International Accounting Rates Research Articles

Wither Convergence: Legal, Regulatory and Trade Opportunism in Telecommunications

Technological and marketplace convergence in Information, Communications and Entertainment (ICE) has contributed to the merger of conduit and content. Yet laws, regulations and trade policies assume a separation between the delivery of content and the creation of the content. For example, the traditional common carrier model assumed that the transporter of traffic had nothing to do with the generation of the content carried. In the trade policy arena, limitations of the market access for content, such as movies, might apply even as such trade policies would prohibit such market access restrictions for telecommunications services. This paper will examine the consequences of convergence with particular attention to the impact on semantic, telecommunications and trade classifications resulting when content and conduit blend together as occurs with Internet services. For example, Internet-mediated streaming of visual and audio content has characteristics akin to broadcasting, but also qualifies for a largely unregulated status in view of the fact that the service involves packet switched, value-added data communications. Other innovations, like Internet telephony, possibly fit into more than one classification. Other technological applications erode preexisting rules and policies like the international accounting rate division of long distance toll revenues. The marketplace attractiveness of some new services results, in part, from trade and regulatory classifications that can accord arbitrage opportunities by blocking market access, or by avoiding costly regulatory burdens. The paper concludes with suggestions on how legislators, regulators and trade policy makers might curb regulatory opportunism by abandoning the strategy of classifying carriers and services based on static technological or market share assumptions.

Global Universal Service and International Settlement Reform

The objective of this paper is to analyze the international settlement system and its implications for the development of a global telecommunications network in an industry scenario that is moving beyond international accounting rates. The international dimension of funding developing countries' universal service policies is then discussed. It is pointed out that increasing competition in international markets, diverting traffic flows and retail price collection from developing to rich countries could lower the total revenue that the former obtain from international services, even when the received net settlement payments increase. The expected international settlement reforms asked for by the ITU and the US federal regulator could also intensify this phenomenon. Therefore, our conclusion is that such reforms may require adequate safe-guards to deliver financial support to developing world network infrastructure, also considering the positive externalities accruing to rich countries. <bold>Zusammenfassung</bold> <bold>Globaler Universaldienst und Reform der internationalen Ausgleichszahlungen in der Telekommunikation</bold> Der vorliegende Aufsatz analysiert das internationale System der Ausgleichszahlungen und seine Auswirkungen auf die Entwicklung eines globalen Telekommunikationsnetzwerkes. Dies geschieht anhand eines Szenarios, das über internationale Verrechnungssätze hinausgeht. Die internationale Dimension der Finanzierung von Universaldienststrategien in Entwicklungsländern wird anschließend diskutiert. Es wird darauf hingewiesen, dass der sich verschärfende Wettbewerb auf internationalen Märkten, der Kommunikationsströme und Einnahmen von den sich entwickelnden auf die reichen Länder verlagert, zur Verringerung der Gesamteinnhamen der ärmeren Länder führen kann, auch wenn die erhaltenen Netto-Ausgleichszahlungen steigen. Die erwartete Reform des Systems der Ausgleichszahlungen, das die ITU und die US-amerikanische Regulierungsbehörde anstreben, könnten dieses Phänomen weiter verstärken. Die Schlussfolgerung der Autoren lautet daher, dass diese Reformen adäquatebegelitende Maßnahmen erfordern, die den Aufbau einer internationalen Netzinfrastruktur finanziell unterstützen. Hier sollten auch die positiven Externalitäten, die den reichen Ländern zugute kommen, berücksichtigt werden.

