On November 29, 2012, the Federal Communications Commission (“FCC” or “Commission”) adopted an Order streamlining international telephony rules by eliminating regulatory requirements related to the Commission’s International Settlements Policy (“ISP”) and adopting a modified version for Cuba, the only country appearing on the Commission’s “Exclusion List” identifying countries and facilities not covered by the grant of global Section 214 authority under the FCC’s rules.

Traditionally, the ISP has required that: (1) all U.S. carriers be offered the same effective accounting rate and same effective date for the rate (“nondiscrimination”); (2) all U.S. carriers are entitled to a proportionate share of U.S.-inbound, or return traffic based upon their proportion of U.S.-outbound traffic (“proportionate return”); and (3) the accounting rate is divided evenly between U.S. and foreign carriers for U.S.-inbound and outbound traffic so that inbound and outbound settlement rates are identical (“symmetrical settlement rates”).  The ISP was designed to foster competition and decrease international telephone rates.  In addition to the ISP, the Commission also promotes lower international rates through its benchmark policy, which requires carriers to negotiate settlement rates at or below benchmark levels established by the Commission.

As the U.S.-international market and foreign markets have become more competitive and settlement rates have decreased to benchmark rates or below, the Commission exempted a substantial number of international routes from the ISP.  In particular, the FCC exempted benchmark-compliant international routes from the ISP to give U.S. carriers greater flexibility to negotiate market-based arrangements on these routes.  As of November 29^th, the ISP applied to 38 international routes.  In its Order, the Commission announced that while eliminating the ISP for all routes, it will continue to apply its benchmarks policy to direct U.S.-Cuba traffic subject to applicable waivers.  The Commission also adopted certain pro-competitive measures including procedures to address complaints and additional remedies to resolve anti-competitive behavior.

The Commission’s Order is available here: Order