C&W complains about interconnect ruling

Cable & Wireless PLC yesterday criticised Tuesday's court decision upholding the Federal Communications Commission's policy to limit the fees charged by foreign telephone companies for completing long-distance calls originating from the US.

In the lawsuit, C&W had challenged the FCC's authority to impose settlement fees on international carriers. on Tuesday, the US Court of Appeals for the DC Circuit decided to allow the FCC's Benchmark Order, first issued in August 1997, to be enforced. The order, aimed at driving down prices for international calls, mandated caps on the amount foreign telcos could charge US telcos to terminate calls on their networks.

C&W argues that the settlement rates should be negotiated between carriers, not arbitrarily decided by the US government. In addition, with settlement rates declining worldwide, C&W called the FCC's action "inappropriate."

The FCC plan was met with widespread criticism by overseas governments and carriers, since such caps could significantly reduce revenue gained when calls originating in the US are terminated on their networks. Even when non-US telcos are charging settlement rates that fall within the FCC's set benchmark limits -- as is often the case in Europe -- international telcos resent the US government enforcing a price policy on them.

Aside from C&W, other telcos worldwide have filed cases against the FCC as well, including Japan's Kokusai Denshin Denwa (KDD) and Australia's Telstra.

But despite a legal backlash, the FCC-imposed rates for the largest and most affluent countries became effective on January 1. In other countries, the lower rates will be phased in over three years, depending upon the size and affluence of the country.

The FCC believes that the high price of settlement rates in some countries is stifling the growth of the telecommunications industry and resulting in high prices for consumers. The Federal agency determined that some settlement rates were up to 70 per cent higher than cost, especially in developing countries where the revenues are being used to build network infrastructure.

US carriers have supported the FCC decision, since it will reduce cash payments they make to international carriers.

C&W complained that the Order prejudged the outcome of a process sponsored by the International Telecommunications Union (ITU) to develop a "measured and equitable" transition to cost-based settlement rates. C&W said that it has been working along with the vast majority of national operators to create such an ITU-sponsored plan.

C&W will continue to engage with other interested parties to achieve a more equitable result and remains committed to a multilateral resolution of this issue, officials said.

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