RESTRICTED
GENERAL AGREEMENT S/NGBT/W/3/Add.13
21October 1994
ONTRADE INSERVICES
(94-2144)
Original: English Negotiating Group onBasic Telecommunications
COMMUNICATION FROM THE UNITED STATES OFAMERICA
Response toQuestionnaire onBasic Telecommunications
Theattached communication iscirculated attherequest oftheUnited States toMembers of
theNegotiating Group onBasic Telecommunications.S/NGBT/W/3/Add.13
Page2
Response oftheUnited States totheGATT Secretariat Questionnaire on
Basic Telecommunications LawandPolicy ofMembers oftheNGBT
PART I
Definition andMarket Structure
Definition
1. Theprincipal telecommunications legislation oftheUnited States, theCommunications Act
of1934, 47U.S.C. §§151etseq.(1986), provides fortheregulation ofallelectronic communications
provided bywireorradio within theUnited States orbetween theUnited States andanoverseas point.
TitleIIoftheActaddresses theregulation ofasubset ofsuchelectronic communications offered by
entitiesknownas"commoncarriers".UndertheActacommoncarrierisonethatofferscommunications
services tothepublic generally. Foreaseofreference, theCommunications Actconcept ofcommon
carrier services arethekinds ofservices referred tointheGATS Telecommunications Annex as"public
telecommunications transport services".
TheUnited States federal communications regulatory authority, theFederal Communications
Commission (FCC), wascreated byandisresponsible foradministering theCommunications Actof
1934. TheFCC hasdeveloped aregulatory distinction between "basic" telecommunications and
"enhanced" services. TheFCC doesnotexpressly define "basic" telecommunications services, but
hasequated themwithtraditional common carrier services andstated thattheyarelimited tothesimple
transmission ofcustomer information. TheFCCalsodefines "enhanced" services, inSection 64.702(a)
oftheFCC'sRules andRegulations, 47CFR §64.702(a) (1994), as:
Services,offeredovercommoncarriertransmissionfacilitiesusedininter-Statecommunications,
which employ computer processing applications thatactontheformat, content, codeprotocol
orsimilar aspects ofthesubscriber 'stransmitted information; provide thesubscriber additional,
different, orrestructured information; orinvolve subscriber interaction withstored information.
2. The United States does notdistinguish facilities from services indefining basic
telecommunications services. United States telecommunications lawfocuses onthetelecommunications
services offered tousers andtheconditions under which theyareoffered, rather thanthefacilities used
toprovide those services. Thatis,thelawimposes uponcommon carriers thedutytomake services,
rather thanfacilities, available tousers andrequires thecarrier tomake them available upon justand
reasonable rates, terms andconditions.
3. Thetelecommunications services classified as"common carrier" or"basic" under United States
lawwould appear tobesynonymous withtheGATS concept of"public telecommunications transport
services" (PTNS). TheGATS Telecommunications Annex defines PTNS asthose required tobeoffered
tothepublic generally. TheGATS annex concept of"telecommunications transport services" refers
toaclassofservices which, likePTNS, involve simple transmission, without end-to-end change in
formorcontent, butwithout arequirement toofferthemtothepublic generally. Asisdiscussed more
fullybelow intheanswer toPartII,question 6,theUnited States hasauthorized theconstruction of
facilities other thanthose usedforcommon carrier services andtheuseofthose facilities tosupply
services tousers onanon-common carrier basis, (i.e., onterms individually negotiated).
Asthese facilities areusedtoprovide service onanon-common carrier basis, those services
would notconstitute basic communications services under United States law. Those services wouldS/NGBT/W/3/Add.13
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appear toconstitute telecommunications transport services under theGATS annex. TheFCCpermits
UnitedStates-authorizedcommoncarrierstoleasecapacityfromtheterrestrialandunderseacablesystems
andfrom international separate satellite systems foruseinsupplying common carrier services, but
requires them firsttoobtain authorization under Section 214oftheCommunications Acttoconvert
thefacilities tocommon carrier use.
Market structure
4. TheUnited States hasafederal system ofgovernment inwhich governmental authority isshared
between thefederal government andthe50State governments. Intheareaoftelecommunications,
thefederal government regulates thesupply ofinter-State (between apoint inoneState andapoint
inasecond State) and"foreign" (between apoint intheUnited States andanoverseas point)
communications.
TheState governments regulate intra-State (between twopoints inthesame State)
communications. Some Stategovernments haverestricted thesupply ofintra-State telephone service,
atthelocalexchange andintra-State interexchange (long distance) level, toamonopoly provider. Other
States donotlegislatively mandate amonopoly buthaveadefactomonopoly provider oflocalexchange
telephone service. Agrowing number ofStates havebegun affirmatively topermit theintroduction
ofsome competition totheprior monopoly provider.
5. TheUnited States hasnotdesignated anymonopoly supplier forinternational basic
telecommunicationsservicenor,withtheexceptioncitedbelow,forinter-Statebasictelecommunications.
TheUnited States hasnotlimited thenumber ofsuppliers ofthese services using existing facilities
orthenumber ofnewsuppliers thatmayconstruct andoperate facilities. Theonlyexception tothis
isinthesupply ofUnited States domestic mobile service. ForUnited States domestic mobile services,
theFCC, duetotheunavailability offrequencies, required thevarious applicants fordomestic
satellite-basedmobilecommunicationstoformAmericanSatelliteConsortium(AMSC)tobetheexclusive
supplier ofsuchservices.
International mobile andfixed satellite services areprovided onacompetitive basis. For
INTELSAT andINMARSAT facilities, theCommunications Satellite Corporation (Comsat), aprivate
corporation withnogovernment funding, wasdesignated asthesoleUnited States Signatory to
INTELSAT andtoINMARSAT. Comsat isrequired toprovide access toINTELSAT andINMARSAT
satellites onanon-discriminatory basis toallcarriers anduserauthorized bytheFCC. Competition
toINTELSAT andINMARSAT ispermitted. TheFCC doesnotlimitthenumber ofinternational
separate satellite facilities operators. Currently, othersatellite facilities including United States domestic
satellites, Anik, Morelos, Solidaridad, Intersputnik, andanumber ofUnited States separate satellites
areusedtoprovide satellite capacity forinternational services.
Asindicated inresponse toquestion 4,some oftheStates relyupon defacto ordejure
monopoliesfortheprovisionofintra-Statetelephoneservices.Thereareapproximately1,200companies,
called localexchange carriers (LECs), thatprovide localexchange telephone service intheUnited States.
Ofthese 1,200, the22BellOperating Companies (BOCs) account forapproximately 80percentof
telephone stations intheUnited States. The22BOCs areprivately-owned corporations thatare,in
turn,owned byseven regional holding companies, called Regional BellOperating Companies (RBOCs).
TheBOCs arethelocaltelephone operating companies, formerly owned byAmerican Telephone and
Telegraph Company (AT&T), butdivested in1984, aspartofasettlement ofananti-trust casethe
United States government hadbrought against it.Thevastbulkoftheremaining nearly 1,200
United States local exchange providers arealsoprivately-owned corporations. Afew,virtually all
inrural areas, arecooperatives owned bytheir subscribers. There arenosuppliers ofbasic
telecommunications services intheUnited States thatareowned bythefederal orStategovernments.S/NGBT/W/3/Add.13
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LECs provide interexchange (long distance) carriers access totheirlocal exchanges forthe
origination andtermination ofinterexchange calls. Access isgenerally provided through apublic
switched network butcanalsobeobtained through adirect, non-switched facility oracustomer may
choose tolease orconstruct facilities separate from theLEC inorder toobtain transport services.
CompetitiveAccessProviders(CAPS)arepermittedinsomeStates(i.e.,NewYork,California,Illinois,
Maryland). Asnoted inresponse toquestion 4above, intra-State monopolies areunder State, notfederal
control.
Incellulartelephoneservice,theFCC,duetounavailabilityoffrequencies,designatedaduopoly
ofsuppliers foreachmarket inwhich thelocalmonopoly telephone company inthatmarket isallowed
toownoneofthecellular operators butcannot ownboth. Regions aredivided intometropolitan and
ruralareas. Additionally, theFCC'srecent Personal Communication System (PCS) ruling hasprovided
forlicensing uptosixPCScompetitors ineachmobile communications market.
6. United States federal lawdoesnotprohibit foreign entities fromobtaining authorization under
Section 214asacommon carrier orfrominvesting incompanies thatholdSection 214authorizations.
Such foreign entities mayoperate onaresale basis, build theirownnon-radio facilities oroperate a
mixture ofthetwo. Theonlyrestrictions onforeign investment intheCommunications Actarethose
inSection 310relating totheissuance ofradio licences.
Section 310oftheCommunications Act,implemented bytheFCC, contains provisions which
either reduce orpreclude theability offoreign nationals orforeign interests fromholding radiolicences.
Itdoesnotapply towireline (e.g., fibreopticcable, cabletelevision), nortonon-common carrier satellite
systems) services.
Section 310(a) prohibits aforeign government oritsrepresentative from holding anytypeof
radio station licence.
Section 310(b) applies onlytobroadcast, common carrier andaeronautical fixed andenroute
radio station licences.
Specifically, Section 310(b) (1)and(2)prohibit foreign nationals andcorporations organized
under thelawsofaforeign government from holding these categories ofradio licences.
Section 310(b) (3)prohibits suchUnited States corporate radio licensees frombeing more than
20percentforeign owned. They mayhavenoforeign officers ordirectors.
Section 310(b) (4)contains a25percentforeign ownership and25percentforeign participation
(directors, 0percentofficers) benchmark applicable tothecorporate parent ofaUnited States corporate
licensee. Specifically, thebenchmark applies when aUnited States corporate licensee isindirectly
ordirectly controlled byacorporate parent thathasthefollowing:
- foreign national officers;
- more than25percentforeign national directors;
- more than25percentofitscapital stock owned ofrecord orvoted byforeign nationals,
corporations organized under thelawsofaforeign country, oraforeign government
oritsrepresentative.
Insuchcases, theFCC hasthediscretion torevoke ordenythese radio licences on
acase-by-case basis ifitfinds thatthisaction would serve thepublic interest.S/NGBT/W/3/Add.13
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When theFCChasfound thatdoing sowould serve thepublic interest, ithaslicensed
United States-chartered corporations under Section 310(b)(4) where more than
25percentoftheirboard members orofficers areforeign nationals, orwhere more
than25percentofthestock isheldbyforeign persons.
Current levelofidentifiable foreign participation
- British Telecom hasbeenapproved topurchase 20percentoftheequity inMCI, with
certain safeguards against anti-competitive behaviour.
- Cable andWireless completely owns afacilities-based domestic longdistance company
andoperates onaresale basis between theUnited States andCanada.
- Panamsat,operatorofanon-commoncarrierinternationalsatellitesystem,is50percent
foreign owned.
- Reuters, licensed under Title IIIoftheCommunications Actastheoperator ofa
non-common carrier VSAT system, is100percentforeign owned.
- Telefonica Larga Distancia (TLD) isaninterexchange telephone carrier inPuerto Rico
thatisowned bytheSpanish Government carrier, Telefonica.
7. TheUnited States Government generally permits competition inmost segments ofthe
United States basic telecommunications market.
8. TheUnited States hasnotentered intoanybilateral agreements orarrangements relating to
thesupply byUnited States persons ofbasic telecommunications inanother country orthesupply by
foreign persons ofbasic telecommunications services intheUnited States.
TheUnited States isaparty totheInternational Telecommunications Satellite Organization
(INTELSAT) relating tothesupply ofinternational satellite capacity. TheUnited States isalsoaparty
totheInternational Maritime Satellite Organization (INMARSAT). TheUnited States Signatory to
theoperating agreement ofbothorganizations istheCommunications Satellite Corporation (Comsat).
