********************************************************    
                         NOTICE
********************************************************

This document was converted from
WordPerfect to ASCII Text format.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
WordPerfect version or Adobe Acrobat version, if available.

*****************************************************************

                                                        DA 97-511


                           Before the
               FEDERAL COMMUNICATIONS COMMISSION
                    Washington, D.C.  20554

 
In the Matter of                             )
                              )    
Telia North America, Inc.               ) 
                              )
Application for Authority, Pursuant to       )         File No. I-T-C-96-545
Section 214 of the Communications       )
Act of 1934, as amended, to Acquire          )
and Operate Facilities to Provide       )
International Services Between the           )
United States and Sweden           )


               ORDER, AUTHORIZATION AND CERTIFICATE


Adopted:  March 11, 1997                Released:  March 11, 1997

By the Deputy Chief, International Bureau:


                        I.   INTRODUCTION
     1.   In this Order, we grant Telia North America, Inc. (Telia NA) authority pursuant to
Section 214 of the Communications Act of 1934, to acquire and operate facilities for the provision of
switched, private line, and other authorized services between the United States and Sweden, subject to
certain conditions described below.

                         II.  BACKGROUND
     2.   Telia NA, a corporation organized under the laws of the State of Delaware, is a wholly
owned subsidiary of Telia AB, a Swedish corporation.  The shares of Telia AB are owned by the
Government of Sweden.  Telia AB is the incumbent provider of local and inter-city services and provides
international telecommunications services in Sweden.  Telia NA is a U.S. carrier authorized to resell
switched services and non-interconnected private lines to provide services between the United States and
numerous countries.

     3.   On September 27, 1996, Telia NA filed an application to obtain Section 214 authority to
acquire U.S. half-circuits in transoceanic submarine cables and previously authorized satellite facilities
in order to provide service between the United States and Sweden.  This authority would allow Telia NA
to provide "full" circuits on the U.S.-Sweden route, enabling it to provide "end-to-end" facilities-based
service to customers in both countries.  Telia NA proposes to terminate its facilities in an undetermined
U.S. carrier's point-of-presence.

     4.   Telia NA originally proposed to provide facilities-based services between the United
States and Sweden without the use of accounting rates by matching U.S. half circuits with Swedish half
circuits to create "full circuits" in the same facilities, but subsequently withdrew this request.  Telia NA
does not seek to be treated as a non-dominant carrier.

     5.   AT&T and MCI filed petitions to deny Telia NA's application, which Telia NA
opposed.  AT&T and MCI filed replies to Telia NA's opposition.  WorldCom Inc. filed comments
neither opposing nor supporting Telia NA's application, but recommending that Telia NA be required to
re-file its request for authority to provide full circuit services without the use of accounting rates after the
Commission has established its policy framework governing flexible accounting rate arrangements.

                        III.  DISCUSSION

     A.   Overview of Public Interest Analysis

     6.   Because Telia NA is a foreign carrier within the meaning of Section 63.18(h)(1)(ii) of
the Commission's Rules, we examine its application under the framework established in the Foreign
Carrier Entry Order.  In that order, the Commission determined that foreign carriers seeking to provide
U.S. international services to destination countries in which they have market power must demonstrate
that such destination countries offer "effective competitive opportunities" ("ECO") for U.S. carriers to
offer like services.  The Commission stated that it would apply the ECO analysis only to Section 214
applications from foreign carriers, or affiliates of foreign carriers, with market power in destination
countries that potentially can be leveraged to the detriment of unaffiliated U.S. carriers providing service
to those countries.  The Commission also determined that it would continue to consider other public
interest factors that may weigh in favor of, or against, granting the application.

     B.   Analysis of Telia NA's Market Power

     7.   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." 
We examine whether Telia NA's parent, Telia AB, has market power in the local and inter-city facilities
markets for terminating international private line and switched services in Sweden, as a U.S. carrier
ultimately relies upon a facilities-based carrier operating in those markets to reach the Swedish end user. 
A carrier controlling bottleneck facilities and services in the domestic local or inter-city markets could
discriminate in favor of an affiliate competing in the private line or switched services markets by
offering its affiliate superior technical quality, faster provisioning, or preferential rates.

