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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** DA 97-1929 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of) ) U S WEST Long Distance, Inc. ) ) Application for Authorization Pursuant to ) ITC-97-009 Section 214 of the Communications Act of ) 1934, as Amended, to Resell International ) Switched Services from Certain Parts of the ) United States to Lithuania and Russia ) ) ) MediaOne Telecommunications Corp.) and MediaOne Business Services Inc. ) ) Application for Authorization Pursuant to ) ITC-97-095 Section 214 of the Communications Act of ) 1934, as Amended, to Resell International ) Switched Services from Certain Parts of the ) United States to Lithuania and Russia ) ORDER, AUTHORIZATION AND CERTIFICATE Adopted: September 5, 1997 Released: September 9, 1997 By the Chief, Telecommunications Division I. Introduction 1. In this order, we grant the application of U S WEST Long Distance, Inc. (USWLD) and the joint application of MediaOne Telecommunications Corp. (MTC), formerly known as Continental Telecommunications Corp. (CTC), and MediaOne Business Services, Inc. (MBSI) (collectively, the Applicants) to resell international switched telecommunications services that originate outside the in-region states of U S WEST Communications, Inc. and terminate in Lithuania and Russia. We find that the Applicants' provision of these services should be subject to non-dominant carrier regulation. II. Background 2. USWLD, a Delaware corporation, is an indirect wholly-owned subsidiary of U S WEST, Inc. (U S WEST). MTC (formerly CTC), a Massachusetts corporation, and MBSI, a Colorado corporation, also are indirect wholly-owned subsidiaries of U S WEST. U S WEST also owns U S WEST Communications, Inc. (USWC), a Bell Operating Company (BOC). 3. The Applicants each seek authority under Section 214 of the Communications Act of 1934, as amended, to resell international switched services that originate outside the USWC region and terminate in Lithuania and Russia. Presently, each of the Applicants has Section 214 authority to resell international switched services that originate outside the USWC region and terminate in all international points except Lithuania and Russia. The Applicants are affiliated with foreign carriers in Lithuania and Russia. III. Discussion A. BOC Provision of Out-of-Region Services. 4. Upon enactment, the Telecommunications Act of 1996 (1996 Act) allowed the BOCs and their affiliates to provide interLATA services, including international services, that originate outside of their in-region states. Through the common ownership of U S WEST, the Applicants are affiliated with USWC. Consistent with the 1996 Act, therefore, the Applicants seek authority to resell international switched services originating only from points outside the USWC region. The Applicants maintain that a grant of their applications will increase competition and benefit consumers by reducing the prices of international services, increasing the availability of a wider variety of service options, and promoting the more efficient use of existing international facilities. We find that a grant of these applications is consistent with the public interest, convenience, and necessity under Section 214 of the Communications Act of 1934, as amended. We therefore authorize USWLD, MTC, and MBSI to provide resold switched services that originate outside the USWC region and terminate in Lithuania and Russia. B. Regulatory Treatment. 5. The Applicants seek to provide service on a non-dominant basis. U.S. carriers' provision of international services is subject to dominant carrier regulation on particular routes in two circumstances: where the Commission has determined that a U.S. carrier can exercise market power on the U.S. end of a particular route; and where the Commission has determined that a foreign affiliate of the U.S. carrier has market power on the foreign end of a particular route (i.e., the ability to adversely affect competition in the US international services market). 6. Domestic Market Power. Consistent with the Commission's policy governing the BOCs' provision of out-of-region, interstate, domestic interexchange services, the International Bureau (Bureau) recently determined that the BOCs and their affiliates are subject to non-dominant regulatory treatment in the provision of international services from out-of-region states. The Bureau also removed interim separation requirements that it previously had imposed on the BOCs as a condition of non-dominant treatment of out-of- region international services. The Bureau concluded that the BOCs do not have, upon entry or soon thereafter, the ability to raise the price of out-of-region international services by restricting their output of such services, even if such services are offered on an integrated basis with local exchange and exchange access services. We therefore find that the Applicants' affiliation with USWC does not subject their provision of international services originating outside the USWC region to dominant carrier regulation. 7. Foreign Carrier Affiliations. The Commission regulates U.S. international carriers as dominant on routes where an affiliated foreign carrier has the ability to discriminate in favor of its U.S. affiliate through control of bottleneck services or facilities in the destination market. Under this framework, a U.S. international carrier that serves a destination market solely through the resale of switched services of an unaffiliated U.S. facilities-based carrier is presumptively non-dominant for that route, "regardless of any foreign affiliations." The Applicants contend that, despite their affiliations with foreign carriers in Lithuania and Russia, they are presumptively non-dominant on these two routes because they will provide service only through the resale of switched services of unaffiliated, non-dominant U.S. carriers. 8. We first find that, because the Applicants will provide services on these affiliated routes solely through the resale of unaffiliated U.S. facilities-based carriers' switched services, they are entitled to a presumption that they be classified as non-dominant on these routes. Second, the International Bureau recently determined that U S WEST's foreign carrier affiliations in Lithuania and Russia do not give any reason to overcome the presumption set out in Section 63.10(a)(4) of the Commission's rules. No party filed an opposition to the Applicants' Section 214 applications or requests that the Applicants be classified as dominant carriers. We therefore find no basis at this time to regulate the Applicants as dominant carriers in the resale of international switched services on the U.S.- Lithuania and U.S.-Russia routes. III. Ordering Clauses 9. Accordingly, IT IS HEREBY ORDERED that application File No. ITC-97-009, filed by U S WEST Long Distance, Inc. (USWLD), and application File No. ITC-97-095, filed by MediaOne Telecommunications Corp. (MTC) (formerly Continental Telecommunications Corp.) and MediaOne Business Services, Inc. (MBSI), ARE GRANTED. USWLD, MTC, and MBSI are authorized to provide on a non-dominant basis resold international communications services of unaffiliated U.S. international carriers that originate outside the U S WEST Communications, Inc. region and terminate in Lithuania and Russia. 10. This order is issued under Section 0.261 of the Commission's rules and is effective upon adoption. Petitions for reconsideration under Section 1.106 or applications for review under Section 1.115 of the Commission's rules may be filed within 30 days of the date of the public notice of this order (see Section 1.4(b)(2)). FEDERAL COMMUNICATIONS COMMISSION Diane J. Cornell Chief, Telecommunications Division International Bureau