Us Wants Cut In Telecom Accounting Rates

The FCC demand follows preliminary results of a benchmarking study that it undertook this year which reveal that international tariffs are overpriced in some countries.

"Some of the prices are much higher than the costs of completing some of these calls," Troy Tanner, director of the international bureau, FCC told visiting mediapersons at a video conference.

The FCC study will be published later this month and is expected to increase the pressure on VSNL and the Indian department of telecommunications to lower its accounting rates. US carriers had a total net payout of some $5.5 billion (about Rs 19,000 crore) last year to other international carriers which, telecom experts contend, was primarily due to overpriced accounting rates.

 

The US administration and other developed economies have been demanding at various fora like World Trade Organisation meetings that developing countries which have monopoly international telecom operators should reduce their rates. Telecom accounting rates are among the key issues likely to come up for discussions at WTO ministerial deliberations in Singapore this month.

FCC chairman Reed E. Hundt has been championing the cause of US telecom operators for some time now and hopes to reduce accounting rates with some operators. "If he (Hundt) succeeds in reducing the US' telecom deficit by a billion dollars or so, it will be a feather in his cap," an executive with a New York broking house said. "This will strengthen his case for the trade secretary's post," he added.

The FCC contends that since accounting rates are high, there is room for "re-balancing" international tariffs. For instance, the accounting rate between India and the US is $1.60 (about Rs 55), which is shared equally between VSNL and US operators.

Besides, the high accounting rates do not fit in with the liberalisation sweeping the telecom sector the world over, experts feel. "It encourages call-back and other informal traffic, which result in loss of revenues to carriers," FCC's Tanner said.

Made possible by rapid advances in technology, call-back traffic -- illegal in India -- originates from countries which have lower international call tariffs compared with others.

For instance, telecom companies like Kallback take advantage of high international call tariffs in India and connect Indian callers to US or European counterparts at one-third Indian rates.