     8.   Telia AB is a government-owned company that provides local, long distance, and
international services in Sweden.  It provides almost ubiquitous national service in Sweden.  Telia NA
has not argued that Telia AB lacks the ability to control bottleneck services or facilities in Sweden.  Nor
has Telia NA made any showing to demonstrate that Telia AB does not control bottleneck facilities or
services.  Given Telia AB's status in Sweden's telecommunications market and the absence of any
showing otherwise, we assume for purposes of this decision that Telia NA's affiliate, Telia AB, has the
ability to discriminate against unaffiliated U.S. international carriers terminating traffic in Sweden and
thus possesses market power in Sweden's facilities-based market for local, long distance and
international services.

     B.   Effective Competitive Opportunities Analysis

     9.   Under the ECO test for facilities-based entry, we examine first the legal, or de jure,
ability of U.S. carriers to enter the destination foreign country and provide international facilities-based
service.  Next, we focus on the actual conditions of entry, including the terms and conditions of
interconnection, competitive safeguards, and the regulatory framework.  We focus on the overall effect
of these four elements on the opportunities for viable operation as a facilities-based carrier in the foreign
market.  If, however, any of the factors of the effective competitive opportunities test are completely
absent, we will deny authority to provide facilities-based service on that route, unless other public
interest factors warrant a different result.  We also consider as relevant any evidence of existing
competition in international facilities-based services.

          1.   Facilities-Based Entry

     10.   There are no de jure restrictions in Sweden on foreign ownership or participation in
international telecommunications services.  In addition, we agree with the parties that there are no
licensing requirements that would raise a legal barrier to entry in the Swedish market for such services. 
Section 5 of Sweden's Telecommunications Act requires licenses for operators providing telephony
service, mobile service, and leased lines, if such services are offered within a public telecommunications
network and if the operators' activity is of a "considerable extent."  If a license is required, it will be
granted "unless the applicant is obviously not capable to pursue the activity on a permanent basis and
with adequate capacity and quality."  We find that these minimal licensing requirements do not serve as
a barrier to entry in the Swedish market.

     11.  We also note that several foreign-based carriers, including U.S.-based carriers, are
operating on a facilities basis in the Swedish telecommunications market.  The presence of these
facilities-based foreign carriers in the Swedish market is another indicator of open entry. 

          2.   Interconnection

     12.  The second factor we examine as part of the ECO test is whether reasonable and
nondiscriminatory charges, terms and conditions exist for interconnection to a foreign carrier's domestic
facilities for termination and origination of international services, and whether adequate means exist to
monitor and enforce these conditions (e.g., published charges).  Telia NA argues that the following
factors ensure reasonable access and interconnection to Telia AB's local network in Sweden:

          (a)  The Telecom Act requires licensees operating within public telecommunications
          networks, such as Telia AB, to offer interconnection at a price that is "fair and
          reasonable in relation to the performance cost."

          (b)  Sweden's telecommunications sector regulator, the Post-och Telestryelsen (National
          Post and Telecom Agency ("NPTA")), is required to oversee the negotiation of
          interconnection agreements and, if necessary, to act as mediator.

          (c)  Telia AB publishes a standard price list for basic switched services, makes available
          to all interested parties a "Model Interconnect Agreement," and publishes a ten-page
          information brochure entitled "Interconnect with Telia."  Telia AB does not vary from
          its standard prices unless there is an objective cost-oriented basis for agreeing to a
          different price.  Interconnection terms do not vary depending on whether the
          interconnecting party seeks to terminate domestic or international calls; thus, foreign
          carriers that establish a licensed affiliate in Sweden may terminate their international
          traffic in Telia AB's domestic network at the domestic interconnection rate, rather than
          an accounting rate.

