U.S. Trade Representative’s (USTR) office urged FCC to approve pr...

to reform its long distance rules.” USTR submitted comments June 17 on requests for waivers by WorldCom and AT&T on Commission’s international settlements policy to change accounting rate for services with Telmex. Telmex, WorldCom and AT&T reached agreements to change settlement rates for 2001 through 2003. Agreements introduce 3 new rates for 2002 and 2003 based on final destination of call, with weighted average of 8-9 cents per min. “These rates appear a positive step,” USTR said. “However, the new average rate still appears to be at least double the actual cost of terminating these calls in Mexico and differs only marginally from the single 10 cent rate proposed for 2003 in the WorldCom-Telmex agreement that was filed with the Commission last year.” In March, WorldCom petitioned FCC for waiver to lower accounting rate for international traffic it exchanged with Telmex. That would lower average 19-cent rate now in effect with Telmex. It would provide rate of 15 cents in each direction for 2001 and 13.5 cents in each direction for 2002. For 2003, different rates would apply based on whether traffic was northbound or southbound and, in some cases, in which cities it terminated. WorldCom argued that deal would be in public interest because it would move settlement rates “much closer” to cost-based levels on U.S.-Mexico route and would shift it to levels “far below” 19 cents benchmark rate set by FCC. AT&T petitioned FCC in April to implement similar rates. “While AT&T would like to obtain greater reductions, Mexico’s restrictions on competition continue to prevent the negotiation of competitive, cost-based rates on the U.S.-Mexico route,” AT&T said. USTR told FCC it was “particularly disappointing” that pacts don’t consider even deeper reductions for 2003. “Thus, while the rate reductions proposed in the petitions for waiver are a step forward, the proposed rates are still far above cost -- reflecting the power Mexico’s international long distance rules give to Telmex to negotiate these rates,” USTR said. It said Mexico needed to reform those rules to let competing suppliers negotiate rates and to promote “the public interest of achieving cost-based settlement rates.” Telmex in March filing asked Mexican regulator Cofetel to repeal critical provisions of what U.S. had termed anticompetitive international long distance rules. USTR said: “With this filing, the principal Mexican and U.S. telecom providers are now actively seeking to open the cross- border basic telecommunications market to competition.” But it said Mexican govt. hadn’t yet moved to reform rules and create competitive international telecom market. By approving only proposed rates for 2002, FCC could wait until it was easier to evaluate whether additional reductions for 2003 and beyond were likely, USTR said.