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Ext. of Lines, DA 95846//$ )f  $/63.01 Contents of Applications/$ )f  $/300.214 Extension of Lines/$ )f  FiBefore the ` FEDERAL COMMUNICATIONS COMMISSION ?Washington, D.C. 20554  T-In the Matter of  hhCqpp) ` `  hhCqpp)  Tp-American Telephone andhhCqpp)USP93W056  TH -Telegraph Co.; hhCqpp)  T -MCI Telecommunications Corp.hhCqpp)USP93W057 ` `  hhCqpp)  T -Petitions for Waiver of the Internationalqpp)  T -Settlements Policy for a Change in thehhCqpp)  T -Accounting Rate for Switched Voice Servicesqpp)  TX-with Mexico.` `  hhCqpp) $ORDER ON RECONSIDERATION  T-Adopted: April 19, 1995hhCqReleased:)f By the Chief, International Bureau:  S- GI. INTRODUCTION ă  T-1.` ` Telefonos de Mexico, S.A. de C.V., ("Telmex") seeks reconsideration of an order which denied the requests of AT&T and MCI to increase the settlement rates paid to Telmex for  Tx-country direct services.Tx W<ԍ` ` #Xw PE37XP#In the Matter of American Telephone and Telegraph Company and MCI  Y-Telecommunications Corp. USP93W056, USP93W057, 8 FCC Rcd 3901  Y-(Int. Fac. Div. 1993)("Order"). See infra, note 2.(#` T Settlement rates in Mexico are already much too high, and Telmex has not demonstrated a costbased justification for this increase. Since we find no other reason to allow such  T(-a settlement rate increase, Telmex's Petition for Reconsideration is denied.  T-I II. BACKGROUND ă  Ta-2.` ` AT&T and MCI sought waivers of the Commission's International Settlements Policy (ISP) to introduce their country direct services (USADirect and CALL USA, respectively) throughout  T -Mexico at settlement rates of $.35 per minute for Rate Bands 13 and $1.20 per minute for Rate Bands 48 (effective 12/1/92 through 12/31/93). On June 4, 1993, the International Facilities  T!-Division of the Common Carrier Bureau ("Division") denied AT&T's and MCI's waiver requests!O Y'-#Xx PE37XP#эXX` ` Authority formerly delegated to the Common Carrier Bureau to grant such  Y(-waivers now rests with the International Bureau.  See generally, Amendment of"(0*0*0*(" Parts 0,1,25,43,64 and 73 of the Commission's Rules to Reflect a  Yy-Reorganization Establishing the International Bureau, 9 FCC Rcd 7050 (1994).(#` . "!d0*0*0*%"  T-AT&T, MCI and Sprint filed statements in support of Telmex's petition.id+ Y<ԍ` ` #Xw PE37XP#See Letter, dated July 21, 1993, from Michael B. Fingerhut, Sprint to William  Y-F. Caton, Acting Secretary, Federal Communications Commission ("Sprint  Y-Letter"); Letter, dated July 23, 1993, from Stephen C. Garavito, AT&T to William F. Caton, Acting Secretary, Federal Communications Commission  Y-("AT&T Letter"); Letter, dated July 14, 1993, from Jodi L. Cooper, MCI to William F. Caton, Acting Secretary, Federal Communications Commission  Y -("MCI Letter").(#` Ƌ No opposition to Telmex's petition has been filed.   S`- OIII. DISCUSSION ă  T-3.` ` Telmex did not participate in the underlying proceeding. It asserts, however, that Section 1.106 of the Commission's Rules permits a person adversely affected by a Commission action to seek reconsideration if it has shown "good reason why it was not possible for him to participate in  T-the earlier stages of the proceeding." + Y<ԍ` ` #Xw PE37XP#Telmex Petition at pp. 2,3.(#` Ɓ We need not decide whether Telmex has satisfied this standard, because the magnitude of the settlements payments to Mexico and the unique complexity of the Mexican settlement rate structure are such that the public interest requires us to address the issues  T -raised by Telmex.Y H + Y<ԍ` ` #Xw PE37XP#C.f., In Re Application of Central Mobile Radio Phone Service 65 F.C.C.2d  Y-648 (1977); In Re Application of Cable Television of Puerto Rico, San Juan  Y-Puerto Rico 49 F.C.C. 2d 617 (1974).(#` Y  T -4.` ` In denying AT&T's and MCI's waiver requests, the Division found that the proposed  T -settlement rates would contravene the Commission's ISP,7 + Y<ԍ` ` #Xw PE37XP#The ISP requires uniform settlement rates, accounting rates and division of tolls for U.S. international carriers on parallel routes. It encourages  Y-accounting rate reductions by U.S. carriers in an effort to address concerns over the rapidly increasing settlements deficit incurred by the United States  Y!-visavis the rest of the world. See Implementation and Scope of Uniform  Y"-Settlements Policy for Parallel International Communications Routes, 51 Fed.  Y#-Reg. 4736 (1986);recon. 2 FCC Rcd 1118 (1987);fur. recon. 3 FCC Rcd 1614 (1988).