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(1) (a) (i) 1) a)D )DDDFrfq toc 1toc 1` hp x (#!(#B!(#B` hp x (#2Rڳ4toc 2toc 2` hp x (#` !(#B` !(#B` hp x (#toc 3toc 3` hp x (#` !(# ` !(# ` hp x (#toc 4toc 4` hp x (# !(#  !(# ` hp x (#toc 5toc 5` hp x (#h!(# h!(# ` hp x (#2Tv6toc 6toc 6` hp x (#!(#!(#` hp x (#toc 7toc 7 toc 8toc 8` hp x (#!(#!(#` hp x (#toc 9toc 9` hp x (#!(#B!(#B` hp x (#2Vvindex 1index 1` hp x (#` !(# ` !(# ` hp x (#index 2index 2` hp x (#` !(#B` !(#B` hp x (#toatoa` hp x (#!(# !(# ` hp x (#captioncaption 2lJ&Lm _Equation Caption_Equation Caption 2K&\q,Z"i~'^5>M\\>>>\}0>03\\\\\\\\\\>>}}}\rryrr>Qygyrr\grrggF3FM\>\\Q\Q3\\33Q3\\\\FF3\QyQQFI3Ic>0cM>>>0>>>>>>\>\3r\r\r\r\r\yyQrQrQrQrQ>3>3>3>3y\\\\\\\\\gQr\\\\gQ\r\r\r\r\yQyQycyQnrQrQrQrQ\\\c\c\>3>\>>>\\ccyQg3gBg>g;g3y\jy\y\\\yrFrFrF\F\F\FccgBg3gM\\\\\\ygcgFgFgF\g>y\\Fg>g\n0\\=(=WddddddddddddddddddddddddddddddddddddddddNBnnB_\F\\\\\\3;\7;\7>>gg\??n\\pBnnBb\\>g\7"yyyy\njc\}nn\(y.X80,X\  P6G;P)y.\80,T\4  pG;+2a=5,&a\  P6G;&P*2e=5,&e4  pG;&,P:% ,J:\  P6G;JP-H5!,i,5\  P6G;,P\.{,W80,%0W*f9 xr G;X\/0_=5,%&_*f9 xr G;&Xz-X80,<<X9 xOG;   &G^ x/Times New Roma2 S-  ЊG yO- Federal Communications Commission`( (#DA 98348 ă  yxxdddy    P3#&a\  P6G;&P#Before the Federal Communications Commission  S-Washington, D.C. 20554 ă  S8-In the Matter of hh@h) x` `  hh@h)  S-GTE Telecom Incorporatedhh@h) x` `  hh@h)  S-Application for Authority Pursuant to hh@h)  Sp-Section 214 of the Communications Act@h)  SH -to provide International Switched Resale,@h)ppITC95443  S -FacilitiesBased Switched, Private Line @h)ppITC96313  S -Voice and Data Services and hh@h)ppITC96314  S -Resold Noninterconnected Private Lines @h)  S -to Venezuela and the Dominican Republic@h) x` `  hh@h)  SX-GTE Mobilnet Incorporated, on Behalf of @h)  S0-Itself and Certain of its Corporate Affiliates@h) x` `  hh@h)  S-Application for Authorization Pursuant to @h)  S-Section 214 of the Communications to @h)ppITC95561  S-Operate as an International Resale Carrier @h)  Sh-for International Switched Voice Services to @h)  S@-the Dominican Republic and Venezuela@h)  S-  ORDER, AUTHORIZATION AND CERTIFICATE ĐTP  SP-x` ` Adopted: February 20, 1998 hppReleased: Febuary 23, 1998 By the Chief, Telecommunications Division T  S- %I. Introduction ă  S8-x1.` ` In this order, we grant GTE Telecom Incorporated (GTE Telecom) authority under  S -Section 214 of the Communications ActE  yOx"- x47 U.S.C.  214.E to provide facilitiesbased and resold international switched and noninterconnected private line services to the Dominican Republic and Venezuela. We also grant the joint request filed by GTE Mobilnet Incorporated and certain of its corporate affiliates and"!X0*''7#"  S-partnerships (collectively, GTE Mobilnet)$ {Oh-ԍXxSee GTE Mobilnet Incorporated, 11 FCC Rcd 12,835, 12,836, n.2 and Appendix A (Int'l. Bur. 1996)  {O2-(GTE Mobilnet Order) (identifying the joint applicants that comprise GTE Mobilnet).(#$ to resell international switched service to the Dominican Republic and Venezuela.  S- l$II. Background ă  S8-x2.` ` GTE Telecom and GTE Mobilnet (applicants) are both whollyowned by GTE Corporation (GTE), a New York corporation whose operating companies comprise the largest  S-affiliation of independent local exchange carriers (LECs)$ yO -ԍXxBy independent LECs, we refer to exchange telephone companies, including GTE, other than the Bell Operating Companies (BOCs).(#ƶ in the United States. The applicants are affiliated through GTE with Compania Dominicana de Telefonos, C. Por A. (Codetel) in the Dominican Republic, and Compania Anonima Nacional Telefonos de Venezuela (CANTV) in  Sp-Venezuela.~p| {O-ԍXxSee GTE Telecom Incorporated, 11 FCC Rcd 15,939, 15942 (Int'l. Bur. 1996) (GTE Telecom Order)  {OV-and GTE Mobilnet Order, 11 FCC Rcd at 12,837 (GTE indirectly owns 100 percent of Codetel, which provides domestic and international telecommunications service in the Dominican Republic; GTE owns 100 percent of GTE Venezuelan Telephone Incorporated, which owns 51 percent of VenWorld Telecom, C.A., a consortium which owns 40 percent of CANTV, which provides domestic and international  {Ox-telecommunications services in Venezuela); see also GTE Mobilnet Order 11 FCC Rcd at 12,837, n.8  yOB-(GTE is in operational control of CANTV).(#  S -x3.` ` The applicants have filed multiple applications to provide international services originating in the United States and terminating at various overseas points. The Bureau has previously granted some of their requests and deferred others. GTE Telecom and GTE Mobilenet each sought authority to resell the international switched services of unaffiliated U.S. carriers to all foreign points. GTE Telecom also sought authority to provide facilitiesbased private line services to international  SX-points excluding the Dominican Republic and Venezuela.{ X  yO-ԍXxGTE Telecom Inc. Application, ITC95443, (filed July 6, 1995) (GTE Telecom Initial Application); GTE Telecom Inc. Amended Application, File No. ITC 95443, (filed Sept. 12, 1995) (GTE Telecom  yOJ-Amended Application); GTE Mobilnet Inc. Application (filed Oct. 6, 1995) (GTE Mobilnet Application). (#{ AT&T and Worldcom each filed a Petition"X0*8&8&"  S-to Deny in Part GTE Telecom's application; Domtel and Sprint filed comments.k yOh-ԍ XxWorldCom Petition to Deny in Part, (filed Aug. 23, 1995); Domtel Comments (filed Aug. 28, 1995) (Domtel Aug. 28 Comments); Sprint Comments, (filed Sept. 11, 1995) (Sprint Sept. 11 Comments). Domtel subsequently filed comments and AT&T filed a Petition to Deny in Part, raising issues relating to GTE's provision of resold switched services to the Dominican Republic and Venezuela. Domtel Comments (filed Sept. 22, 1995) (Domtel Sept. 22 Comments); AT&T Petition to Deny in Part GTE's Amended Application (filed Oct. 13, 1995) (AT&T Oct. 13 Petition to Deny). (#k AT&T also filed a  S-Petition to Deny in Part GTE Mobilenet's application.@ yO-ԍXxAT&T Petition to Deny in Part, (filed Nov. 20, 1995) (AT&T Petition Deny GTE Mobilnet Application).(#Ɯ  S-x4.