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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Unisource USA, Inc. ) ) Application for Authority Pursuant to ) Section 214 of the Communications Act of 1934,) as amended, to Acquire and Operate Facilities to) File No. ITC 97-470 Provide International Telecommunications ) Services and to Resell Telecommunications) Services of Other Carriers between the ) United States and the Netherlands ) ORDER, AUTHORIZATION AND CERTIFICATE Adopted: February 3, 1998 Released: February 3, 1998 By the Chief, Telecommunications Division: I. INTRODUCTION 1. In this Order we grant Unisource USA, Inc. ("Unisource USA") authority, pursuant to Section 214 of the Communications Act of 1934, as amended, to acquire and operate facilities to provide international services, including international basic switched, private line, data, television and business services between the United States and the Netherlands. We also grant Unisource USA authority to resell interconnected private lines ("ISR"), non-interconnected international private lines ("non-interconnected private line resale") and international message telephone service ("IMTS resale") between the United States and the Netherlands. II. BACKGROUND 2. Unisource USA is a wholly-owned subsidiary of Unisource N.V. ("Unisource"), a provider of international telecommunications services. Unisource is a joint venture owned by PTT Telecom BV ("PTT Telecom"), a Netherlands corporation that provides domestic and international telecommunications services in the Netherlands; Telia AB, a Swedish corporation providing domestic and international services in Sweden; and Swisscom, a Swiss corporation providing domestic and international service in Switzerland. Unisource USA requests Section 214 authority to provide international facilities-based services, ISR, non-interconnected private line resale and IMTS resale services between the United States and the Netherlands. We placed the application on public notice. AT&T filed a petition to condition and Sprint, Esprit, and Viatel filed petitions to deny and condition. Unisource USA filed an opposition to these petitions. Sprint, Esprit and AT&T filed replies to the Unisource Opposition. III. DISCUSSION A. ECO/Equivalency Analysis 3. Unisource USA agrees that it is affiliated with PTT Telecom, the largest telecommunications operator in the Netherlands, and that therefore we must examine Unisource USA's application to provide service between the United States and the Netherlands 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 facilities-based, non-interconnected private line resale and IMTS resale services to destination countries in which they or an affiliate have market power must demonstrate that such countries offer "effective competitive opportunities" ("ECO") for U.S. carriers to offer like services at the time service is authorized or in the near future. The Commission also determined that it would require any carrier seeking to provide ISR to demonstrate that the destination country offers effective competitive opportunities to U.S. carriers to provide ISR at the time the application is granted ("equivalency"). 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. 4. On January 30, 1998, the International Bureau released an order granting KPN USA, Inc., a wholly-owned subsidiary of PTT Telecom, authority to provide facilities-based, ISR, non-interconnected private line resale and IMTS resale services between the United States and the Netherlands. In that Order, the Bureau found that the Netherlands currently offers U.S. carriers effective competitive opportunities to provide all these services. Specifically, the Bureau concluded that the Netherlands affords U.S. carriers the legal right to provide facilities-based, ISR, non-interconnected private lines and IMTS services; U.S. carriers are able to obtain reasonable and nondiscriminatory interconnection charges, terms and conditions; the Netherlands' laws provide sufficient protection against anticompetitive practices; and there is sufficient regulatory oversight to protect and promote competition. 5. There is no evidence in the record that contradicts the Bureau's equivalency determination in the KPN Order, and we find no reason to revisit that decision in this proceeding. Petitioners do not present any arguments that we have not already addressed in the KPN Order. 6. We note that in the Benchmarks Order, the Commission adopted conditions that apply to authorizations to provide facilities-based services and ISR. With respect to the provision of facilities-based switched or private line services to affiliates, the settlement rate of the applicant's foreign affiliate must be at or below the relevant benchmark on the affiliated route at the time service is commenced. In order to provide ISR, the Benchmarks Order requires that settlement rates for 50 percent of the settled U.S.-billed traffic between the United States and that country are at or below the benchmark. The Benchmarks Order set a settlement rate of U.S. $0.15 per minute with the Netherlands. PTT Telecom's settlement rate with its U.S. correspondents is currently below the benchmark so the condition for facilities-based service has been met. PTT Telecom's settlement rate is currently $0.13 per minute as of January 1, 1998 and U.S. $0.115 per minute on July 1, 1998. Thus, both the condition for facilities-based service to an affiliate and the ISR condition are satisfied. 7. AT&T opposes Unisource USA's entrance in the U.S. service market through any arrangement unless Unisource USA is subject to any safeguards adopted in the Foreign Participation Order and PTT Telecom provides U.S. carriers with cost-based accounting rates. We agree with AT&T that Unisource, like any other carrier, will be subject to the rules and policies established in the Foreign Participation Order and Benchmarks Order. In our discussion of the regulatory treatment of Unisource USA, we note that the conditions adopted in the Foreign Participation Order for dominant carriers will apply to Unisource USA when they are effective. We do not agree, however, that PTT Telecom must adopt settlement rates below those required in the Benchmarks Order as a condition for grant of its application. In that Order, we concluded that AT&T's proposals to require cost-based interconnection as a condition to the provision of facilities-based service or ISR would be an overreaction to the potential for anticompetitive activity and that our authority to take enforcement action would be a strong deterrent to such activity. 8. The Executive Branch has not raised any national security, law enforcement, foreign policy, or trade concerns with this application. We find that this authorization will benefit U.S. consumers calling the Netherlands by adding an additional carrier, thus increasing competition on that route. Accordingly, we find no additional public interest factors that warrant denial of this application. B. Regulatory Treatment 9. Unisource USA has agreed to be regulated as a dominant carrier. As a dominant carrier on the U.S.