WPC 2B?J Courierphoenix#XP\  P6QXP#3|j 0_1HPLAS4.PRS 4x  @\oeX@26%F%K3|jTimes New RomanTimes New Roman Bold  P6Q XP#Times New RomanTimes New Roman Bold"i~'^09CSS999S]+9+/SSSSSSSSSS//]]]Ixnnxg]xx9?xgxx]xn]gxxxxg9/9MS9ISISI9SS//S/SSSS9?/SSxSSIP!PZ9+ZM999+99999999S/xIxIxIxIxIlnIgIgIgIgI9/9/9/9/xSxSxSxSxSxSxSxSxSxSxIxSxRxSxSxS]SxIxIxInInInZnIxigIgIgIgIxSxSxSxZxSxZxS9/9S999Su]ZZxSg/gCg9g9g/xSbxSxSxSxSxn9n9n9]?]?]?]ZgFg/gMxSxSxSxSxSxSxxZgIgIgIxSg9xS]?g9xSi+SS88WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN8HH"&H>XHH8HB8>HH^HH>"".2",2,2,"222N2222"&22H22,006"6."""""""""""2H,H,H,H,H,XAB,>,>,>,>,""""H2H2H2H2H2H2H2H2H2H2H,H2H1H2H2H282H,H,H,B,B,B6B,H?>,>,>,>,H2H2H2H6H2H6H2""2"""2F866H2>>(>">">H2;H2H2H2H2XHB"B"B"8&8&8&86>*>>.H2H2H2H2H2H2^HH6>,>,>,H2>"H28&>"H2?22!!WFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN$<<$.2",2222`2 LL2 LL2L"",,2d""Washington, D.C. 20554 s4 <DL!4 <DL! 44  <<,ZDDDA 96378  XH44 <DL!DL!In the Matter of) )  X 4AT&T Corp.)DDISP96W062! )!  X 4Proposed Extension of)!  X 4Accounting Rate Agreement for)  X 4Switched Voice Service with)!  X 4DL!4 <DL!Argentina  <<,Z)  Xb'j4 <DL!4 <DL! ORDER   X44s4 <DL!4 <DL!X44 Adopted: March 18, 1996ZDDReleased: March 18, 1996!4 By the Chief, International Bureau:  X4#XP\  P6QXP#  X'Y4 <DL!4 <DL! Introduction s4 <DL!4 <DL!  X4441. This Commission will not allow foreign monopolists to undermine U.S.  X4law, injure U.S. carriers or disadvantage U.S. consumers. Telintar,X| yO ' "} ԍXTelintar, a privately-owned company, provides international telecommunications services in Argentina on  "I a monopoly basis through November 1997. Telefonica of Argentina and Telecom Argentina, Argentina's two regional monopoly providers of local telephone service, each own 50 percent of Telintar.(#Ɓ of Argentina, is attempting to do just that. We must use our regulatory authority to prevent this effort from being successful.  X74442. Telintar has used its market power to discriminate against individual U.S. carriers to win concessions in accounting rate negotiations. It has, for example, unilaterally blocked AT&T's circuits to Argentina and USADirect Service in retaliation for AT&T's efforts to negotiate a lower accounting rate. This unprecedented discriminatory and retaliatory behavior constitutes classic whipsawing and violates our International Settlements Policy (ISP). To enforce our law, and to protect U.S. carriers and consumers, we must order U.S. carriers providing direct facilitiesbased service to Argentina in correspondence with Telintar to suspend settlement payments to Telintar. Such payments will remain suspended until AT&T's"#0*((!" international circuits and USADirect Service with Telintar have been fully restored."#0*((e""Ԍ X-ԙ443. Additionally, we reject AT&T's February 20, 1996, request for a waiver of the Commission's ISP to extend AT&T's previously authorized accounting rate between AT&T and Telintar of $1.47 per minute for switched voice service between the parties. This accounting rate is discriminatory and therefore a violation of our ISP. We do, however, approve the proposed extension at the rate of $1.43 per minute, which is the lowest rate currently being paid by other U.S. carriers to Telintar. Payments at this rate may commence after Telintar restores full service to AT&T.  XH--4 <DL!4 <DL! Background Td4 <DL!4 <DL!  X -444. On September 30, 1995, AT&T's agreement with Telintar to settle international calls at the previouslyauthorized accounting rate of $1.47 per minute expired. No new agreement was reached by the termination date. On January 26, 1996, AT&T and Telintar reached an agreement to extend the $1.47 per minute accounting rate for an interim period commencing October 1, 1995, and ending January 31, 1996. The extension of the expired agreement was entered into by AT&T to ensure the continuation of settlement payments to Telintar while the parties  Xy-continued to negotiate.y^ yO- MԍXAT&T's International Settlements Policy Waiver for Change in the Accounting Rate for Switched Voice Service with Argentina, ISP96W062, (filed February 20, 1996).(#  XK-445. A week after execution of the accounting rate extension, and only two days after AT&T and Telintar met to negotiate a new rate, Telintar began a series of  X-escalating steps to disrupt AT&T's international service with Argentina. On February 3, 1996, Telintar blocked ninety (90) AT&T circuits, preventing the use of those  X-circuits by AT&T for outbound U.S. international calls to Argentina.