Global Accounting Rate Reform

More than 107 Country/Organisation are taking the FCC to US Court. ITU Study Group 3 met during the period from 2 till 11 December 1997 in Geneva to find away out the greatest challenge in the history of telecommunications, the meeting wittnessed the largest ever turn out for Study Group 3. There were 12 white contributions, 17 delayed contributions and 7 Temporary documents, totalling 160 pages, almost all addressed the accounting rate issue, the meeting heard them all summarised by their "authors" and was given the opporunity to ask points of clarifications. The main issue before the meeting was the termination charges. The next meeting of SG 3 will be during the period from 2 till 12 June 1998, prior to that the accounting rate issue will be discussed amongst other issues, at an ITU World Telecommunications Policy Forum in Geneva during the period from 16 till 18 March 1998 and the ITU Council in May. Trinidad & Tobago have summarised the whole issue in their document below. To view the final draft text produced by Study Group 3 for the transitional period and till new accounting system emerges as a result of the coming meetings. click here

Welcome to my home page, my name is Khalil Alfardan and I am from Bahrain.More About Me I have been working in the Telecommunication business for many years now, and my job have been mainly assoicated with global exposure. This home page is mainly dedicated for the work I have been associated with lately and that is the reform of the global accounting rate system. I will try to summarise the whole story of the global challenges facing the Telecommunication Industry worldwide and the latest development as and when it happens, and I hope you find the information in my home page both useful and interesting. Please feel free to share with me your experiences and keep sending any suggestions or observations on anything you like to talk about. I will make my introduction short and I will go straight to the hottest issue in the Telecommunication World today.

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Telecommunications plays an increasingly important role in our lives. In fact, in many countries the revenues generated from the telecommunications business are the prime source of the national income, with the international telecommunications services being the main element in that income. In order to remunerate each other for the costs incurred in terminating each other calls the International Telecommunications Union (ITU) a UN body responsible for setting telecommunications services standards, rules and regulations devised the Inter-admin Accounting Rate system. In this system, a certain amount of money is biletrally agreed upon and usually shared on a 50/50 basis for each minute of traffic, where the amount payable by the originator of traffic is called the settlement rate. Countries have no flexibility to reduce international call prices due to the level of accounting rate agreed which can only be reduced if the other country is in agreement, this has been the main obstacle for any changes in international call pricing in almost all countries due to the fact that some countries depend on the money generated from incoming calls to develop their Networks. And this is why, many services have emerged that bypass the traditional methods of communication and subsequently the traditional accounting remuneration system with the view of charging less prices to their customers. At the end of 1996, the Federal Communications Commission (FCC) - the US Telecommunications regulator - issued a Rulemaking proposal to set new settlement rate benchmarks. This was a unilateral move opposed by most countries due to its adverse effects on national income.
FCC has classified the world into four categories as follows:

Category.........Settlement Rate.........Effective.........Period Allowed

Upper Income.......$0.154 per minute.Jan 1999...........1 year
Upper Middle.......$0.191.................Jan 2000...........2 years
Lower Middle.......$0.191.................Jan 2001...........3 years
Lower Income.......$0.234.................Jan 2002...........4 years
the FCC Report & Order final decision was made on 7 August 1997 with effective date 1st january 1998 and with periods allowed as shown above, however, FCC is allowing five years for those countries whose Teledensity is less than 1%.

As far as the Arab Countries, they fall in the following categories:

Upper Income: Kuwait, Qatar and UAE.

Upper Middle Income: Bahrain, Libya, Oman, Saudi Arabia.

Lower Middle Income: algeria, Iraq, Jordan, Lebanon, Morocco, syria and Tunisia.

Lower Income: Sudan, Mauritania and Somalia.


The financial effects of the implementation of FCC bench Marking Rates on other countries is huge, just to give an example, the financial loss that Syria, Jordan, Kuwait, Qatar, Saudi Arabia, UAE and Bahrain are going to suffer if FCC do implement their rates from one side is 106 million US Dollars per annum.

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FCC Report & Order
Minutes of the Arab Committee for the Arab League
REGIONAL TARIFF GROUP FOR ASIA AND OCEANIA(TAS)
First Report On Termination Fee
Termination Fee Document prepared by ST. VINCENT&GRENADINES (supported by C&W)
Hong Kong Views on Termination Fee(supported by a lot of countries)
Trinidad & Tobago views on Termination Fee as the way out(Very Interesting)
Global Reactions
Some ByPassers Sites

Hot Links

Bahrain, My Country.
International Telecommunication Union Home Page
US Federal Communication Commission Home Page
KDD to challenge FCC Bench Mark Settlement Rates in Court

Some Papers on Accounting Rates Reform
Asia Pacific Telecoms (APT) Regional Meeting on Settlement Rate Reform
Sprint Statement On FCC Proposal
FCC Takes Steps Towards Lowering Overseas Rates(AP)
World Trade Organisation (WTO) Web Site
The Caribbeans Response to FCC

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