- The Washington Times - Tuesday, June 1, 2004

The United States and Mexico yesterday settled a dispute over international long-distance fees charged to U.S. telecommunications firms.

The settlement would help roll back fees that companies such as AT&T; and MCI estimate cost customers about $500 million a year, making calls from the United States to Mexico cheaper.

The World Trade Organization (WTO) in April ruled that Mexico was not allowing U.S. firms to compete fairly when bargaining for access to Mexico’s domestic telecommunications network, a restriction that drove up costs for cross-border calls.

The settlement, which follows WTO recommendations, requires Mexico to loosen rules and regulations that helped prop up international connection charges.

“We are very pleased that Mexico is rapidly moving to introduce a competitive international marketplace by agreeing to the speedy removal of its restrictions on competitive rate negotiations. This action will benefit consumers in both countries,” said Len Cali, AT&T; vice president of law and director of federal government affairs.

Companies such as AT&T; are generally required to connect into the home country’s — in this case, Mexico’s — telecommunications network when handling international calls.

The fee would be paid by the U.S. carrier to a Mexican carrier for a call from the United States to Mexico.

U.S.-based firms had been forced to negotiate that fee with Telefonos de Mexico (Telmex), the dominant local phone system.

With the settlement, Telmex loses its monopoly position as sole bargainer for interconnection rates, and smaller competitors will be able to set their own interconnection rates.

“Both countries believe that the elimination of these provisions will allow the competitive commercial negotiations of international settlement rates,” the United States and Mexico said in a joint statement.

The WTO ruling and settlement deal with wholesale rates, not consumer rates. But lower wholesale charges would allow greater competition and falling charges for calls in and out of Mexico.

U.S. carriers in 2002 estimated that the high international rate costs U.S. customers about $500 million in excess payments a year.

More than 6 billion minutes in calls cross the U.S.-Mexico border every year, representing services worth more than $2 billion, the U.S. Trade Representative’s office said.

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