` ` The International Bureau (Bureau) granted the applicants' respective Section 214 applications, but excluded authorization to resell switched service to the Dominican Republic and  S8-Venezuela.8 {Op-ԍXxSee GTE Telecom Order, 11 FCC Rcd 15,939; see also GTE Mobilnet Order, 11 FCC Rcd 12,835. (#Ʋ The Bureau found that the applicants' requests to offer this service to the Dominican Republic and Venezuela raised public interest issues relating to the settlements process that could not be resolved on the record. The Bureau therefore deferred a decision with respect to the applicants' requests for authorization on the Dominican Republic and Venezuela routes to permit the parties an  S-additional opportunity to address these outstanding issues. *  {Ob-ԍXxSee GTE Telecom Order, 11 FCC Rcd at 15,95664; GTE Mobilnet Order, 11 FCC Rcd at 12,84649.(#Ƨ We address the issues that the Bureau  Sp-deferred in the GTE Telecom Order and GTE Mobilnet Order in this order. p  {O-ԍXxGTE Telecom also filed an application for review of the GTE Telecom Order. See GTE Telecom  {O-Application for Review (filed Oct. 16, 1996); see also AT&T Opposition to Application for Review of GTE Telecom Incorporated (filed Oct. 31, 1996); Opposition by Domtel to GTE Telecom's Application for Review (filed Nov. 4, 1996); Reply in Support of Application for Review of GTE Telecom Incorporated (filed Nov. 14, 1996).(#  S" -x5.` ` GTE Telecom also filed applications to provide facilitiesbased switched and private line service as well as resold noninterconnected private line service to the Dominican Republic and  S -Venezuela.T  p yO-ԍXxGTE Telecom, Inc. application to provide facilitiesbased international switched and private line voice and data services and resold noninterconnected private line services to the Dominican Republic, ITC96314, (Filed June 4, 1996) (GTE Telecom Dominican Republic Application); GTE Telecom, Inc. application to provide facilitiesbased international switched and private line voice and data services and resold noninterconnected private line services to Venezuela, ITC96313, (Filed June 4, 1996) (GTE Telecom Venezuela Application); (#T AT&T filed comments on GTE Telecom's application to provide service to the  S -Dominican Republic.  yO2$-ԍxAT&T Comments, file no. ITC 96314, (filed July 19, 1996) (AT&T July 19 Comments). " x 0*8&8&y"Ԍ S-% III. Discussion T  S-TP A.xApplications to Resell International Switched Services  S`-Ԛx6.` ` The Bureau deferred action on the applicants' requests for authorization to resell international switched service to the Dominican Republic and Venezuela in part because significant  S-issues were raised in the record in this proceeding that required further information. Since the GTE  S-Telecom Order and the GTE Mobilnet Order, there have been significant improvements in accounting rates offered to U.S. carriers by Codetel and CANTV and improvements in the competitive environment in the Dominican Republic that alleviate many of these concerns. In addition, since those  St-two orders were adopted, the Commission adopted the Foreign Participation Order, which clarifies the  SN -Commission's policies regarding other issues raised by the opposing parties.j \N  {O -ԍXxRules and Policies on Foreign Participation in the U.S. Telecommunications Market, IB Dockets No.  yO -97142 and 9522, Report and Order and Order on Reconsideration, FCC 97398 (rel. Nov. 26, 1997),  {OH -recon pending, (Foreign Participation Order).(#j  S -x7.` ` FP1In the Foreign Participation Order, the Commission recently adopted a presumption in favor of granting Section 214 applications of applicants from WTO member countries to serve markets in which the applicant has a foreign affiliate. Under the new policy, competition concerns related to an applicant's affiliation with a foreign carrier from a WTO member country will warrant denial of an applicant's request to serve that country only under exceptional circumstances where grant of the  S8-authorization would pose a very high risk to competition in the U.S. international services market.b8 {O-ԍxForeign Participation Order  5058.b The Commission continues to consider other public interest factors, such as national security, law enforcement, foreign policy and trade issues relevant to granting or denying an application by a  S-foreignaffiliated carrier.R~ {O-ԍXxId.  5968.(#R  Sp-x8.` ` The majority of the pleadings and ex parte submissions filed in this proceeding predate  SJ-the Commission's Foreign Participation Order, which modified our public interest analysis of applications for international Section 214 authorization. The Commission stated specifically in the  S-Foreign Participation Order that it would apply the new rules to all applications pending before the  S-Commission in any procedural posture at the time they become effective.^ {O-ԍXxForeign Participation Order  329. See also Public Notice, DA 972629, rel. Dec. 18, 1997; Rules and  {OP -Policies on Foreign Participation in the U.S. Telecommunications Market, IB Docket No. 97142,  {O!-Notice of Proposed Rulemaking, FCC 97195,  44 (rel. June 4, 1997) (Foreign Participation Notice).(#ƹ It is well established that  S-the Commission may apply new rules and policies to pending matters.6  {O#-ԍXxSee Sprint Corporation, Declaratory Ruling and Order, 11 FCC Rcd 1850, 1855,  34 (1996) (footnote omitted).(# Accordingly, we will evaluate" 0*8&8&"  S-GTE Telecom's and GTE Mobilenet's applications under the standard adopted in the Foreign  S-Participation Order.  S-x9.` ` Although we are concerned with the allegations of Codetel's abuse of market power in the Dominican Republic, we do not find on this record that granting GTE Telecom's application would pose a very high risk to competition in the U.S. market. We also do not find, on this record, that the conditions that Tricom advocates are necessary to prevent harm to competition in the U.S. market.  S-x 10.