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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* 1.DA 96-1293 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) HARRIS CORPORATION ) File No. ISP-96-W-089 ) Request for International Settlements ) Policy Waiver for Zaire ) ORDER AND AUTHORIZATION Adopted: August 13, 1996 Released: August 13, 1996 By the Chief, Telecommunications Division: I. INTRODUCTION 1. Harris Corporation (Harris) has filed a petition for waiver of the Commission's International Settlements Policy (ISP) to provide international service from Zaire to the United States on a full-circuit basis. Two carriers, WorldCom Inc. (WorldCom) and AT&T oppose Harris' waiver request. In this decision, we grant Harris' request but limit the duration of the waiver to one year. II. SUMMARY OF WAIVER REQUEST 2. Harris seeks to implement an arrangement with its foreign correspondent, Office National des Postes et T‚l‚communications du Zaire (ONPTZ), in which Harris would provide a full circuit, end-to-end link via INTELSAT space segment between Harris' U.S. switching center in Melbourne, Florida and its earth station facilities in Zaire. In Zaire, Harris would provide a dedicated facility to connect the earth station facilities to calling centers owned and operated by ONPTZ in four cities, Bukavu, Goma, Kinshasa and Uviva. According to Harris, there is currently little or no international service available to these cities. Under Harris' proposal, only outbound traffic would be transmitted from Zaire. Calls would be placed in the calling centers through the use of prepaid debit cards sold by ONPTZ. Harris notes that the scope of the service would be modest as it would provide only two to eight voice circuits in each of the four cities. Traffic revenue for the U.S.-Zaire link would not be settled under conventional accounting rates and would not be subject to proportionate return requirements. Instead, ONPTZ would pay a $2.50 per minute rate to Harris, Harris would supply all earth station, transmission and other facilities (including installation and maintenance services), and pay the cost of the INTELSAT space segment on both ends. Harris asserts that the requested waiver is consistent with the Commission's Policy Statement on International Rate Reform in that it comports with the Commission's stated openness to innovative approaches outside of the traditional accounting rate system that result in the provision of new international services in developing countries. 3. WorldCom and AT&T oppose Harris' request for several reasons. First, WorldCom argues that grant of the waiver would reduce pressure on ONPTZ to reduce the U.S.-Zaire accounting rate. WorldCom notes that since July, 1994, the U.S.-Zaire accounting rate has declined from $1.34 per minute to $0.80 per minute. WorldCom further argues that grant of the waiver would lead to the diversion of U.S.-inbound return traffic away from U.S. facilities-based carriers, resulting in a higher traffic imbalance and higher settlements payments to Zaire. WorldCom also argues that the waiver is unnecessary because service to the United States is already available in the four cities that Harris proposes to serve. WorldCom indicates that its correspondent, Telecel International (Telecel), operates earth stations in each of the cities from which traffic is sent to the United States. In addition, WorldCom points out that Telecel has deployed 100 pay phones "throughout Zaire" from which users can call the United States. AT&T agrees with WorldCom that the waiver is unnecessary. AT&T suggests that the arrangement between Harris and ONPTZ can be structured in a manner that is consistent with the Commission's ISP requirements. According to AT&T, Harris could provide dedicated lines and earth stations to ONPTZ on an unbundled, per-minute basis and ONPTZ could provide service to the United States within the accounting rate system. AT&T further argues that the waiver would unnecessarily relieve ONPTZ of its proportionate return obligations even though ONPTZ has been "erratic at best" at fulfilling such obligations. III. DISCUSSION 4. WorldCom and AT&T have presented persuasive arguments against the grant of Harris' waiver request, and we share many of their concerns. We note, however, that currently there is very little international service originating from Zaire. For example, in 1994, Zaire-originated, Zaire-billed calls amounted to 7,863 minutes. Telecel's provision of only 100 pay phones for a country that is one-fourth the size of the United States underscores the scarcity of telecommunications services in Zaire. Under these circumstances, we view the limited grant of Harris' waiver as a short-term means of allowing for the provision of service by a U.S. carrier in areas of Zaire in which service is either extremely limited or non-existent. 5. We disagree with Harris, however, that this arrangement is of the type we envisioned in our Policy Statement. There, we announced our "openness to new approaches to providing international services," particularly for developing countries "which agree they must reform their accounting rates and introduce competition." Zaire, and its dominant carrier, ONPTZ, do not appear to meet these criteria. There is nothing in the record that demonstrates a commitment to lower accounting rates or to the introduction of competition in the telecommunications market of Zaire. It is only because of the combination of unique circumstances presented here that we grant Harris' waiver request. 6. Finally, because we have concerns about the long-term benefits of the type of approach proposed by Harris, we will limit the duration of the waiver to one year. In particular, we question whether this arrangement, in which Harris receives $2.50 per minute from ONPTZ who in turn passes this charge on to the end user, will result in appreciable gains in traffic originating from Zaire. While Harris may provide service to areas where little or none currently exists, there is no indication from Harris that ONPTZ will be pricing this service in such a manner to make it affordable to the general public. Because the competitive aspects of this proposal have yet to be verified, a time-limited waiver is appropriate. At the end of the one-year period, Harris may seek an extension of the waiver but must demonstrate continuing public interest benefits, including improved service, higher usage and reforms in Zaire's telecommunications market. We will also monitor the amount of traffic originating in Zaire to determine whether this arrangement is in fact serving the public interest and what impact it has on the accounting rate system. Harris shall file the information required under Section 43.61 of the Commission's Rules on a quarterly basis, the first report being due 120 days after commencement of service offered to the public by Harris, covering the first 90 days of operations. Harris also shall file with these traffic reports information as to the price of this service to the public in Zaire, and how it compares to ONPTZ's other tariffed services, as well as the services available through other means. This information will be useful in assessing the actual competitive aspects of this arrangement. 7. We reiterate that nothing in our grant of Harris' waiver request should be construed as indicating the Commission's position with respect to the types of accounting rate arrangements we will consider under our Policy Statement. A unique set of circumstances lead us to believe that a time-limited waiver of the ISP is appropriate. These unique circumstances include: (1) the scarcity of telecommunications services in Zaire; (2) the low level of traffic originating in Zaire and terminating in the United States; (3) the additional facilities which Harris' end-to-end link offers on this route, and the potential for this offering to stimulate additional outgoing traffic; and (4) Harris' ability to provide this end-to-end service immediately as a result of its presence in Zaire under the auspices of the UNHCR. In the future, we expect to develop criteria in order to provide additional guidance on alternatives to traditional accounting rate mechanisms for developing countries. IV. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED that Harris' petition, File No. ISP-96-W-089, for a waiver of the Commission's ISP to permit the proposed arrangement to provide international service from Zaire to the United States is GRANTED for a period of one year from the release of this Order. 9. IT IS FURTHER ORDERED that Harris shall file the information required under Section 43.61 of the Commission's Rules, 47 C.F.R.  43.61, on a quarterly basis, the first report being due 120 days after commencement of service offered to the public by Harris, covering the first 90 days of operations. 10. IT IS FURTHER ORDERED that Harris shall file information as to the costs of this service to the public in Zaire, and how it compares to ONPTZ's other tariffed services, as well as the services available through other means. This information shall also be filed on a quarterly basis, the first report being due 120 days after commencement of service offered to the public by Harris, covering the first 90 days of operations. 11. 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 date of the public notice of this Order (see 47 C.F.R. Section 1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Diane J. Cornell Chief, Telecommunications Division International Bureau