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Accounting and Settlement System

heodor Irmer
Director, ITU Telecommunication Standardization Bureau(TSB)

Geneva, 16th March 1998

Ladies and Gentlemen,

Dear Colleagues,

On behalf of the ITU Standardization Sector and its Standardization Bureau, I would like to welcome all of you to this 2nd World Telecommunication Policy Forum. The considerable number of participants underlines that the topic of this Forum on "Telecommunication and Trade" is indeed very timely. I am convinced that, during the forthcoming three days, we will have many interesting discussions but even more important is to come up with practical hands-on advice which we can use for solving the problems which are ahead of us.

No surprise that, as Director of the TSB, I would like to focus on the much-discussed and much-disputed issue of international accounting and settlement system of which ITU-T Study Group 3 is the guardian. Although the accounting rate system served us rather well in the past, it is becoming dramatically clear that this system is no longer applicable in the new telecommunications environment, marked by buzzwords like liberalization, privatization, competition and globalization.

There have, of course, been several attempts to review the existing framework for international accounting. One of these early attempts was the development of Recommendation D.140 which was heralded, at its time, as a major break-through. However, the practical results were rather disappointing as the implementation of this Recommendation did not live up to its expectations.

It appears, however, that the wind is now blowing from a different direction. Although in the past discussions in SG 3 turned out to be simply a mere repetition of arguments in favour of and against cost-based tariffing, a more substantial discussion is now underway in SG 3. It appears that the principle of cost-based tariffing is now increasingly accepted, but the big question remains, namely how to manage the transition from the existing tariff régime to the new cost-based model? As in telecommunications technology, where we moved from the analogue to the digital world, the real problems are occurring during the transition time when two different technical worlds have to be brought together. This holds also true for the international accounting and settlement system: the transition period is the most critical one!

Being aware of this problem, an encouraging step was taken at the end of last year by a Study Group 3 Rapporteurs’ Group which came forward with a new attempt to solving the problem of transition. In its report this Group stipulated that, because of the different technical and economic situations in ITU Member countries, different remuneration procedures may co-exist during the transition period. For example, between liberalized countries, one might well consider the termination charge or the settlement rate procedure to be used. Other countries in which the economic and technical conditions do not yet permit the application of such cost-based procedures may, for a certain time (the duration is another hot-disputed issue still to be agreed upon), continue to operate the traditional accounting rate system. In other words, for a certain transitional period, several different accounting and settlement procedures may co-exist with the clear understanding that the establishment of a cost-based international remuneration procedure is the ultimate target.

Another encouraging step in the right direction: it appears that the proposal of SG 3, to achieve the accounting rate level of 1SDR per minute by the end of 1998 takes ground - for example just last month at the TAF Group meeting in Harare, 28 African countries accepted in general this proposal.

Compared to holding on to status quo which was the case for a long time in SG 3, these refreshing examples of a "fresh breeze" has, indeed, brought us new thoughts. Admittedly, one may have wished more progress, more rapid progress - and I personally fully share this viewpoint - but on the other hand, one has to understand that the transition from the existing to a new remuneration scheme is a highly delicate and complex matter which cannot possibly happen overnight.

We in ITU, and particularly in ITU-T, are practically confronted every day with the argument that we are bureaucratic, slow and that the development of standards takes too much time. Rather than proving that this unqualified overall judgment is flatly incorrect, let me ask the seemingly simple question "who, in this context, is the ITU"? I will give you the answer: you, dear friends and colleagues, you are the ITU and you are determining by the end of the day whether there is progress or standstill. We have the instruments and tools to work fast and efficiently but if you, the ITU membership, is not yet ready for agreements, the best tools are useless.

Take a look at Study Group 3: this Study Group now meets (in full session) every

6 months, the shortest possible meeting sequence (by the way: a one-week meeting of SG 3 costs about Sfr. 200.000). In between the full sessions, Working Parties may require additional meetings and Rapporteurs’ meetings may be held at almost any time. We have arranged meetings of all Regional Tariff Groups around the globe and my colleague,

Mr. Tanaka who is the TSB Counsellor for SG 3, has beaten several times the record of "in 30 days around the world". Never before we had before such an affluence of regional Tariff Group meetings as quite a number of them were practically "hibernating". Moreover, together with BDT, we organized seminars in various countries. All these measures have one objective in common: to inform the ITU membership of the different proposals for the reform of the accounting rate system, to discuss with them the pro’s and con’s and to provide them with the necessary knowledge to draw appropriate conclusions.

In summary, I think it is obvious that TSB provided you, the ITU membership, by arranging all these numerous meetings, with the necessary tools to enable you to come to well-based decisions. But, as stated, such decisions are entirely in your hands and you have to make up your minds to decide which decisions you want to take and at what time.

At this point I would already like to say a few words on a proposal in Option C which we will analyze in more detail during this Forum. The proposal is to create an "inter-sessional group" to accelerate the reform of the accounting rate system. Although one might question the usefulness of a new group which would act in addition to the many platforms for discussion and decision I outlined above, we should nevertheless try this proposal.

As with an "inter-sessional" group we would have some administrative problems, I would like to suggest to install such a new group as a "Focus Group". Such "Focus Groups" can be set up since WTSC-96 (Resolution 23) in the case that "…. additional working methods may be needed for certain topics which are identified by the membership to be of high market-driven priority and require short-term resolution, need to be handled on a project team basis and need to involve expertise and participation from outside of the ITU-T membership."

Bearing this broad range of activities in mind, such a "Focus Group" (to be set up by Study Group 3) would fit perfectly well into the framework of ITU-T and would also meet the other requirements as mentioned in Opinion C.

Dear friends and colleagues,

the next three days will not be short of discussions and disputes. But remember: whatever we will discuss and on whatever issues we will be disputing, let us not forget one of the basic objectives of this Forum, namely to create a common understanding on the burning issues of the accounting rate reform, and thus supporting the move forward to long-awaited and urgently needed decisions on how to transit from the ailing to the new and more healthy accounting and settlement system. Let us face the challenge and master it !