Regulation of International Accounting Rates

The Commission adopted a Report and Order that will permit flexibility in its accounting rate polices. The Commission concluded that U.S. carriers should be permitted to negotiate alternative settlement payment arrangements that deviate from the International Settlements Policy (ISP) with foreign correspondents in countries that satisfy the Commission's economic competitive opportunity (ECO) test. In addition, the Commission will consider alternative settlement arrangements between a U.S. carrier and a foreign correspondent in a country that does not satisfy the ECO test where the U.S. carrier can demonstrate that deviation from the ISP will promote market-oriented pricing and competition, while precluding abuse of market power by the foreign correspondent. The Commission also adopted safeguards to ensure that its new flexibility policy does not have anticompetitive effects in the international market. The safeguards that are alternative arrangements between affiliated carriers and those involved in non-equity joint ventures must be filed with the Commission and made public, and alternative arrangements affecting more than twenty-five percent of the inbound or twenty-five percent of the outbound traffic on a particular route must be filed with the Commission and made public, and not contain unreasonably discriminatory terms and conditions. The Commission's action will encourage the development of competitive market conditions in other countries and lead to more economically efficient contractual arrangements for terminating service that ultimately will benefit U.S. consumers through lower calling prices.