     13.  AT&T and MCI reject the claim that there are reasonable and nondiscriminatory terms
for interconnection in Sweden.  AT&T argues that the Telecom Act provides no assurance of
nondiscriminatory interconnection and the nondiscrimination requirement of the ECO test is therefore
satisfied only to the extent Telia AB is willing to police itself.  AT&T further argues that Telia NA's
statement that U.S. carriers may terminate their international traffic in Telia AB's domestic network at
domestic interconnection rates if they establish a licensed affiliate in Sweden implies that domestic
interconnection rates charged to a facilities-based carrier in Sweden will be less than those charged to a
U.S. carrier reselling private lines for the provision of switched services between the United States and
Sweden.  AT&T states that absent clarification that Telia AB is legally bound to offer interconnection to
all carriers at the same terms and conditions, the Commission should find that Sweden fails to satisfy the
nondiscriminatory interconnection criteria of the ECO test.

     14.  MCI contends that because Telia AB is not required to publish an adequate description
of its interconnection agreements, there is no assurance that it complies with its published price list and
model interconnection agreement.  MCI also asserts that Telia AB's interconnection terms and
conditions are unreasonable and enforcement in Sweden is inadequate for resolving anticompetitive
issues.

     15.  Telia NA counters that Telia AB is legally obligated under the Telecom Act to offer
interconnection to other licensees and to parties registered with the NPTA.  It also asserts that under
Sweden's Competition Act, Telia AB is not free to discriminate in the rates, terms and conditions of
interconnection.  Telia NA further states that neither MCI or AT&T has claimed or demonstrated that
Telia AB does not make its standard rates, terms, and conditions available on a nondiscriminatory basis. 
Telia NA also contends that because Telia AB is required to file copies of its interconnection agreements
with the NPTA, an interconnecting party could seek confirmation from the NPTA that Telia AB follows
the terms and conditions of its model agreement and standard price list.  Finally, Telia NA points to what
it states are previous findings by the Commission that the nondiscriminatory offering of published
standard interconnect arrangements at standard prices is an adequate alternative to tariffed service
offerings and rates.

     16.  With respect to AT&T's assertion that the application implies that Telia AB will
discriminate against U.S. carriers reselling interconnected private line services in Sweden, Telia NA
states that, in accordance with the Competition Act's prohibition against discrimination, Telia AB does
not discriminate in the terms and conditions of interconnection.  Telia NA nonetheless states that Telia
AB commits that it will offer its national interconnection rate to all U.S. carriers, facilities-based and
resellers, that seek to terminate a full circuit in Telia AB's domestic network in Sweden.

     17.  In response to MCI's claim that Telia AB's interconnection terms and conditions are
unreasonable, Telia NA notes that Telia AB is required by the Telecom Act to offer interconnection at
prices that are "fair and reasonable" and use specified cost accounting principles in calculating
interconnection rates.  Telia NA also states that Telia AB is periodically audited by the NPTA.  Telia
NA states that MCI does not cite to any provision in Telia AB's Model Interconnect Agreement or
standard price list that it believes is unreasonable and does not provide any other evidence to support its
claim.  Telia NA also points to the fact that Telia AB has successfully negotiated agreements with ten
facilities-based carriers as evidence that Sweden's interconnection regime is working.  Telia NA states
that if the first interconnection negotiation is excluded, the average time for negotiation is approximately
six months.

     18.  In response, MCI contends that the unreasonableness of Telia AB's interconnection rates
is evidenced by severe discrepancies between interconnection rates and retail rates offered to
customers.  AT&T replies that any approval of the application should be conditioned on Telia AB
abiding by its commitment to offer its national interconnection rate to all U.S. carriers that seek to
terminate a full circuit in Telia AB's network in Sweden.

     19.  As an initial matter, we review here the basic legal and regulatory framework governing
interconnection in Sweden.  Sweden's Telecom Act, enacted in 1993, requires license holders to provide
interconnection upon request to other license holders at rates that are "fair and reasonable in relation to
the performance cost."  The NPTA, however, does not have authority to mandate the terms and
conditions of interconnection.  The NPTA's role in interconnection disputes is limited to mediating
disputes and making recommendations upon request of a negotiating party.  In addition to the sector-
specific Telecom Act, Sweden's Competition Act applies to telecommunications services.  Of particular
relevance is Section 19, which prohibits the abuse of a dominant position.  Sweden's Competition
Authority, the Konkurrensverket, enforces the Competition Act.  There is no requirement, either under
NPTA regulations or the Telecom Act, that license holders publish their interconnection charges, and
Swedish privacy law prohibits the publication of privately negotiated agreements such as interconnection
agreements without the permission of all parties to the agreement.  Telia AB is, however, required to file
its interconnection agreements with the NPTA.

