissioner Harold W. Furchtgott-Roth In re: Notice of Proposed Rulemaking 1998 Biennial Regulatory Review -- Review of International Common Carrier Regulations, IB Docket 98-118 I support adoption of this Notice of Proposed Rulemaking. In my view, any reduction of unnecessary regulatory burdens is beneficial. To that extent, this item is good and I am all for it. This item should not, however, be mistaken for complete compliance with Section 11 of the Communications Act. As I have explained previously, the FCC is not planning to "review all regulations issued under this Act . . . that apply to the operations or activities of any provider of telecommunications service," as required under Subsection 11(a) in 1998 (emphasis added). See generally 1998 Biennial Regulatory Review -- Review of Computer III and ONA Safeguards and Requirements, 13 FCC Rcd 6040 (released Jan. 30, 1998). Nor has the Commission issued general principles to guide our public interest analysis and decision-making process across the wide range of FCC regulations. In one important respect, however, the FCC's current efforts are more ambitious and difficult than I believe are required by the Communications Act. Subsection 11(a) -- captioned "Biennial Review" -- requires only that the Commission "determine whether any such regulation is no longer necessary in the public interest." (emphasis added). It is pursuant to Subsection 11(b) -- entitled "Effect of Determination" -- that regulations determined to be no longer in the public interest must be repealed or modified. Thus, the repeal or modification of our rules, which requires notice and comment rulemaking proceedings, need not necessarily be accomplished during the year of the biennial review. Yet the Commission plans to complete roughly thirty such proceedings this year. I encourage parties to participate in these thirty rulemaking proceedings. I also suggest that parties submit to the Commission -- either informally or as a formal filing -- specific suggestions of rules we might determine this year to be no longer necessary in the public interest as well as ideas for a thorough review of all our rules pursuant to Subsection 11(a). * * * * * * *