FCC to Enforce Benchmark Rate on U.S. to Fiji Route

Last week, the FCC granted a petition filed by AT&T requesting enforcement of the benchmark rate of $0.19 per minute for international traffic on the U.S.-Fiji route. Among other requirements, the Memorandum Opinion and Order (“Order”), specified that “all U.S. international facilities-based carriers providing international message telephone service with Fintel[1] on the U.S.-Fiji route SHALL CONDUCT settlements for services provided on or after May 6, 2014 at a rate that does not exceed the Commission's benchmark settlement rate of $0.19 per minute.”

In 1997, the FCC adopted the Benchmarks Order[2] to address the fact that accounting rates on most international routes exceeded the foreign carriers' costs to terminate international message telephone service from the United States. The FCC found that, through lower calling prices and increased demand, both customers and carriers would benefit from international rates closer to cost. The Benchmarks Order adopted benchmark settlement rates for international termination services on a route-specific basis.

Prior to November 7, 2011 Fintel’s termination rates were consistent with the FCC’s benchmark policy, but after that time, Fintel, responding to local developments, raised its termination rates above the benchmarks rates and AT&T was therefore unable to directly send traffic to Fiji.

As required, AT&T attempted to negotiate rates with Fintel that were consistent with the FCC’s benchmark policy, but was unsuccessful. The impact of the Order does not land squarely on Fintel, given the FCC has no jurisdiction over pure foreign carriers, but rather on U.S. international facilities-based carriers who terminate international traffic to Fiji. The FCC ordered that all U.S. international carriers must: (i) comply with the Benchmarks Order, i.e., not pay to Fintel a settlement rate in excess of $0.19 per minute ; (ii) in any negotiations with Fintel regarding any settlement rates must achieve rates that comply with the rules and requirements of the FCC’s Benchmarks Order; and (iii) immediately inform the FCC when it negotiates a benchmark settlement rate with Fintel for direct termination of U.S. traffic on the U.S.-Fiji route. The Order is also a clear signal to foreign carriers and governments that the FCC intends to enforce its benchmark policy.

[1] The incumbent international carrier in Fiji is Fiji International Telecommunications Limited (“Fintel”).
[2] International Settlement Rates, B3 Docket No. 96-261, Report and Order, FCC 97-280, 12 FCC Rcd 19806, 19807 08, TT 1-2 (1997) (Benchmarks Order), aff'd sub nom. Cable & Wireless P.L.C. v. FCC, 166 F.3d 1224 (D.C. Cir. 1999) (Cable & Wireless); Report and Order on Reconsideration and Order Lifting Stay, FCC 99-124, 14 FCC Rcd 9256 (1999).