     20.  We find that this interconnection regime satisfies the interconnection element of the
ECO test.  While the Swedish interconnection regime may not be ideal, it appears at the present time that
U.S. carriers have the opportunity to obtain interconnection on reasonable and nondiscriminatory terms
for the provision of international facilities-based service.  We base our finding on the following factors: 
(1) the legal requirement that Telia AB provide interconnection upon request at rates that are fair and
reasonable in relation to cost; (2) public and private remedies for anticompetitive conduct, and the
apparent willingness of the Swedish Competition Authority to utilize such public remedies; (3) Telia
AB's publication of a standard price list for interconnection services; (4) the successful negotiation of a
number of interconnection agreements;  and (5) emerging competition in the Swedish local exchange
market.

     21.  We are concerned that the NPTA's role in resolving interconnection disputes is too
limited to be effective.  However, we believe that reasonable and nondiscriminatory interconnection is
available in Sweden, despite the NPTA's limited role.  As Telia NA states, the Competition Authority in
Sweden performs many of the functions traditionally assumed by a telecommunications sector regulator
in ensuring the availability of reasonable and nondiscriminatory interconnection.  Contrary to MCI's
assertion, there is no evidence that the Competition Authority lacks the ability or willingness  to enforce
adequately the Competition Act in the telecommunications sector.  To the contrary, there is evidence that
the Competition Authority has taken action with respect to interconnection issues recently.  For
example, in one case, the Competition Authority issued an order prohibiting Telia AB from charging
Tele2 an interconnection rate that exceeded the amount set by the Competition Authority.

     22.  We also note that as a member of the European Union (E.U.), Sweden will be required to
conform its telecommunications regulatory regime to the European Union's Competition Directive by
January 1, 1998.  Sweden's Ministry of Transport and Communications (MTC) has issued a Green
Paper proposing conforming revisions to Sweden's Telecom Act.  The proposed reforms include
granting the NPTA the authority to settle interconnection disputes.  We recognize that these regulatory
revisions have not been instituted, and in fact, have not yet been introduced in the Swedish Parliament. 
Nonetheless, we believe that Sweden's obligation as a member of the European Union to make these
revisions to its regulatory regime indicates a commitment on the part of the Swedish government to
ensure the availability of reasonable and nondiscriminatory interconnection.

     23.  Despite MCI's contention that Telia AB's interconnection rates are unreasonable, there is
no indication in the record that Telia AB's interconnection rates preclude viable entry into the
international services market in Sweden.  Telia AB's published price list offers rates for interconnection
of calls to Telia AB's network.  The rates are approximately 2 cents (U.S.) peak and 1 cent (U.S.) off-
peak per minute for short-haul calls.  The rates for longer haul calls are 3 cents (U.S.) peak and 1.5 cents
(U.S.) off-peak per minute.  A 1 cent (U.S.) per-call access charge also applies.  We note that these
rates compare favorably with rates in the United States for similar services.  We also note that the
existence of facilities-based competition in the international services market in Sweden suggests that
Sweden's interconnection regime is conducive to entry in that market.  Telia AB's share of the
international services market has fallen from almost 100 percent in 1993 to around 70 percent in 1995. 
In addition, Telia AB has negotiated interconnection agreements with ten facilities-based carriers.  The
availability of favorable toll interconnection rates as well as the actual entry of multiple facilities-based
international carriers into the Swedish market supports our finding that Sweden satisfies the
interconnection factor of the ECO test.