TheUnited States hasentered intoonebilateral andonetrilateral agreement, theUnited States-
Canada FreeTrade Agreement (CFTA) andtheNorth American FreeTrade Agreement (NAFTA,
which supersedes theCFTA), relating tothesupply ofenhanced telecommunications services. The
commitments oftheUnited States under these agreements arevirtually identical tothecommitments
theUnited States made intheenhanced services sector under theGATS agreement. Additionally, the
United States hasentered intoseveral bilateral arrangements withFrance, Germany, Hong Kong, Japan,
Korea, theNetherlands andtheUnited Kingdom, alsorelating tothesupply ofenhanced services.
PART II
Competition
A. Subsectors
(a) Voice telephone services
(i) Overview: Voice telephone service isgenerally opentocompetition fordomestic long-distance
(i.e.inter-State interexchange) service. Intrastate local exchange voice telephone service
ismainlyprovidedbyprivately-ownedcompaniesregulatedbyStatePublicUtilityCommissions.S/NGBT/W/3/Add.13
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While local exchange service isprovided onadefacto ordejuremonopoly basis inmany
States, anincreasing number arepermitting competition. Insome States, competitive access
providers areallowed (seeabove under 5).
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad.
Thecross-border mode ofdelivery isnotrelevant tolocal-exchange ordomestic long-distance
(i.e.,intra-State orinter-State interexchange) telephone service butdoespertain tointernational
long-distance telephone service. Anexample ofthecross-border supply ofinternational
telephone service would bethejointly-provided international service under ajointoperating
agreement. Asecond example would be"country-direct service" inwhich acarrier fromone
country offers tousers inanother country alocal telephone number thatconnects thecaller
toanoperator inthecarrier 'shome country andallows thecalltobebilled atthecarrier 's
home country rates. Athirdexample would bethevariation oncountry-direct service which
allows thecaller tocallnotonlythecarrier 'shome country butother countries aswellat
home-country rates(e.g., AT&T 's"World Connect" service). Afourth example would be
"call-back service". TheUnited States doesnotimpose anyrestrictions onthese types of
cross-border supply ofinternational telephone service toorfrom theUnited States.
TheUnited States imposes nospecial requirements, conditions orlimitations oncommercial
presence orthepresence ofnatural persons aside from thehorizontal measures described in
theGATS commitments andexemptions schedules oftheUnited States andthose listed in(iii),
(iv)and(v)below.
(iii) Market access: TheUnited States imposes noquantitative restrictions, economic needs tests,
limitations onoutput, limitations onforeign investment orother market access limits onthe
supply ofinter-State interexchange voice telephone services orforinternational resale, except
thatresale issubject toanequivalency testtoensure thatUnited States companies areafforded
similar opportunities intheothercountry. (Note: United States telecommunications regulation
doesnotusetheterm"international simple resale". TheFCCusesthetermresale.) Individual
States maylimitthenumber ofsuppliers ofintra-State voice telephone services; however, these
limits apply todomestic andforeign companies alike.
(iv) National treatment: TheSection 310foreign-ownership restrictions apply forallradio-based
common carrier services (e.g., microwave relay stations).
(v) Licensing: Authorization ofcommunications common carriers isgoverned byTitle II
(Section214)oftheCommunicationsAct.RadiolicensingisgovernedbyTitleIII(Section307)
oftheCommunications Act. Thesupply ofacommon carrier service using radio requires
bothanauthorization under Section 214asacarrier andaradio licence under Section 307
oftheCommunications Act.
Most applications forFCC action, including Section 214applications andradio licence
applications, require thepayment ofaprocessing fee,payable atthetime offiling the
application. TheFCCpublishes aschedule ofthefeesforeachtypeofapplication. Thefee
forfiling aSection 214application is$705. Thefeesforaradio licence range from$125for
adding anewsubscriber toacellular radio telephone system to$241,080 tolaunch andoperate
anentire domestic orinternational communications satellite system.
Upon receipt theFCC places anapplication under Section 214orSection 307onnotice for
30daystopermit interested persons tofilecomments. Thestandard forgranting aSection 214
authorization iswhether thegrant would serve the"public convenience andnecessity" (alsoS/NGBT/W/3/Add.13
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referred toasthe"public interest" standard). Thestandard forgranting aradio licence is
whether thegrant willserve the"public interest, convenience ornecessity". Thestatute does
notspelloutconcrete criteria forgranting aSection 214authorization orSection 307radio
licence, butleaves theFCC flexibility toactinthepublic interest asthatevolves overtime.
TheFCC'sCompetitive Carrier decision created twoclasses ofcarriers forinter-State and
international long-distance service: "dominant" and"non-dominant". TheFCC classified
dominant carriers asthose thathave"market power" -theability toaffect priceoravailability
ofservice. TheFCCchose nottorelyonanyonefactor asdeterminative of"dominant" status;
instead itconsidered anumber offactors, including market share, control ofbottleneck facilities,
rateofreturn, andactual orpotential competition. TheFCCclassified asdominant theBOCs,
AT&T, Comsat andtelephone companies inUnited States "offshore points", suchastheVirgin
Islands andPuerto Rico. Dominant domestic carriers arerequired tofilecost-supported tariffs
(fortheirservices) on45daysadvance notice. TheFCCmustalsoauthorize dominant carriers '
acquisition oftransmission capacity. Because AT&T issubject tostrong competition inits
business services, theFCC hasstreamlined itsregulation ofthose services andtreats itasa
non-dominant carrier forthose. Tariffs fornon-dominant carriers arepresumed lawful, need
notbecost-supported, andonlyrequire 14daysadvance notice.
TheFCCapplied thedominant/non-dominant distinction totheinternational services market
in1985. Itmodified itsoriginal rulesinMarch 1993. Thenewrulesimpose dominant carrier
regulation onlyonthose routes where aUnited States carrier, whether United States -or
foreign-owned, hasaforeign carrier affiliate withtheability todiscriminate against unaffiliated
United States carriers (through thecontrol ofbottleneck services orfacilities inthedestination
market).
Affiliation isdefined astheexistence ofcommon control between aUnited States andforeign
carrier.
Under thisnewpolicy, carriers thathavenoaffiliation withaforeign carrier inthedestination
market arepresumptively non-dominant; carriers affiliated withaforeign carrier thatisa
monopoly inthedestination market arepresumptively dominant onthatroute; andcarriers
affiliated withaforeign carrier thatisnotamonopoly inthedestination market receive closer
scrutiny onthatroute.
Inaddition, affiliated United States carriers thatmerely resell theinternational switched services
ofunrelated United States carriers arepresumed non-dominant.
Dominant carrier regulations donotaddress thequestion ofentrystandards forforeign carriers.
AT&T recently filedapetition forrulemaking asking theFCCtorequire thatcomparable entry
opportunities existforUnited States carriers before permitting entry byaforeign carrier.
Thevarious United States States determine theirownprovisions relating tothelicensing of
localexchange telephone carriers andofintra-State long-distance (interexchange) service.
(b) Packet-switched datatransmission services
(i) Overview: Packet-switched dataservices aregenerally opentocompetition andmaybeoffered
either ascommon carrier orenhanced services. When offered ascommon carrier services,
packet-switched dataservices aresubject tofederal andState regulation. When offered as
enhanced services, packet-switched dataservices arenotsubject toregulation. Most
packet-switched dataservices areprovided onanenhanced services basis andarenotsubject
toregulation.S/NGBT/W/3/Add.13
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(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad. TheUnited States imposes nospecial requirements, conditions orlimitations on
cross-border supply, commercial presence orthepresence ofnatural persons aside from the
horizontal measures described intheGATS commitments andexemptions schedules ofthe
United States andthose listed in(iii),(iv)and(v)below.
(iii) Market access: There arenolimitations onmarket access forenhanced packet-switched data
transmission services, including foreign ownership andequity participation. Ifprovided on
anintra-State basis, itissubject toState regulation. Radio-based common carrier services
aresubject toSection 310foreign-ownership restrictions.
(iv) National treatment: There arenolimitations, unless theservice isprovided asacommon carrier
service using radio-based facilities, inwhich caseSection 310applies.
(v) Licensing: Licensing isnotrequired fordomestic orinternational enhanced packet-switched
datatransmission service. Only dominant providers ofpacket-switched dataasadomestic
inter-State interexchange service mustapply forFCCSection 214authorization. Allproviders
ofinternational common carrier services must apply forFCC Section 214authority.
Packet-switched datatransmission services aresubject toState regulation when provided as
anintra-State service.
(c) Circuit-switched datatransmission services
(i) Overview: Circuit-switched datatransmission services arecommon carrier services thatare
generally opentocompetition, subject tofederal andState regulation.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad.
TheUnited States imposes nospecial requirements, conditions orlimitations oncross-border
supply, commercial presence orthepresence ofnatural persons aside from thehorizontal
measures described intheGATS commitments andexemptions schedules oftheUnited States
andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheState levelduetolocal monopoly
provision ofbasic telephone services. Radio-based common carrier services aresubject to
Section 310foreign-ownership restrictions. Ifprovided onanintra-State basis, itissubject
toState regulation.
(iv) National treatment: There arenolimitations, unless theservice isprovided asacommon carrier
service using radio-based facilities, inwhich caseSection 310applies.
(v) Licensing: Only dominant providers ofcircuit-switched dataasadomestic inter-State
interexchange service must apply forFCC Section 214authorization. Allproviders of
international common carrier services must apply forFCC Section 214authority.
Circuit-switched datatransmission services aresubject toState regulation when provided as
anintra-State service.
(d) Telex
(i) Overview: Telex isacommon carrier service thatisgenerally opentocompetition, subject
tofederal andState regulation.S/NGBT/W/3/Add.13
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(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad. TheUnited States imposes nospecial requirements, conditions orlimitations on
cross-border supply, commercial presence orthepresence ofnatural persons aside from the
horizontal measures described intheGATS commitments andexemptions schedules ofthe
United States andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheState levelfortelexservices dueto
monopoly supply ofbasictelephone services. Radio-based common carrier services aresubject
toSection 310foreign-ownership restrictions.
(iv) National treatment: There arenolimitations onnational treatment unless thisservice isprovided
asaradio-based common carrier service, inwhich caseSection 310applies.
(v) Licensing: Onlydominant common carriers supplying inter-State interexchange service must
apply forFCC Section 214authority. Allcarriers must apply forSection 214authority to
provide international common carrier services. Intra-State services aresubject toState
regulation.
(e) Telegraph
(i) Overview: Telegraph isacommon carrier service thatisgenerally opentocompetition, subject
tofederal andState regulation.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad. TheUnited States imposes nospecial requirements, conditions orlimitations on
cross-border supply, commercial presence orthepresence ofnatural persons aside from the
horizontal measures described intheGATS commitments andexemptions schedules ofthe
United States andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheStatelevelduetomonopoly provision
oflocaltelephone services. Radio-based common carrier services aresubject toSection 310
foreign-ownership restrictions.
(iv) National treatment: TheUnited States imposes nolimitations onnational treatment unless
provided over radio-based facilities, inwhich caseitwould besubject toSection 310
foreign-ownership restrictions.
(v) Licensing: Onlydominant common carriers aresubject toFCCSection 214authorization for
thesupply ofdomestic inter-State interexchange services. Allinternational services aresubject
toSection 214authorization. Intra-State services aresubject toState regulation.
(f) Facsimile
(i) Overview: Facsimile, defined asthetransmission ofimages without service enhancements,
would technically beclassified asabasictelecommunications service under United States law.
