NEWS
                                                            February 25, 1998



       STATEMENT OF CHAIRMAN WILLIAM E. KENNARD ON THE CURRENT DISPUTE
                      BETWEEN TELMEX AND U.S. CARRIERS

       "I applaud the steps that Mexico has recently taken to foster competition in its
telecommunications market.  However, I am very concerned about a number of issues that in my view
are preventing vigorous competition between the U.S. and Mexico.  First, I am deeply committed to
achieving significant annual reductions in inflated settlement rates on the U.S.-Mexico route.  The
Commission applauds U.S. carriers' efforts to achieve such reductions as a way of bringing down the
cost of international rates for consumers both here and abroad.  Vigorous competition on this route
also requires a rapid phasing-out of the 58% surcharge which the incumbent carrier Telmex currently
imposes on competitors.  It is imperative that the Mexican authorities act to eliminate that surcharge
quickly.  Finally, on both sides of the border, we must move to a regulatory regime that embraces
carriers' ability freely to negotiate the most economically rational agreements for terminating each
other's traffic."

                                    - FCC -