FCC LIFTS REGS ON INTERCARRIER AGREEMENT

06/01/1999

The Federal Communications Commission (FCC) approved reforms of international settlements policy by deregulating intercarrier arrangements between U.S. carriers and foreign nondominant carriers on competitive routes. The FCC policy was originally meant to combat “whipsawing,” the practice whereby foreign phone companies extract higher rates for completing international calls from the United States. But a World Trade Organization agreement led 72 countries to open their markets to competition for telecom services, and international call rates have greatly decreased. The FCC order will: Eliminate the international settlements policy and contract filing requirements for arrangements with foreign carriers that lack market power; Eliminate the foreign international settlements policy for arrangements with all carriers on routes where rates to terminate U.S. calls are at least 25 percent lower than the relevant settlement rate benchmark previously adopted by the FCC; Permit U.S. carriers to file arrangements on a confidential basis with foreign carriers with market power on routes where the international settlements policy is removed; Simplify accounting rate filing requirements; Eliminate the flexibility policy in recognition that the reforms to the international settlements policy render the flexibility policy superfluous. The commission believes the new policy will give greater opportunities to smaller carriers and will allow the market, rather than government regulation, to govern settlement agreements between carriers in competitive markets.

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