Federal Communications Commission: International Settlement Rates

Published by the Government Accountability Office on 1997-09-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel


      September 22, 1997

      The Honorable John McCain
      The Honorable Ernest F. Hollings
      Ranking Minority Member
      Committee on Commerce, Science, and Transportation
      United States Senate

      The Honorable Thomas J. Bliley, Jr.
      The Honorable John D. Dingell
      Ranking Minority Member
      Committee on Commerce
      House of Representatives

      Subject:   Federal Communications Commission: International Settlement Rates

      Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report
      on a major rule promulgated by the Federal Communications Commission
      (Commission), entitled "International Settlement Rates" (IB Docket No. 96-261;
      FCC 97-280). We received the rule on September 8, 1997. It was published in the
      Federal Register as a final rule on August 29, 1997. 62 Fed. Reg. 45758.

      The final rule revises the benchmark settlement rates for international message
      telephone service between the United States and other countries. The revisions to
      the benchmark rates were necessary because the current benchmarks have been
      rendered obsolete by changes in the global telecommunications market in recent
      years. According to the Commission, current rates greatly exceed foreign carriers'
      actual costs for terminating calls originating from the United States. The revised
      rates reflect technological improvements, their associated cost reductions, and the
      market structure changes occurring in the global telecommunications market.

      Enclosed is our assessment of the Commission's compliance with the procedural
      steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the
      rule. Our review indicates that the Commission complied with the applicable

If you have any questions about this report, please contact James Vickers, Assistant
General Counsel, at (202) 512-8210. The official responsible for GAO evaluation
work relating to the Federal Communications Commission is John Anderson,
Director of Transportation Issues. Mr. Anderson can be reached at (202) 512-2834.

Robert P. Murphy
General Counsel


cc: Mr. Peter W. Herrick
    AMD-Performance Evaluation and
     Records Management
    Federal Communications Commission

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       ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                                ISSUED BY
                     (IB Docket No. 96-261; FCC 97-280)

(i) Cost-benefit analysis

The Commission, in its report to our Office, states that it was not required to
prepare and did not prepare a cost-benefit analysis of the final rule.

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,
607, and 609

The Commission prepared an Initial Regulatory Flexibility Analysis which was
published in its entirety in the Notice of Proposed Rulemaking and comments were

The preamble to the final rule contains the complete Final Regulatory Flexibility
Analysis, which describes the reason for the final rule and the legal basis for it. The
analysis also includes descriptions and estimates of the number of small entities
affected by the rule; a discussion of the recordkeeping, reporting, and other
compliance requirements; and the steps taken to minimize the burdens on small

The Commission believes that, at most, 635 international carriers that provide
switched services using resold or facilities-based private lines would be classified as
small entities.

The Commission did not receive any comments on the alternative enforcement
methods that may be necessary to support U.S. carriers, including small entities.
The Commission also solicited comments on a variety of alternative methodologies
for calculating benchmark settlement rates, but these methodologies would not have
any impact on small entities.

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

As an independent regulatory agency, the Commission is not subject to title II of the
Unfunded Mandates Reform Act of 1995.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

The final rule was promulgated using the notice and comment procedures of
5 U.S.C. § 553. On December 30, 1996, the Commission published in the Federal
Register a Notice of Proposed Rulemaking and requested comments on the
proposed rule. 61 Fed. Reg. 68702.

The Commission received comments from over 75 companies and foreign
governments concerning the proposed rule. The preamble to the final rule
discusses the comments received and the changes the Commission made as a result
of the comments, including a more frequent collection of information to protect
against anticompetitive behavior and to detect market distortions.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The final rule contains a revision of an existing information collection requirement
which is subject to approval by the Office of Management and Budget under the
Paperwork Reduction Act.

In the preamble to the final rule, the Commission explains the need for the
information and the burden estimate related to the collection. The Commission
estimates that five U.S. common carriers would have to file the Reports of Overseas
Telecommunications Traffic. These reports are currently filed on an annual basis,
and the new collection requirement has them being filed quarterly in order to detect
any market distortions. The total burden hours are estimated at 800 hours annually
but at no additional cost because the carriers are currently maintaining the data as
part of their normal business practices.

The requirement will not become effective and have to be complied with until the
collection is approved by the Office of Management and Budget.

Statutory authorization for the rule

The final rule was issued pursuant to sections 1, 2, 4(i), 201, 205, 214, and 303(r) of
the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152, 154(i), 201,
205, 214, and 303(r).

Executive Order No. 12866

The rule, promulgated by an independent regulatory agency, is not subject to the
review requirements of Executive Order No. 12866.

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The Commission did not identify any other statutes or executive orders imposing
requirements on the rulemaking.

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