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File how2ftp (.txt & .wp) is in directory /pub/Bureaus/Miscellaneous/Public_Notices/ ***************************************************************** ******** DA 96-399 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In Re Application of ) ) KDD America, Inc. ) File No. I-T-C-95-481 ) Application for Authority under ) Section 214 of the Communications ) Act of 1934, as amended, to Resell ) Non-interconnected Private Line ) Services Between the United States ) of America and Various International ) Points ) ORDER, AUTHORIZATION AND CERTIFICATE Adopted: March 21, 1996 Released: March 21, 1996 By the Chief, International Bureau: Introduction 1. KDD America, Inc. (KDD) seeks authority, pursuant to Section 214 of the Communications Act of 1934, to resell non-interconnected private lines to Germany, the United Kingdom, and Japan. After considering the record in this proceeding and the impact of the Commission's recent Foreign Carrier Entry Order, we find the public interest would be served by granting authorization to KDD for service to the United Kingdom and Germany. We defer consideration of KDD's request to provide service to Japan until all interested parties can comment on KDD's market power in Japan and the applicability of our effective competitive opportunities test. Pleadin gs 2. KDD filed its application on August 11, 1995. AT&T filed a Petition to Deny, KDD opposed that petition, and AT&T responded. KDD's application states that KDD is a wholly-owned subsidiary of Kokusai Denshin Denwa Co., Ltd., the largest international carrier in Japan. KDD has affiliates in the United Kingdom, Belgium, Germany, Japan, and Hong Kong. AT&T's petition to deny argues that we should apply an "effective market access" standard to this application and to resale applications in general. AT&T further argues that Japan does not offer "effective market access" to U.S. carriers and that allowing KDD to provide non-interconnected private line resale to Germany and the United Kingdom would therefore be inconsistent with the Commission's goals articulated in the Foreign Carrier Entry NPRM. Finally, AT&T argues that there are no other countervailing public interest reasons to grant KDD's application. 3. In opposition to AT&T's petition to deny, KDD states that its application is routine under the Commission's current policies. KDD states that AT&T's arguments are not relevant and argues that the Commission's existing open entry policy should allow for an expeditious grant of its application. AT&T responds that the potential negative impact on the public interest requires denial of this application. 4. On November 30, 1995, the Commission approved the Foreign Carrier Entry Order, in which it adopted rules that govern the entry of foreign carriers into the U.S. market for international telecommunications services. KDD submitted a supplemental filing following release of the Foreign Carrier Entry Order which supplies information required by the newly adopted rules. AT&T filed a partial opposition to the supplemental filing which does not oppose authorizing service to the United Kingdom or Germany, but does oppose grant of authorization for service to Japan. Discussion 5. The Foreign Carrier Entry Order provides the standard by which applications of foreign carriers seeking to provide international telecommunications services in the United States will be measured. In the context of that proceeding, the Commission addressed the arguments raised by AT&T here. We therefore need not address these arguments individually. The Commission stated that carriers seeking to provide resale of non- interconnected private lines to countries in which they have an affiliate with market power must demonstrate that the affiliated market offers effective competitive opportunities for U.S. carriers seeking to resell non-interconnected private lines. The Commission also stated that it will continue to consider other public interest factors that may weigh in favor of, or against, granting the application. These factors include the general significance of the proposed entry to the promotion of competition in the U.S. communications market, any national security, law enforcement, foreign policy, or trade concerns raised by the Executive Branch, and the presence of cost-based accounting rates. 6. In adopting an effective competitive opportunities test, the Commission stated that it would only apply this test to those applications from foreign carriers that have market power, or are affiliated with such carriers, in the destination markets they seek to serve. The Foreign Carrier Entry Order defines market power as "the ability of the carrier to act anticompetitively against unaffiliated U.S. carriers through the control of bottleneck services or facilities on the foreign end." Bottleneck services or facilities are "those that are necessary for the provision of international services, including inter-city or local access facilities on the foreign end." The Commission found that applications from foreign carriers that hold market power raise the greatest potential of anticompetitive conduct, particularly where U.S. carriers are not allowed to compete effectively in those markets. If the affiliation is with a non-dominant foreign carrier, we would not apply an effective competitive opportunities analysis to the application. 