FCC Urged To Refrain From Regulating Foreign MTRs

The FCC shouldn’t try to regulate foreign mobile termination rates (MTRs), at least for now, many U.S. and foreign telecom carriers agreed in comments. Commenters said national regulatory authorities (NRAs) in many countries have taken actions to lower MTRs. They said the NRAs were better positioned than the FCC to determine whether the rates charged in their countries were too high. Parties urged the Commission to give the relevant foreign regulators time to address the issue in their markets before taking any actions. CompTel/Ascent, AT&T, MCI and Sprint disagreed.

The comments came in response to an FCC proceeding seeking to develop a record on foreign MTRs in calling party pays (CPP) markets. As part of the ISP Reform proceeding, the agency raised the issue of “whether U.S. consumers could be paying rates for foreign mobile termination service that are unreasonably high or discriminatory.” In the order adopted in March, the FCC committed to issue the Notice of Inquiry “to develop a record on foreign mobile termination rates.”

CTIA argued U.S. international callers didn’t face discriminatory MTRs compared to domestic callers in foreign countries. It noted that in contrast to the FCC’s benchmarks proceeding, “U.S. interests are aligned with their foreign counterparts and NRAs’ actions to lower MTRs have benefited both foreign and U.S. callers.” Supported by several other wireless carriers, CTIA said FCC’s analysis of whether MTRs were “unreasonably high,” would require “a detailed undertaking of the policy and economic underpinnings of CPP and individual countries’ costs and cost modeling -- a task far better left to individual NRAs.” The Commission should instead focus on “the more objective determination” of whether foreign operators impose discriminatory mobile termination rates against U.S. consumers, CTIA said.

Cable & Wireless (C&W) expressed concern that “the FCC lacks the authority to adopt benchmarks, or otherwise to prescribe the rates, that U.S. carriers pay” to terminate U.S.-billed traffic on foreign mobile networks. It noted that in the appeal of the FCC order setting benchmark settlement rates for traffic terminating on fixed foreign networks, the U.S. Appeals Court, D.C., declined to confirm the FCC’s authority to adopt benchmarks that conflict with the regulations or rate prescriptions of a foreign regulator.

BellSouth and Verizon urged the FCC to refrain from regulating foreign MTRs and allow independent foreign regulators to address the issue. “Intervention by the Commission could undermine or weaken the authority of foreign regulators, particularly in less developed countries,” Verizon said. BellSouth said “the Commission should work with its foreign counterparts to address any issues that may arise on a case-by-case basis, rather than attempting to impose a costly, worldwide regulatory framework.”

Foreign govts. and telecom operators called on the FCC to refrain from regulatory action on the issue. Japan’s govt. urged the FCC not to address foreign termination rates “in a unilateral manner,” noting that the MTRs were “a subject to be handled by each country’s regulatory body as an internal policy.” Telecom Italia said there was “no need” for the FCC to intervene, because the existing EU regulatory framework contained “specific regulation that insure as appropriate mechanism to avoid market abuse with reference to [MTRs].” Telefonica said since the U.S. is a member of the WTO, “the FCC, rather than adopting unilateral actions with extraterritorial reach, should rely upon the WTO dispute settlement procedure to resolve any conflict in the provision of telecommunications services that involve other WTO member states.” NTT suggested the Commission, which shouldn’t assert jurisdiction over MTRs, “may wish to focus this inquiry on surcharges which U.S. international carriers impose on U.S. consumers for calls to mobile telephones in other countries.”

Supported by AT&T, MCI and Sprint, CompTel reiterated that the Commission should launch a rulemaking addressing “the anti-competitive effect of above cost and discriminatory fixed-to-mobile termination rates.” “High termination charges on mobile networks in countries with CPP regimes result in substantial competitive distortions, leading to an artificial transfer of resources from fixed networks to mobile networks,” MCI said. It urged the Commission to encourage foreign regulators to take “an appropriate regulatory action to minimize the problem.” AT&T said the FCC should launch a rulemaking to establish new benchmarks for mobile termination. It noted that the number of foreign countries where it had to pay higher MTRs rose to 153 in 2005 from 30 in 2001. Sprint recommended the FCC hold that U.S. carriers may not pay new or increased MTRs imposed retroactively or without a minimum of 30 days advance notice of their effectiveness. It said the Commission should also examine the barriers to direct connection created by foreign mobile carriers and should scrutinize the adoption of new CPP regimes by foreign govts.