OPINION C - The evolution of the international telecommunication environment, particularly the accounting and settlement system

The Second World Telecommunication Policy Forum (Geneva, 1998),

considering

a) the terms and spirit of the International Telecommunication Regulations (Melbourne, 1988);

b) that ITU-T Recommendation D.140 calls for the establishment of rates for the settlement of accounts which are cost-orientated and applied in a non-discriminatory manner,

recognizing

a) that, following the implementation of the commitments in basic telecommunications made under the GATS, three-quarters of global outgoing international traffic is now provided under competitive market conditions, but that many countries have not made commitments;

b) that, given the uneven pace of market liberalization, the number of asymmetric relations between competitive, partially competitive and non-competitive markets is likely to increase in the short term;

c) that with increased competition in the global telecommunications market, several methods for settling international traffic will coexist;

d) that these circumstances create additional urgency to the work of ITU-T Study Group 3 in reforming the international accounting and settlements system;

e) that each country's level of telecommunication development and cost structures is different;

f) that ITU-T Study Group 3 has proposed transitional arrangements as an initial step to cost-orientated rates (in the form of a proposed new Annex to Recommendation D.140) and is also considering expanding the menu of remuneration options included in Recommendation D.150,

noting

a) that between certain countries where competition has been introduced, rates for the termination of international traffic are already as low as 0.05 SDR per minute;

b) that the nine case studies carried out for this Forum show a range of indicative costs for terminating international calls, and reveal that further analysis and verification is needed,

aware

a) that many developing countries are concerned that too rapid a reduction in settlement rates could also lead to a reduction in settlement payments and, as a result, would endanger or reduce their ability to meet network development targets and fulfil universal service obligations, and that to mitigate these negative consequences, transitional arrangements based on a country's special circumstances have been recommended by ITU-T Study Group 3;

b) that a cost-orientated accounting rate system may be asymmetric, i.e., with higher costs for terminating calls in some countries than others,

invites all ITU Member States and Sector Members

1 to endorse the work of ITU-T Study Group 3 in developing transitional arrangements as an initial step towards cost-orientated rates;

2 to introduce cost-accounting mechanisms in their network operations to allow them to establish the real costs of providing telecommunications services;

3 to work on a bilateral basis, or on a multilateral basis through the ITU, to achieve cost-orientated accounting rates in accordance with ITU-T Recommendation D.140, noting that this recommendation is subject to proposals for further expansion, along with Recommendation D.150; to facilitate the achievement of this objective within a multilaterally-agreed framework, taking account of the specific needs of the developing countries and in particular the least developed countries;

4 to acknowledge that an increasing number of countries will be evolving to a multi-operator environment and, notwithstanding each ITU Member State's domestic liberalization policies, to ensure that agreements to exchange international traffic with major suppliers can be extended to new entrants of these countries in accordance with principles of cost-orientation and non-discrimination as defined in ITU-T Recommendation D.140;

5 to support the results of country case studies after appropriate validation,

invites the Director of TSB, in consultation with the Chairman of Study Group 3

to establish a focus group (WTSC-96 Resolution 23) under the lead responsibility of ITU-T Study Group 3 with the following terms of reference:

a) Membership

The focus group will be open to all participants in the work of Study Group 3, including the chairs and members of the Regional Tariff Groups, together with all interested members of the ITU.

b) Working methods

The focus group should, as applicable, follow the working methods and procedures for focus groups adopted by TSAG (TSAG 1997, Report R2).

Recognizing firstly the need for urgency and secondly the already existing demands on experts in the field of international accounting, the focus group should, to the extent possible, work by electronic means and through the organization of Plenary Meetings allowing optimum participation. Interpretation facilities should, as far as possible, be provided for the Plenary Meetings of the group. The TSB should establish an E-mail reflector for the use of the group. Contributions may also be made directly in correspondence to the Chairman of the group.

The progress and output of the focus group should be available via an appropriate Website. Where resources are earmarked for collection of cost information in a given tariff region, and if the tariff group of this region is in the process of gathering that information, these resources would be used to support the actions of the tariff group.

c) Time-scales

The focus group should be established and begin work immediately.

It is recommended that the final report should be submitted to the Director of the TSB by 6 November 1998 with an interim report to the June 1998 Study Group 3 meeting where the formation of the focus group will be approved. In addition, the final report is to be submitted as a normal contribution to the December 1998 meeting of Study Group 3 for consideration.

d) Objectives and activities

Given that, in many Member States of the Union, the necessary infrastructure does not exist to enable the determining of cost orientation, and pending the development of methodologies for determining the cost orientation of settlement rates (or equivalent), the objective of the focus group will be to facilitate the progress of Study Group 3 at its June and December meetings through a work programme, preferably to be carried out in three steps:

i) The nine case studies presented to the Second World Telecommunication Policy Forum together with any subsequent case studies.

ii) Existing analyses of market trends and statistical studies/data including, the results of the Regional Tariff Groups and cost elements, the report of the 7th Regulatory Colloquium, the schedules of reductions submitted in response to the ITU-T Questionnaire, and other relevant reports.

iii) The development of proposals for solutions for transitional arrangements towards cost orientation beyond 1998, including ranges of indicative target rates, taking into account i) and ii).

The focus group should also take account of the Agenda, Report and Opinions of the Second World Telecommunication Policy Forum,

invites the Director of BDT

1 to respond positively to requests from developing countries for assistance in developing cost-accounting systems for telecommunication services;

2 to support the focus group in particular by:

• facilitating the participation of representatives of developing countries, particularly the least developed countries, by the provision of fellowships and the provision of equipment to enable electronic means of working;

• making available all studies and data related to the work of the focus group,

invites the ITU Council

recognizing the urgency of the matter, to provide the necessary resources to all Sectors of the Union for the group to meet in a way so as to produce its report to the Director of TSB and ITU-T Study Group 3 in time.