` ` In order to deny an application or impose additional conditions on the authorization of a foreignaffiliated applicant such as GTE Telecom, the Commission must find that a risk to competition in the U.S. international services market warrants such action. In such a case, the  S$ -Commission must find that its safeguards would be ineffective in preventing the foreign carrier affiliate from engaging in anticompetitive conduct against unaffiliated U.S. carriers and that, as a result, the foreign carrier would be able to raise the costs of these carriers to the degree that U.S.  S -consumers would be injured.  {O-ԍXxForeign Participation Order  51; see also id. ("[A]n applicant seeking to enter the U.S. market that is affiliated with a telecommunications carrier that possesses the ability to exercise market power in the foreign market for facilities and services necessary for the provision of U.S. international services may have the ability to discriminate . . . to the detriment of unaffiliated U.S. carriers. The foreign carrier could raise the costs of its U.S. affiliate's rivals through discriminatory pricing or by discriminating in provisioning and maintenance intervals or quality of service.") (#Ɯ The Commission found that its regulatory safeguards, many of which it  S -adopted in the Foreign Participation Order, would be adequate to detect and deter anticompetitive  S^-conduct "in virtually all circumstances."C^B {O@-ԍXxId. (#C  S-x 11.` ` Tricom, which provides international, domestic long distance, and local exchange service in the Dominican Republic, requests that the Commission impose a variety of conditions on  S-GTE Telecom's grant of authority. {O2-ԍXxTricom has filed numerous ex parte letters in this proceeding, in addition to the comments filed by its subsidiary, Domtel, an authorized U.S. carrier.(# Tricom argues that these conditions are necessary to resolve its  S-disputes with Codetel and guard against future anticompetitive conduct.9.  yOd-ԍXxLetter from Judith O'Neil, Attorney for Tricom, to Diane J. Cornell, Chief, Telecommunications Division, International Bureau, FCC (Jan. 6, 1998) (Tricom Jan 6 Letter); Letter from Judith O'Neil, Attorney for Tricom to Diane J. Cornell, Chief, Telecommunications Division, International Bureau, FCC (Nov. 17, 1997) (Tricom Nov. 17 Letter); Letter from Judith O'Neil, Attorney for Tricom to Diane J. Cornell, Chief, Telecommunications Division, International Bureau, FCC (Sept. 30, 1997) (Tricom Sept. 30 Letter).(#9 Tricom also asks that we"0*8&8&"  S-impose on GTE Telecom the same conditions we imposed in the Telmex/Sprint Order. {Oh-ԍXxTelmex/Sprint Communications, L.L.C., Order, Authorization, and Certificate, File No. ITC 970127 (rel.  {O2-Oct. 30, 1997) (Telmex/Sprint Order).(# Tricom alleges that Codetel has failed to provide interconnection facilities in accord with negotiated agreements. It also alleges that Codetel has discriminated against Tricom in favor of another Dominican Carrier allegedly because of Tricom's refusal to agree not to compete against Codetel in the local exchange market. In addition, Tricom has detailed numerous ongoing legal disputes with  S:-Codetel that it argues are evidence of Codetel's abuse of market power.g:$ yO-ԍXxTricom Nov. 17 Letter; Tricom Sept. 30 Letter.(#g  S-x 12.` ` We find that some of the conduct alleged by Tricom, specifically, discriminatory access charges and unreasonable delays in provisioning of circuits (including failures to install facilities under negotiated agreements), may have an adverse impact on U.S. consumers and the U.S. market for international services. To the extent Codetel succeeds in raising the costs of its competitors in the Dominican international services market, these competitors may choose to exit the market, thereby preserving Codetel's market power in the Dominican Republic. As a result, there would be significantly less pressure to lower accounting rates for international service from the United States.  S - x 13.` ` In deferring GTE Telecom's and GTE Mobilnet's applications to resell international switched services to the Dominican Republic and Venezuela, the Bureau identified three ways in which granting the requested authority could exacerbate the U.S. net settlements deficit with those countries, and therefore could be contrary to the public interest. First, in light of the fact that GTE controls both Codetel in the Dominican Republic and CANTV in Venezuela, the Bureau expressed concern that GTE Telecom and GTE Mobilnet could use the market power of Codetel and CANTV "to manipulate the settlements process and [their] . . . prices to U.S. consumers on these affiliated  S-routes in a manner that increases U.S. carrier outpayments to Codetel and CANTV." {O-ԍXxGTE Telecom Order, 11 FCC at 15,96162,  45; see also GTE Mobilnet Order, 11 FCC at 12,84647,  24, 28.(# Second, the Bureau noted that CANTV had engaged in discriminatory treatment of U.S. carriers in accounting rate negotiations, "by refusing to offer the same terms and conditions to all U.S. carriers in violation of our  S-International Settlements Policy."h {O-ԍxGTE Telecom Order, 11 FCC Rcd at 15,962,  48.h Finally, the Bureau noted that Codetel appeared to have used its settlement rate negotiations with U.S. carriers and engaged in other discriminatory behavior to thwart competition in the Dominican Republic, and that such activity "undermine[s] the Commission's efforts  S-to encourage competition in foreign markets as a vehicle to drive accounting rates toward cost."] {O!-ԍXxId., at 15,963,  50.(#]  SR-x 14.` ` 2Since the GTE Telecom Order and the GTE Mobilnet Order were adopted, we find that there have been significant developments that alleviate the concerns expressed in those orders. Most significantly, U.S. carriers have been able to negotiate significant settlement rate reductions both"2 0*8&8&k" with Codetel in the Dominican Republic and CANTV in Venezuela. U.S. carriers have recently filed settlement rate arrangements with Codetel and CANTV that will reduce their respective settlement rates from the already reduced current rate of $.43 to the $.19 benchmark by the applicable target date  S-of January 1, 2001.