NEWSReport No. IN 96-8                 INTERNATIONAL ACTION  March 18, 1996

      INTERNATIONAL BUREAU ACTS TO STOP WHIPSAWING OF U.S. CARRIERS
                        BY TELINTAR OF ARGENTINA
                                    
  Today, the FCC's International Bureau took strong action to protect U.S. consumers
and U.S. carriers from a foreign monopolist's attempt to undermine U.S. law and
discriminate against U.S. carriers.  Specifically, the International Bureau ordered all U.S.
carriers providing direct facilities-based service to Argentina to suspend settlement payments
to Telintar.  

  Telintar, the monopoly international service provider in Argentina, has used its
market power to discriminate against individual U.S. carriers.  It has, for example,
unilaterally blocked AT&T's circuits to Argentina, disabled AT&T's USADirect  Service
and imposed discriminatory accounting rates.  Telintar's actions, taken in retaliation for
AT&T's efforts to negotiate a significantly lower accounting rate, constitute classic
"whipsawing."  Whipsawing refers to practices by monopolists to play competitive U.S.
carriers against one another in order to gain concessions and benefits for themselves.  

  This type of behavior is contrary to the U.S. public interest and a violation of the
Commission's International Settlement Policy (ISP).  Just last month the FCC adopted a
Policy Statement on International Accounting Rate Reform, Policy Statement, FCC 96-37,
(rel. Jan. 31, 1996), in which it announced that it would act aggressively to enforce the ISP
and to protect U.S. carriers from being whipsawed by foreign carriers during accounting rate
negotiations.  With its Order, the International Bureau sends a strong signal that such
discriminatory and retaliatory behavior will not be tolerated and that the Bureau will use its
regulatory authority to prevent such efforts from being successful.

  U.S. carriers have been trying for several years to negotiate lower accounting rates
with Telintar.  The accounting rate is the negotiated rate paid by U.S. carriers to terminate
their traffic with their foreign correspondents.  It is the per minute charge which forms the
basis of the settlement payments.  Accounting rates, however, are well above the cost of
providing international service.  As such, settlement payments constitute a large subsidy paid
by U.S. consumers to foreign carriers. 


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  On February 3, 1996, Telintar began a series of escalating steps to disrupt AT&T's
international service with Argentina, in response to AT&T's efforts to negotiate lower 
accounting rates.  In response, the International Bureau requested assistance of the
Argentine regulator, the National Telecommunications Commission (CNT), to facilitate
the prompt restoration of AT&T's service and to avoid the need for regulatory action to
protect the needs of U.S. carriers and consumers.  The United States Department of State
also contacted the Argentine government and requested its assistance in resolving this matter. 
But to date, Telintar has not taken any action to restore service. 

  The Order states that all settlement payments by U.S. carriers to Telintar be
suspended until Telintar fully restores AT&T's international circuits and USADirect Service. 
Once Telintar complies with this condition, the Order directs all U.S. carriers to resume
settlement payments to Telintar, including settlements that have been withheld,  at an
accounting rate of $1.43 per minute (the lowest accounting rate currently in effect between a
U.S. carrier and Telintar) pending further accounting rate negotiations between U.S carriers
and Telintar.  

  In addition to Telintar's disruption of AT&T's service, Telintar has refused to grant
another U.S. carrier, WorldCom, adequate facilities to terminate all of WorldCom's traffic
destined for Argentina.  The International Bureau also found this to constitute whipsawing,
and stated that if Telintar does not promptly remedy this situation, the International Bureau
will consider further action.  The International Bureau ordered WorldCom to file, within 15
days, a report with the Commission stating whether Telintar has provided it with suitable
facilities to terminate traffic.

  Action by International Bureau  March 18 by Report & Order (DA 96-378)  [ISP-96-
W-062].

 
                                -- FCC --

  News Media contact: Rosemary Kimball, 418-0500.  
  International Bureau contacts:  Diane Cornell at (202) 418-1470, Troy Tanner (202)
418-1468, Maureen McLaughlin (202) 418-1399.