Because afacsimile machine isconsidered tobeapiece ofcustomer premises equipment (CPE)
[theUnited States termforterminal equipment] thatusers mayattach tothepublic switched
telephone network (PSN), most facsimile transmissions actually consist ofcustomer useof
ordinary localandlong-distance telephone service.
Thesupply offacsimile service tothirdparties forafeedoesexist, butisnotregulated asa
telecommunications service. Third partyservice iswhere afacsimile service supplier purchases
afacsimile machine, attaches ittothePSNonthesupplier 'sownpremises, andwillacceptS/NGBT/W/3/Add.13
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messages from thepublic fortransmission. Facsimile service isalsooften provided onan
enhanced services basis asoneofapackage ofenhanced services provided toacustomer.
Such enhanced facsimile services arealsonotregulated.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad.
TheUnited States imposes nospecial requirements, conditions orlimitations oncross-border
supply, commercial presence orthepresence ofnatural persons aside from thehorizontal
measures described intheGATS commitments andexemptions schedules oftheUnited States
andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheStatelevelduetomonopoly provision
ofintra-State telephone service. Radio-based common carrier facsimile service issubject to
Section 310foreign-ownership restrictions.
(iv) National treatment: Norestrictions onnational treatment unless provided asaradio-based
common carrier service.
(v) Licensing: Enhanced facsimile services arenotsubject tolicensing. Onlydominant common
carriers aresubject toFCC Section 214authorization ifproviding thisservice asadomestic
inter-State interexchange service. Allinternational common carrier services aresubject to
Section 214authorization. Intra-State services aresubject toState regulation.
(g) Private leased circuits
(i) Overview: Thesupply ofprivate leased circuits isacommon carrier service thatisopento
competition, subject tofederal andState regulation.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad.
TheUnited States imposes nospecial requirements, conditions orlimitations oncross-border
supply, commercial presence orthepresence ofnatural persons aside from thehorizontal
measures described intheGATS commitments andexemptions schedules oftheUnited States
andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheStatelevelduetomonopoly provision
ofintra-State telephone service. Useofradio facilities tosupply common carrier private leased
circuit services issubject toSection 310foreign-ownership restrictions. Thesupply of
international private leased circuits onacross-border basis isnotconditioned onequivalent
resale opportunities inthecountry onthefarendofthecircuit.
(iv) National treatment: TheUnited States affords national treatment forthesupply ofprivate leased
circuits, except forSection 310foreign-ownership restrictions.
(v) Licensing: Only dominant common carriers aresubject toFCCSection 214authorization if
providing thisservice asadomestic inter-State interexchange service. Allinternational common
carrier services aresubject toSection 214authorization. Intra-State services aresubject to
State regulation.S/NGBT/W/3/Add.13
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(o) Other
Domestic/international satellite services andsatellite links/capacity
(i) Overview: Domestic andinternational satellite services andfacilities areopentocompetition
andmaybeoperated onbothacommon carrier andanon-common carrier basis.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad.
Thecross-border mode ofsupply would notappear toberelevant tothesupply ofdomestic
satellite service. TheUnited States hasanopenentry policy forthesupply ofUnited States
domestic satellite services (i.e., asatellite system licensed bytheUnited States theprimary
purpose ofwhich istosupply communications needs between twopoints within theUnited
States). TheUnited States willalsoauthorize theuseofUnited States domestic satellites to
provide "trans-border services" (i.e., service between theUnited States andaforeign country
thatcancommunicate withaUnited States satellite) ortheuseofadomestic satellite licensed
byaforeign country (i.e., asatellite primarily intended forusetoserve twopoints within the
country thatlicensed it),solongassuchtrans-border useisanancillary orsecondary useof
suchsatellites.
TheUnited States imposes nospecial requirements, conditions orlimitations oncommercial
presence orthepresence ofnatural persons aside from thehorizontal measures described in
theGATS commitments andexemptions schedules oftheUnited States andthose listed in(iii),
(iv)and(v)below.
(iii) Market access: There arenoforeign ownership restrictions onthelicensing ofsuppliers of
non-common carrier satellite services. Section 310foreign-ownership restrictions apply to
common carrier satellite services. AMSC hasanexclusive licence forthesupply of
satellite-based aeronautical andlandmobile services intheUnited States. TheFCCrequires
aircraft touseAMSC fordomestic segments ofinternational flights (i.e., theportion ofan
international flight overUnited States territory).
(iv) National treatment: TheUnited States affords national treatment tosuppliers ofnon-common
carrier satellite services. Satellite common carriers aresubject toSection 310foreign-ownership
restrictions.
(v) Licensing: TheFCC licences theconstruction andlaunching ofcommon carrier and
non-common carrier satellites under TitleIIIoftheCommunications Act.TheFCCadditionally
authorizes common carrier suppliers ofdomestic andinternational services under Section 214
oftheCommunications Act. TheFCClicenses earth stations operating withcommon carrier
andnon-common carrier satellite systems under Title IIIoftheCommunications Act.
Additionally,earthstationssupplyingserviceinconnectionwithcommoncarriersatellitesystems
must beauthorized under Section 214. Newearth stations seeking toprovide trans-border
services mustbelicensed whether theywillbeutilizing United States-licensed ornon-United
States-licensed satellites.
Satellite earth stations
(i) Overview: TheUnited States permits theconstruction andoperation ofearthstations operating
withINTELSAT andINMARSAT, separate satellite systems, andUnited States domestic
systems, either bythesatellite system operator orbyindependent persons.S/NGBT/W/3/Add.13
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(ii) Modes ofsupply: Consumption abroad doesnotapply.
TheUnited States imposes nospecial requirements, conditions orlimitations oncross-border
supply, commercial presence orthepresence ofnatural persons aside from thehorizontal
measures described intheGATS commitments andexemptions schedules oftheUnited States
andthose listed in(iii),(iv)and(v)below.
(iii) Market access: TheUnited States permits theuseofsatellite earthstations inconnection with
theuseofdomestic satellite systems forthecross-border supply oftelecommunications services,
solongassuchcross-border transmissions represent anancillary rather thanprimary useof
thesatellite. Common carriers aresubject toSection 310foreign-ownership restrictions.
(iv) National treatment: Limitations onnational treatment include licensing conditions (below)
forforeign-owned earth stations andSection 310foreign-ownership restrictions forcommon
carriers.
(v) Licensing:
Trans-border services: Thelicences forUnited States earth stations thatoperate withUnited
States-authorized domestic satellites neednotbemodified tobeusedfortrans-border services.
United States-authorized earth stations thatwant toaddthecapability tocommunicate
trans-border withadomestic satellite system licensed byagovernment other thantheUnited
States must obtain amodification ofitsearth station licence.
Receive-only earth stations: Operators ofdomestic receive-only earth stations donotrequire
anFCC licence. They mayregister withtheFCC toobtain protection from interference.
Allinternational receive-only station operators must obtain anFCC licence.
Foreign-owned earth stations: The1962 Communications Satellite Actlimits toComsat and
United States-authorized common carriers thelicensing ofearth stations usedinconnection
withtheINTELSAT satellite system forthesupply ofcommon carrier services. Foreign entities
mayobtain licences tooperate earth stations withtheINTELSAT system fortheirownuse
orthesupply ofnon-common carrier services (e.g., VSATs).
International switching andother international gateway facilities; e.g.submarine landing licences
(i) Overview: United States lawrequires anyone wishing tolandeither acommon carrier or
non-common carrier submarine communications cableonitsshores toobtain asubmarine cable
landing licence.
(ii) Modes ofsupply: Consumption abroad doesnotapply.
TheUnited States imposes therestrictions oncross-border provision ofservice described in
(iii),(iv)and(v)below. TheUnited States imposes nospecial requirements, conditions or
limitations oncommercial presence orthepresence ofnatural persons asidefromthehorizontal
measures described intheGATS commitments andexemptions schedules oftheUnited States
andthose listed in(iii),(iv)and(v)below.
(iii) Market access: There arenoquantitative orqualitative restrictions. Theonlylimitation is
equivalent righttolandacable inthecountry originating theapplication.
(iv) National treatment: TheUnited States affords national treatment oncemarket access isgranted.S/NGBT/W/3/Add.13
Page13
(v) Licensing:ProvisionofcommoncarrierserviceisdependentupongrantofaSection214licence
fromtheFCC. Through anexecutive order, theFCChastheauthority tocondition thegrant
ofacable landing licence uponthegrant ofequivalent rights tolandcables inother countries,
toassure justandreasonable ratesandservice, toprotect thesecurity oftheUnited States and,
toprotect therights ofUnited States 'citizens.
Mobile services: analogue/digital cellular mobile networks andservices; PCSnetworks andservices:
paging services; mobile dataservices
(i) Overview: United States common carrier mobile radiotelephone service includes bothanalogue
anddigital cellular telephone services, personal communications services (PCS), public
(non-cellular) mobile radio service (PMRS) andrural radio service. These services areall
interconnected tothePSNand,thus,areclassed ascommercial mobile radio services (CMRS),
andareopentocompetition.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations ontheconsumption
abroad ofthese mobile radio services.
United States lawdoesnotaddress thecross-border supply ofmobile radio services. FCC
regulations permit Canadian-licensed cellular andpublic mobile radio stations, when present
intheterritory oftheUnited States, tocommunicate withUnited States-licensed basestations
afterauthorization bytheFCC. United States licensed mobile stations, when inCanada, may
communicatewithCanada-licensedbasestationsuponauthorizationfromtheCanadianregulator.
Forothercountries,UnitedStates-licensedmobilecarriersmayprovideservicetomobilestations
inthose countries ifthose stations havebeenproperly licensed bytheirgovernments.
TheUnited States imposes nospecial requirements, conditions orlimitations oncommercial
presence orthepresence ofnatural persons aside from thehorizontal measures described in
theGATS commitments andexemptions schedules oftheUnited States andthose listed in(iii),
(iv)and(v)below.
(iii) Market access: Quantitative restrictions existinsome mobile services markets (cellular and
PCS), duetoscarcity ofavailable spectrum. Radio-based common carrier services aresubject
toSection 310foreign-ownership restrictions.
(iv) Nationaltreatment:Foreignownershiprestrictionsapplytoradio-basedcommoncarrierservices.
TheUnited States affords national treatment toallnon-common carrier radio-based services.
(v) Licensing: TheFCC haslicensed twocellular carriers foreachdesignated cellular market,
andwilllicense uptosixPCSsuppliers foreachdesignated PCSmarket. Current selection
procedures formobile services include lotteries (cellular) andspectrum auctions (PCS).
Fixed lineaccess
(i) Overview:
Access tolocalnetworks: United States lawrequires Local Exchange Carriers (LECs) togrant
other carriers, including cellular andpublic mobile radio service suppliers, access totheLEC
networks onequal andnon-discriminatory terms andconditions. Inaddition, LECs aresubject
toState regulation. Inthose cases where theState permits competition toaLEC, theFCC
requires thattheLECprovide suchCompetitive Access Providers (CAPs) access totheirlocal
networks onequal andnon-discriminatory rates, terms andconditions.S/NGBT/W/3/Add.13
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Access tolong-distance networks: TheCommunications Actrequires inter-State interexchange
common carriers toprovide access totheirnetworks upon reasonable request.
(ii) Modes ofsupply: Consumption abroad doesnotapply.
Cross-border supply doesnotapply.
TheUnited States imposes nospecial requirements, conditions orlimitations oncommercial
presence orthepresence ofnatural persons aside from thehorizontal measures described in
theGATS commitments andexemptions schedules oftheUnited States.
(iii) Market access: There arenoquantitative orqualitative restrictions onmarket access. There
arenoforeign ownership limitations.
