Us Regulator Softens Stand On Telecom Accounting Rates

US telecoms and electronic media regulator, the Federal Communications Commission (FCC) has softened its aggressive stance on telecom accounting rates (TARs) against countries with monopoly international telecom providers.

It had set a deadline of 2002 for these countries to reduce their TARs by half or three-fourths the current rates. Instead, the FCC has now agreed that if intervention by a multilateral agency like the International Telecommuni-cation Union (ITU) is able to expedite reduction of TARs, it will not take action against the monopoly international telecom providers.

Last December, the US regulator had warned against closing down telecom circuits from such countries if they failed to reduce TARs within the prescribed time limits. TARs are charges telecom carries levy on each other to carry and terminate a call. A TAR of $1.60 (Rs 57.60) per minute between the US and India means that when a call is made from the US to India, the American carrier pays VSNL, Indias monopoly international telecom services provider, half the TAR, that is, 80 cents (Rs 28.80) per minute. Of this, VSNL keeps Rs 10 and passes on the rest to the department of telecommunications. The rates are revenue-neutral to an economy that has an equal number of incoming and outgoing calls. However, in India, Japan and a number of other Asian countries with high incoming telecom traffic compared to outgoing traffic, there is net forex inflow.

 

Correspondingly, in countries like the US, which have a high outgoing-to-incoming telephone traffic ratio, there is a massive capital outflow, estimated to be around $5 billion (Rs 18,000 crore) in fiscal 1995-96. The FCC has accused countries like India, Singapore and Japan of deliberately pegging TARs way above costs, taking undue advantage of the monopoly status of their telecom providers.

The FCCs assent to an ITU intervention is being interpreted here as a climbdown from its earlier stance in the absence of significant support from other telecom administrations.

A host of Asian governments including India, Singapore, South Korea and Japan had protested the FCC move. The US regulator failed to rally support for its move from the ITU, which saw the FCCs unilateral effort undermining its own authority.

The ITU has commissioned a study on TARs, secretary general Pekka Tarjanne said here. On Sunday, he admitted that the high TARs (pegged far above costs of providing international telecom services) was leading the global telecom network towards catastophe.