AT&T Corp is still not happy that the UK government has done enough to level the telecommunications playing field, and reckons that the proposed consent decree between British Telecommunications Plc and MCI Communications Inc does not go far enough. Under the US system, for the Justice Department to get its demands written into law, it […]
AT&T Corp is still not happy that the UK government has done enough to level the telecommunications playing field, and reckons that the proposed consent decree between British Telecommunications Plc and MCI Communications Inc does not go far enough. Under the US system, for the Justice Department to get its demands written into law, it has to file a suit against the companies involved, and, as in this case, where it is pushing at an open door since everyone wants the agreement to go through, it proposes its own settlement to the suit. The partners haggle and eventually accept a final version of this, it goes before a judge and once he has nodded it through, it acquires the force of law. AT&T says that while Justice has recognised the anti-competitive potential of the alliance, there are other issues that need to be addressed before US carriers can have a truly level playing field to compete in the UK as freely as foreign carriers can now compete in the US. The proposed consent decree requires the partners to publish rates, terms and conditions under which they will gain access to the British Telecom network and other information that is not normally public, and will prevent British Telecom from engaging in private line resale – simple resale into the US until US carriers can do likewise into the UK. And it requires non-discriminatory access terms and conditions for US carriers in the UK, to prevent British Telecom from charging its joint venture with MCI lower rates than it does competitors. But AT&T is unhappy that Justice has not addressed the critical issue of above-cost accounting rates – the rates that phone companies charge each other for landing calls originating in another country, nor recognise that US carriers can never compete fairly in the UK unless they are allowed to use their own international facilities. Because British Telecom and MCI will be paying each other for traffic between their US and UK networks, they will always have a competitive advantage over other US carriers so long as international accounting rates are above cost. To them it becomes a transfer payment, while it is an actual out-of-pocket expense to other carriers, Ma Bell complains.
This is a little disingenuous, because the UK has gone much further than other countries in lowering accounting rates, and will clearly be a very big issue in the negotiations over the proposed Sprint Corp-France Telecom-Deutsche Bundespost Telekom: the continental carriers have tended to keep accounting rates high and use the big profits they make on international calls to subsidise local phone service – and there will be fierce resistance to local calls becoming much more expensive. It points out that the Euro-US partnerships will have their own facilities in the US, Europe and between Europe and the US, whereas in the case of the UK, other US carriers can offer international service from the UK only by using facilities leased from British Telecom or Mercury Communications Ltd, putting US carriers at a competitive disadvantage in the UK because they must rely on facilities controlled by their competitors and must pay higher costs than if they were able to own their own international facilities in the UK. Nevertheless, despite the need for Federal Communications Commission and European Community approval, MCI and British Telecom now reckon that their alliance is a done deal; British Telecom will wholly own the Concert joint venture, which will absorb Syncordia, until all the approvals are safely in.