(iv) National treatment: TheUnited States affords national treatment forfixed lineaccess.
(v) Licensing: TheUnited States doesnotrequire alicence forinterconnection tothelocalexchange
ortointer-State interexchange networks.
Wireless access
(i) Overview:
Access tothelocalexchange: Local Exchange Carriers arerequired bytheFCC toprovide
access onequal, non-discriminatory terms andconditions towireless services suppliers seeking
tointerconnect tothelocalnetwork.
Access tocellular carriers: Arule-making isnowpending before theFCCtoconsider whether
toadopt apolicy requiring cellular carriers tointerconnect withcompetitive access providers
inthecellular supplier 'sterritory.
Accesstomobilenetworks:TheFCChasrecentlyrequestedpubliccommentonwhetherCMRS
providersshouldberequiredtopermitinterconnectionbyotherCMRS providers[Docket94-54]
andtocharge access charges.
(ii) Modes ofsupply: Consumption abroad doesnotapply.
Cross-border supply doesnotapply.
TheUnited States imposes nospecial requirements, conditions orlimitations oncommercial
presence orthepresence ofnatural persons aside from thehorizontal measures described in
theGATS commitments andexemptions schedules oftheUnited States
(iii) Market access: There arenomarket access restrictions onaccess totelecommunications
networks.
(iv) Nationaltreatment:Therearenoforeignownershiprestrictionsonaccesstotelecommunications
networks.
(v) Licensing: Alicence isnotrequired forinterconnection tothelocalexchange orlong-distance
networks.S/NGBT/W/3/Add.13
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Cable/telco cross-ownership andvideo dialtone
(i) Overview: The1984 Cable Actprohibits telephone companies from providing video
programming intheirservice areas. Cable television companies areprohibited fromproviding
telephone services inmany jurisdictions because ofState laworregulation. Asaninterim
steptorepeal ofthecable/telco cross-ownership prohibitions, theFCCin1992authorized the
provision ofVideo Dialtone. Itallowed localtelephone companies toprovide thetransmission
pathforvideo programming onacommon carrier basis, while another, separate entity provides
theprogramming.
Thevideo dialtone framework requires thatlocalexchange companies participating inthevideo
marketplace make available tomultiple service providers, onanon-discriminatory basis, a
basic platform (common carriage transmission service) thatwilldeliver video programming
andpotentially other services toconsumers. Telephone companies mayalsoofferenhanced
andnon-common carrier services related totheprovision ofvideo programming, suchasvideo
gateways, customized information services, andvideo customer premises equipment.
Local exchange carriers mayhaveupto5percentownership of,andnon-ownership affiliation
with, video programmers thatarecustomers of,interconnect with, orshare construction of
thebasic platform.
InAugust 1993, aUnited States court ruled thattheprohibition oncable-telco cross-ownership
violates theFirstAmendment andenjoined theGovernment from enforcing thebanagainst
BellAtlantic, oneoftheregional BellOperating Companies. Theruling isbeing appealed.
Subsequently, more courts havemade thesame ruling inother cases.
TheotherBellOperating Companies, GTEandtheSouthern NewEngland Telephone Company
havefiledsimilar suitsinfederal courts intheiroperating areas contending thatthecable-telco
cross-ownership prohibition isalsounconstitutional asapplied tothem.
TheFCC recently stated thatthecable/telco cross-ownership prohibition doesnotapply to
long-distance carriers.
Several localtelephone companies areexperimenting withvideo dialtone services asmarket
and/or technical trials.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad.
Cross-border provision ofservice: United States lawdoesnotprovide forcross-border supply
ofvideo dialtone service.
TheUnited States imposes nospecial requirements, conditions orlimitations oncommercial
presence orthepresence ofnatural persons aside from thehorizontal measures described in
theGATS commitments andexemptions schedules oftheUnited States andthose listed in(iii),
(iv)and(v)below.
(iii) Market access: There arenolimitations onmarket access.
(iv) National treatment: There arenolimitations onnational treatment.
(v) Licensing: Onlydominant carriers arerequired tofileforSection 214authority toconstruct
facilities toprovide avideo dialtone platform. Unless theyaredominant common carriers,S/NGBT/W/3/Add.13
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programme providers arenotrequired tohaveacable television franchise ortoapply fora
licence toprovide video services.
Intra-corporate communications:
(i) Overview: Inaddition tothevarious services discussed inresponse tothequestions insection
A,theUnited States permits users toassemble networks composed ofprivate leased circuits
forthehandling oftheuser'sownintracorporate communications. TheUnited States permits
suchintracorporate userstointerconnect private leased circuits tothePSNatbothendstosatisfy
theuser'sowncommunications needs.
TheUnited States alsopermits users toshare theuseofaprivate leased circuit(s). Sharing
isdefined astheusebymore thanoneuserofaprivate leased circuit(s), withorwithout the
addition ofvalue, where eachuserpaysitsrateable share ofthetotalexpense ofthecircuit(s)
andwhere noprofit iscollected. Sharing canoccur onseveral bases, suchastimeorthe
subdivision ofachannel intosmaller channels. United States regulations permit oneofthe
sharing users tobedesignated astheprimary customer, theonethatcontracts withacarrier
toobtain theprivate leased circuit. Suchaprimary customer mayalsoperform management
functions inconnection withthesharing ofthecircuits andmayassess amanagement feeto
recover itsactual out-of-pocket costs. Sharing isnotclassified ascommon carriage orregulated.
[N.B. sharing isdistinguished fromresale bytheabsence ofaprofit. Resale isalsopermitted,
butisregulated ascommon carriage.]
TheUnited States alsopermits useofprivate leased circuits notonlybyvarious branches of
thesamecorporation, butalsobysubsidiaries, branches, enterprises related byequity holdings,
unrelated companies inthesamelineofbusiness andevenunrelated entities thatwishtoestablish
acommunications linkbetween them.
Inaddition toleasing private leased circuits fromcommunications common carriers, users may
alsoobtain communications services fromcompanies onanon-common carrier basisandmay
interconnect suchnon-common carrier circuits withcircuits obtained fromcommon carriers.
Finally, theUnited States permits private userstoconstruct theirowncommunications facilities
tosatisfy theirowncommunications needs andtointerconnect suchprivately-owned facilities
withcircuits obtained fromcommon carriers andcircuits obtained fromnon-common carriers.
(ii) Modes ofsupply: Theabove refers toaccess anduseoftelecommunications services for
intracorporate communications, rather thanthesupply ofsuch services tothird persons.
Therefore, themodes ofsupply donotapply.
(iii) Market access doesnotapply.
(iv) National treatment: TheUnited States affords national treatment withrespect toaccess toand
useoftelecommunications services.
(v) Licensing: Theuserdoesnotneedtoobtain FCCauthorization toleaseprivate leased circuits
fromacarrier, toacquire services fromanon-common carrier supplier ofservices ortobuild
itsownwireline facilities. Theusermust obtain alicence from theFCC forradio circuits
usedinthecreation ofanintracorporate network.S/NGBT/W/3/Add.13
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B. Categories
Local/long distance/international
1.(i) Overview: TheUnited States distinguishes between "local exchange" and"interexchange"
telephone service. TheUnited States term"local exchange" corresponds totheterm"local"
usedinthisquestion. TheUnited States term"interexchange" corresponds totheterm"long
distance" usedinthisquestion.
United States regulatory lawfurther divides theconcept ofinterexchange service intointra-State,
inter-State andinternational interexchange service.
TheUnited States isdivided intoLocal Access andTransport Areas (LATAs). Anycallwithin
aLATA isconsidered alocal call. Local Calls areprovided byLocal Exchange Carriers
(LECs) andareunder Stateregulation. Calls thatgooutside thelocalLATA butremain within
theStateareintra-State interexchange callsandareunder Stateregulation. TheBellOperating
Companies areprohibited fromproviding intra-State interexchange calls. Calls thatgooutside
thelocalLATA andoutside theStateareinter-State interexchange callsthataresubject toFCC
jurisdiction.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroadorcross-borderprovisionofservices.TheUnitedStatesimposesnospecialrequirements,
conditions orlimitations oncommercial presence orthepresence ofnatural persons asidefrom
thehorizontal measures described intheGATS commitments andexemptions schedules of
theUnited States andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheStatelevelduetomonopoly provision
oflocaltelephone services. Radio-based common carrier services aresubject toSection 310
foreign-ownership restrictions.
(iv) National treatment: TheUnited States imposes norestrictions onnational treatment, except
forradio-based common carrier services subject toSection 310foreign-ownership restrictions.
(v) Licensing: TheFCC'sdominant andnon-dominant regulations apply todomestic inter-State
interexchange services. Non-dominant carriers arenotrequired toapply forSection 214
authorization toprovide domestic inter-State interexchange telephone service (seeSection II,
A.Voice Telephone Services under "licensing"). Intra-State services aresubject toState
regulation.
2.(i) Overview: TheUnited States treats domestic andinternational telephone services asseparate
geographic markets andauthorizes providers separately ineachmarket subdivision. Companies
thatareauthorized asproviders ofinter-State interexchange telephone services arepermitted
toobtain authorization toprovide international interexchange services andsome havebeen
authorized todoboth.
TheUnited States doesnotimpose limitations onthenumber ofproviders ofdomestic or
international interexchange services. TheBOCs, however, pursuant totheMFJunder which
theyweredivested fromAT&T (i.e., the1982 divestiture decree referred toastheModified
Final Judgment, orMFJ, intheUnited States v.AT&T anti-trust case), arenotpermitted to
offer either domestic orinternational interexchange service atthepresent time.
Intra-State interexchange calls: Competition isallowed insome States, depending onthe
regulations oftheState Public Utility Commission.S/NGBT/W/3/Add.13
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(ii) Modesofsupply:TheUnitedStatesimposesnorestrictionsorlimitationonconsumptionabroad
orcross-border provision ofservices. TheUnited States imposes nospecial requirements,
conditions orlimitations oncommercial presence orthepresence ofnatural persons asidefrom
thehorizontal measures described intheGATS commitments andexemptions schedules of
theUnited States andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheStatelevelduetomonopoly provision
oflocaltelephone services. Radio-based common carrier services aresubject toSection 310
foreign-ownership restrictions.
(iv) National treatment: TheUnited States imposes norestrictions onnational treatment, except
forradio-based common carrier services, which aresubject toSection 310foreign-ownership
restrictions.
(v) Licensing: Intra-State services aresubject toState regulation. Domestic andinternational
long-distance services aresubject totheFCC'sdominant andnon-dominant regulations.
Non-dominant carriers arenotrequired toapply forSection 214authorization fortheprovision
ofdomestic inter-State interexchange telephone services (seeSection II,A.Voice Telephone
Services). Allcarriers mustreceive Section 214authorization toprovide international voice
telephone services foreachcountry tobeserved from theUnited States.
Wire-based
IntheUnitedStates,telephoneservicesareoftenprovidedusingamixofwire-basedandwireless
facilities. Wire-based telecommunications networks andservices aresubject toregulations described
inthepreceding question (#2,(i)-(v)) regarding domestic local, inter-State interexchange, and
international networks andservices.
Radio-based
IntheUnitedStates,telephoneservicesareoftenprovidedusingamixofwire-basedandwireless
facilities. Radio-based telecommunications networks andservices aresubject toregulations described
inthequestion above (#2,(i)-(v)) regarding domestic local, long-distance, andinternational networks
andservices.
