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Trade in Telecommunications:
A Glossary of Technical Terms

Accounting rate

Defined in the International Telecommunication Regulations as "The rate agreed between administrations (or recognized private operating agencies) in a given relation that is used for the establishment of international accounts". Basically, the internal price agreed between public telecommunication operators (PTOs) for carrying international traffic between two points. This is used to determine the price charged to the originating PTO by the terminating PTO, usually set at one half the accounting rate (also called the settlement rate)


This service, initially offered in competition to established public telecommunication operators, is now increasingly part of a PTO services. Call-back can potentially offer substantial savings to consumers. Most US-based call-back services rely on uncompleted call signalling systems. This type of call-back service solicits pre-subscribed customers in a foreign country to dial a US telephone number and, after a certain number of rings, to hang up. The US call-back company then initiates a call to the foreign telephone number and when the foreign caller answers, he or she receives a US dial tone from the switch at the reseller's US location. The customer can then place a call in the United States or to a foreign destination. The customer does not pay the US carrier or the foreign carrier for the initial uncompleted call. In contrast, other call-back services provide foreign customers a US dial tone by using the foreign carrier's outbound service to establish an initial connection with a reseller's call conferencing unit. That unit then redials the calling party's number, thus requiring the foreign caller to pay for the initial call. Alternatively, inbound international freephone numbers (‘800’) can be used to establish a connection to the resellers US facility. In such cases the foreign caller only pays the call-back provider for the second US call and the reseller recoups the cost of the inbound international ‘800’ number from its charges for this second call.

Call origination

The service of originating a telephone, fax or other telecommunication call from the calling party.

Call termination

The service of terminating a telephone, fax or other telecommunication call to the called party.

Call termination charge

A charge applied by a carrier for terminating a call which might be either:

a single charge applied to all incoming traffic under a traditional half-circuit regime, applied in a cost-oriented, non-discriminatory and transparent manner; or

an unbundled termination charge broken down into the basic cost elements of international transmission, international gateway and national extension, and possibly an element of subsidy.


A company or organization which provides public telecommunications services. This terms is used synonymously with public telecommunication operator.

Collection rate

The price, or tariff, charged by the PTO to the customer (end-user) making a call.

Full-circuit regime

A term used to describe a system in which a carrier, or an alliance of carriers, pays the full cost of an international circuit up to the point of interconnection to the network of a foreign operator, on the territory (physically or virtually) of that operator.

Half-circuit regime

A term used to describe the traditional system in which two or more carriers jointly share the cost of an international circuit between origination and termination.

International simple resale (ISR)

Now permitted in a growing number of countries and on particular bilateral connections. The principle behind ISR is that a PTO or private company can gather traffic to a particular destination from a variety of different customers and then route it via an international leased line. The company offering the service is thus able to charge its clients per minute while paying only a fixed-rate fee to the operator from whom it leases the line. The service requires the ability to lease lines from the PTO which can be connected to the public switched network at one or both ends.

Local loop

The part of the network comprising the connection between the PTO’s exchange and the subscriber’s home.

Least developed country (LDC)

A term which refers to the 48 countries and territories which are recognized by the United Nations General Assembly as being among the least developed countries and which are accorded special priority for the purpose of granting assistance.

Modes of delivery

The General Agreement on Trade in Services (GATS) recognizes four modes of delivery of traded services:

Cross-border supply: the supply of a service, such as an international telephone call, from the territory of one WTO Member into that of any other;

Consumption abroad: the supply of a service in the territory of one WTO Member to a service consumer, for instance a tourist, of any other ;

Commercial presence: the supply of a service by a service supplier of one WTO Member, through commercial presence in the territory of any other, for instance by establishing a local switch;

Presence of natural persons: the supply of a service by a service supplier of one WTO Member, through presence of natural persons, for instance employees of that service supplier, in the territory of any other.


The public telecommunication operator.

Settlement payment

The net payment made in settlement of international telecommunication accounts between two carriers where traffic in one direction exceeds that flowing in the other direction.

Settlement rate

The share of the accounting rate (normally half) paid by the PTO in one country to another PTO in another country to cover the costs of carrying the originating PTO’s traffic on its network. For example, if the accounting rate between Country A and Country B is $1, the settlement rate would normally be 50 cents. That means that when Country A terminates a call for Country B, Country B pays Country A 50 cents, and vice versa.

A net settlement payment only needs to be made when the number of calls from one of the two countries exceeds the number of calls from the other.

Volume and collection charges different
between two countries

Volume is the same but collection charges differ between two countries

Volume is different but collection charges are the same
between two countries


Special drawing right, an international currency unit used for trading purposes, determined by the International Monetary Fund and based on the average of a basket of currencies. At the time of writing, the approximate value of an SDR was US$1.35 (for full listing, see http://www.imf.org/external/np/tre/sdr/drates/0701.htm).

Trade in telecommunications

A term defined in ITU's 1997 "World Telecommunication Development Report: Trade in Telecommunications" as "Sales of telecommunication equipment or services that cross national borders". Thus, while the value of total equipment and services sold in 1998 will probably exceed US$1trillion, the percentage which will cross national borders is probably only about 15 per cent at most. The rest stays within domestic markets.

In the context of trade in telecommunication services, a country which terminates a call may be considered as "exporting" a call termination service. Similarly, a country which originates a call may be considered as "importing" a call termination service. Trade in telecommunications services also covers "transactions" that cross national borders which would cover foreign investment, such as the acquisition of shares in telephone companies by foreign investors, or joint ventures between local and foreign partners to establish new telecommunication service companies.


A type of call re-origination service which exploits differences in the collection charge and/or the settlement rate between countries in order to route via the least cost path. In particular, this form of alternative calling exploits asymmetric accounting rates between countries.