7. After reviewing the record, we conclude that it is not necessary to engage in an effective competitive opportunities analysis of the German or U.K. resale markets because KDD's affiliates in those countries do not possess market power. KDD states that neither its U.K. nor its German affiliates own telecommunications facilities in those markets. This Commission has recognized that participation in the U.S. market by foreign carriers that do not own or control telecommunication facilities in a foreign market is unlikely to raise market power concerns. Although KDD's application identifies affiliates in Germany and the United Kingdom, the record contains no other information to suggest that affiliates of KDD possess market power in those countries. Indeed, AT&T does not argue that KDD has market power in the United Kingdom or Germany. We therefore find that we need not apply our effective competitive opportunities analysis for authorization of service on those routes. We also note that the Executive Branch has raised no other public interest concerns with respect to KDD's service to the United Kingdom or Germany. 8. KDD's supplemental filing does, however, raise the issue of whether KDD possesses market power in Japan and whether the Japanese market offers effective competitive opportunities for the resale of non-interconnected private lines. AT&T argues that KDD has market power in Japan and that the Japanese market does not meet the requirements of the effective competitive opportunities analysis. 9. In order to treat this application expeditiously, we will grant KDD's application to serve Germany and the United Kingdom and will defer consideration of its application to serve Japan. We therefore find that grant of authorization to KDD America to resell non-interconnected private lines for service to the United Kingdom and Germany to be in the public interest and consistent with the provisions of Section 214 of the Communications Act. Our public interest finding is limited to use of the authorized facilities for the provision of service between the United States and the United Kingdom, and between the United States and Germany. We make no finding and do not authorize the use of these facilities to serve any other foreign point under Section 214. Ordering Clauses 10. Accordingly, IT IS ORDERED that application File I-T-C-95-481 IS GRANTED IN PART and KDD America, Inc. is authorized to resell international private lines not interconnected to the public switched network for the provision of international private line services between the United States and Germany and the United Kingdom. 11. It is FURTHER ORDERED that KDD America's application for authority under Section 214 of the Communications Act of 1934, as amended, to resell non- interconnected private line services between the United States of America and Japan is hereby DEFERRED. 12. It is FURTHER ORDERED that KDD America, Inc. shall comply with Section 203 of the Communications Act, 47 U.S.C.  203, Part 61 and Sections 43.51 and 43.61 of the Commission's Rules, 47 C.F.R. Part 61 and  43.51 and 43.61, and shall file annual reports of circuit additions in accordance with the requirements set forth in Rules for Filing of International Circuit Status Reports, CC Docket No. 93-157, Report and Order, 10 FCC Rcd 8605 (1995). 13. It is FURTHER ORDERED that our authorization of KDD America, Inc. to provide private lines as part of its authorized services is limited to the provision of non- interconnected private line service only between the United States and the United Kingdom or between the United States and Germany, that is, private lines that originate in the United States and terminate in the United Kingdom or Germany, or that originate in the United Kingdom or Germany and terminate in the United States. In addition, KDD America may not -- and KDD America's tariffs must state that its customers may not -- connect private lines provided over these facilities to the public switched network at either the U.S. or foreign end or both, for the provision of international switched basic services, unless authorized to do so by the Commission upon finding that the foreign administration affords resale opportunities equivalent to those available under U.S. law, in accordance with Regulation of International Accounting Rates, Phase II, First Report and Order, 7 FCC Rcd 559 (1991), Order on Reconsideration and Third Further Notice of Proposed Rulemaking, 7 FCC Rcd 7927 (1992), petition for reconsideration pending. See also Market Entry and Regulation of Foreign- Affiliated Entities, Report and Order, IB Docket 95-22, FCC 95-475 (released November 30, 1995), at  133-138. 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 Section 1.115 of the Commission's Rules may be filed within 30 days of the public notice of this Order (see Section 1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Scott Blake Harris Chief, International Bureau