Rediff Logo Infotech Banner Ads Find/Feedback/Site Index
June 6, 1997


India wants telecom revenue-sharing ratio altered

India will press for a change in the existing 50:50 global telecom revenue-sharing arrangement in the crucial November meeting of the International Telecom Union in Geneva.

Top government sources indicated that the Department of Telecommunications is expected to advocate a 60:40 revenue sharing formula as the costs involved in terminating international calls into India are higher than the present settlement rates.

The telecom accounting rate, which is negotiated between two foreign carriers for carrying and ending a minute-long international call, is now split equally. Each carrier portion of the TAR is its settlement weight which is half the negotiated accounting rate.

The latest DoT drive stems from the unanimous agreement at ITU's Kyoto conference that developing countries are justified in demanding a 60:40 sharing of telecom accounting rates. If that surplus revenue is used in funding network development.

That apart, the DoT, it is learnt, is also exploring the call termination fee concept pioneered by the OECD, wherein such charges will be incorporated into international settlement rates.

According to sources, call termination charges, which will be levied by the concerned registered operating agency (VSNL, in India's case), are expected to be virtually identical for all foreign carriers.

Sources said "Call termination fees charged by a country will be an open rate and the same terms will apply for all international carriers."

More importantly, developing countries are likely to be given the autonomy to freely determine their own call termination fees without having to negotiate the rates bilaterally.

At present, DoT officials, it is learnt, are working to evolve a standard call termination tariff structure for all foreign carriers, which will subsequently be vetted by the high-powered Rapporteurs Group, compromising representatives of 50 leading ITU member-countries.

However, India's bid to recast the existing accounting rate-sharing pattern with global telecom carriers is expected to be strongly contested by the US telecom regulator, the Federal Communications Commission.

The FCC believes the country has singularly benefited from settlement payouts. Call traffic from the US alone has jumped three-fold in the past five years, it has pointed out.

The FCC, which has been clamouring for drastic reduction in accounting rates worldwide, has threatened to authorise its national carriers to unilaterally slash them without waiting for any formal agreement with the international calling partners.

In its Notice of Proposed Rule-Making, the FCC has advocated the measures of updating its benchmark settlement rates for International Messages Telephone Services between the US and other countries.

The benchmarks or price caps indicate the aggregate cost for international transmission facilities, international gateway switches and the national extension charge in each partner country.

However, India will be able to stave off mounting pressures from the US and the European Commission. To scale down TARs till 2000 as it has successfully opted for the most favoured nation exception in this regard at the last round of the meetings with the World Trading Organisation in Geneva.

The MFN exception on the TARs insulates developing countries from the pressures of rich WTO members.

- Compiled from the Indian media

Tell us what you think of this story