FCC Okays Rule That May Cut Overseas Call Rates

WASHINGTON - Regulators have voted to make it easier for U.S. and foreign telephone companies to negotiate lower rates for overseas calls, the first step in a U.S. bid to drive down international calling costs.

The Federal Communications Commission agreed to waive its "proportionate return" rules that limit the ability of U.S. and foreign carriers to negotiate lower rates for overseas calls.

But to win a waiver, a foreign carrier's home market must be open to competition.

"It will allow competitive pressures, rather than archaic rules, to govern the (telecommunications) market," said Don Gips, head of the FCC's International Bureau.

The existing rules require overseas companies to turn over their long-distance calls to U.S. carriers in the same proportion U.S. carriers send calls to a foreign carrier's home market.

Among those countries likely to benefit from the rule are Britain, Canada, Sweden and Chile.

The plan comes as British Telecommunications has proposed to merge with MCI Communications. Such affiliated companies are likely to see special safeguards imposed on their phone traffic, although the new order would still make it easier for the two to negotiate cheaper calling packages.

Next month the FCC is expected to propose rules to cut the charges U.S. carriers pay foreign phone monopolies to complete overseas calls made from the United States.

Officials say the foreign charges, or "accounting rates," run five to 10 times actual costs, reflecting the power of state-run monopolies unexposed to home competition.

The FCC proposal due next month would set "benchmark" rates for what U.S. carriers could pay foreign carriers to complete calls. These rates, according to FCC officials, would better reflect actual costs.

The agency must still work out the details of how long a country would have to lower its rates and what steps could be taken if it refused to do so.

Copyright, Reuters Ltd. All rights reserved