     24.  As Telia NA points out, we stated in the Foreign Carrier Entry Order that the
nondiscriminatory offering of published standard interconnect arrangements at standard prices could be
an adequate alternative to tariffed service offerings and rates.  We are concerned, however, that because
there is no legal requirement that Telia NA publish its interconnection arrangements, U.S. carriers cannot
be assured that Telia NA provides nondiscriminatory interconnection in compliance with the rates
offered in its published price list.  Indeed, Swedish law prohibits the publication of interconnection
agreements without the consent of all parties to the agreement.  However, according to Telia NA, Telia
AB may publish as part of its price list the actual prices it has negotiated with interconnecting carriers, as
long as the carriers to whom the price is charged are not identified.  The publication of the actual
interconnection prices negotiated by Telia AB would eliminate our concern about ensuring compliance
with Telia AB's price list.  We therefore make such publication a specific condition of this grant of Telia
NA's application.  We also make compliance with Telia AB's commitment to offer its domestic
interconnection rate to all U.S. carriers that seek to terminate a full circuit in Telia AB's network in
Sweden a condition of this grant.  If we obtain evidence that these conditions have been violated, we will
revisit the issue of whether the public interest continues to be served by today's grant of Telia NA's
application, or any future applications by Telia NA to add facilities on the U.S.-Sweden route.

          3.   Competitive Safeguards

     25.  The third factor we examine in our ECO analysis is whether safeguards exist in the
foreign destination market to protect against anticompetitive practices.  The safeguards we consider
important include:  (1) the existence of cost-allocation rules to prevent cross-subsidization; (2) timely
and nondiscriminatory disclosure of technical information needed to use, or interconnect with, carriers'
facilities; and (3) protection of carrier and customer proprietary information.

     26.  Cost-Allocation Rules.  Telia states that all three competitive safeguards are present in
the Swedish regulatory scheme.  Telia further states that to the extent commenters argue Sweden's
competitive safeguards are inadequate, the existence of facilities-based competition in the Swedish
market for international telecommunications services provides U.S. carriers with the most effective
solution to eliminate the potential for anticompetitive conduct.  With respect to the existence of cost-
allocation rules, Telia states that interconnection pricing is based on a cost-allocation model, under
which network elements are allocated a cost and carriers are charged based on the elements they use,
plus a reasonable rate of return.  No commenter disputes the existence of cost-allocation rules;
however, MCI states that the discrepancy between Telia NA's rates for retail customers and its
interconnection rates is an example of cross-subsidization.

     27.  We find that there are adequate cost-allocation safeguards in Sweden to prevent cross-
subsidization of services.  Section 20 of the Telecom Act requires that interconnection services be
provided at rates that are "fair and reasonable in relation to the performance cost."  Telia AB is required
to use specified cost accounting principles in calculating interconnection rates and is periodically audited
by the NPTA.  Further, we find no evidence in the record that Telia AB has improperly cross-
subsidized retail rates with revenues from its interconnection rates, as MCI suggests.  We note that such
cross-subsidization would be actionable as an abuse of dominant position under the Competition Act.

     28.  Disclosure of Network Information.  Telia NA states that Telia AB's license requires it to
use standard network interfaces.  MCI, however, argues that this license condition is inadequate, noting
that Telia AB's competitors have complained that it does not provide timely and nondiscriminatory
disclosure of technical information needed for interconnection.  Telia NA replies that MCI refers to a
complaint by Telenordia that Telia AB does not disclose technical information used in designing its
facilities, not that it does not disclose technical information needed to interconnect with Telia AB's
facilities.

     29.  The record suggests there are adequate requirements to ensure that carriers receive the
technical network information necessary to interconnect with Telia AB.  Telia AB's license requires it to
use standard interfaces established by the NPTA or the International Telecommunications Union.  These
interfaces are available from the NPTA or Telia.  In addition, Telia AB's Model Interconnect
Agreement provides that such information is available upon request and provides a timeframe for the
establishment of points of interconnection.  Furthermore, no party has offered specific evidence that
any carrier has been denied the technical information needed to operate a telecommunications network
service in Sweden.  Finally, the record indicates that withholding essential technical information needed
to interconnect is actionable under the Competition Act as an abuse of dominant position.  The
availability of such enforcement mechanisms is an additional guarantee that U.S. carriers have access to
the technical information necessary to interconnect with Telia AB's network.