~ {O-ԍXx See, e.g., Letter from Dennis S. Niimi, Vice PresidentInternational, Hawaiian Tel International, to Magalie Roman Salas, Secretary, FCC (Dec. 29, 1997); Letter from Martin Gitter, District Manager Law and Public Policy, AT&T, to William F. Caton, Acting Secretary, FCC (Oct. 6, 1997); Letter from Marybeth M. Banks, Director, Federal Regulatory Affairs, Sprint to William F. Caton, Acting Secretary,  {O-FCC (October 1, 1997). The Commission's Benchmarks Order directs U.S. carriers to negotiate a settlement rate of $.19 with carriers in the Dominican Republic and Venezuela by January 1, 2001.  {O -Benchmarks Order  195231.(# GTE informs us that these arrangements will be available to all U.S. facilities S`-based carriers.` yO -ԍXxLetter from F. Gordon Maxson, Director Regulatory Affairs, GTE Service Corp., to Regina Keeney,  yO -Chief, International Bureau, FCC (January 22, 1998). (# These settlement rate reductions will offer substantial savings to U.S. consumers and reduce incentives for Codetel and CANTV to engage in a traffic distortion scenario. We therefore find it unlikely that the applicants will "manipulate the settlements process and prices to increase  S-settlements payments."b\f  {O-ԍXxWe note that in the Foreign Participation Order, the Commission required foreignaffiliated carriers seeking to resell switched services to provide service to an affiliated market to file quarterly traffic and  {O-revenue reports. Foreign Participation Order  211.(#b Also, in light of assurances that reduced settlement rates will be made available to all facilitiesbased carriers, absent credible evidence to the contrary, we are no longer concerned that Codetel and CANTV will discriminate among U.S. carriers in negotiating settlement arrangements.  S -x15.` ` We also note that GTE has recently filed an interconnection agreement, entered into between Tricom and Codetel, that appears to resolve the most significant issues that Tricom's  S -proposed conditions are intended to address.  yO-ԍXxLetter from Gordon Maxson, Director Regulatory Affairs, GTE to Magalie R. Salas, Secretary, FCC (January 22, 1998) (January 2 Agreement).(# We are therefore less concerned that Codetel will block competition in the Dominican Republic. Tricom expresses concern that certain aspects of this agreement may be renegotiated in the future. It asks that we condition GTE Telecom's authorization on Codetel charging Dominican carriers nonrecurring and perminute access charges that are "based in cost and cost justified" and which do not "contain any element of subsidy." Tricom also requests, in relevant part, that we condition GTE Telecom's authorization on Codetel's continued compliance with  S-the January 2 agreement.M yOb!-ԍXxTricom Jan 6 Letter.(#M Tricom has not demonstrated a risk to competition in the U.S. international services market that would justify unilateral imposition of such a condition. We find that the issues raised by Tricom that affect the U.S. international services market are largely resolved by the January 2 agreement. We also find that Codetel's conduct in the Dominican market is properly the subject of Dominican law and regulation. Indeed, GTE notes that all pending arbitrations between Tricom and"@r0*8&8&c"  S-Codetel have been resolved. Finally, we find that existing Commission rules and safeguards, such as the quarterly circuit status reports, discussed below, are sufficient to ensure that GTE Telecom and GTE Mobilnet are unable to harm competition in the U.S. market for international services. Nevertheless, we reserve the right to take action in the event that competition in the U.S. market for international services is adversely impacted by future actions by Codetel that restrict Tricom's ability to compete.  S-x16.` ` We also do not find it in the public interest to impose on GTE Telecom the same  S-conditions that were agreed to in the Telmex/Sprint Proceeding by Telmex/Sprint, as urged by  S-Tricom.  {O -ԍXxSee Tricom January 6 Letter at 1; Tricom November 17 Letter at 23. (#Ɖ Tricom offers little rationale for applying these detailed conditions to GTE Telecom. The conditions it advocates were voluntarily agreed to by Sprint and Telmex prior to the grant of resale authorization to their U.S. joint venture company. We do not find that imposing such conditions unilaterally on GTE Telecom in the wake of the significant progress in reducing settlement rates and the new terms and conditions that Codetel agreed to with Tricom would serve the public interest.  S -Furthermore, the terms voluntarily agreed to in the Sprint/Telmex proceeding took place in a regulatory environment in which the authorization in question was subject to an effective competitive  S -opportunities analysis.t! Z {O~-ԍxSee Foreign Carrier Entry Order, 11 FCC Rcd at 392630.t No such analysis is applicable here, either under the rules adopted in the  S\-Foreign Carrier Entry Order,U"\ {O-ԍxSee id, 11 FCC Rcd at 391214.U or under the revised rules adopted in the Foreign Participation Order. We therefore decline to impose the conditions advocated by Tricom.  S-x17.` ` Tricom's U.S. affiliate, Domtel, also requests that GTE Telecom be allowed to resell the services of U.S. carriers that are dominant only when "the U.S. carrier makes the same volume and  S-terms and conditions of resale available to all other resellers."#~ yO-ԍXxDomtel Comments to Opposition at 5. We note that all U.S. international carriers, including nondominant carriers, are subject to the nondiscrimination requirements of Section 202 of the Act. 47 U.S.C.  202. We also note, that since the date of Domtel's filing, we have found AT&T to be nondominant. There are therefore no facilitiesbased carriers regulated as dominant on routes to the  {O-Dominican Republic and Venezuela.  Motion of AT&T Corp. to be Declared NonDominant for  {O-International Service, Order, FCC 96209, 12 FCC Rcd 17,963 (1996).(#Ɯ In addition, Domtel requests that  Sn-"GTE Telecom's resale be required to adhere in all respects to proportionate return . . . . [i.e., that  SH-GTE Telecom] accept only . . . [its] proportionate share of return traffic."d$H  yO -ԍXx Domtel Comments to Opposition at 5. (#d We decline to adopt these conditions. U.S. facilitiesbased carriers are already bound to offer resale service on  S-nondiscriminatory terms and conditions.