FCC opens new era of global competition

The Federal Communications Commission rang the opening bell on a global telecommunications free-for-all last week when it issued an order making the U.S. the first country to adopt the landmark World Trade Organization Agreement on Basic Telecommunications Services.

Despite opening America's $200 billion telecommunications services market to foreign competition, most U.S. carriers were pleased with the FCC's action.

"CompTel applauds today's order for opening up more markets to competition for the benefit of U.S. consumers," said Carol Ann Bischoff, vice president of federal and legislative affairs for the Competitive Telecommunications Association.

However, an AT&T official said the FCC should have moved further toward creating robust competition by requiring foreign carriers entering the U.S. market and using switched resale to reduce accounting rates to the benchmark level as a condition of entry. The commission's failure to do so creates a loophole that will let foreign carriers favor their own affiliates in the U.S., while continuing to charge Americans more for their calls abroad, said Rick Bailey, vice president of federal government affairs for AT&T.

In issuing its order, the commission decided not to extend the tough international settlement rates it adopted in August. AT&T and MCI had lobbied for the rules extension that would place a greater burden on foreign competitors.

As a safeguard against unexpected complications, however, the FCC, the office of the U.S. Trade Representative, the State Department and the Defense Department all will be able to block a foreign commercial venture if they believe a company could hinder competition, raise trade or hurt national security in the U.S.

The FCC hopes that the order eventually will lower international calling rates for consumers by as much as 80% and create numerous overseas opportunities for American communications companies.

"Increased competition will benefit American consumers by producing lower prices, greater service choice and innovation," said the FCC's new chairman, William Kennard at the commission's first full meeting last week.

While the FCC's actions will undoubtedly help U.S. companies in their efforts to expand beyond U.S. borders, they will also make it easier for foreign carriers and satellite operators to offer international phone and data services on U.S. shores. U.S. long-distance companies could witness a drop in their share of the nation's $12 billion calling market to large foreign PTTs such as Deutsche Telekom and France Telecom, industry analysts said. But American companies should more than recoup the losses in markets overseas.