-Netherlands route, Unisource USA will be required to comply with Section 63.10 of our rules. Section 63.10 requires carriers regulated as dominant on a particular route due to a foreign carrier affiliation to: 1) file tariffs on no less than 14-days notice; 2) maintain complete records of the provisioning and maintenance of basic network facilities and services procured from the foreign carrier affiliate; 3) obtain Commission approval pursuant to  63.18 before adding or discontinuing circuits; and 4) file quarterly reports of revenue, number of messages, and number of minutes of both originating and terminating traffic. Upon the effective date of the Foreign Participation Order, dominant carriers will be subject to revised rules. At that time, Unisource will be required to: 1) file tariffs one day in advance of effectiveness; 2) maintain a limited form of structural separation between it and PTT Telecom; 3) file quarterly reports of revenue, number of messages, and number of minutes of both originating and terminating traffic; 4) file quarterly reporting requirements on provisioning and maintenance services provided by PTT Telecom; and 5) file quarterly circuit status reports. In addition, as a carrier affiliated with a foreign carrier that possesses market power in the foreign market, Unisource will have to comply with certain reporting requirements regarding provision of switched resale services in the United States when the rule becomes effective. 10. Petitioners argue that the Commission should impose on Unisource USA and PTT Telecom, a number of conditions, in addition to the conditions imposed on dominant carriers. These include requiring PTT Telecom to provide reasonable, nondiscriminatory, cost-oriented interconnection arrangements to competitors promptly and publish its actual interconnection rates, terms and conditions with other carriers. Petitioners also request that the Commission: 1) require Unisource USA to file regular reports regarding Dutch progress in implementing telecommunications reform, specifically reports on the status of all interconnection agreements between PTT Telecom and its competitors; 2) prohibit Unisource USA from purchasing capacity of any cable serving the Netherlands unless similar amounts of capacity are also made available to competing unaffiliated carriers; 3) prohibit Unisource USA from terminating Netherlands-U.S. traffic from PTT Telecom that is not in compliance with the European Union equal access requirements; and 4) require Unisource USA to file quarterly records on provisioning and maintenance of facilities and services received from PTT Telecom and Unisource. Sprint asks the Commission to impose a number of conditions on PTT Telecom relating to settlement of traffic terminating in the Netherlands. 11. Petitioners requested that the same conditions be imposed on PTT Telecom and KPN USA, Inc. in the proceeding leading up to the issuance of the KPN Order. For the reasons specified in that Order, we decline to impose any additional conditions on Unisource USA or Unisource. 12. Esprit argues that the Commission should also impose a requirement that Unisource USA accept no special concessions from PTT Telecom, Telia or Swiss Telecom. We currently prohibit all U.S. carriers, regardless of their regulatory status or whether they have a foreign affiliate, from agreeing to accept special concessions from any foreign carrier or administration. We also note that in the Foreign Participation Order, the Commission gives greater specificity to the "No Special Concessions" rule by delineating the types of prohibited conduct. Unisource USA will be subject to our current "No Special Concessions" rule, as well as any modification to that rule once it becomes effective. IV. CONCLUSION 13. We grant the application before us in this proceeding because the Netherlands offers equivalent private line resale opportunities to U.S.-based carriers for the provision of switched services via private lines, as well as effective competitive opportunities to provide facilities-based service and other resale services. We believe that additional services between the United States and the Netherlands will promote competition and the introduction of new international telecommunications services. V. ORDERING CLAUSES 14. In view of the foregoing, IT IS HEREBY CERTIFIED that the present and future public convenience and necessity require the grant of this application. 15. Accordingly, IT IS HEREBY ORDERED that File No. ITC 97-470 IS GRANTED and Unisource USA, Inc. is authorized to: 1) provide facilities based service between the United States and the Netherlands; 2) resell international private lines interconnected to the public switched network for the provision of switched services, including voice, date and facsimile; 3) resell international private lines not interconnected to the public switched network for the provision of international private line services between the United States and the Netherlands; and 4) provide international switched resale services between the United States and the Netherlands. 16. IT IS FURTHER ORDERED that the authority granted herein to resell international private lines between the United States and the Netherlands for the provision of switched services is limited to the provision of such services between the United States and the Netherlands only -- that is, private lines which carry traffic that originates in the United States and terminates in the Netherlands, or traffic that originates in the Netherlands and terminates in the United States. This restriction is subject to the following exceptions: (a) Unisource USA may engage in "switched hubbing" through the Netherlands consistent with Section 63.17 of the Commissions rules, 47 C.F.R.  63.17; and (b) Unisource USA may provide U.S. inbound or outbound switched basic service over authorized private lines extending between the United States and the Netherlands, United Kingdom, Sweden, New Zealand, and Australia. 17. IT IS FURTHER ORDERED that Unisource USA shall be regulated as a dominant carrier on the U.S.- Netherlands route, pursuant to Section 214 of the Act, 47 U.S.C.  214, and 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. 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 "facilities resale" on the U.S.- Netherlands route. 18. IT IS FURTHER ORDERED that Unisource USA shall comply with Sections 63.21 of the Commission's rules, 47 C.F.R.  63.21 and shall also file the information required by Section 43.61 for "facilities resale" on the U.S.- Netherlands route on a semi-annual basis not later than September 30 for the prior January through June period and March 31 for the second six-month calendar period, for the first three calendar years after this equivalency finding. 19. IT IS FURTHER ORDERED that grant of this authorization is conditioned upon the Netherlands' continuing to afford resale opportunities to U.S.-based carriers equivalent to those afforded under U.S. law. 20. 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)). FEDERAL COMMUNICATIONS COMMISSION Diane Cornell Chief, Telecommunications Division