WTAC 11/6 Rev.

Suggestion from the Working Group chaired by T. Hagstrom

WTAC’s Recommendation on International Telecommunication Settlements

The present system for international telecommunication settlements is based on principles which are close to 50 years old and emanates from a monopoly world in telecommunications. Today the market situation is radically different. There is a rapid development towards competition and open markets in an increasing number of countries. Within the framework of WTO, 68 nations with 90% of the global telecommunication market have agreed to deregulate the telecommunication market, starting 1 January 1998.

This development means that today the traditional system for international settlements is unsustainable and therefore is increasingly circumvented. The system is also harmful to the development of IT because it de facto imposes an arbitrary tax on IT due to tariffs that are too high.

In the light of these facts, WTAC suggests that the following actions are taken by the ITU:

1. ITU declares that the present traditional system for international telecommunication settlements is unsustainable. It cannot cope with the market development and should not be used as a guiding principle after 1999.
   
   
2. Based on abundant evidence, ITU acknowledges that operators in countries with open markets should find appropriate systems for international settlements between themselves. It is natural that there will emerge a number of different systems. In an open market, the setting of prices is a result of market forces leading to cost-orientated prices instead of being the result of an administrative process.
   
   
3. ITU issues recommended basic rules of the game in an open global telecommunication market. All open markets need such rules. They should be issued by the ITU before the end of 1999, taking into account the emerging policy and regulatory frameworks.
   
   
4. ITU issues recommended guidelines for fair competition as a support when moving from monopoly to open markets and competition, taking into account emerging policy and regulatory frameworks.
   
   
5. ITU offers its support as adviser to countries (who so wish) during the transition from monopoly to open markets. ITU should, in particular, pay attention to the needs of those developing countries who could be affected negatively during the transition period. The ITU should also be prepared to assist these countries in their negotiations with the World Bank and other multilateral organizations and obtaining necessary training of operators and regulators.
   
   
6. ITU offers - when required - to be a neutral facilitator in negotiations about international telecommunication settlements between countries with open markets and countries who do not have open markets. The ITU can also act as a facilitator in negotiations between countries with closed markets, when requested. This participation by the ITU is based on the precondition that the ITU has access to necessary documentation from the parties concerned in order to play such a role.

The ITU should actively promote this new role for itself.