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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).
FCC LIFTS REGULATIONS ON INTER-CARRIER AGREEMENTS IN BROAD REFORM
OF INTERNATIONAL SETTLEMENTS POLICY
The Commission today approved sweeping reform of the longstanding international settlements
policy, deregulating inter-carrier settlement arrangements between U.S. carriers and foreign non-
dominant carriers on competitive routes. |
The FCC's international settlements policy was originally designed to prevent monopoly foreign carriers from taking advantage of the competitive marketplace in the United States by playing one carrier off against another - a practice known as "whipsawing" - in order to extract higher rates for the completion of international calls originating in the United States. The international settlements policy attempts to prevent whipsawing by prohibiting U.S. carriers from accepting discriminatory terms and conditions for the termination of traffic in overseas markets.
The reforms to the international settlements policy adopted by the Commission today reflect the new realities that exist in the international telecommunications market. Under the 1997 World Trade Organization Agreement on Basic Telecommunications, 72 countries made commitments to open their markets to competition for telecommunications services. In many of those countries, new entrants are already providing service to customers at lower rates and higher standards of service than the former monopoly provider.
U.S. consumers have benefitted from these changes in the international telecommunications market. Settlement rates, the rates U.S. carriers pay to complete international calls, have declined by an average of 22 percent since 1998 and consumer prices have dropped precipitously on competitive routes. For example, discount rates for international calls to the United Kingdom have declined by about 80 percent, and rates to Germany and the Netherlands have decreased by about 50 percent since 1996.
While the international settlements policy has been a successful tool in preventing harmful discrimination against U.S. carriers by foreign monopoly carriers, the Commission's action today recognizes that the policy is not necessary on routes where there is competition on the foreign end of a call. In fact, continued application of the international settlements policy in such circumstances could impede the further development of competition by restricting the ability of U.S. carriers to seek lower cost, innovative arrangements for the termination of U.S. calls overseas.
Specifically, the Commission:
Action by the Commission April 15, 1999, by Report and Order (FCC 99-73). Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell and Tristani.
International Bureau contact: Robert McDonald at (202) 262-1198 (until April 19)