News media Information: 202 / 418-0500 Fax-On-Demand: 202 / 418-2830 Internet: http://www.fcc.gov ftp.fcc.gov Federal Communications Commission 1919 M Street, N.W. Washington, D.C. 20554 This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC, 515 F.2d 385 (D.C. Cir. 1974). IN Report No. 97-35 INTERNATIONAL ACTION October 30, 1997 INTERNATIONAL BUREAU GRANTS TELMEX/SPRINT COMMUNICATIONS, L.L.C. AUTHORITY TO PROVIDE INTERNATIONAL SWITCHED RESALE SERVICES The International Bureau, on delegated authority, granted Telmex/Sprint Communications, L.L.C. (TSC) the authority to provide international switched resale services to all points, including Mexico, subject to certain conditions. The addition of TSC to the United States' international telecommunications market and the commitments made by Telmex as part of this proceeding will increase competition, especially on the U.S.-Mexico route. Consumers in the United States will gain substantial benefits from today's decision by the reduction of prices that will result from increased competition. TSC is a joint venture between an indirect subsidiary of Tel‚fonos de M‚xico, S.A. de C.V. (Telmex), a Mexican corporation, and an indirect subsidiary of the Sprint Corporation (Sprint), a U.S. Corporation. TSC plans to provide international switched resale services by reselling Sprint's facilities-based services. As part of this proceeding, Telmex has committed to annual reductions in its settlement rate with U.S. carriers for terminating international traffic and has pledged to cut that rate in half over the next two years (from 39.5 cents a minute today to 19 cents a minute by January 1, 2000). The commitment by Telmex to reduce its settlement rate to 19 cents marks the most significant commitment by a carrier from any middle or low income country to reduce its settlement rate with the United States to the levels prescribed to U.S. carriers by the Commission in its Benchmarks Order of August 1997. Telmex's commitment is particularly important in light of the fact that U.S. carriers' net settlement payments to Mexico are more than four times higher than those to any other country. In 1996, Telmex received more than $875 million in settlement payments from U.S. carriers. Telmex's commitment translates into settlement savings of more than $650 million over the next three years compared to today's rates, which will ensure U.S. consumers enjoy significantly lower prices when calling Mexico. Applying the Commission's current rules, the Bureau found that a conditional grant of TSC's application serves the public interest. Several major U.S.-affiliated carriers, including affiliates of AT&T and MCI, are already competing in Mexico. These carriers have succeeded in gaining a significant share of the Mexican long-distance and international markets by providing service on both a facilities and switched resale basis. Mexico has also committed in the World Trade Organization's Agreement on Basic Telecommunications to continue to permit foreign carriers to enter its market. The Bureau noted that it expects that Mexico will offer all U.S. carriers effective competitive opportunities to provide international switched resale services in the near future. Telmex has also undertaken, or committed to undertake, a number of actions to improve the competitiveness of the U.S.-Mexican route, including an agreement on providing circuits in a timely fashion to its competitors in Mexico. The Order also imposes certain conditions and safeguards on TSC's authorization to help eliminate the potential for anti- competitive conduct on the U.S.-Mexico route. Additionally, TSC will be regulated as dominant on the U.S.-Mexico route and subject to appropriate reporting requirements. Action by Chief of the International Bureau, October 29, 1997, by Order, Authorization, and Certificate (DA 97-2289). - FCC - News Media contact: Meribeth McCarrick at (202) 418-0256. International Bureau contact: Jamie Hedlund at (202) 418-1399.