%  {O"$-ԍXxSee 47 U.S.C.  202; see also 47 C.F.R.  63.14.(#Ƈ Further, to the extent GTE Telecom operates as a switched"%0*8&8&%" reseller on a given route, it would not be entitled to receive return traffic under the Commission's  S-proportionate return policy.& {O@-  kЍXxSee Regulation of International Accounting Rates, CC Docket 90337, Fourth Report and Order, 11 FCC  {O -Rcd 20,063, 20,099100 (1996) (Flexibility Order).(#  S- x18.` ` We also find no merit to AT&T's argument that granting GTE Telecom resale authority to the Dominican Republic and Venezuela would provide it with the incentive and the ability to price retail services below cost and earn substantial profits solely from the settlements payments  S-paid to Codetel from the underlying facilitiesbased carrier.A'$ yO -ԍxAT&T Reply at 2.A We note that similar arguments were  S-raised by AT&T in the Foreign Participation and Benchmarks proceedings. The behavior AT&T  S-describes is a predatory price squeeze. The Commission found in the Benchmarks Order that there is a risk of predatory price squeeze behavior when a foreignaffiliated carrier provides U.S. facilitiesbased service to a foreign market in which the affiliated foreign carrier provides the terminating  SL -service and collects abovecost settlement rates.t(\L  {O-ԍXxSee International Settlement Rates, IB Docket 96261, Report and Order, FCC 97280,  195231, (rel.  {Oj-Aug. 18, 1997) (Benchmarks Order),  recon. pending, appeal filed, Cable & Wireless et al. v. FCC, No. 971612 (D.C. Cir. filed Sept. 26, 1997). (#t The Commission therefore adopted a benchmark settlement rate condition for carriers seeking authorization to provide facilitiesbased service to an  S -affiliated foreign market.R)Z  {Ot-ԍXxId. The Benchmarks Order requires that we condition these authorizations on the affiliated foreign carrier offering U.S. international carriers a settlement rate for the affiliated market that is at or below the relevant benchmark settlement rate adopted in that order.(#R In the Foreign Participation Order, however, the Commission declined to apply a benchmark settlement rate condition for switched resellers' provision of service to affiliated  S -markets.r*  {OH-ԍXxForeign Participation Order  179214.(#r The Commission found that a switched reseller has substantially less incentive to engage in a price squeeze strategy than a facilitiesbased carrier and that it is easier to detect a predatory price  S^-squeeze in a switched resale context than in a facilitiesbased context.B+^  {O-ԍXxId.(#B We therefore find no basis for denial of GTE Telecom's application in the scenario detailed in AT&T's opposition to these applications. For the same reasons, we deny AT&T's proposal to condition GTE Mobilnet's authorization on Codetel and CANTV maintaining accounting rates at or below the applicable  S-benchmark.m, yO|!-ԍXxAT&T Comments to GTE Mobilnet's Application, at 2. (#m  S-  Sn-x19.` ` Nevertheless, in the Foreign Participation Order, the Commission adopted a quarterly traffic and revenue reporting requirement for all switched resellers providing service to markets where an affiliated foreign carrier has sufficient market power to affect competition adversely in the U.S."  ,0*8&8&b" market and collects settlement revenue from U.S. carriers. The purpose of this requirement is to enable the Commission to detect whether a foreignaffiliated reseller is engaging in a traffic distortion  S-scheme on affiliated routes.\- {O-ԍxForeign Participation Order  211.\ Prior to the Foreign Participation Order's adoption, GTE Telecom and GTE Mobilnet had voluntarily committed to make available to the Commission, on a quarterly basis, revenues and traffic volumes for their resold, switched service on the Dominican and Venezuelan routes. If GTE Telecom or GTE Mobilnet were to engage in anticompetitive behavior on these two routes a possibility which we consider to be remote, based on the record before us the quarterly traffic and revenue reports will help to reveal such behavior.  S-x20.` ` In light of the above analysis, we do not find that GTE Telecom's and GTE Mobilnet's affiliations with Codetel and CANTV pose risks to competition in the U.S. international services market that would justify imposing conditions or denying authorization to serve the Dominican Republic and Venezuela via switched resale. We also find that there are no other relevant public interest factors that would lead us to deny the applicants' authorizations. The Executive Branch has not raised any national security, law enforcement, foreign policy or trade concerns. We therefore grant GTE Telecom's and GTE Mobilnet's authorizations to serve the Dominican Republic and Venezuela through resale of an unaffiliated facilitiesbased carrier's switched services.  S2- B.xFacilitiesbased and Resold Noninterconnected Private Line Service  S-x21.` ` GTE Telecom also seeks authority to provide facilitiesbased switched and private line service and to resell noninterconnected private lines for service to the Dominican Republic and  S-Venezuela..Z yO-ԍxGTE Telecom Dominican Republic Application; GTE Telecom Venezuela Application. AT&T asks us to require that Codetel agree to settle U.S. traffic at rates at or below the  Sj-benchmark settlement rate.k/j yO-ԍxAT&T Comments (File No. ITC96314) (filed July 19, 1996).k  S-x22.` ` Applying the public interest analysis adopted in the Foreign Participation Order,]0z {O4-ԍXxSee supra   FP17 .(#] we do not find, on this record, evidence that would lead us to conclude that granting GTE authority to provide facilitiesbased or resold noninterconnected private line service to the Dominican Republic and Venezuela would pose a very high risk to competition in the U.S. market. We also find that there are no other relevant public interest factors that would lead us to deny GTE Telecom's authorizations. The Executive Branch has not raised any national security, law enforcement, foreign policy or trade concerns. In addition, we find that AT&T's request for settlement rate conditions on GTE Telecom's  S-provision of service to the Dominican Republic and Venezuela has been addressed in the Benchmarks  S-Order. The condition adopted in the Benchmarks Order for facilitiesbased service applies for service  S-to those countries. As we concluded in the Benchmarks Order, we see no reason to impose such a condition on the resale of noninterconnected private lines." 