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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).
|August 7, 1998|
STATEMENT OF FCC CHAIRMAN WILLIAM E. KENNARD ON TELMEX
Today the International Bureau granted Telmex/Sprint Communications (TSC) final
authority to enter the U.S. market to provide service to all points, including Mexico. In doing
so, the Bureau found that TSC has fulfilled the outstanding conditions contained in the
Bureau's October 30, 1997 Order conditionally granting TSC international switched resale
authority. I expect the addition of TSC services in the U.S. market will increase competition
on the U.S.-Mexico route, and that U.S. consumers will benefit from this increased
competition in the form of lower prices on calls to Mexico.|
Telmex's early commitment to reach a settlement rate of 19 cents for traffic from the United States by January 1, 2000, consistent with the Commission's 1997 Benchmarks Order, was critical to the public interest finding supporting grant of TSC's license by the Bureau last October. Central to the Benchmarks Order was the Commission's belief that consumers will not receive the full benefits of increased competition until settlement rates come down closer to cost-based levels. I am troubled, therefore, by the lack of progress in reducing settlement rates on this route for 1998 and 1999, and continue to support U.S. carriers' efforts to negotiate settlement rates with Telmex during these interim years which are lower than those proposed in the TSC settlement rate waiver request that is pending before the Commission. As I have previously indicated, the proposed TSC settlement rates deviate too far from the glidepath, or proportionate reductions envisioned in the Benchmarks Order, to be acceptable. Ultimately, it is up to the carriers on the U.S.-Mexico route to negotiate settlement rate reductions, and to do so will require each of them to show a willingness to compromise from their current positions. I urge them to do so expeditiously.
I am also concerned about allegations of anticompetitive conduct by Telmex on the U.S.-Mexico route. TSC's authorization is therefore conditioned on TSC or its affiliates not engaging in anticompetitive actions which will give TSC an unfair advantage in the U.S. international services market.
This Commission firmly believes that vigorous competition and lower rates are in the public interest of consumers both in Mexico and the United States. Regulators in Mexico have told me that they share this vision, and Mexico has been in the forefront of the liberalization that is sweeping across Latin America. I am committed to maintaining, and deepening, the close working relationship which the Commission has long maintained with our Mexican counterparts. In the spirit of that cooperation, I look forward to working with my Mexican colleagues to improve competitive conditions generally on the U.S.-Mexico route so that customers in both countries receive the full benefits of competition.