(#`  noting that: 1) the rates were higher than" 0*((="  T-the existing rates for the USADirect service available in Rate Band 8,z+ Yh<ԍ` ` #Xw PE37XP#While MCI's waiver request proposed to provide CALL USA for the first time, the proposed settlement rate is still considered an increase under the ISP because the proposed rate is higher than the rate previously offered to AT&T for its USADirect service. 47 C.F.R. 64.1001 (b).(#` z 2) the carriers failed to show that the proposed rates would improve the settlements deficit with Mexico, or would otherwise be in  T-the public interest, and 3) the carriers made no attempt to justify these proposed rates on a cost basis.Dz4+ Y<ԍ` ` #Xw PE37XP#Order at  916. In its Order, the Division noted that, because the settlement rates paid by AT&T for USADirect service in Rate Band 8 are the same for dial traffic originating in the U.S. and terminating in Rate Band 8, the carriers would "be hard pressed, on the basis of cost, to justify the introduction of a settlement rate for USADirect which is higher than the rate for dial traffic,"  Y -even had they attempted to do so. Order at  12.(#` D  T8-5.` ` Telmex's main argument on reconsideration is not that the proposed settlement rates for USADirect and Call USA are consistent with the ISP, but that an exception to the ISP is  T-warranted. v + Y<ԍ` ` #Xw PE37XP#Telmex Petition at pp. 310; see also Sprint Letter, at pp. 1,2; MCI Letter at  Y-pp. 2,3.(#` In support, Telmex asserts that its efforts to restructure Mexico's telecommunications infrastructure justify a departure from the ISP. Telmex asserts generally that it is upgrading its telecommunications infrastructure, adjusting prices to reflect cost, and introducing competition. Telmex therefore would have us deviate from the principle that settlement rates should reflect cost.  T -6.` ` We support Telmex's efforts to align its pricing structure more closely to cost, but the proposed settlement rates for USADirect and CALL USA would depart from these efforts. We also do not believe that Telmex has shown that this settlement rate increase for country direct services is essential to its efforts to upgrade its infrastructure. If general assertions that rates increases support infrastructure development and a transition to a more competitive environment sufficed to justify a waiver of the ISP, it would be difficult to deny waivers. The ISP could be eviscerated. Mexico already receives the largest net settlement payments based upon settlement rates that are not justified  T-by cost.: 9|+ Y<ԍ` ` #Xw PE37XP#Between 1985 and 1993, the U.S. net settlements payment to Mexico totaled $4.3 billion. In 1993 alone Telmex received $720 million, five times more  Y!-than the second largest payment. Trends in the International  Yw"-Telecommunications Industry Through 1992, Industry Analysis Division (IAD),  Yb#-FCC, March 1994 (19851992 data); 1993 Section, 43.61 International  YM$-Telecommunications Data, IAD, FCC, November 21, 1994 (1993 data). The average settlement payment per minute for U.S. billed telephone service to  Y!&-Mexico in  1993 was 65/minute. This compares with an average rate of 15/minute for calls to Canada, and with a global average of 55/minute. " ' 0*((I'"  Y-1993 Section, 43.61 International Telecommunications Data, IAD, FCC, November 21, 1994. As stated in the Division's Order, we have seen no persuasive evidence that implementing the proposed settlement rates for  YM-country direct services would decrease net payments to Mexico. Order, at  Y8-p.4,nn.26,27. (#` : "  0*(("Ԍ T-ԙ7.` ` Further, it is our understanding that the improvements and realignments in Telmex's communications infrastructure include investment in technologically advanced equipment the presence of which has resulted in the increased availability of telecommunications service throughout Mexico. These factors should lower the unit cost of providing service, and permit lower settlement  T`-rates. However, the settlement rates for U.S. billed calls to Mexico that expired December 31, 1994 are among the highest rates U.S. carriers have with any foreign administration. We note the U.S. carriers' ongoing settlement rate negotiations with Telmex and hope that they will produce  T-significantly reduced rates.  T-8.` ` We reject Telmex's argument, initially advanced by AT&T and MCI, that because country direct services are a substitute for Mexican operator assisted service, the proposed settlement rate is an "increase" only if it is higher than those settlement rates applicable to operator assisted  T! -calls.` ;! + Y<ԍ` ` #Xw PE37XP#Telmex Petition at p.10,n.14; AT&T Letter at pp. 2,3. AT&T unpersuasively restates this argument in its letter supporting Telmex's Petition for  Y-Reconsideration.  