#footnote reference#)6footnote reference) In addition,  X-Telintar disabled AT&T's USADirect Service from Argentina. Despite AT&T's objections, Telintar blocked an additional ninety (90) AT&T circuits on February 14,  X-1996. ^ yO{-  ԍXxTechnical reengineering of the trunks affected by Telintar's actions resulted in the blockage of 210 of AT&T's 540 circuits with Argentina.(# Telintar also has rerouted a portion of AT&T's return traffic to other carriers.  X|-446. In response to these actions, on February 16, 1996, the International Bureau requested the assistance of the Argentine regulator, the National Telecommunications Commission (CNT), to facilitate the prompt restoration of AT&T's service and to avoid the need for regulatory measures to protect the interests of U.S. carriers and consumers. A copy of the written request was sent to Telintar. Although we have reason to believe CNT has tried to intervene, the Bureau has received no response from Telintar. The United States Department of State also contacted the Argentine government and requested its assistance in resolving this matter. But to date, Telintar has not taken any action to restore service. "h$x,**d#"Ԍ X-447. In addition to Telintar's disruption of AT&T's service, Telintar has refused to grant WorldComm adequate facilities to terminate all of WorldCom's traffic destined for Argentina. As a result, WorldCom has been forced to overflow as much as 25% of its traffic to other carriers for termination in Argentina. WorldCom has advised the Commission that the additional capacity it requires can be accomplished by means of circuit multiplication, and that no additional investment in cable or satellite  Xv-facilities is required.v^ {O-  ԍXxSee Letter dated February 9, 1996 from Robert S. Koppel, WorldCom, to Scott Blake Harris, Chief, International Bureau, FCC.(#  X_-  XH-0,4 <DL!4 <DL! Discussion  X1-T  X -Td4 <DL!4 <DL!448. Telintar's actions restricting individual U.S. carriers' ability to serve  X -Argentina are contrary to the Commission's ISP. The ISP is designed to prevent foreign carriers with market power from using that power to obtain unduly favorable  X -terms and conditions in their relations with competing U.S. carriers (i.e.,  X -"whipsawing")c "^ {O-  .ԍXxId at 9. See Mackay Radio and Telegraph Company, 2 FCC 592 (1936), affd en banc, 4 FCC 150 (1937),  {O[-  affd sub nom., Mackay Radio and Telegraph Co. v. FCC, 97 F.2d 641 (D.C. Cir. 1938). "Whipsawing"   \refers to the practice of a foreign correspondent playing competitive U.S. carriers against one another in   order to gain concessions and benefits for itself to the detriment of U.S. carriers and ratepayers, a result at  {O-  odds with the U.S. public interest. AT&T v. MCI, 9 FCC Rcd 2688 (1994) citing Implementation and Scope  {O-of the Uniform Settlements Policy for Parallel International Communications Routes, 59 RR 2d 982 (1986).(#c. #footnote reference#The Commission has directed us to prevent foreign carrier retaliation  X -against U.S. carriers seeking to establish lower, more costbased accounting rates in accordance with the ISP and International Telegraph Telephone Consultative  Xy-Committee (CCITT) Recommendations.)C-footnote reference)#footnote reference#"y, yO|-  ԍXxCCITT Recommendation D.140 provides that accounting rates for international telephone services be cost   Loriented and take into account relevant cost trends. That Recommendation was approved by the CCITT on  {O -  October 1, 1992, by greater than an eighty percent margin. Regulation of International Accounting Rates, Order on Reconsideration, 7 FCC Rcd 8049, 8052 (1992).(#  XK-449. Just last month, the Commission adopted a Policy Statement on  X6-International Accounting Rate Reform in which it reaffirmed "...the need to ensure that foreign carriers do not abuse their market power in negotiations with U.S.  X -carriers...."  ^ {OG"-  ԍXxPolicy Statement on International Accounting Rate Reform, Policy Statement, FCC 96-37, rel. Jan. 31, 1996,  {O#- 9 ("Policy Statement").(# The Commission announced that it would act aggressively to enforce the ISP to "support U.S. carriers which refuse to continue to pay high accounting rates when existing agreements expire" and to protect U.S. carriers from being whipsawed  X-by foreign carriers during accounting rate negotiations.B^ {O^'-ԍXxId.