Moving beyond international accounting rates

Moving beyond international accounting rates

International Accounting Rate Reform in Telecommunications

Twenty European countries came together in 1865 to form an organisation, the predecessor to the International Telecommunications Union and to arrive at mechanisms and agree upon a methodology of distributing the revenues from the international telegraph service. The current accounting rate system is a modified version of the then developed methodology for the International telegraph. This international settlement regime based on accounting rates has long been under attack by economists, policy-makers in developed countries and international trade organisations. The ITU, the OECD, the FCC and other regulatory bodies are pursuing various initiatives to reform or replace the existing accounting rate system. These regulatory initiatives are aimed at reducing the current pricing distortions embedded in the accounting rate system. In the wake of the WTO agreement, a system of traffic compensation that is not ‘cost oriented’ is not only unsustainable, it is also in violation of the regulatory principles set out in the WTO reference paper.

Falling through the cracks: International accounting rate reform at the ITU and WTO

Heightened attention to international accounting rates at the ITU and the WTO has led some observers to conclude that carriers soon will impose cost-based termination charges. This article concludes that while accounting rates have declined on some routes, many incumbent carriers can and will delay or thwart progress. The article examines the FCC’s unilateral regulatory initiative as evidence of a growing schism between governments keen on immediate progress and those that fear a ‘free fall’ in accounting rates and quick end to settlement surpluses. The article also considers technological innovations like call-back and Internet telephony with an eye toward assesssing whether and how widespread accounting rate reductions will occur.

Internet telephony and the international accounting rate system

This paper attempts to provide an economic framework for assessing why and how Internet telephony may affect the international accounting rate system in particular, and communication over circuit switched networks in general. It reviews the regulatory treatment of Internet telephony, and compares the costs and prices of making international calls over the Internet and the public switched telephone network (PSTN). It argues that Internet telephony is unlikely to prove central to the downfall of the international system; other technologies, such as resale, will play a larger role. The paper also suggests a general framework in which to analyse competition between networks (such as the Internet and the PSTN). This framework indicates that differences in the preferences of end users for congestion will drive networks to specialise.

International accounting rates

International accounting rates

Why is the international accounting rate system in terminal decline, and what might be the consequences?

This paper looks at the incentives and opportunities existing in the provision of international telephony and argues that the present accounting rate system is unsustainable. The paper also provides a framework within which current or proposed regulations governing trade in international telecommunications services can be analysed. The enormous profits available in this sector, together with developments in digital and fibre optic technology, are resulting in a breakdown of the Implicit cartel arrangements which have largely prevented operators from on-selling services (a type of arbitrage). However, liberalization by only part of the world will give rise to a potentially serious new problem—monopoly opportunism by operators in non-liberalized countries. The paper analyses this and other potential problems that can be expected to arise in the future.

International accounting rates. A perspective

Abstract Since 1987 the USA has waged a campaign to lower the absolute level of international accounting rates to lessen its roughly $4 billion international telecommunications settlement deficit. However, the commercial potency of the accounting rate regime lies in the cost-based division of the accounting rate, not the overall level which has been the focus of the US policy effort. True cost-based accounting rates may not necessarily improve the US position, especially with the developing world. The developing world nevertheless runs the risk of being unfairly caught in the cost-based crossfire. A decade after The Missing Link the international accounting rate regime still provides a bilateral mechanism to deliver infrastructure support to the developing world; such support accords with the aspirations of both the ITU and G7 to achieve universal access to the benefits of the Information Society.

International telephone service imbalances: Accounting rates and regulatory policy

The USA suffers a large and growing balance of payments deficit in the telecommunications sector, a phenomenon often blamed on the international accounting rate system. The experience of other countries suggests that this explanation is too simple, however. This article concludes from a new econometric analysis that the underlying problem is that regulatory and licensing policies globally have inhibited competition in international markets and in so doing have buttressed high and static accounting rates. The appropriate solution will be full encouragement of competitive and market pressures, supplemented by well considered political and regulatory interventions.

International accounting rates: A different approach?

The level of intercontinental accounting rates, especially for international telephone traffic, has become the focus of increasing interest because of their impact on settlements between international carriers and also because of the suggestion that they become the vehicle for aid to developing countries. This article examines past development of the accounting rate method and investigates why they cause difficulties for international carriers in the present environment. It suggests an alternative approach for achieving realistic accounting rate levels.