AT&T Letter at pp. 2,3. However for the reasons stated in   Y-8, infra, we continue to reject this argument. In its letter, AT&T also restates its position that the proposed settlement payments for USADirect would result in a decrease in net settlement payments to Mexico, and would benefit U.S.  YI-citizens in Mexico. AT&T Letter at pp. 13; see also MCI Letter at pp. 2,3.  Y4-We also reject these arguments for the reasons set forth in the Order. Order at  14,15,n.27.(#` ` The question of whether the proposed settlement rate for country direct service has increased is better resolved by reference to the previous settlement rate applied to USADirect service than by  T -reference to the settlement rate applied to a different service with different costs. + Y<ԍ` ` #Xw PE37XP#See e.g., Telefonica at  18.(#` ƌ For example, the cost to Telmex of a service utilizing a Mexicobased operator employed by Telmex obviously differs from the cost to Telmex that is associated with a country direct call where a U.S. (not Mexican) operator is used to complete the call.  T -9.` ` Telmex next argues that the Division acted unreasonably in comparing the proposed settlement rates to the existing settlement rates for USADirect service because reliance on such comparisons will "discourage foreign carriers from implementing new services with U.S. Carriers...in  T-the future." Telmex Petition at p.9,n.12. However, we routinely rely on such comparative data. In fact, our rules require that such data accompany any proposed change in accounting rates. 47 C.F.R.  64.1001(e)(f). Moreover, Telmex has submitted no evidence to support this argument. In addition, this position also directly contravenes the ISP and the waiver standard established by the Commission" 0*(("  T-in the Phase I Report and Order. P+ Yh<ԍ` ` #Xw PE37XP#Telmex also argues that the facts of this case differ from those in American  YS-Telephone and Telegraph Company and MCI Communications Corporation, 5  Y>-FCC Rcd 4618 (Com. Car. Bur. 1990) (Telefonica), where the Common Carrier Bureau found that the proposed accounting rate increases did not serve  Y-the public interest. It thus argues that it was improper for the Division to cite  Y-that case here. However, the Division merely cited Telefonica as an example of the general policy that the accounting rate increases are not in the public interest. (#`   T- 10.` ` Finally, Telmex argues that, if the record contains no evidence of whipsawing, and "proposed rates are not higher than rates for like services currently in effect," the burden of proof  Tb-shifts to the Commission to justify its refusal to permit the proposed change.b+ Y <ԍ` ` #Xw PE37XP#Telmex Petition at p.11. (#`  We find that the  T:-proposed rates are, in fact, higher than rates for like services currently in effect.: + Ym<ԍ` ` #Xw PE37XP#Order at  816.(#` Ɖ As the Division noted in its Order, in 1992 AT&T paid a settlement rate of $1.10 per minute (day) and $.74 per  T-minute (night) for the USADirect services available from four cities located in Rate Band 8.rF + Y<ԍ` ` #Xw PE37XP#Order at n.7(#` r Thus, the proposed settlement rate of $1.20 per minute (Rate Bands 48) is clearly an increase which Telmex has not justified based on underlying costs. Moreover, Telmex's argument that the burden of proof somehow shifts in the circumstances it cites is unsupported by any authority. Even in the  TJ -absence of whipsawing, the burden remains with the party seeking waiver.J + Y<ԍ` ` #Xw PE37XP#See, e.g., Phase I Report and Order, 6 FCC Rcd at 35545.(#` Ɵ  T - 11.` ` We recognize that Mexico has taken significant strides to introduce competition into its telecommunication market, and also to move calling prices more in line with costs. However, noncostbased increases in the settlement rates would undermine these efforts, and are inconsistent with the ISP.  S2- JIV. CONCLUSION ă  T- 12.` ` For the reasons stated above, we deny Telmex's Petition for Reconsideration.  S- 3V. ORDERING CLAUSES ă  TB- 13.` ` Accordingly, IT IS ORDERED that the Petition for Reconsideration filed by Telmex IS DENIED.  T- 14.` ` This order is issued under Section 0.261 of the Commission's Rules and is effective upon adoption. Petitions for reconsideration under section 1.106 or applications for review under"0*((" Section 1.115 of the Commission's Rules may be filed within 30 days of the public notice of this  T-order (see Section 1.4(b)(2)). ` `  hhCqFederal Communications Commission ` `  hhCqScott Blake Harris ` `  hhCqChief, International Bureau