12:51 PM Jun 2, 1997
INTERNATIONAL PAYMENTS SYSTEM UNDER PRESSURE
Geneva, 30 May (TWN) -- A Study Group under the International Telecommunications Union, chaired by Japan's Matsudaira, which has been looking into various issues relating to the international telecommunications accounting rate system appears to have ended its current meeting here without reaching any definitive conclusions on various alternatives before it. The Study Group, under the ITU, is to meet again later this year. Before the study group is a report from an informal expert group named by the ITU Secretary-General, Finland's Dr. Pekka Tarjanne. The present international accounting system is based on bilateral agreements between telecommunications administrations, and most of them are based on a simple 50-50 sharing of the accounting rates. However, in recent times, it has come under pressure, particularly from the United States whose administration complains that the system is resulting in a large outflow from the United States to foreign telecommunications operators, either state-owned or privately-owned monopolies. The US is pressing for a revision on a cost-related basis, and has published guidelines that its own operators should bear in mind while negotiating agreements with foreign telecommunications operators. While the US blames its outflows, estimated in the range of 10-20 billion dollars annually, on what it presents as a monopolistic behaviour of the operators at the other end who are charging fees, unrelated to costs, for completing the calls to subscribers on their territories. However, other studies suggest that a reason for the larger number of calls originating in the US for destinations abroad, compared to calls originating abroad for US destinations, has been firstly, the large number of foreign immigrants in the US who call back their homes to be in touch with their families, direct and extended, as also the growth of the US Call-back services. Under the latter, 'A' in country X calling 'B' in country Y, calls the call-back service which then establishes a connection between A in X and B in Y. In international terms it is a call to Y originating in the USA and a call to X -- thus technically involving a payment from the US telecom operator (whether AT & T or Sprint etc) to operators at the other two centres. But it shows up as revenues on the Call-Back service books (and US BOP as service receipts), and thus merely looking at the payments between the telecom operators does not provide a full picture. And if more persons, relatively better off, from the US call their relations back home, and there is an outpayment on this account, it is a reflection of the incomes and earnings of peoples in different countries, and cannot be blamed on the cost-related accounting. All the figures cited about the outpayments on such calls from the US to countries of central America or to South Asia, in particular India, reflect the fact that some highly skilled and professional emigration has taken place from these countries to the United States. This view was in fact conceded, at an ITU organized briefing here last week, by a representative of the US Federal Communications Commission, who said that the FCC was not looking for a balancing of the books, but rather to promoting a cost-related charge for the international settlement. Earlier, an ITU official, Tim Kelly, in presenting the views of the informal group of experts, projected a picture of heavy bilateral imbalance between the United States and some of the countries involved in the international telephone calls, and the pressure to conform to cost-related charges in a liberalising economy, and claimed that the outcome of liberalisation would benefit consumers around the world. This view does not appear to have been borne out so far in terms of overall consumer benefits: whether in the US or UK while costs of long-distance calls have come down, the costs of basic services have either not come down, or slated to go up after the initial regulatory period of staggering the price rises work through. Kelly had no answer either to a questioner who pointed that his effort to establish not only a sectoral trade/transaction balance on international telephone calls, but a balance within the sector between countries, was a case of putting the entire theory of free trade on its head. A free trade theory at a multilateral level was predicated on overall balance of trade in goods and services across sectors and across countries. Kelly as well as several of the telecommunications officials present conceded that there was no effective way of measuring the 'costs' involved in establishing and completing international telephone calls, and thus the talk of a cost-related formula could be misleading. While Kelly's presentation, and that of Matsudaira (who repeated a number of times his view that the telephone service, as a product, is no different from a shampoo, and hence there was no need for an ITU-set policy and things could be left to the market) suggested that the informal experts view was the one before the study group, experts from Argentina and from St. Vincent and the Grenadines stressed that it was only one of the proposals, but hoped discussions within the study group would lead to a consensus decision. The representative from India would not comment on any of the proposals. The informal experts group advising the ITU Director-General (it was not at all clear from the presentations whether the expert group was set up by a mandate of the ITU's intergovernmental body or an initiative of the D.G.) sets out some guiding principles for establishing the international settlement rates. It argues that the ITU's constitution requires the members to work together to set the rates at levels as low as possible consistent with efficient service. The experts suggest among others, that * the ITU should support liberalization and competition in telecommunications at national and international levels such as through the WTO agreement, * that the financial arrangements on trade in international services between liberalized parts of the world could be left to market participants, national regulators and competition law in those countries, while arrangements involving non-liberalizing countries at one or both ends of a relationship will require an ITU initiative, * that the ITU would have an important role to play in facilitating decision-making and mobilizing political support through providing accurate and timely data, and by developing costing methodologies and pricing principles, in implementing the WTO agreements and in dealing with universal service issues, and * to articulate general range of international settlement rates towards which current rates are likely to evolve given competitive pressures. The informal expert group asked the ITU head to position himself as the key advocate for reform of the international telecommunications sector, and the champion of more efficient, low cost telecom service for consumers. While both Kelly and the US FCC representative both conceded difficulties in arriving at costs, the expert group has recommended that on basis of ITU estimates, in all but a few cases, settlement rates should be priced at below 25 cents per minute. The expert group however adds that for some developing countries there will be need to provide for a transition period before cost-based financial arrangements can be achieved.