From: Bill Frantz <frantz@netcom.com>
Date: Wed, 3 Sep 1997 14:02:09 +0800
To: cypherpunks@cyberpass.net
Subject: Europe puts pressure on FCC over accounting rate moves
Message-ID: <v03007811b032ab0c6dc7@[207.94.249.183]>
MIME-Version: 1.0
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                Telecoms Newsline

        A News Service for Telecoms Professionals
             Sponsored by Hewlett-Packard
              Issue 48: 2 September 1997
           http://www.telecomsnewsline.com

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Europe puts pressure on FCC over accounting rate moves
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The European Commission (EC) has warned the US regulator, the Federal
Communications Commission (FCC), that its unilateral action (see TN
46) could jeopardise the World Trade Organisation agreement on
telecoms. The FCC has rejected the WTO agreements sanctioned by the
ITU, and intends to impose its own cost-based accounting tariff for
international call terminations.

The US suffers an enormous trade deficit in telecoms services
because its international calls are much cheaper than those in many
other countries. This means that far more traffic originates in the
US for termination overseas than comes in from abroad, resulting in
American international operators paying out more than US$5 billion
per year to foreign carriers for the termination of calls.

The FCC has come up with its own benchmarking scheme which will be
introduced over the next five years. This has enraged many nations
who view it as dictatorial; it is also against the multilateral
approach of the WTO agreement. Furthermore, in the absence of
accurate data, the FCC has used countries1/4 GDP (rather than how much
it costs overseas operators to handle calls) to set the settlement
rates that US operators will be obliged to pay overseas carriers in
future. At the moment the FCC feels that many countries1/4 accounting
rates are inflated and bear no relation to the actual cost of
providing the service.

Poorer countries claim that it costs them much more to handle calls
because they struggle with antiquated infrastructure and that they
need the revenue from high accounting rates to cover the cost of
modernising their networks. In addition, for less developed
economies, the monies they receive in settlement rates are a precious
source of hard currency. The debate looks set to run and run with the
International Telecommunication Union (ITU) stuck between a rock and
hard place, trying to find a compromise that is acceptable to all
parties.

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Telecoms Newsline       {c} 1997 Hewlett-Packard Co.

 Editor:      Peter Judge
 Contributor: Annie Turner

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