03-NOV-97
Telmex Sprint Communications, a
joint venture between US carrier Sprint and Mexico's leading telco
Telefonos de Mexico, has won a license to provide international
switched resale from the US to anywhere in the world.
To gain the license - in the teeth of fierce complaints from
US carriers AT&T and MCI, both of whom have their own operations
in Mexico - TSC has promised the Federal
Communications Commission that its parent Telmex will meet the
commission's controversial August notice on settlement rate
benchmarks.
TSC is believed to be the first carrier to achieve a license by
explicitly signing up to the benchmarks, which set a timetable for
foreign telcos to agree an FCC-set level for international accounting
rates. Almost a dozen other operators, especially from Asia, have
appealed the order in a Washington DC court, saying the US has no
right to force the pace of negotiations unilaterally.
At present Telmex has a 39.5 cent settlement rate with US carriers,
which - because of the larger volume of traffic to Mexico from the US
than vice versa - has led to a net accounting rate deficit of $875
million last year. The US's overall deficit for the whole world last
year, according to interim figures published last month, was $5.6
billion.
The agreement commits Telmex to bringing its rate down to 19 cents by
January 1, 2000. An FCC spokesman said this would result in
savings of $650 million to US customers in the next three
years alone. "This is the biggest route to Latin America by far," he
said.
The agreement ignores repeated complaints from US carriers that
Mexico is still unfairly blocking foreign carriers' entry into the
market, citing interconnection rate problems, regulatory
inconsistencies and incidents such as the illegal severing of a cable
by Telmex employees.
But the FCC took the view that since affiliates of carriers including
AT&T and MCI, operating under the names Alestra and Avantel
respectively, have captured 30% of the available preselection market
in under a year, the Mexican market was on the right trajectory -
despite the odd hiccup.
The analysis of the Mexican market was undertaken under the US's
Effective Competitive Opportunities rule, which dictates that
licensee countries must allow US companies equal market opportunities
to those their own enterprises are seeking in the US.
From January, however, such tests will be superseded by the World
Trade Organization's Basic Telecoms Accord, under which the US has
promised to assume that any member country passes the ECO test
automatically.
12-NOV-97
Philippine Long
Distance Telephone Co. is attempting to renege on an agreement with
AT&T Corp. to slash international calling rates by 62 percent in
three years, U.S. regulators said.
The Federal Communications Commission said PLDT wants to lengthen to
five years the period for reducing the amount it charges U.S. phone
companies to complete calls to the Philippines.
"We have been told by AT&T an accounting agreement it had reached
with PLDT is not being honored," said Diane Cornell, chief of the
FCC's telecommunications division. "AT&T states that PLDT now
believes that the FCC has agreed to a five-year transition for the
Philippines."
Cornell said the misunderstanding arose after an FCC team visited the
Philippines recently to discuss the accounting rate reductions
proposed by U.S. regulators in August.
Under the FCC's new benchmarks, PLDT would have to cut the rate they
charge for completing calls from the U.S. to $0.19 per minute within
three years from the current $0.50. The new rules take effect on Jan.
1, 1998.
"We do not believe a five-year transition period is justified
in the case of the Philippines," Cornell said in a letter to
Philippine Communications Undersecretary Josefina Lichauco.
"We believe PLDT should honor the accounting rate agreement reached
with AT&T, and not use our discussions with you as a basis for
backing out of an agreement."
PLDT officials weren't immediately available for comment.
Under the accounting-rate system governing international calls,
carriers negotiate charges and then split them. The phone company
originating a call bills the customer and then pays the carrier that
completes the call a fee known as the settlement rate.
With more and longer calls originating from the U.S. and high
international rates in other countries, American companies have
consistently paid large fees to foreign carriers.
Local companies such as PLDT historically have used inflated
international rates to subsidize domestic calls and pay for the
development of their phone networks. PLDT derives more than half its
income from international calls, with the bulk coming from the
U.S.
Shares in PLDT tumbled 20 pesos to 830 today on the Philippine Stock
Exchange.