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Federal Communications Commission
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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).

January 18, 2000

Rosemary Kimball (202) 418-0500


Washington, D.C. -- As part of its ongoing effort to promote competition and liberalization in the international telecommunications services market, the Commission today issued its Report on International Telecommunications Markets for 1999. The report, which tracks several trends in international telecommunications markets since the signing of the historic World Trade Organization Agreement on Basic Telecommunications (WTO Agreement), is prepared annually at the request of Senator Ernest F. Hollings (D-SC). The first such report was issued on December 7, 1998.

As the report indicates, international calling prices have continued to decline significantly over the past year and many countries are continuing to open their markets to competition by foreign telecommunications and satellite companies. In addition to the Commission's rules implementing the WTO Agreement, other Commission policies, such as settlement rate reform, have played an important role in bringing about increased competition, lower prices and more choices for consumers.

Some of the developments highlighted in the report include:

  • Rates paid by U.S. consumers for international service to most foreign destinations have declined significantly since the WTO Agreement came into effect. From 1996 to 1998, the average price of an international long distance call declined from 74 cents per minute to 55 cents per minute, a 25% decline. By the time the Commission's Benchmarks Order is fully implemented in 2003, we expect to see much deeper reductions in international calling rates. On highly competitive routes such as the U.S.-UK route, prices have fallen even more dramatically, to as low as 10 cents per minute. Although aggregate data for 1999 are not yet available, all indications are that the trend toward lower rates has continued and that the current average price is well below 55 cents per minute.

  • International settlement rates continue to decline, especially in WTO members that have made full market access commitments. The vast majority of WTO members with full market access commitments have settlement rates that are at or below the target benchmark rates that were set by the FCC in its Benchmark proceeding. From 1998 to 1999, there was an average decline of 15% in settlement rates of WTO members with full market access commitments. WTO members with full market access commitments have an average settlement rate of 16.8 cents per minute, while those with lesser commitments average 39.9 cents per minute.

  • As of year-end 1999, the FCC will have achieved benchmarks compliance for 99% of the net settled minutes for upper income countries (those that were scheduled to be in compliance by 1/1/99). For upper-middle income countries (those scheduled to be in compliance by 1/1/00), the compliance rate is 86% of net settled minutes.

  • With the surge in competition since the WTO, non-incumbent multinational carriers are making inroads into the global telecom marketplace. Of 14 non-incumbent multinational carriers, both U.S. and foreign, all but one (for which information is available) showed a positive growth rate measured by percentage year-to-year change from the first quarter of 1998 to 1999. Five of the 14 non-incumbent multinational carriers grew even faster than they did the year before. Four of these new entrants grew at a staggering rate ? more than 100% ? over this period.

  • In the top ten markets measured by the number of telephone lines, the number of new entrants increased from 1998 to 1999 in all ten markets except for one, which remained unchanged. In Hong Kong, the number of new entrants climbed dramatically from 4 to 59 ? more than a 14-fold increase. In the top five markets measured by market revenues, penetration by new entrants was significant in all five countries: Japan, Germany, United Kingdom, France and Italy. For example, in Japan the number of new entrants rose from 9 to 42.

  • The satellite services sector of the telecommunications market is growing rapidly and continues to diversify its service offerings. The new satellite systems are expected to bring business and other consumers a wide variety of new broadband and mobile voice and data services and connect users in countries around the globe. The Satellite Industry Association (SIA) states that 1998 commercial satellite industry revenue was $65.9 billion, with double-digit growth forecast for the next decade.

  • The WTO Agreement has set an important benchmark for opening markets to satellite services around the world. Many countries - particularly in Europe and, increasingly, in Latin America, Asia, and Africa - have liberalized their regulations. Furthermore, there are a significant number of countries that now permit multiple entities to obtain licenses to provide voice, data, or video services for their own use or for third-party use; permit ownership and operation of private earth station equipment; and to permit choice in providers of satellite capacity.

  • Spending on telecom equipment and services is estimated to reach $983 billion by year-end in Canada, Mexico, Western and Eastern Europe, Latin America, and the Asia-Pacific region combined. Spending on transport services, equipment, and support services will soar to $1.8 trillion in 2003 at a 16.7% compound annual growth rate. U.S. manufacturers are expected to garner $45 billion - that is 12.7% - of the estimated $345 billion that that will be spent on telecom equipment in 2003.

  • A $10 billion global venture between AT&T and BT aims to serve the entire communications needs of multinational companies and individuals around the world. The two companies in the joint venture reportedly have agreed to invest a total of $1 billion, split equally between them, in U.S. businesses involved in high technology and emerging communications markets, and plan to build an intelligent, managed Internet Protocol (IP)-based global network.

  • The formation of the joint venture between the American company Qwest and the Dutch company KPN in 1999 to create a pan-European, IP-based fiber optic network linked to Qwest's infrastructure in North America for data, voice and video exemplifies the type of carrier combinations spurred by the WTO.

  • Since last year, the full WTO commitments of three countries, Ireland, Peru and Portugal, have come into force, bringing the total number to 25 countries that have legal obligations to allow majority foreign-owned companies seeking to provide international voice service using their facilities they themselves own and control. There are now 78 WTO members that have made commitments in the area of basic telecommunication services.

  • Since the signing of the WTO Agreement, many countries have made inroads in reforming their telecommunications regulatory structure in order to encourage the development of competition in their telecommunications industry. As a result, both local and long-distance interconnection rates have fallen in many countries, but primarily in Europe.

  • According to SIA, satellite companies continue to view the WTO Agreement as a positive force in the development and growth of the satellite industry. For example, several countries allow licensed radio and television broadcasters and cable television providers to own their own transmission broadcast facilities and to purchase satellite capacity without restriction.

  • Over the past year, the FCC has authorized two non-U.S. licensed satellite service providers, TMI and New Skies, to offer service in the United States.

  • The FCC has streamlined its WTO implementation rules by developing a "Permitted List" of U.S. and non-U.S. satellite systems whereby nearly all earth station operators providing fixed-satellite service in the conventional C- and Ku-bands may access any of these designated satellites without additional Commission action, consistent with the technical parameters authorized in the earth station licenses.

Action by the Chief, International Bureau, January 14, 2000, by Report (DA 00-87)

- FCC -

International Bureau Contact: Justin Connor at (202) 418-1476

TTY: (202) 418-2555.