Resale basis
3.(i) Overview: United States telecommunications regulations permit resale ofdomestic and
international voice telephone services andresale ofdomestic andinternational private leased
circuits, either toprovide private lineservices ortoprovide international enhanced services
aswellasinternational switched basicservices, including voice telephone services. TheUnited
States defines resale asthepurchase ofatelecommunications service from acarrier andthe
subsequent resale ofsome orallofthatcapacity tounrelated thirdpersons forprofit (asdistinct
fromshared use,which involves onlyrecovery ofout-of-pocket expenses). Resale ofcommon
carrier services isclassified asacommon carrier service. Companies engaged intheresale
ofprivate leased circuits mayconnect suchcircuits tothepublic switched network atoneor
atbothends.
TheUnited States affords national treatment withrespect toresale ofprivate leased circuits.
There arenolimitations placed upon resale ofcircuits thatoriginate andterminate within the
United States. Resellers ofsuchdomestic services areconsidered tobenon-dominant carriers
andneednotobtain authorization under Section 214. Resellers arerequired tofiletariffs.S/NGBT/W/3/Add.13
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TheUnited States alsoaffords national treatment withrespect totheresale ofinternational
voice telephone services andinternational private leased circuits. Resellers ofinternational
private leased circuits mayinterconnect themwiththePSNatbothends. Companies wishing
toresell international private leased circuits fortheprovision ofprivate lineservice faceno
limitations, solongasneither theynortheircustomers interconnect theprivate leased circuit
tothePSN. Companies wishing toresell private leased circuits interconnected tothePSN
atoneorbothendsmaydosoonlyoncircuits between theUnited States andthose countries
thatgrant resale opportunities equivalent tothose available intheUnited States.
Equivalence isdetermined onacase-by-case basisinthecontext ofaSection 214application.
Acompany seeking authorization asareseller ofprivate linestoacountry thathasnotbeen
declaredtobeequivalentmustincludewithitsapplicationinformationdemonstratingequivalence.
Once acountry hasbeen declared equivalent, anapplicant need fileonlyastandard 214
application. Todate,onlyCanada andtheUnited Kingdom havebeendeclared tobeequivalent,
although there areapplications pending seeking toshow other countries tobeequivalent.
(ii) Modes ofsupply: There arenorestrictions onconsumption abroad.
Asforthecross-border mode, FCCauthorizations toresell international private leased circuits
fortheprovision ofswitched services permit thesupply ofservice onlybetween theUnited
States andtheauthorized country. Therules, thus,preclude theuseofresold circuits torefile
traffic destined tothirdcountries.
TheUnited States imposes nospecial requirements, conditions orlimitations oncommercial
presence orthepresence ofnatural persons aside from thehorizontal measures described in
theGATS commitments andexemptions schedules oftheUnited States andthose listed in(iii),
(iv)and(v)below.
(iii) Market access: There arenolimitations onmarket access, subject totheequivalency testfor
international resale ofprivate leased circuits forthesupply ofswitched voice service.
International resale issubject toatesttodetermine whether ornotequivalent opportunities
existforUnited States service providers intheforeign provider 'smarket.
(iv) National treatment: National treatment isafforded forresale ofdomestic local, long-distance,
andinternational services.
(v) Licensing: Resale ofcommon carrier andprivate lineservices arenotsubject toSection 214
authorization, except fortheprovision ofinternational resale services. Resale fortheprovision
ofintra-State services issubject toState regulation.
4.(i) Overview: Asindicated above, theUnited States permits virtually unlimited resale tothird
persons (forprofit), soresale ofexcess capacity (i.e., capacity leftoverafteraprivate leased
circuit customer hassatisfied itsowncommunications needs) would bepermitted. Oneisalso
freetoleaseaprivate leased circuit fortheexpress purpose ofengaging inresale. Resale of
aprivate leased circuit forthesupply ofeither adomestic orinternational enhanced service
isnotcommon carriage andrequires noauthorization from theFCC.
Resale fortheprovision ofadomestic orinternational basic service iscommon carriage.
Domestic resale forthesupply ofabasic service requires noFCC authorization. Resale of
international private linesrequires route-by-route authorization andtheshowing ofequivalence
(except where theresale isfortheprovision ofprivate lineservice notinterconnected tothe
PSN).S/NGBT/W/3/Add.13
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(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroadorcross-borderprovisionofservices.TheUnitedStatesimposesnospecialrequirements,
conditions, orlimitations oncommercial presence orthepresence ofnatural persons asidefrom
thehorizontal measures described intheGATS commitments andexemptions schedules of
theUnited States andthose listed in(iii),(iv)and(v)below.
(iii) Market access: There arenolimitations onmarket access, subject totheequivalency testfor
international resale ofprivate leased circuits fortheprovision ofswitched voice services.
International resale issubject toanequivalency testtodetermine whether ornotopportunities
existforUnited States service providers intheforeign resale market.
(iv) National treatment: National treatment afforded forresale ofdomestic local, long-distance
andinternational services.
(v) Licensing: Resale ofcommon carrier andprivate lineservices arenotsubject toSection 214
authorization, except fortheprovision ofinternational resale services. Resale ofintra-State
services issubject toState regulation.
Facilities-based
5.(i) Overview: Suppliers ofdomestic orinternational basicservices mayoperate onaresale basis,
afacilities basis, orupon amixture ofowned facilities andresold services. There areno
limitations upon thenumber ornationality ofentities thatmaybeauthorized toconstruct or
acquire inter-State orinternational wireline facilities (theUnited States regulator isrequired
toensure thatagrant ofanapplication under Section 214doesnotharmtheUnited States public
interest).
TheUnited States alsopermits relatively unlimited authorization ofentities touseradiocircuits,
subject, ofcourse, totheavailability offrequencies andtheavoidance ofharmful interference.
Additionally, assetoutabove, Section 310oftheCommunications Actplaces some limits on
theissuance ofradio licences toforeign persons.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad oronbuilding facilities forthecross-border provision ofservices. TheUnited States
imposes nospecial requirements, conditions orlimitations oncommercial presence orthe
presence ofnatural persons aside from thehorizontal measures described intheGATS
commitments andexemptions schedules oftheUnited States andthose listed in(iii),(iv)and
(v)below.
(iii) Market access: Foreign ownership restrictions apply onlytoradio-based facilities thatfall
within theprovisions ofSection 310oftheCommunications Act.States mayplace quantitative
restrictions ontheconstruction oflocalnetwork facilities. Allother network facilities areopen
tobothforeign anddomestic competition.
(iv) National treatment: Radio-based telecommunications facilities aresubject toSection 310
foreign-ownership restrictions. There arenolimitations onnational treatment ofother
telecommunications facilities, including private radio-based facilities.
(v) Licensing: International wireline facilities require Section 214authorization bytheFCC.S/NGBT/W/3/Add.13
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Public/non-public supply
6.(i) Overview:Asindicatedabove,theUnitedStatesconceptof"basic"telecommunicationsservices
issynonymous withcommon carrier services. Theshortanswer, therefore, isthattechnically
thereisnosuchthing intheUnited States asa"non-public basic telecommunications service".
However, thisdoesnotmean thattheFCCdoesnotrecognize alternatives tocommon carrier
services.
TheFCC hasrecognized thatthere aresome communications services thatareofatypenot
likely tobeoffered tothepublic indiscriminately andthat,solongastheFCCfindsthattheir
offer willnotendanger theexistence andefficiency ofcommon carrier services, forwhich
there isnoneedtocompel theirindiscriminate offer. Forexample, under itsAbove 890
decision, theFCClicences companies toconstruct microwave radio communications networks
fortheirownprivate communications. Similarly, theFCChasallowed United States electric
utilities toconstruct optical-fibre wireline facilities along theirrights ofwaytocarry their
intracorporate communications. TheFCChasallowed suchutilities tomake excess capacity
ontheirsystemsavailableonanon-commoncarrierbasistoauthorizedcommunicationscommon
carriers andtoother users.
TheFCChasalsoauthorizedcommunicationscommoncarrierstouseaportionoftheircommon
carrier facilities tosupply communications services tousers onanon-common carrier basis.
Forexample, theFCC authorized United States domestic satellite system operators tolease
transponders tousers onnegotiated terms andconditions, including auction.
TheFCChasalsoauthorized orpermitted companies toconstruct facilities expressly tosupply
communications services onanon-common carrier basis. Internationally, theFCC has
authorizedcompaniestoconstructunderseascommunicationscableandseparatesatellitesystems
(i.e., separate from theINTELSAT andINMARSAT satellite systems) tosupply
communications capacity tousers onindividually-negotiated terms andconditions. TheFCC
hasalsolicensed separate satellite operators, aswellaspersons unrelated tosuchoperators,
toconstruct earth stations tosupply earth-station services tousers inconnection withsuch
separate satellite systems. Recently, theFCChaslicensed thesupply oflowearthorbitsatellite
services (LEOS) andallowed theLEOS operators, solongastheydonotprovide service to
endusers, tomake satellite capacity available tocommon carrier commercial mobile radio
service suppliers onanon-common carrier basis.
TheUnited States hasalsolicensed companies tooperate radio facilities fortheoffer of
non-common carrier third-party radio services. Inthe1980'stheFCClicensed bothcommon
carrierandnon-commoncarrierpagingservicesandanon-commoncarriertrunkedradio-dispatch
services called specialized mobile radio services (SMRS).
On10August 1993, United States lawreclassified some United States mobile radio services
intotwocategories:commercialmobileradioservices(CMRS )andprivatemobileradioservices
(PMRS), thedifference being thatCMRS areinterconnected tothePSN, while PMRS arenot.
CMRS areclassified ascommon carrier services subject toregulation under TitleII;PMRS
arenon-common carrier andnotregulated under TitleII.
Since mostpaging andSMRS operations previously authorized asnon-common carrier services
areinterconnected tothePSN, theyhavebeenreclassified asCMRS andwillberegulated as
common carriers. Those paging andSMRS operations thatarenotinterconnected tothePSN
willcontinue toberegulated asnon-common carriers.S/NGBT/W/3/Add.13
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(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroad orcross-border provision ofpublic switched andnon-public basicservices. TheUnited
States imposes nospecial requirements, conditions, orlimitations oncommercial presence or
presence ofnatural persons aside from thehorizontal measures described intheGATS
commitments andexemptions schedules oftheUnited States andthose listed in(iii),(iv)and
(v)below.
(iii) Market access: Quantitative restrictions mayexistattheStatelevelduetomonopoly provision
oflocaltelephone services. Radio-based common carrier services aresubject toSection 310
foreign-ownership restrictions.
(iv) National treatment: TheUnited States imposes norestrictions onnational treatment, except
forradio-based common carrier services subject toSection 310foreign-ownership restrictions.
Foreign persons andcorporations withforeign ownership thatwerenon-common carrier paging
andSMRS licence-holders on10May1993, havebeen"grandfathered" andwillbeallowed
toretain those licences.
(v) Licensing: TheFCC'sdominant andnon-dominant regulations apply topublic switched
inter-State interexchange andinternational services. Non-dominant inter-State interexchange
services donotrequire Section 214authorization. International longdistance services require
Section 214authorization. Intra-State services aresubject toState regulation.
7.(i) Overview: TheCommunications Actstates thatitisthedutyofallcommon carriers, regardless
oftheservice offered, toserve thepublic upon areasonable request forservice. Therefore,
aservice thatwould beclassified ascommon carrier, voice, dataorimage, would besubject
tothecommon carrier obligations.
Asapractical matter, considering thelargenumber ofproviders ofbasic service intheUnited
States, itisnotgenerally necessary fortheUnited States regulator toenforce thisobligation
against asmall carrier. Ifonecarrier does notchoose tooffer service toaparticular
geographical area, there isusually another thatiswilling todoso.Further, there arelarge
United States carriers thatprovide service throughout theUnited States from whom service
would beavailable.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroadorcross-borderprovisionofservices.TheUnitedStatesimposesnospecialrequirements,
conditions orlimitations oncommercial presence orthepresence ofnatural persons asidefrom
thehorizontal measures described intheGATS commitments andexemptions schedules of
theUnited States andthose listed in(iii),(iv)and(v)below.
