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Chairman on Lower Phone Bills for Americans Through Additional Deregulation of International Telephony Market

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Released: May 13, 2011

STATEMENT OF

CHAIRMAN JULIUS GENACHOWSKI

Re:
Modifying the Commission's Process to Avert Harm to U.S. Competition and U.S.
Customers Caused by Anticompetitive Conduct
, IB Docket No. 05-254; Joint Petition for
Rulemaking to Further Reform the International Settlements Policy
, Public Notice, RM-
11322, Report No. 2764; Petition of AT&T Inc. for Settlements Stop Payment Order on
the U.S.-Tonga Route
, IB Docket No. 09-10, Second Order and Request for Further
Comment; Petition of AT&T Inc. for Settlements Stop Payment Order on the U.S.-Tonga
Route,
IB Docket No. 09-10, Order and Request for Further Comment; Reporting
Requirements for U.S. Providers of International Telecommunications Services,
Amendment of Part 43 of the Commission's Rules,
IB Docket No. 04-112, Notice of
Proposed Rulemaking
Today, the FCC takes important steps to eliminate outdated policies and unnecessary
regulatory burdens. We propose to further deregulate the market for international phone calls. We
eliminate five collections of data regarding international communications and propose
streamlining and modernizing other data collections.
These steps are part of our broader efforts to streamline and modernize the Commission's
rules and reduce unneeded burdens on the private sector, while ensuring the right policies and
data collections are in place to enable the Commission to carry out its statutory duties. They've
been a focus since the start of my tenure, and they build on the strong work of my colleagues on
the Commission; indeed, they incorporate ideas from my colleagues.
These efforts include launching our Data Innovation Initiative, which is designed to
ensure the Commission's policies are fact-based and data-driven; working on creating a
Consolidated Licensing System, which would provide a single portal of access to all of the FCC's
licensing systems; making it easier for radio stations to certify compliance with our technical
rules; identifying ways to reduce barriers to broadband infrastructure deployment as part of our
Broadband Acceleration Initiative; eliminating unnecessary restrictions on the use of certain
spectrum bands; and launching a comprehensive review of our current telecommunications
regulations, seeking public comment on which regulations are no longer necessary or in the
public interest.
In the first notice of proposed rulemaking we adopt today, we propose eliminating our
International Settlements Policy from almost all of the few dozen international routes to which it
continues to apply.
The International Settlements Policy prohibits certain potentially anticompetitive terms in
agreements for exchanging phone traffic between U.S. and foreign carriers with market power. It
was adopted to protect U.S. carriers and consumers. In 1996, international phone rates for U.S.
consumers averaged $0.74 per minute. In 2009, they averaged just $0.08 per minute, and the
volume of annual traffic had increased 250 percent over 1996 levels. What happened?
FCC policies made a big difference.
By the mid-1990s, settlement rates for exchanging international traffic remained
substantially above cost, despite earlier efforts to reform the International Settlements Policy. So
in 1997, the Commission voted to establish rate benchmarks, which prevented foreign

monopolists from demanding excessive rates or anticompetitive conditions in agreements with
U.S. carriers regarding the exchange of phone traffic.
This policy has led to such growth in competition that we now face a different challenge.
For the remaining routes to which the International Settlements Policy continues to apply, the
Policy limits U.S. carriers' flexibility to negotiate efficient and innovative termination
agreements.
In these markets, the Policy has outlived its usefulness. So it's time for it to go.
Today we are also eliminating unneeded regulations regarding the collection of data on
international phone traffic, comprehensively reforming these policies for the first time in almost
twenty years.
In February, as part of our Data Innovation Initiative, our agency-wide data team
identified twenty data collections to target for elimination or streamlining. The data collections
we address today are in addition to those initial twenty collections identified as the result of
further work by our International Bureau.
We're proposing to eliminate all traffic and revenue reporting obligations for more than
1,000 smaller carriers, and to reduce the level of detail other carriers must report about their
international traffic by more than 90 percent. Our reforms will save many thousands of hours
currently being spent each year to comply with these outdated obligations, and are part of our
ongoing efforts to match our data collections with our data needs.
I thank the staff of the International Bureau for their dedicated work on these items.

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