     30.  Safeguards for Carrier and Customer Proprietary Information.  Telia claims that Swedish
law protects the privacy of proprietary information.  MCI, however, contends that the Swedish
government has not acted to protect carrier and customer proprietary information and that privacy
provisions in Swedish law have not prevented Telia from using information received as a result of its
monopoly position to further its own business interests.  Telia replies that MCI cites no instance in
which Telia AB has used information about other carriers' use of its network to its advantage.  Moreover,
Telia contends that carriers can protect themselves against such actions through contractual provisions. 
In response, MCI states that Telia's claim that carriers can protect themselves against disclosure of
confidential business information through contractual provisions is unpersuasive, given that
interconnecting carriers have little bargaining power.

     31.  The record shows that Telia AB has an affirmative obligation under Swedish law to
protect carrier and customer proprietary information.  Section 25 of the Telecom Act provides that
operators may not "forward or utilize" information concerning "telecommunications subscriptions"
without obtaining a customer's prior consent.  Contrary to MCI's contention, we find no evidence in the
record to suggest that Telia AB has used carrier proprietary information to its advantage or that Sweden's
privacy rules are not sufficient to safeguard against the misuse of carrier and customer proprietary
information.  If we receive information contradicting this conclusion, we will revisit the issue.

     32.  In sum, we find that competitive safeguards in Sweden are sufficient to protect U.S.
carriers against anticompetitive practices, including cross-subsidization and the unauthorized disclosure
of proprietary information.  Also, Sweden's Competition Authority has sufficient authority to intervene
(as explained in the next section) to protect competition.  Further, Telia AB is required to provide the
technical information necessary to interconnect, and there is no evidence in the record that Telia AB has
failed to provide such information in a timely manner.  We also note that the extent of competition in the
Swedish facilities-based market for international services, and the successful negotiation of several
interconnection agreements suggests that the Swedish regulatory environment, including its competitive
safeguards, is conducive to competitive entry by U.S. carriers.

     33.  Regulatory framework.  The fourth factor to be reviewed under the ECO analysis is
whether there is an effective regulatory framework in Sweden to develop, implement and enforce legal
requirements, interconnection arrangements and other competitive safeguards.  The focus is on whether
there is separation between the foreign regulator and the operator of international facilities-based
services, and whether there are fair and transparent regulatory procedures in the destination market. 
Sufficient separation between the operator and the regulator is necessary to ensure that the regulator is
independent, empowered, and does not have a conflict of interest in regulating the operator. Transparent
procedures allow competitors to know precisely what obligations are required of the incumbent dominant
carrier and what rights they have to seek enforcement of such obligations.

     34.  Telia states that Sweden has an effective regulatory framework which "affords" U.S.
carriers non-discriminatory treatment.  Telia states that the 1993 Telecom Act separated the regulatory
and operational functions of the Swedish national carrier Televerket into the NPTA and Telia AB.  Telia
states that under this statutory split, the NPTA is an independent regulatory body with significant
authority.  According to Telia, the NPTA is obligated to oversee interconnection agreements, and if
necessary, to mediate interconnection disputes.  It also has authority to issue and revoke licenses, request
documents in order to ensure compliance with the Telecom Act, and issue "injunctions and
prohibitions."  Telia also notes that Sweden's Competition Act applies to telecommunications and that
the Competition Authority is empowered to prevent telecommunications operators from engaging in
discriminatory practices.

     35.  MCI argues that Telia has failed to demonstrate that there is an independent regulatory
body in Sweden empowered to enforce competitive safeguards.  MCI cites the fact that the NPTA and
Telia still are owned by or are part of the government as evidence that the NPTA is not an independent
regulator.  MCI also questions the effectiveness of the NPTA, stating that it has no power to settle
interconnection disputes or prescribe rates or tariffs.  MCI also appears to question the ability of the
Competition Authority to handle complaints filed against Telia.

     36.  In response to MCI's assertions, Telia NA states that the NPTA has not bestowed any
preferential treatment on Telia AB, nor has MCI offered evidence of such treatment.  Telia NA states
that the Government of Sweden regulates Telia AB on an arm's length basis, as demonstrated by the
criticisms of the Swedish regulatory regime in the MTC Green Paper cited repeatedly by MCI.  Telia
states that the MTC Green Paper demonstrates the Swedish Government's commitment to promoting
competition and to acting as an impartial, unbiased, and independent regulatory authority.  Telia also
disputes MCI's claim that the NPTA and Competition Authority are ineffective.  Telia states that the
NPTA has successfully mediated each of the three interconnection disputes that have come before it. 
With respect to the effectiveness of the Competition Authority, Telia NA states that the Competition
Authority has the power to conclude interconnection disputes and can require an undertaking to
terminate an abuse or request the Stockholm City Court to levy a fine of up to ten percent of a company's
turnover from the prior year.  Telia NA notes that the Competition Authority has taken action against
Telia AB with respect to interconnection on two occasions within the past two years.