(iii) Market access: Quantitative restrictions mayexistattheStatelevelduetomonopoly provision
oflocaltelephone services. Radio-based common carrier services aresubject toSection 310
foreign-ownership restrictions.
(iv) National treatment: There arenorestrictions onnational treatment, except forradio-based
common carrier services subject toSection 310foreign-ownership restriction.
(v) Licensing: TheFCC'sdominant andnon-dominant regulations apply todomestic inter-State
interexchange services. Non-dominant domestic long-distance services arenotrequired tofile
Section 214authorizations. International common carrier services arerequired tofileSection
214authorizations. Intra-State services aresubject toState regulation.
8. Seethepreceding answer toquestion number 6.S/NGBT/W/3/Add.13
Page23
9.(i) Overview: Asnoted above, oneobligation ofallcommon carriers istoprovide service upon
areasonable request. Another obligation isforthecarrier tofileatariffandnottodiscriminate
unjustly between different customers orclasses ofcustomers.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroadorcross-borderprovisionofservices.TheUnitedStatesimposesnospecialrequirements,
conditions orlimitations oncommercial presence orthepresence ofnatural persons asidefrom
thehorizontal measures described intheGATS commitments andexemptions schedules of
theUnited States.
(iii) Market access: There arenocommon carrier obligations restricting market access.
(iv) National treatment: TheUnited States imposes norestrictions onnational treatment.
(v) Licensing: Common carrier licensing obligations aredescribed inSection II,A.TheFCC's
dominant andnon-dominant regulations apply todomestic inter-State interexchange services.
Non-dominant carriers arenotrequired toapply forSection 214authorization toprovide
domestic inter-State interexchange telephone service. (SeeSection II,A.Voice Telephone
Services under "licensing"). Intra-State common carrier services aresubject toStateregulation.
10. United States-authorized common carriers lease private circuits tousers forintracorporate
communications andoften actasagents fortheuserinobtaining matching half-circuits from
theiroverseas correspondents. Other telecommunications service suppliers alsoorganize and
offer tousers aprivate network fortheuser'sintracorporate communications.
11.(i) Overview: Theprovision ofpaytelephones isnotlimited toamonopoly orexclusive provider.
Local exchange carriers, aswellasinterexchange carriers, provide paytelephones. TheUnited
States alsopermits persons topurchase payphones, interconnect themtothePSNandprovide
whatisknown asacustomer-owned coin-operated telephone (COCOT). SuchCOCOTs are
notregulated asatelephone company butascustomer-supplied equipment.
(ii) Modes ofsupply: TheUnited States imposes norestrictions orlimitations onconsumption
abroadorcross-borderprovisionofservices.TheUnitedStatesimposesnospecialrequirements,
conditions orlimitations oncommercial presence orthepresence ofnatural persons asidefrom
thehorizontal measures described intheGATS commitments andexemptions schedules of
theUnited States.
(iii) Market access: TheUnited States imposes norestrictions onmarket access.
(iv) National treatment: TheUnited States imposes norestrictions onnational treatment.
(v) Licensing:Existingcommoncarriersarealreadyauthorizedtoprovidepublicpayphoneservice.
COCOTs arenotrequired toobtain authorization either fromtheFCCorfromStateregulators.
PART III
Regulatory Issues
Relationship between regulatory andoperational functions
1. Telecommunications regulatory functions areinthehands oftheUnited States Government
(regulation ofinter-State andinternational telecommunications services) andofthevarious StateS/NGBT/W/3/Add.13
Page24
governments (regulation ofintra-State service). Thecarriers donothaveanyauthority tomake or
enforce telecommunications regulations.
TheUnitedStatesdoespermitcommunicationscommoncarriers,andallotherinterestedpersons,
toparticipate inthesetting oftelecommunications standards. Standards setting fortheUnited States
publicnetworkischieflytheresponsibilityofaprivatebody,theT1Committees(fundedbytheExchange
Carriers Standards Association).
TheT1Committees, andallother suchprivate-sector standards-setting bodies, mustfollow
rules ofprocedure thatguarantee atransparent process thatallows anyone (foreign orUnited States)
tolearnofaproposed standard, tocomment onitbefore itisadopted, andtoappeal astandard itbelieves
tohavebeenunfairly selected. Carriers mayrequire thatcustomers notattach anyequipment tothe
network thatisinconsistent withitstechnical standards. This, however, doesnotmean thatthecarriers
canenforce theirvoluntarily-approved standards; thatfunction islimited totheregulator (seethe
response toquestion 8below).
Rather, thestandard isenforced when theregulator reviews applications forpermission toattach
communications equipment tothenetwork. Theregulator looks toseethattheequipment doesnot
harm thenetwork, network personnel orusers. Once theequipment hasbeenapproved, thecarrier
must permit ittobeattached toitsnetwork.
2. TheFCC hasstatutory authority tosetmandatory standards andhasdonesoinafewareas
suchassafety oflife,standards forapproving equipment tobeattached tothenetwork, hearing aid
compatibility andthelike. Generally, however, United States telecommunications standards setting
islefttotheprivate sector andconsists ofvoluntary rather thanmandatory standards. Theregulator
would alsobetheoneresponsible toenforce astandard ifitjudged thatitwasnecessary tomandate
compliance withapreviously voluntary standard (seetheresponse toquestion 8below).
3. Under thefederal system intheUnited States telecommunications areregulated atthenational
andStatelevel. Thenational regulator isresponsible fortheregulation ofinter-State andinternational
telecommunications andforallcommercial useofradio frequencies intheprovision of
telecommunications. AtboththeStateandthenational levelaregulated supplier oftelecommunications
services hastherighttonotice ofproposed regulations, theopportunity tocomment upon them and
theright toseekreconsideration ofanadverse ruling bothbefore theregulator itself andbefore a
United States judicial court.
Frequency allotment orassignment
4. Allocation ofradio spectrum tovarious telecommunications services isaresponsibility ofthe
United States federal government. TheNational Telecommunications andInformation Administration
(NTIA) intheUnited States Department ofCommerce isresponsible forallocating spectrum usedby
theUnited States Federal Government. TheFCCisresponsible forallother usesofradio spectrum.
Thetwoagencies cooperate inensuring thatspectrum isallocated asneeded forbothtypes ofuseand
foravoiding harmful interference withother usesofradio spectrum. Allocations aremade onthebasis
ofarulemaking thatisopen tocomment byinterested persons andsubject toanappeal ifsomeone
feelsaggrieved byaparticular allocation.
TheNTIA andtheFCC similarly share responsibility forassignment offrequencies within
aparticular allocation tospecific users. TheNTIA assigns frequencies fortheUnited States Federal
Government andtheFCC isresponsible forother assignments.S/NGBT/W/3/Add.13
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Themethods bywhich theFCCassigns frequencies vary, depending uponthetypeofservice
forwhich thefrequency istobeassigned. Some frequencies areassigned onthebasisofanadjudicatory
proceeding initiated byanapplication under Title IIIoftheCommunications Act. Incontested
applications, under some conditions, theFCC hasconducted comparative hearings inanattempt to
seewhich ofseveral applicants should receive thegrant. More recently, frequency assignments have
beencarried outinsome services onthebasis ofalottery, inwhich allapplicants 'names areputinto
adrum andthewinner ischosen bydrawing thename outofthedrum.
Most recently, theUnited States Congress adopted legislation topermit theFCC toselect
radio-licence assignees byauctioning therighttousethefrequency tothehighest bidder. TheFCC
recentlyhelditsfirstspectrumauctiontoassignsomefrequenciesinthepersonalcommunicationsservice.
5. Section 310oftheCommunications Actrestricts foreign ownership ofradio licences forthe
supply ofbasic telecommunications. Thus, foreign companies donotreceive national treatment in
thisrespect.
Numbering andidentification codes
6. Telephone Numbering: Numbering fortelephone service intheUnited States andfor18other
countries within theITUZone 1isdone inaccordance withtheNorth American Numbering Plan
(NANP). First, theNANP provides themechanism fornumbering telephone stations intheUnited
States. Under theNANP thenumbering planadministrator (currently, Bellcore) assigns three-digit
Numbering PlanArea (NPA) codes (commonly referred toas"area codes") toidentify defined
geographical areas within theUnited States andtheother North American region countries thatfollow
theNANP.
Within eachNPAtheadministrator assigns toauthorized operators theeponymous three-digit
Central Office (CO)codes toidentify eachtelephone company 'scentral office switches. Thetelephone
company thenassigns afour-digit Subscriber Identifier Code foreachstation attached toaparticular
centralofficeswitch.Theuseoffourdigitspermitstheidentificationofamaximumof10,000subscriber
stations foreachswitch.
TheNANP alsocovers theassignment ofCOcodes for900service, interexchange carrier
Carrier Identification Codes (CICs), which permit carriers andcustomers tohavemore direct access
tothePSN, service access (N00) codes, service (N11) codes.
Additionally, theNANP administrator (inagreement withotherrelevant bodies) assigns vertical
service codes (such as*73for"callforwarding activation"), SS7network address codes, andAutomatic
Number Identification (ANI) codes.
Asindicated above, thecurrent NANP administrator isBellcore, acompany jointly owned
bytheseven RBOCs. Bellcore haspetitioned theFCC toberemoved asadministrator. TheFCC
hasinitiated arulemaking toreview allaspects oftheNANP andother numbering issues andhasin
thatconnection sought comment ontheBellcore request tobereplaced asadministrator. Therulemaking
isstillpending.
DataNetwork Identification Codes (DNICs): TheFCCassigns DNICs forpublic datanetworks
operating within theUnited States andbetween theUnited States andother countries. TheDNIC is
afour-digit codecreated bytheITU'sCCITT (now theInternational Telecommunications Bureau)
under CCITT (now ITB)Recommendation X.121.S/NGBT/W/3/Add.13
Page26
TheITBassigns theUnited States andother countries oneormore three-digit datacountry
codes (DCCs). TheFCCthenassigns tenone-digit network identification codes toeachDCC tomake
upthefour-digit DNIC.
Number Portability: TheFCC hasrules requiring portability of800numbers thatare
administered through anationwide database. Portability of"local" numbers (local exchange numbers,
inUnited States terms) iscurrently under examination intheNANP rulemaking.
7. Yes. Bellcore, theNANP administrator, assigns codes inaccordance withnon-discrimination
regulations developed byindustry consensus andenforced bythemandate oftheUnited States regulator.
TheFCC itself assigns DNICs onanon-discriminatory basis.
Standards, typeapproval andequipment attachment
8. Inbasic telecommunications mostnetwork standards arevoluntary. Onemandatory standard
thatdoes exist, however, relates totheFCC'scustomer premises equipment (CPE) registration
programme thatsetstherequirements forattaching terminal andother CPEtothetelephone network.
Theregistration programme, which issetoutinPart68oftheFCC'sRules andRegulations,
47C.F.R. §§68.01 etseq.(1993), requires amanufacturer orseller oftelecommunications CPEto
obtain aregistration number foreachtypeofequipment thatshows thattheequipment hasbeenfound
tomeettheFCC'sstandards forprotection ofthenetwork, network personnel andusers.
Another basic service mandatory standard intheUnited States relates tothenetwork interface
(theactual physical connection toanetwork, suchasastandard plug). Toensure thatthisstandard
doesnotrestrict competition, thenetwork standard islimited tothebareessentials ofaphysical
connection andrelated coding required toensure thatadevice ornetwork thatconnects through the
interface canoperate without harming thenetwork.
