C&W in court over foreign calls
C&W said it will take the issue to a Washington court by the end of the year. The dispute centres on settlement fees, a 130-year-old revenue- sharing system developed originally among governments, that keeps the cost of international phone calls artificially high. They are charged by a domestic phone company to carry a call from overseas to its destination.
The dispute has arisen because competition has driven down US call prices, and US consumers make more international calls than they receive. As a result, US phone companies pay companies elsewhere more to connect international calls from the US than they receive, which resulted in a $5.7bn (pounds 3.5bn) deficit last year.
The dispute comes only a year after 69 countries agreed to open up the $1,000bn global telecommunications market to competition as part of a World Trade Organisation accord.
The US Federal Communications Commission said it will legally enforce lower charges on US international phone companies from next January. That means they will be legally prohibited from paying more than 23 cents per minute to foreign phone companies. In some developing countries, those rates are as much as 80 cents per minute now.
"Everything above 6 to 8 cents is pure profit," said Diane Cornell, head of the US Federal Communications Commission's international telecommunications bureau. "We think settlement fees should be standardised at between 6 cents and 8 cents per minute worldwide."
However, C&W and phone companies around the world say the US is overstepping the mark.
C&W has more to lose than most phone companies because it owns stakes in some 70 phone companies around the world, many of them in developing countries. According to an FCC study, the cost to US phone companies of making calls to Hong Kong exceeded the real cost of those calls by 714 per cent in 1996. That year, Hong Kong reportedly received more than six times as much traffic from the US than it sent back.
Developing countries receive about $10bn per year from settlements, according to the International Telecommunications Union - more than from international development banks in the first half of this decade.
The FCC said it will enforce benchmarks of 15 cents per minute, 19 cents per minute and 23 cents per minute according to how developed competition is in each country.
Copyright: IOS & Bloomberg
- 1 Man and woman arrested on suspicion of conspiracy to murder victim of Woolwich machete attack, named as Drummer Lee Rigby
- 2 'Sickening, deluded and unforgivable': Horrific attack brings terror to London’s streets
- 3 Grace Dent: I’m not sure how these people can avoid being called ‘bigots’. And the more ‘civilised’, the worse they are
- 4 Woolwich murder: They killed, then they performed - these men should be starved of our attention
- 5 Woolwich attack: The EDL will seek to exploit this evil crime for their own evil ends
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Nook is donating eReaders to volunteers at high-need schools and participating in exclusive events throughout the campaign.
Get the latest on The Evening Standard's campaign to get London's children reading.
Win anything from gadgets to five-star holidays on our competitions and offers page.