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Joint letter, International Settlement Rates NPRM

Docket Number
IB Docket No. 96-261
Friday, February 07, 1997






February 7, 1997

Dear Chairman Hundt:

We are writing to express our support for the goals and objectives of the Federal Communications Commission's International Settlement Rates Notice of Proposed Rulemaking (NPRM), IB Docket No. 96-261, released December 19, 1996. Agencies may file comments on the details contained in the NPRM at a later date.

We believe that the goals and objectives of the NPRM support the Executive Branch's goals of 1) reforming the international accounting rate system and moving towards cost-based accounting rates, 2) addressing asymmetries in market liberalization in the provision of international telecommunications services, and 3) opening up foreign markets in order to ensure the introduction of effective competition in telecommunications.

We concur with the Commission's judgment that there is a critical need to address the asymmetries that currently exist as a result of differing stages in liberalization of international telecommunications markets. Clearly, promoting increased and effective competition in the global market for telecommunications services is a positive step. In this regard, a successful World Trade Organization agreement on basic telecommunications, together with accounting rate reform, will help ensure effective competition in the global marketplace.

We also concur that the consequences of these asymmetries contribute to the current high level of settlements paid by U.S. telecommunications carriers to foreign carriers. In 1995, for example, outbound settlements from the United States exceeded $5 billion, most of which reflects a subsidy paid to foreign carriers from restrictive markets whose settlement rates are not cost-based. Furthermore, the desire of the U.S. Government to achieve accounting rate reform is shared by the members of the International Telecommunication Union and the Organization for Economic Cooperation and Development, and is helped by the efforts of the International Bank for Reconstruction and Development (World Bank) to encourage liberalization of the telecommunications sector. We support these international efforts and believe that the goals and objectives of the Commission's NPRM complement the work of these organizations.

We applaud the Commission's investigations into the various mechanisms for achieving cost-based accounting rates. We are prepared to continue working with you so the Commission ensures that Executive Branch policies and legal authorities regarding national security, foreign policy, law enforcement, competition, and telecommunications, trade and investment policy, as well as interpretation of international agreements, are respected. We look forward to your bringing this rulemaking process to an expeditious conclusion.


Amb. Jeffrey M. Lang      Hon. Larry Irving      Amb. Vonya B. McCann
Deputy U.S. Trade         Assistant Secretary    U.S. Coordinator
 Representative            for Communications    International
Office of the U.S.         and Information        Communications and
 Trade Representative     Dept. of Commerce       Information Policy
                                                 Dept. of State