Another mandatory standard iswhatisreferred toas"equal interconnection." Thisstandard
provides thatallcompeting interexchange telephone carriers canconnect toaBOC local exchange
network through connections thatareequal inkind, price andquality totheinterconnection theBOC
gavetoAT&T before their1984 divestiture.
9. Asindicated intheanswer toquestion number 2,above inthissection, bodies setting standards
inthetelecommunications sector mustpublicly announce anintention tomodify anexisting standard
ortodevelop anewstandard; must allow allinterested persons tocomment ontheproposal; and
must allow those aggrieved byadecision ofthebody achance toseekreconsideration orreview of
thatdecision. Foreigners mayparticipate inthestandards process onthesame basisasaUnited States
person; theonlycriterion isthattheperson seeking toparticipate show ithasaninterest inthestandard
tobeadopted.
10. FCC rules provide fortypeapproval ofequipment iftheregulator deems suchaprocedure
necessary ordesirable. Atthepresent time, noequipment isrequired tobetypeapproved. Rather,
theFCChassimplified theprocedures itusesforreviewing equipment forstandards conformity. The
FCC'sPart68CPEprogram, forexample, doesnotrequire theFCCtotesttheequipment. Rather,
Part68requires themanufacturer totestCPEtodemonstrate thatitmeets thePart68standards and
tosubmit theresults totheFCC.
Other procedures usedfordifferent equipment include verification andcertification, inwhich
themanufacturer isrequired toreview FCCstandards andtoverify orcertify thatitsequipment meets
them, butisnotrequired tosubmit testresults. TheFCC may, however, require amanufacturer to
submit itstestresults, if,forexample, someone complains thataparticular piece ofequipment has
created aproblem.S/NGBT/W/3/Add.13
Page27
TheFCC alsohastheauthority anditsownlaboratories toperform itsowntestsifitfeels
thattobenecessary ordesirable andtorequire manufacturers tomake changes toequipment orremove
theequipment fromthemarket, ifitstestsshow non-conformity toarelevant standard. TheFCCalso
randomly testsequipment tomonitor theeffectiveness ofitsregistration programmes.
11. TheFCCallows customer attachment ofanyequipment thathasbeenregistered under itsPart
68equipment-registration programme described above oranyequipment connected tothenetwork
through anintermediary device thathasbeenregistered under Part68.
12. Yes,customers mayprovide theirownswitching, either fortheirownprivate intracorporate
networks, enhanced-service networks orfortheprovision ofresale services tothepublic.
13. Yes,telephone carriers arerequired topermit theattachment ofanyequipment thatbears a
registration sticker showing thattheequipment hasbeen registered under theFCC'sPart68
CPE-registrationprogramme.Additionally,customersmayattachequipment,suchascomputers,which
arenotthemselves registered asCPE, butwhich areconnected tothenetwork through apiece of
registered equipment orthrough aprotective device thatensures thattheunregistered equipment does
notharm thenetwork, network personnel orusers.
Interconnection
14. Ingeneral, users oftelecommunications services intheUnited States areallowed freely to
interconnect services fortheirprivate, intracorporate use,toshare useofservices withother users,
tocommunicate withother users whoarenotrelated totheuser, andforthesupply ofanenhanced
orbasic telecommunications services tothird parties forprofit. Additionally, allcommon carriers
intheUnited States arerequired topermit interconnection ofservices supplied bythem with
communications circuits provided bythecustomer orbyanother carrier foranyofthepurposes set
forth above orother reasonable purposes.
15. FCC rules require allcommon carriers tointerconnect theirnetworks withprivately-owned
customer networks orwithservices/networks provided byother common carriers (i.e., providers of
basicservices). Because theUnited States permits virtually unlimited resale andfacilities-based service,
therearealargenumber ofinterconnection arrangements available under tariff. Additionally, carriers
arefreetonegotiate other mutually-agreeable terms covering particular forms ofinterconnection that
arenotcovered byatariffed arrangement. Ifacarrier believes thatanother carrier withwhich itwishes
tointerconnect isunreasonably refusing tointerconnect orthatithasfailed tooffer reasonable
interconnection terms, itcanrequest theFCC tomediate.
In1984, aspartofthedivestiture oftheBOCs from AT&T, theMFJrequired theBOCs to
make available toallinterexchange carriers access totheirlocal exchange networks atratesandon
terms andconditions thatareequal tothose under which theyinterconnect toAT&T. Thisequal access
requirement hasnowbeencompleted. Thecharges forsuchinterconnection aresetforthintheBOC
inter-State access tariffs filedwiththeFCC. Other localexchange carriers arealsorequired tofile
inter-State access tariffs ortoconcur inthetariffs ofother carriers.
16. Interconnection ofleased linestopublic datanetworks ispermitted bothfortheprivate use
oftheleased-line customer andforthecustomer 'suseoftheinterconnected lineintheprovision of
services toitscustomers.
17. TheFCC hashistorically required carriers tosetinterconnection charges onthebasis of
cost-of-service. TheFCC isstillcommitted totheimportance ofcost-based charges, but,because
theUnited States telecommunications market hasbeencompetitive formore than20years, itnowrelies
onthemarket toensure cost-based interconnection charges. Formost forms ofcarrier-to-carrierS/NGBT/W/3/Add.13
Page28
interconnection,theinterconnectingcarriersnegotiatemutually-agreeableterms.Ifthecarriersencounter
difficulty inreaching aninterconnection agreement, theycanrequest theassistance oftheFCC. Users
arealsofreetonegotiate interconnection arrangements withcarriers, butoften donotneedtodoso,
since awidevariety ofstandard interconnection arrangements areavailable tothem attariffed rates.
With respect tothecharges localexchange carriers impose upon interexchange carriers and
other users foraccess totheLEC networks, there aretwoformal pricing mechanisms used. After
the1984divestiture, theFCCrequired theBOCs totarifftheirinterconnection arrangements andcharges
(known asinter-State access tariffs) with theFCC andtojustify their charges onthebasis of
cost-of-service. TheFCC access-charge rules require thecarriers, asmuch aspossible, tocover
traffic-sensitive(i.e.,usage-sensitive)costsfromtraffic-sensitivechargesandnon-traffic-sensitive(fixed)
costsbyfixed charges. In1991 theFCCrequired theBOCs, whoaccount forthebulkofinter-State
access intheUnited States, andGTE toshifttheregulation oftheirinter-State access charges from
traditional rate-base, rate-of-return regulation toaprice-cap methodology. Subsequently, several other
LECs have voluntarily shifted toprice caps. Theremaining LECs stillemploy thetraditional
methodology.
When theBOCs shifted toprice capsin1991 theirinitial price capwassetbytaking thelast
access ratethecarriers hadfiledunder therate-of-return regulation, adjusting itforinflation andreducing
itbya"productivity set-aside" toreflect thefactthattheBOCs increase theirefficiency more rapidly
thandoestheUSeconomy generally. Thecarrier charges, thus,arenolonger strictly setinaccordance
withcostofservice. TheFCC concluded thattheprice-cap incentive forgreater efficiency would
yieldbenefits forusers thatoutweigh anydetriments arising fromthatdeparture. However, thecarriers
arestillrequired tofilecostinformation sothattheFCCcanmonitor theperformance ofprice caps.
Further, theprice-cap rulesrequire thecarriers toshare withusers anyincrease inprofits thatexceed
thatpermitted bytheprice cap.
Competitive safeguards
18. Theantitrustlawspreventafirmfromusingmarketpowertopreventotherfirmsfromcompeting
withit.Thus, atelephone company thatcontrols bottleneck facilities (e.g., localaccess) maynotuse
control ofthebottleneck todenyother carriers access tocustomers. Normayalocalexchange provider
discriminate against anyother carrier intheprices, terms andconditions itoffers foraccess. The
Modification ofFinal Judgment intheantitrust caseagainst AT&T (United States v.Western Electric)
separated thelocalexchange business fromthelongdistance business inorder toremove theincentives
todiscriminate, andbroke upthelocal exchange business intoseven separate companies, reducing
itsconcentratedeconomicpower.TheMFJalsoenjoinedthelocalexchangecarriersfromdiscrimination
inoffering anylongdistance carrier prices, terms orconditions ofinterconnection, andrequired them
toprovide equal access toalllongdistance carriers onthesame terms asAT&T.
TheUnited States relies uponnon-structural safeguards toprevent dominant carriers (i.e.,those
withmarket power inrelevant geographic markets) from engaging inunfair competitive practices in
those markets where theycompete. TheFCCdefines market power asthepower tocontrol theprice
orsupply oftelecommunications services.
FCCcompetitivesafeguardsconsistofseveralelements,chieflyprescribedaccountingsafeguards,
cost-allocation procedures, reporting requirements, andprocedures fordealing withinformation the
carrier obtains from andabout itscustomers.
Local exchange carriers (LECs) who, inmany markets, havemonopolies fortheprovision
oftelephone service areconsidered dominant. TheBOCs, asthelargest oftheLECs arerequired
tofilewiththeFCC"Open Network Architecture" (ONA) plans before theycanengage incompetitive
services outside theirprovision oflocalexchange telephone service.S/NGBT/W/3/Add.13
Page29
These ONA plans provide theterms andconditions under which theBOCs provide service
tocompeting carriers andtotheirowncompetitive-services operations. TheONA plans divide BOC
services intovarious service elements, provide thatcompeting carriers maypurchase anyoftheservices
elements thattheywantandprovide theprices forsuchservice elements.
AT&T, thelargest United States provider ofinter-exchange orlong-distance telephone service
doesnothaveamonopoly inanymarket. AT&T, however, hasbeenclassified asdominant dueto
itsshare oftheUnited States interexchange market andthefactthat,before divestiture oftheBOCs,
itoncewasthemonopoly provider.
19. FCCregulations divide common carriers intotwoclasses: "dominant" and"non-dominant."
Under FCC regulations acarrier isconsidered dominant ifithas"market power", i.e.,ifithasthe
power tocontrol thesupply orprice oftelecommunications services inarelevant geographic market.
Foradiscussion ofUnited States competitive safeguards, seetheanswer toquestion 18.For
adiscussion oftheCompetitive Carrier decision ondominant/non-dominant classification, seethe
discussion inPartII,Section A,(a)Voice Telephone Services.
20. TheAntitrust Division oftheDepartment ofJustice setstheindustry-wide antitrust policy.
Through enforcement oftheantitrust laws, theDepartment attempts topromote competition inthe
broadest possible range ofcommunication services. TheDepartment hasbrought several important
actions involving telecommunications tothecourts, including United States v.Western Electric,
United States v.GTE, United States v.AT&T, (relating toitsacquisition ofMcCaw), andUnited States
v.MCI(relating totheBT-MCI international transactions). Section 2oftheSherman Actgenerally
preventsfirmsfromobtainingandexercisingmonopolypowerand,thus,preventscarrierswithbottleneck
monopolies from discriminating against other competitive firms intheareaofinterconnection soas
toacquire monopolies inadjacent markets.
Mergers andacquisitions inthetelecommunications industry aresubject totheantitrust laws.
TheHorizontal Merger Guidelines oftheAntitrust Division andtheFederal Trade Commission (FTC)
describe theanalytical framework andstandards normally usedinanalysing mergers between horizontal
competitors subject toeither Section 7oftheClayton Act,which prohibits mergers iftheireffect may
betosubstantially lessen competition, ortotendtocreate amonopoly; Section 1oftheSherman Act,
which prohibits mergers iftheyconstitute anillegal contract, combination orconspiracy inrestraint
oftrade; or,Section 5oftheFTCAct,which prohibits mergers iftheyconstitute anunfair method
ofcompetition. Intheareaoftelecommunications mergers, Section 7oftheClayton Actgives courts
theauthority toprevent mergers thatmight giveafirmthemeans andincentive todiscriminate inthe
prices, terms andcondition ofinterconnection soastoacquire market power inanother market.