(#B ).footnote reference)#footnote reference#)!5footnote reference)#footnote reference#  X-"z,**Q"Ԍ X-4410. Telintar's disruption of service between the United States and Argentina, in retaliation for AT&T's efforts to negotiate a significantly lower accounting rate than $1.43 is contrary to the U.S. public interest and a violation of the ISP. Such retaliation unfairly discriminates against individual U.S. carriers and is a classic example of whipsawing. Unfortunately, our attempts to work with the Argentine regulator, CNT, to restore service and avoid the need for regulatory measures have not yet been successful. As such, we find that regulatory intervention is necessary.  XH-4411. )5footnote reference)#footnote reference#Telintars actions to disrupt U.S. international service and to continue such disruption after Commission communication of its policies warrants our exercise of Commission authority to order all U.S. carriers to suspend the payment of all settlements to Telintar effective immediately. This suspension will continue until AT&T's circuits are no longer blocked and its USADirect Service is restored. Once this occurs payment of settlements to Telintar, including settlements that have been withheld, shall resume consistent with the terms of this Order, and without further order of the Commission. However, should this situation continue, we will consider further action.  Xb-4412. Further, to eliminate the discriminatory accounting rate levels among U.S. carriers with Telintar, we establish $1.43 per minute as the maximum interim accounting rate U.S. carriers may pay, effective October 1, 1995. This accounting rate  X-level reflects the lowest level agreed to by Telintar with a U.S. carrier (i.e., MCI and Sprint). This rate is still higher than the $1.20 maximum benchmark rate we  X-established in the Second Report and Order and thus appears generous as an interim accounting rate.  X-4413. We also find that Telintar's refusal to provide WorldCom with adequate facilities constitutes whipsawing and, therefore, cannot be allowed to continue. If Telintar does not promptly remedy this situation, we will consider further action.  XR-4414. We expect AT&T and any other U.S. carriers corresponding with Telintar to negotiate toward the benchmarks that we have previously established, as well as toward any new benchmarks that we may establish. We further expect that there will be no discrimination among U.S. carriers.  X-4 <DL!4 <DL! Ordering Clauses Td4 <DL!4 <DL!  X!-4415. Accordingly, IT IS ORDERED that all facilitiesbased carriers subject to FCC jurisdiction having a correspondency agreement with Telintar for the direct termination of U.S. traffic shall suspend all settlement payments to Telintar for switched voice service effective upon release of this Order until such time as Telintar has restored AT&T's circuits and AT&T's USA Direct service;  X''-4416. IT IS FURTHER ORDERED that AT&Ts request to extend its accounting rate agreement with Telintar at the rate of $1.47 per minute is REJECTED and the proposed extension is APPROVED at the rate of $1.43 per minute. "),**n("Ԍ X-ԙ4417. IT IS FURTHER ORDERED that, upon resumption of payments in accordance with this Order, all U.S. carriers, including AT&T and WorldCom, shall be authorized to pay Telintar, effective October 1, 1995, at $1.43 per minute for switched voice service pending further negotiations between U.S. carriers with Telintar;  X-4418. IT IS FURTHER ORDERED that all U.S. carriers shall continue their efforts to achieve further significant reductions in the accounting rate with Telintar; and  X1-4419. IT IS FURTHER ORDERED that WorldCom shall file a report within 15 days of the release of this Order stating whether Telintar has provided it with suitable facilities to terminate all of its traffic destined for Argentina.  X -4420. This Order is issued under Section 0.261 of the Commissions Rules and is effective upon adoption. Petitions for reconsideration under Section 1.106 or applications for review under Section 1.115 of the Commissions Rules may be filed within 30 days of the date of public notice of this Order (see 47 C.F.R. Section 1.4(b)(2)). 44  <<,FEDERAL COMMUNICATIONS COMMISSION 44  <<,Scott Blake Harris 44  <<,Chief, International Bureau