International toll revenue division: Tackling the inequities and inefficiencies

Abstract

International telecommunication carriers negotiate operating agreements for routing traffic and dividing toll revenues. They also establish an accounting rate to compensate each other for accepting calls and delivering them to the intended recipient. Accounting rates have failed to drop commensurate with lower unit costs incurred by service providers, and have motivated customers and carriers alike to devise ways to route exempt traffic. Artificially high accounting rates exacerbate the impact of significantly higher outbound US international traffic volumes. In 1991 the accounting rate settlement process resulted in the payment of over $3.4 billion by US carriers to their foreign counterparts in both developed and developing nations. This article outlines the accounting rate settlement process and how the Federal Communications Commission has reacted to a growing deficit. It identifies various user self-help strategies, and suggests alternatives to the FCC's approach for achieving success in lowering accounting rates.