00*8&8&"Ԍ S-ԙx23.` ` In the Benchmarks Order, the Commission established benchmarks that will govern the  S-international settlement rates U.S. carriers pay foreign carriers. 1 yOB-ԍXxThe settlement rate refers to each carrier's portion of the accounting rate. In almost all cases, the settlement rate is equal to onehalf of the negotiated accounting rate. At settlement, each carrier nets the minutes of service it billed against the minutes the other carrier billed. The carrier that billed more minutes of service pays the other carrier a net settlement payment calculated by multiplying the settlement rate by the number of imbalanced minutes.(#  The Commission also adopted a benchmark settlement rate condition, effective January 1, 1998, for authorizations to provide facilitiesbased switched or private line services to destination markets where the authorized carrier is affiliated  Sb-with a foreign carrier. Pursuant to the Benchmarks Order, we condition any authorization to provide facilitiesbased switched or private line service to an affiliated market on the affiliated foreign carrier having in effect a settlement rate with U.S. international carriers on the U.S.affiliated market route  S-that is at or below the relevant benchmark settlement rate adopted in that order.2x {O -ԍXxBenchmarks Order  231. The Commission reaffirmed this condition in the Foreign Participation  {O -Order  211.(# The Benchmarks  S-Order requires U.S. carriers to negotiate a settlement rate of U.S. $0.19 per minute with carriers in the  S-Dominican Republic and Venezuela.Q3 {O-ԍxBenchmarks Order  120.Q Codetel and CANTV both have settlement rates with U.S. carriers currently at $0.43, much higher than the benchmark. Thus, we authorize GTE Telecom to begin to provide facilitiesbased service to the Dominican Republic and Venezuela only when Codetel's and CANTV's respective settlement rates are at or below $0.19.  S - C.xRegulatory Treatment  S - x24.` `  V.C.2  V.C.2.A Our regulations governing the U.S. international services market traditionally have distinguished between "dominant" and "nondominant" carriers. We have classified carriers operating in the U.S. market, whether U.S. or foreignowned, as dominant in their provision of U.S. international services on particular routes in two circumstances: (1) where we have determined that a U.S. carrier can exercise market power on the U.S. end of a particular route; and (2) where we have determined that a foreign carrier has market power on the foreign end of a particular route that can adversely affect competition in the U.S. international services market. Carriers regulated as dominant on a particular route due to an affiliation with a carrier possessing market power on the foreign end of that route are subject to specific safeguards set forth in our rules. These safeguards differ significantly from the safeguards the Commission traditionally has imposed on U.S. carriers regulated as dominant  S-due to market power on the U.S. end of a route.~4f  {O -ԍXxSee generally Foreign Participation Order  215.(#~  S-x25.` ` As an incumbent, independent LEC, GTE is classified as nondominant in the provision of international services unless we find that it warrants regulation as a dominant carrier on a particular U.S. international route due to an affiliation with a foreign carrier that has market power on"X 40*8&8&"  S-the foreign end of the route.+5 {Oh-ԍXxRegulatory Treatment of LEC Provision of Interexchange Services Originating in the LEC's Local  {O2-Exchange Area, CC Dockets No. 96149 and 9661, Second Report and Order in CC Docket No. 96149  {O-and Third Report and Order in CC Docket No. 9661, 12 FCC Rcd 15,756 (1997) (LEC Classification  {O-Order); see also Nynex Long Distance Co., et al. and GTE Inc., DA 971662 (Int'l. Bur, rel. Aug. 14,  yO-1997).(#+ Even when regulated as nondominant, however, GTE Telecom and GTE Mobilnet are subject to certain separation requirements in their provision of inregion,  S-international services.6 {O-ԍXxLEC Classification Order, 12 FCC Rcd at 15,86164,  18492; 47 C.F.R.  64.19011903.(#Ɵ  S`-x 1.` ` GTE Mobilnet  S-x26.` ` We grant here GTE Mobilnet's authorization to provide resold switched services on a nondominant carrier basis. We do not find sufficient evidence that GTE Mobilnet could use the market power of CANTV or Codetel to give it an advantage in the U.S. market for international resold switched services.  SH -x27.` ` Under Section 63.10(a)(4) of the Commission's rules, a U.S. international carrier that provides switched service on a particular U.S. international route solely through the resale of the switched services of a U.S. facilitiesbased carrier with which the reseller is not affiliated is presumptively nondominant in its provision of switched services on that route "regardless of any  S -foreign affiliations."7  {OZ-ԍXxRegulation of International Common Carrier Services, CC Docket No. 91360, Report and Order, 7 FCC  {O$-Rcd 7331, 7335 (1992) (International Services); Foreign Participation Order, Appendix A  63.10(a)(4) (to be codified at 47 C.F.R.  63.10(a)(4); hereinafter, all cites to Section 63.10 of the Commission's  {O-rules are as codified); see Streamlining the International Section 214 Authorization Process and Tariff  {O-Requirements, IB Docket No. 95118, Report and Order, 11 FCC Rcd 12,884, 12,91617,  8081  {OJ-(1996); International Competitive Carrier Policies, CC Docket No. 85107, Report and Order, 102 FCC  {O-2d 812, 84344,  7677 (1985) (International Competitive Carrier). (#Ƙ The Commission has found that the resale of an unaffiliated U.S. facilitiesbased carrier's switched services "presents no substantial possibility of anticompetitive effects in the U.S. international service market, because the reseller's foreign affiliate is negotiating the terms and  S0-conditions of access to the destination market with an unaffiliated carrier on the U.S. end[.]"8"0^  {O.