####################################################### Telecoms Newsline A News Service for Telecoms Professionals Sponsored by Hewlett-Packard Issue 48: 2 September 1997 http://www.telecomsnewsline.com ######################################################## Europe puts pressure on FCC over accounting rate moves ------------------------------------------------------ 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 countriesΠGDP (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 countriesΠaccounting 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. ######################################################## Telecoms Newsline {c} 1997 Hewlett-Packard Co. Editor: Peter Judge Contributor: Annie Turner To subscribe to Telecoms Newsline send mail to <timalist@list.telecomsnewsline.com> with 'subscribe hp and your e-mail address' in message body. To unsubscribe, send mail to <timalist@list.telecomsnewsline.com> with 'unsubscribe and your e-mail address' in or message body. Or visit our website at http://www.telecomsnewsline.com If you like us, pass it on. This publication is free and may be re-posted. Entire issues may be posted without alteration or editing. Individual stories may also be re-posted, with this message attached. If you want to re-post all issues to a Web site or list, please appreciate our work by telling us. As Telecoms Newsline is available globally on the Internet, we cannot guarantee price or availability of products in your area. Editorial comments or questions please mailto:publisher@telecomsnewsline.com ######################################################## ------------------------------------------------------------------------- Bill Frantz | The Internet was designed | Periwinkle -- Consulting (408)356-8506 | to protect the free world | 16345 Englewood Ave. frantz@netcom.com | from hostile governments. | Los Gatos, CA 95032, USA