[ Text Version | WordPerfect Version ]

fcclogo NEWS

Federal Communications Commission
1919 - M Street, N.W.
Washington, D.C. 20554
News media information 202 / 418-0500
Fax-On-Demand 202 / 418-2830
Internet: http://www.fcc.gov

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. Circ 1974).

Report No. IN 98-46 INTERNATIONAL ACTION August 7, 1998


The International Bureau authorized Telmex/Sprint Communications, L.L.C. (TSC) to commence international switched resale services from the United States to all points, including Mexico, based upon the Bureau's determination that the conditions set out in TSC's license had been fulfilled. Commencement of service 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 Tel‚fonos de M‚xico, S.A. de C.V. (Telmex) and Sprint Corporation (Sprint). TSC plans to provide international switched resale services by reselling Sprint's facilities-based services. In October 1997, the International Bureau conditionally granted TSC Section 214 authorization to provide this service, subject to the fulfillment of certain conditions specified in the Order. Two conditions related to Telmex's discriminatory practices in favor of Sprint. In order for the 214 to become effective, the Order stipulated that Telmex had to demonstrate that it had offered other U.S. carriers one-stop shopping and Paid 800 agreements on the same terms and conditions as it has made such agreements available to Sprint. The third condition related to the manner in which Telmex calculated proportionate return traffic to the United States. TSC filed a letter on May 26, 1998, in which it claimed all the specified conditions had been fulfilled. The filing of this letter enabled the Bureau to commence its review of TSC's compliance with these conditions.

In today's Order, the Bureau found, after evaluating TSC's filing and the responsive pleadings, that Telmex had met the conditions. The Bureau concluded that Telmex no longer discriminates in favor of Sprint and is providing equal opportunities to other U.S. carriers in one- stop shopping and Paid 800. The Bureau will require the parties to report within a month on the status of negotiations to make U.S. carriers whole for Paid 800 traffic that was improperly sent to Sprint since January 1996, when the service began.

The Commission recognizes that significant problems exist in the Mexican telecommunications market and is addressing those problems through other proceedings at the Commission, as well as directly in discussion with Mexican regulators. The Commission is committed to achieving significant annual reductions in the inflated settlement rates on the U.S.- Mexico route. Telmex's agreement to meet the benchmark settlement rate on schedule in 2000 was one of the reasons the International Bureau granted the Section 214 license. The Bureau also supports carrier efforts to achieve interim reductions in 1998 and 1999 that are greater than the rates currently proposed.

In a separate Order, the International Bureau rejected a request filed by Sprint on October 17, 1997 to waive the Commission's International Settlements Policy (ISP) to allow a substantially lower settlement payment for Sprint's Paid 800 service between Sprint and Telmex, than applies for standard international traffic. Paid 800 service allows a caller in Mexico to initiate an international call to a U.S. toll-free number. The Bureau found that Paid 800 service is fundamentally the same as regular international service and Sprint did not demonstrate that lower costs justify the substantial settlement rate difference. Most important, the Bureau found that allowing a lower rate for Paid 800 would put upward pressure on U.S. calling prices.

Action by the Chief, International Bureau, August 7, 1998, by Order (DA 98-1585) and Order on Reconsideration (DA 98-1586).

- FCC -

News Media contact: Rosemary Kimball at (202) 418-0500.
International Bureau contacts: Peter Pappas at (202) 418-0746 and Robert Calaff at (202) 418-0431.