The US Federal Communications Commission (FCC) on November 15 refused a request made on behalf of the local phone company for a waiver of the benchmark settlement rates which will come into effect from January 1 and GT&T will have to face a US62 cents per minute cut on all calls from the US.
Sources say that the impact of this shortfall from next year on GT&T's revenues would have to be assessed and tariffs for local service may come under pressure to offset the loss.
On July 6th, 2001, Atlantic Tele-Network Inc (ATN), the parent company of the Guyana Telephone and Telegraph Company Limited (GT&T), filed a petition for a waiver of the imposition of US23 cents as the settlement rate for calls from the US to Guyana.
"In this order, we deny ATN's waiver request. We find that ATN has not persuasively demonstrated that a waiver of the transition deadline would be in the public interest," the FCC said in its order adopted on November 15th and released the following day.
The FCC said that in its Benchmarks Order of 1997 it had made an allowance for the applicable settlement rate to be reconsidered if the rates would not have permitted the carrier to recover incremental costs of providing international termination service. It also considered the impact of benchmark rates on developing countries and said that it would contemplate granting additional transition time for countries where the annual percentage reductions in the settlement rate would lead to a loss of greater than 20% of a country's annual telecoms revenue.
"ATN has not demonstrated in its petition that it cannot recover incremental costs at the benchmark rate of 23 cents or that it meets the criteria for grant of additional transition time," the FCC said.
The FCC noted that in 1997, it adopted the Benchmarks Order governing US carriers in their settlement arrangements with foreign carriers and these orders carried a schedule of effective dates. The FCC said it adopted the new settlement rates because in most cases, the rates that US carriers pay their foreign carriers are substantially above the cost foreign carriers incur to terminate US international traffic.
"These high settlement rates discourage effective competition and cost-based pricing in foreign markets, create competitive distortions in the US international market, and harm US consumers who must directly pay these increased costs to US carriers through artificially high international calling prices," the FCC said in its ruling.
ATN had requested a five-year extension of the transition deadline of January 1 2002 for the US-Guyana route or until GT&T achieved a teledensity of 23 (23 households with phones per 100 households) - whichever occurred first. The current teledensity is said to be 12. ATN argued that a waiver was necessary because a loss in revenue from the lowered rates will harm infrastructure development and the provision of universal service in Guyana.
"ATN asserts that Guyana has `no other choice' than to rely upon settlement payments for funding investment in its telecommunications network and further claims that settlement revenues have been reinvested in infrastructure development of the telecommunications network of Guyana during the past decade," the FCC noted.
ATN further argued to the commission that a waiver was in the public interest as it will create job opportunities for the US industry through increased sales of information technology equipment and internet related services and hence create opportunities for US consumers who call Guyana to communicate with a higher percentage of people abroad.
The FCC found that such a waiver to ATN would have undermined its policy as a waiver would affect the downward trend in settlement rates paid by US carriers and the calling rates paid by US consumers. The FCC noted that the implementation of the reduced accounting rates have allowed US consumers to pay less for international calls and this could lead to increase demand for international calls and thereby raise revenues for foreign carriers.
"In addition, GT&T has had ample time to make reasonable adjustments in the settlement rate it negotiates with international US international carriers. Because the benchmark rate for low income countries such as [Guyana] does not take effect until January 1, 2002, GT&T has had more than four years to make the transition from its consistently high settlement rate with US carriers to the benchmark rate of 23 cents," the FCC stated.
It pointed out that the last reduction GT&T made in the settlement rate with US carriers for the US-Guyana route was in 1987 whilst many low-income category carriers had already made the transition to the benchmark rate.
"For the foregoing reasons, we do not find ATN's contentions persuasive that there is good cause to waive the transition deadline for the US-Guyana route. Grant of ATN's request would not be in the public interest or consistent with Commission policies. Therefore, we reject ATN's arguments and deny the petition for waiver," the FCC ruled.
The FCC said that since the implementation of the Benchmarks Order, the average US-international accounting rate has fallen from US81 cents in 1995 to US38 cents in 2000. Further, the average price of residential direct-dial for all US-international routes combined has dropped from US74 cents per minute in 1997 to US52 cents per minute in 2000. (Gitanjali Singh)