WASHINGTON-U.S. telecom firms again are complaining to Bush administration trade officials about fees charged by foreign mobile-phone carriers to connect calls, a controversy cellular operators do not want to see enlarged at the Federal Communications Commission at a time when wireless service providers are using illegal rate regulation as an argument to ward off state lawsuits.
Nonetheless, the majority owner of No. 1 Cingular Wireless L.L.C. finds itself veering from the industry position staked out in recent years by cell-phone trade group CTIA. AT&T Inc., which changed its name from SBC Communications Inc. after acquiring the long-distance giant, is majority owner of Cingular.
“The very high rates U.S. carriers pay to terminate calls on foreign mobile-phone networks are a huge and fast-growing problem and are reversing progress toward cost-based international termination rates in the markets of many U.S. trading partners,” AT&T told the Office of the U.S. Trade Representative. “These high termination fees inflate the settlement payments of AT&T and other U.S. carriers and cause higher prices to U.S. consumers. In the last four years, the number of countries in which AT&T is required to pay mobile surcharges (i.e., in addition to the fixed-termination rate) to its foreign correspondents has increased from approximately 30 countries in 2001 to approximately 150 countries today.”
What does AT&T consider excessive for foreign mobile-termination fees? AT&T said it must pay 20 cents per minute to connect calls to foreign mobile-phone subscribers “in otherwise competitive countries” compared to two-hundredths of a cent per minute it is charged to have U.S. calls terminated on wireline networks abroad. Because most foreign countries do not require cellular users to pay for calls they receive, U.S. consumers making international calls terminated on foreign wireless systems must absorb mobile-termination fees.
The calling-party-pays structure used by many countries has caused various national regulators in other countries to conclude their mobile-phone operators have market power over termination on their wireless systems, AT&T noted.
“Contrary to the claims that are frequently made by foreign mobile operators, retail competition in CPP regimes fails to mitigate the market power that CPP mobile operators enjoy over call termination on their networks,” AT&T told USTR.
According to AT&T, the biggest mobile termination fee culprits are Austria, Belgium, Bulgaria, Estonia, Germany, Greece, Grenada, Iceland, Jamaica, Italy, Malta, Morocco, the Netherlands, New Zealand, Peru, Poland, Portugal, Romania, Spain and Switzerland.
“Although national regulators have taken some action to address high mobile rates, much more needs to be done by all these countries to comply with their WTO [World Trade Organization] obligations to ensure that interconnection rates for international calls terminating on mobile networks are both cost-oriented and reasonable,” said AT&T.
AT&T, pointing to FCC data, said U.S. mobile-phone carriers charge five-thousandths of a cent per minute to terminate calls on their networks.
NII Holdings Inc., which serves 2.5 million wireless customers in several Latin American countries, said “Peru’s current regulatory environment does not fully comply with Peru’s WTO commitments of ensuring cost-oriented mobile terminate rates.” NII pointed to USTR’s 2005 report that found Peru’s mobile-termination rates among the highest in the world.
Comptel, a U.S. group representing competitive telecom service providers, reminded USTR that problems with foreign mobile-termination fees raised by the association in recent years remain unresolved.
“Some downward movement has occurred in mobile-termination rates, and in some places, such as Japan, mobile-termination rates are no longer significantly out of line with costs,” said Comptel. “In Europe, Latin America and the Pacific Rim, excessive mobile-termination rates remain a significant problem.”
Meantime, the FCC has yet to decide whether to flex its regulatory muscle on mobile-termination fees. The U.S. cellular industry has urged the FCC against doing so, essentially advising U.S. regulators to stay out of it and allow foreign officials to address the issue.