     37.  Telia NA further argues that regulatory oversight in Sweden will improve as a result of
Sweden's membership in the European Union.  Sweden states that as a result of its membership in the
European Union, it will be required to conform its telecommunications regulatory regime to the
European Union's Competition Directive by January 1, 1998.  In addition, Telia NA points to the fact
that the European Commission has jurisdiction to investigate and prevent abuses of a dominant market
position in the Swedish market that have an effect on trade between member states.  Telia states that the
presence of a second regulatory body will provide U.S. carriers with further assurance that they will
receive fair and nondiscriminatory treatment in the Swedish market.

     38.  Although we have concerns about the NPTA's lack of authority to resolve
interconnection disputes, we nevertheless conclude that on balance there is sufficient regulatory
oversight to protect and promote competition in the Swedish telecommunications market.  As an initial
matter, we note that the Commission's ECO test does not require a regulatory regime exactly patterned
on that which exists in the United States.  While the NPTA's authority to resolve interconnection disputes
is limited, the Competition Authority has a significant role in preventing anticompetitive practices in the
telecommunications sector.  Moreover, the Competition Authority has demonstrated a willingness to
exercise its authority and, as Telia NA points out, the Swedish government has demonstrated a
commitment to ensuring that its regulatory regime is conducive to competitive entry.  While we find
that the current Swedish regulatory regime provides sufficient regulatory oversight, we note that the
proposed changes to the Telecom Act to bring Sweden's regulatory regime into compliance with the E.U.
Competition Directive will give the NPTA additional authority to resolve interconnection disputes and
mandate reasonable and nondiscriminatory interconnection.  These changes will provide U.S. carriers
with additional assurance that they will receive non-discriminatory treatment in Sweden.

     39.  We are concerned about the Swedish government's ownership of Telia.  We would prefer
to see separation of the regulator and operator.  As we stated in the Foreign Carrier Entry Order, absent
sufficient separation between the operator and the regulator to ensure that the regulator is independent,
empowered, and does not have a conflict of interest in regulating the operator, there is little reason to
believe that the regulator will not favor the operator.  We note, however, that contrary to MCI's
suggestion, there is no indication in the record that the NPTA has granted preferential treatment to Telia. 
We therefore find, based on the record, that there is an effective regulatory framework in Sweden.  We
will, however, continue to monitor whether the NPTA remains an independent regulator and takes
adequate action within its powers to address complaints against Telia.
 
     40.  In summary, we find that ECO exists for international facilities-based operators in
Sweden.  There are no de jure barriers to entry, and foreign ownership of international providers is
unrestricted.  U.S. carriers appear in practice to have the opportunity to obtain reasonable and
nondiscriminatory terms to interconnect for the origination and termination of international calls. 
Competitive safeguards and an independent regulatory framework provide checks on the potential for
abuse of market power.  Finally, the fact that there are several facilities-based licensed international
service operators in Sweden is evidence that Sweden in fact offers U.S. carriers effective competitive
opportunities to compete as international facilities-based carriers in that country today.  However,
because we have some concerns about the effectiveness of the Swedish interconnection regime, we
specifically condition this Section 214 authorization on the publication of the actual interconnection
prices negotiated by Telia NA's affiliate, Telia AB, as part of Telia AB's standard price list.  We also
condition this authorization on compliance with Telia AB's commitment to offer its national
interconnection rate to all U.S. carriers that seek to terminate a full circuit in Telia AB's network in
Sweden.  If we obtain evidence that these conditions have been violated, we will revisit the issue of
whether the public interest continues to be served by today's grant of Telia NA's application, or any
future applications by Telia NA to add facilities on the U.S.-Sweden route.