21. IntheUnited States ,atpresent, onlyonemajor common carrier, AT&T, isalsoengaged in
themanufacture oftelecommunications equipment. AT&T 'sequipment manufacturing subsidiary,
AT&T Technology, faces competition inthemanufacture ofequipment and,thus, isnotregulated.
Itscarrier parent isregulated under theaccounting andother provisions described above. The
competition thatAT&T faces, aswellasitsprice cap,helps ensure thatAT&T doesnotusemoney
taken from ratepayers tosubsidize itscompetitive equipment undertaking, nor shift
equipment-manufacturing costs toitscarrier operations.
TheBOCs, ontheother handarenowbarred fromengaging inequipment manufacturing under
theterms ofthe1982 divestiture decree thatseparated them fromtheoldAT&T monopoly (referred
toastheModified Final Judgment, orMFJ, intheUnited States v.AT&T antitrust case). TheMFJ
permits theBOCs tosellorleasetelecommunications equipment, butrequires themtoformaseparate
subsidiary tocarry outthose operations.S/NGBT/W/3/Add.13
Page30
Thisline-of-business restriction isunder review intheUnited States Congress, withaview
toremoval orsubstantial liberalization oftherestriction onengaging inequipment manufacturing.
Onecannot predict theoutcome ofthislegislative initiative. Itcanbesaid,however, thatmany of
thepeople whocommented onthisproposal havepointed outtheneedforthegovernment toscrutinize
anyproposal bytheBOCs toenter equipment manufacturing.
Pricing-related measures
22. Section 204oftheCommunications Actrequires thatcommon carrier charges forinter-State
andinternational communications services be"justandreasonable." Sections 204-206 oftheActgive
theFCC authority toinvestigate carrier charges and,afterahearing, toprescribe charges andrates
ofreturn. TheFCCregulates thecharges ofmostdominant carriers under aprice-cap methodology.
Thatis,theFCC hassetacharge thatthecarriers maynotexceed without affirmative approval by
theFCC. TheFCC employs arate-base/rate-of-return regulatory methodology forsome, smaller
dominant carriers. TheFCCdoesnotregulate thecharges ofnon-dominant carriers onaday-to-day
basis, but"presumes" thattheirfiledratesarelawful, unless challenged.
23. TheCommunications Actdoesnotrequire approval ofcarrier-filed rates(tariffs) before they
become effective. Carriers arerequired tofiletariffs aspecified number ofdaysbefore theeffective
datetoprovide anopportunity forFCCstafftoreview thefiling andtoallow thepublic anopportunity
tocomment onthem. Thelength ofthereview periods differ depending uponthepurpose ofthefiling,
ranging fromoneday,forcorrecting typographical errors inatariff, to90days, fortheLECs 'annual
access tariff filings.
Thelength ofthereview periods alsodiffer depending upontheregulatory status ofthecarrier
filing thetariff, withdominant carriers having longer review periods thannon-dominant carriers.
Domestic, non-dominant, inter-State carriers mayfileanytariffs ortariff changes onnotlessthan
oneday'snotice. Dominant carriers, suchastheBOCs, thatoperate under aprice capcanfilearate
change within therange ofthecapon14days'notice andother changes on35daysnotice. AT&T
isrequired tofileitstariffs fornewservices anditsannual price-cap filing on45daysnotice.
Because thetariffs become effective automatically unless theFCC actstoreject orsuspend
them, atariff maybechallenged byacustomer orother interested party atanytime, eveniftherate
hasbeeneffective formany years. Fordominant carriers, themere factthatarateisonfileinits
tariff andeffective confers nopresumption thattherateislawful.
Since non-dominant carriers arethose thatdonothavethepower tocontrol thepriceorsupply
oftelecommunications services, theirtariffs arepresumed tobelawful. Thatis,there isnoreason
foracustomer ortheFCC stafftochallenge thecarrier 'srate,asthemarket willprevent acarrier
fromcharging anunreasonable rate. Ifacustomer finds acarrier 'stariff ratetoohigh, itcansimply
takeservice from adifferent carrier. FCC staffmay, however, onitsowninitiative orinresponse
toacomplaint ofinterested persons, undertake aninvestigation intothelawfulness ofaspecific tariff
ortariff item.
Forinternational services, dominant carriers mustfiletariffs on45daysnotice. Non-dominant
international carriers mayfiletariffs on14daysnotice. Aswithdomestic rates, thereisnopresumption
thatadominant carrier 'srate(orother tariff term) forinternational service islawful. Thetariffs of
non-dominant carriers arepresumed tobelawful unless successfully challenged.
24. Section202oftheCommunicationsActforbidscarriersfromengaginginunjustorunreasonable
discrimination asbetween customers andthatrequirement would apply equally tothecharging ofrates
thatunreasonably discriminate between customers. Carriers are,however, allowed topackage services
andtogivevolume discounts totheextent thattheycanshow thatdifferences intherates chargedS/NGBT/W/3/Add.13
Page31
customers under suchpackages arerelated todifferences incostorother factors. Dominant carriers
must filesuchratesintheirtariff attheFCC andmust make service available toanyone thatmeets
thecriteria setoutinthetariff.
With respect toaccounting ratesforinternational services, theyaresetbythecarriers rather
thanthegovernment. Thecarriers negotiate eachaccounting ratewithcorrespondents attheother
endofthecircuit. Thecarriers arerequired, however, tofileallaccounting rateswiththeFCC, which
doeshavetheauthority toreview them andtotakeaction ifitdeems aparticular accounting rateto
beunlawful.
TheFCCdoesapply an"international settlement policy" (ISP) toaccounting ratesunder which
aPTToroverseas carrier thatdeals withmore thanoneUnited States carrier forservice between the
United States andthatoverseas point mustgenerally apply toeachsuchUnited States carrier thesame
accounting rate,thesame division oftheaccounting rateandthesame settlement rateforconverting
between different currencies. TheISPdoesallow United States carriers toseekawaiver ofthe
requirement ofuniformity ifitcanjustify theuseofanon-uniform accounting rate.
25. No.Each carrier must fileitsownrates, although, inappropriate circumstances, acarrier
mayelectto"concur" inanother carriers 'tariff (i.e., charge thesame rates).
26. TheFCChastraditionally sought tobasecarrier ratesonthecostofproviding service. The
FCC staffreviews thecost-allocation manuals usedbydominant carriers inallocating costs between
services. Insetting thepricecapsthatapply toAT&T andtheLECs (forinter-State access), theFCC
looks tothecarriers 'costofservice. Theprice capmethodology provides forFCCreview ofthecap
from timetotimetoensure thattheprice capcontinues toserve theUnited States public interest.
27. Fornon-dominant carriers, thepresumption oflawfulness discussed inanswer toquestion 23,
above, applies totariffs fornewservices aswellastochanges intheratesforexisting services. For
dominant carriers, thecarrier isrequired toensure thattherateforanewservice doesnotcreate an
unreasonable discrimination against customers ofexisting services. Thisisdonebyreference tocost
ofservice.
TheFCC, however, doesnotprescribe therateofreturn acarrier mustearnoneachservice
itoffers orrequire acarrier toearnthesame profit oneachservice. Further, theFCC recognizes
thatacarrier incurs costs inintroducing anewservice, andthattheservice maynotbeprofitable
immediately orforacertain period. TheFCCdoes, however, review costinformation acarrier files
withthetariff foranewservice toseeifaservice overall willmake apositive contribution tothe
carrier 'srecovery ofitscostofservice.
Rights ofwayfortheconstruction ofinfrastructure
28. Common carriers arepermitted tobuild telecommunications facilities, toresell theservices
ofother carriers ortooperate withamixture ofthetwo. Adominant carrier wishing tobuild itsown
facilities fortheprovision ofbasic services between twopoints intheUnited States must obtain
authorization under Section 214oftheCommunications Act. Thecontents ofanapplication under
Section 214aresetoutinSection 61.03 oftheFCC'sRules andRegulations, 47C.F.R. §63.01 (1993).
Section 214setsa"public convenience andnecessity" standard forthegrant ofanapplication.
Common carriers arepermitted touserights ofwaygranted overpublic roads throughout the
United States. TheUnited States Constitution provides thataright ofwaycanbeobtained over
privately-owned landifitisrequired foralegitimate "public" purpose. Construction ofcommon carrierS/NGBT/W/3/Add.13
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facilities havequalified assuchapublic purpose. Common carriers mayalsoseeklicensing touse
radio frequencies fortheprovision ofabasic service. Radio licensing comes under TitleIIIofthe
Communications Act.
29. Ingeneral, theUnited States affords national treatment withrespect toauthorization offacilities
under Section 214,asfaraswireline (i.e., non-radio) facilities areconcerned. Section 310ofthe
Communications Act,however, forbids theissuance ofaradio licence toaforeign government orthe
"representative" ofaforeign government. Seethediscussion under PartI,question 6,above.
Newtelecommunications services
30. Solongasaservice meets thedefinition ofabasic service, anexisting common carrier is
generally freetointroduce theservice using thefacilities ithaspreviously beenauthorized toconstruct
oracquire under Section 214-without theneedforanadditional authorization. Aperson wishing
tobecome acommon carrier toprovide thenewservice maysimply fileanapplication under Section
214under thesame procedures described above for"existing" common carrier services.
Since, within thelimits discussed above, allbasic services areopentocompetition, there is
generally noneedforaperson toseekanyregulatory determination thataparticular newservice is
included within liberalized services. Itmight bepossible tohypothesize thatsomeparticular newservice
might raisesufficient public-interest questions thatwould require theregulator toconsider thembefore
authorizing them, butsuchcases would probably berare. Ifsuchaquestion weretoarise, itwould
likely dosoasaresult ofcomments filedonsomeone 'sapplication under Section 214.
TheUnited States regulatory regime does, however, provide adeclaratory ruling procedure
bywhich aprospective applicant ortheregulator itselfcould seekadetermination astothepublic-interest
implications ofaparticular newservice. Additionally, aparticular newservice (e.g., thenewpersonal
communications service) mayrequire theuseofradio frequencies thatarenotavailable. Insucha
case, theregulator might berequired toallocate frequencies tothenewservice before itwould bein
aposition toactonaSection 214orTitleIIIradio-licence application.
31. Thedefinition ofacommon carrier andacommon carriage service aresetoutinlegislation
andamplified bycourt interpretations. Thespecific concepts ofbasicandenhanced services havebeen
developed bytheFCC. TheFCC, therefore, hastheauthority todecide whether aparticular service
isbasic orenhanced.
Aperson thatwishes toofferanewservice isnot,however, required toseekaformal declaration
from theFCC thatitsservice isbasic orenhanced. Rather, theregulatory definitions andcourt
interpretations arepublished andonemayapply thosedefinitions toaspecific service anddecide whether
itthinks theservice isenhanced (inwhich caseitneeds noadditional authority fromtheFCCtoproceed)
orbasic (inwhich caseitmayneedFCC authorization).
Someone whofeelsthattheprovider should haveobtained FCCauthorization before beginning
service maybring thematter totheattention oftheregulator through acomplaint. Theregulator may
alsobegin anaction toreview theservice orthesupplier 'sauthorization onitsownmotion. Ifthe
FCCdetermines thattheservice isbasic andrequires anauthorization forwhich thesupplier hasnot
applied, itcanorder theprovider tostopoffering theservice ororder ittoseekproper authorization.
TheFCC canalsofineaprovider foroffering aservice without prior authorization.