-ԍXxInternational Services, 11 FCC Rcd at 7335; see also Foreign Carrier Entry Order, 11 FCC Rcd at 3927, 3928,  143 (rejecting GTE's proposal that the Commission regulate affiliated switched service resellers as dominant, stating that "[w]e continue to consider it unlikely that a foreign carrier reseller would engage in discriminatory conduct under such circumstances").(#  S-x28.` ` We therefore find that GTE Mobilnet qualifies as nondominant for the provision of international switched services to the Dominican Republic and Venezuela under the Commission's" H80*8&8&"  S-rules to the extent it resells the switched services of unaffiliated U.S. facilitiesbased carriers.O9 yOh-ԍXx47 C.F.R. 63.10(a)(4).(#O Because GTE Mobilnet is affiliated with Codetel and CANTV, each of which we find possess sufficient market power to affect competition adversely in the U.S. market, we will require GTE Mobilnet to file quarterly reports of its switched resale traffic to the Dominican Republic and  S`-Venezuela.:`X {OX-ԍXxSee Foreign Participation Order,  207212; and Appendix C,  43.61(c) (to be codified at 47 C.F.R.  43.61(c)).(#  S- x2. ` ` GTE Telecom  S-x29.` ` Under the Commission's regulatory framework, a facilitiesbased U.S. international carrier is presumptively regulated as dominant for the provision of switched or private line services on a particular route if it is affiliated with a foreign carrier that possesses market power in the destination  SH -market.;H  {O-ԍx47 C.F.R.  63.10(a)(2); see also 47 C.F.R.  63.18(h)(1)(i) (definition of affiliation). Where the U.S. carrier is affiliated with a foreign carrier that is not a monopoly provider in the destination market and seeks to be regulated as non-dominant on that route, it bears the burden of demonstrating that its foreign affiliate lacks sufficient market power on the foreign end of the route to  S -affect competition adversely in the U.S. market.<" D yO-ԍXx47 C.F.R.  63.10(a)(3); If the U.S. carrier demonstrates that the foreign affiliate lacks 50 percent market share in the international transport and the local access markets on the foreign end of the route,  {OD-the U.S. carrier is presumptively classified as nondominant.  See Foreign Participation Order  215239.(#ƣ These same presumptions apply in the provision of international private line service.  SX-x30.` ` 4GTE Telecom does not seek to be regulated as a nondominant carrier for the provision of facilitiesbased or resold private line service to either the Dominican Republic or Venezuela. Accordingly, GTE Telecom will be subject to the Commission's dominant carrier regulations for such service to the Dominican Republic and Venezuela, as set forth in the  S-Commissio n's rules.X=\.  {O-ԍXxSee 47 C.F.R. 63.10(c); see also Foreign Participation Order  24092. GTE Telecom also will be  {OP-subject to the Commission's generally applicable safeguards for U.S. international carriers. Id.  150 yO-76(#X  Sh-x31.` ` GTE Telecom does seek nondominant status for its resale of switched services.d>hR  {OZ"-ԍXxSee 47 C.F.R.  63.10(a)(4).(#d The presumption of nondominance for switched resale in the Commission's rules, however, does not apply"@ >0*8&8&r"  S-where a resale carrier also provides switched services on affiliated route as a facilitiesbased carrier.b? {Oh-ԍXxSee 47 C.F.R.  63.10(a)(1)(4).(#b GTE Telecom will therefore be subject to dominant carrier regulation in its provision of switched service to the Dominican Republic and Venezuela upon initiation of facilitiesbased services to each  S-country. So long as GTE Telecom provides service solely through the resale of the switched services of a U.S. facilitiesbased carrier with which it is not affiliated, GTE Telecom will be regulated as nondominant. We will require, however, that GTE Telecom, when providing service solely as a switched reseller, comply with the Commission's requirement to file quarterly reports of its switched resale  S-services to the Dominican Republic and Venezuela.G@XZ yO -ԍXxSection 63.10(c)(3) of the Commission's rules also requires GTE Telecom, as a dominant carrier on the U.S. Dominican Republic and U.S.Venezuela routes, to file quarterly traffic and revenue reports for all services authorized in this order. 47 C.F.R.  63.10(c)(3).(#G  S-x32.` ` Domtel argues that GTE Telecom should not be granted switched resale authority as a nondominant carrier. Domtel asserts that Codetel and CANTV are dominant carriers in their  SJ -respective markets and have a history of discriminating against unaffiliated carriers.VAJ z yOd-ԍxDomtel Comments to Opposition at 34.V In addition, it states that two of the U.S. carriers whose services GTE Telecom proposes to resell "together dominate  S -(80 percent) U.S. traffic to the foreign destination[.]":B  {O-ԍxId.: Under these circumstances, argues Domtel, GTE Telecom "has the ability to interfere with the underlying operating arrangements of the resold  S -U.S. carrier and [GTE Telecom's] . . . foreign affiliate[.]":C  {O-ԍxId.:  SZ-x 33.` ` We find that Domtel does not provide sufficient evidence to overcome the presumption of nondominance for switched resellers. Although Codetel and CANTV may have the ability to interfere with the underlying operating arrangements of the resold U.S. facilitiesbased carrier, it is far from clear that these carriers have the incentive to do so. The fact that the U.S. carriers whose service GTE Telecom proposes to resell constitute 80% of the U.S. market offer little incentive for Codetel and CANTV to discriminate in favor of GTE Telecom, because in order to provide preferential treatment to GTE Telecom, Codetel and CANTV would have to offer preferential treatment to the rest of the traffic carried by the underlying facilitiesbased carriers, which constitutes 80% of all traffic exchanged with the United States. In light of the fact that GTE Telecom's traffic is likely, at least in the short term, to constitute only a small fraction of the traffic between the United States and the Dominican Republic and Venezuela, GTE Telecom's facilitiesbased competitors are far more likely to benefit from such a scheme than GTE Telecom itself.  