     D.   Other Public Interest Factors

     41.  The additional factors we consider relevant to Section 214 public interest analysis
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.

     42.  We find that there are no other countervailing public interest reasons to deny grant of
Telia NA's application.  The Executive Branch has not raised with us any concerns about Telia NA's
application.  We also note that at 8.5 cents, the U.S. settlement rates with Telia AB and Tele2 are among
the lowest in the world.  The only discussion of this issue in the record relates to that portion of Telia
NA's Application that seeks approval to provide end-to-end service between the United States and
Sweden without the use of accounting rates.  Because Telia NA has withdrawn that portion of its
application, we need not address the points raised by the parties on this issue.

                         IV.  CONCLUSION
     43.  We conclude that grant of Telia NA's application for facilities-based service on the U.S.-
Sweden route is in the public interest.  We find that U.S. carriers have effective competitive
opportunities to provide international facilities-based service in Sweden.  There are no legal barriers to
entry or ownership of international service providers.  A number of companies are currently registered to
operate as international service providers in Sweden, and several of these presently operate on a
facilities-basis, suggesting the absence of practical barriers to entry.  Sweden's Telecom Act,
Competition Act, its independent regulatory institutions, and current market conditions (particularly
favorable toll interconnection rates) appear to provide adequate assurance of reasonable and
nondiscriminatory interconnection and effective competitive safeguards at this time.  We thus grant Telia
NA's application subject to the conditions described below.

                      V.  ORDERING CLAUSES

     44.  Accordingly, IT IS HEREBY CERTIFIED that the present and future public interest,
convenience, and necessity require a grant of the present application, and IT IS ORDERED that
application File No. I-T-C-96-545 IS GRANTED, and Telia NA is authorized to acquire and operate the
following facilities for the provision of switched, private line, and other authorized services between the
United States and Sweden:  5 DS-3s in each of the following undersea cables:  ODIN, Rioja, and TAT-
12.

     45.  IT IS FURTHER ORDERED that as a condition of this grant, Telia NA's affiliate, Telia
AB, must publish, as part of its interconnection price list, the actual interconnection prices negotiated by
Telia AB.

     46.  IT IS FURTHER ORDERED that as a condition of this grant, Telia NA's affiliate, Telia
AB, must offer its domestic interconnection rate to all U.S. carriers that seek to terminate a full circuit in
Telia AB's network in Sweden. 
 
     47.  IT IS FURTHER ORDERED that Telia NA shall comply with Sections 43.51,  43.61,
and 43.82 of the Commission's rules, 47 C.F.R.  43.51, 43.61 & 43.82.

     48.  IT IS FURTHER ORDERED that Telia NA's authorization to provide private line
service is limited to the provision of private line service only between the United States and Sweden, that
is, private lines that originate in the United States and terminate in Sweden or that originate in Sweden
and terminate in the United States.  In addition, Telia NA may not connect private lines between the
United States and Sweden to the public switched network at either the U.S. or Sweden end, or both, for
the provision of international switched basic services, unless authorized to do so by the Commission in
accordance with paragraphs (e)(4) and (e)(6) of Section 63.18 of the Commission's rules, 47 C.F.R. 
63.18(e)(4) & (6) or except as provided in paragraph (e)(4)(ii) of Section 63.18, 47 C.F.R. 
63.18(e)(4)(ii).

     49.  IT IS FURTHER ORDERED that Telia NA shall be regulated as a dominant carrier on
the U.S.-Sweden route pursuant to Section 63.10 of the Commission's rules, 47 C.F.R.  63.10, and shall
comply with the requirements of paragraph (c) of that section.

     50.  This Order is issued under Section 0.261 of the Commission's Rules, 47 C.F.R.  0.261
(1994), and is effective upon adoption.  Petitions for reconsideration under Section 1.106, 47 C.F.R. 
1.106 (1994), or applications for review under Section 1.115 of the Commission's Rules, 47 C.F.R. 
1.115 (1994), may be filed within thirty days of the public notice of this Order (see 47 C.F.R. 
1.4(b)(2)).


                              FEDERAL COMMUNICATIONS COMMISSION




                              Ruth Milkman
                              Deputy Chief, International Bureau