SR-x!34.` ` We therefore find that there is insufficient evidence in the record to persuade us that  S*-Codetel or CANTV are likely to use their market power in the Dominican Republic and Venezuela, respectively, to discriminate in favor of GTE Telecom or GTE Mobilnet in their resale of switched". C0*8&8&k" services of unaffiliated facilitiesbased carriers to the Dominican Republic and Venezuela. GTE Telecom's provision of service as a switched reseller will therefore be regulated as nondominant until  S-such time as it provides facilitiesbased service.bD {O-ԍXxSee supra   430 .(#b  S`- IV. Conclusion ă  S-x"35.` ` We find that a grant of GTE Telecom's and GTE Mobilnet's abovecaptioned applications to provide service between the United States and the Dominican Republic and Venezuela will serve the public convenience and necessity under Section 214 of the Act by increasing competition in international services, expanding the range of new and innovative services, and allowing for the more efficient use of existing international telecommunications facilities. We also find that GTE Mobilnet qualifies for nondominant carrier regulation to provide resold switched services of unaffiliated facilitiesbased carriers. We will regulate GTE Telecom as dominant for the provision of all authorized services to the Dominican Republic and Venezuela, except to the extent that it provides switched services on those routes solely through the resale of unaffiliated carriers' switched services.  SX- @ V. Ordering Clauses T  S-TPx#36.` ` Upon consideration of the application and in view of the foregoing, IT IS HEREBY CERTIFIED that the present and future public convenience and necessity require the provision of facilitiesbased and resold international switched and noninterconnected private line services between the United States and the Dominican Republic and Venezuela by GTE Telecom, Inc. and resold international switched services between the United States and the Dominican Republic and Venezuela by GTE Mobilnet, Inc. subject to the conditions set forth below.  S-x$37.` ` Accordingly, IT IS HEREBY ORDERED that File No. ITC 95443 IS GRANTED and GTE Telecom, Inc. is authorized to provide resold international switched services between the United States and the Dominican Republic and Venezuela;  SP-x%38.55` ` 87DOMIT IS FURTHER ORDERED that File No. ITC 95561 IS GRANTED and GTE Mobilnet, Inc. is authorized to provide resold international switched services between the United States and the Dominican Republic and Venezuela.  S-x&39.55` ` 87DOMIT IS FURTHER ORDERED that File No. ITC 96313 IS GRANTED and GTE Telecom, Inc. is authorized to: 1) resell international private lines not interconnected to the public switched network; 2) provide facilities based service between the United States and Venezuela.  S -x'40.55` ` 87DOMIT IS FURTHER ORDERED that File No. ITC 96314 IS GRANTED and GTE Telecom, Inc. is authorized to: 1) resell international private lines not interconnected to the public switched network; 2) provide facilities based service between the United States and the Dominican Republic.""ZD0*8&8&$"Ԍ S-ԙx(41.` ` IT IS FURTHER ORDERED that GTE Telecom shall comply with Sections 43.82, 63.19, 63.21 and 63.15(b) and with all other relevant Commission rules and policies.  S-x)42.` ` IT IS FURTHER ORDERED that GTE Mobilnet shall comply with Sections 63.19, and 63.21 and with all other relevant Commission rules and policies.  S-x*43.` ` IT IS FURTHER ORDERED that GTE Telecom may not and GTE Telecom's tariffs must state that its customers may not connect their private lines to the public switched network at either the U.S. or foreign end, or both, for the provision of international switched basic  S-services unless the Commission has authorized the provision of such service. See 47 C.F.R. 63.18(e)(2)(ii)(c), (e)(3)!(4); 63.21(a).  S" -x+44.` ` IT IS FURTHER ORDERED that neither GTE Telecom nor GTE Mobilnet may agree to accept special concessions from Codetel or CANTV with respect to the services that they provide between the United States and the Dominican Republic or Venezuela. "Special concessions" is defined  S -in Section 63.14(b) of the Commission's rules as amended by the Commission's Foreign Participation  S -Order, FCC 97398.  S6-x,45.` ` IT IS FURTHER ORDERED THAT AT&T's Petitions to Deny in Part ARE DENIED.  S- x-46.` ` IT IS FURTHER ORDERED that GTE Telecom shall be regulated as a dominant carrier on the U.S.Dominican Republic and U.S.Venezuela routes, pursuant to Section 214 of the Act, 47 U.S.C.  214 and Section 63.10 of the Commission's Rules and shall comply with the requirements of paragraph (c) of that section, except to the extent that it provides service "solely through the resale of an unaffiliated U.S. facilitiesbased carrier's international switched services" pursuant to Section 63.10(a)(4). The quarterly traffic reports filed pursuant to Section 63.10(c) must include the information required by Section 43.61 of the Commission's rules, 47 C.F.R.  43.61, for "resale of international switched services" on the U.S. Dominican Republic and Venezuela routes.  SV- x.47.` ` This Order is issued under Section 0.261 of the Commission's rules, 47 C.F.R.  0.261 (1996), and is effective upon adoption. Petitions for reconsideration under Section 1.106 of the Commission's rules, 47 C.F.R.  1.106 (1996), or applications for review under Section 1.115 of the Commission's rules, 47 C.F.R.  1.115 (1996), may be filed within 30 days of the date of public notice of this Order and Authorization (see 47 C.F.R.  1.4(b)(2)).  Sf- x` `  hhFEDERAL COMMUNICATIONS COMMISSION  S!- x` `  hhDiane J. Cornell x` `  hhChief, Telecommunications Division  Sv#-