Abstract
This paper models settlement arrangements between international telecommunication carriers. The FCC in the United States claims these arrangements cost United States consumers billions of dollars annually, largely to subsidize foreign carriers in low-income countries. A model is given which makes sense of this claim, as well as the role of costs, competition, and income disparities in settlement rate determination. Findings are tested using data spanning 17 years and 167 countries. Some implications are drawn for the FCC's recently proposed settlement rate caps, as well as for proposals for multilateral solutions.
Similar content being viewed by others
References
Armstrong, Mark. 1998. “Network Interconnection.” The Economic Journal 108: 545-564.
Carter, Michael., and Julian Wright. 1991. “Optimal Telecommunication Tariffs and the CCITT.” Telecommunications Journal 59: 125-131.
Carter, Michael., and Julian Wright. 1994. “Symbiotic Production: The Case of Telecommunication Pricing.” Review of Industrial Organization 9: 365-378.
Carter, Michael., and Julian Wright. 1999. “Interconnection in Network Industries.” Review of Industrial Organization (No. 14, February): 1-25.
Cave, M., and M.P. Donnelly. 1996. “The Pricing of International Telecommunications by Monopoly Operators.” Information Economics and Policy 8: 107-123.
De Fraja, Gianni., and Paola Valbonesi. 1998. “Revenue Sharing Rules for International Telephony.” Mimeo. University of York.
Ergas, Henry. 1998. “International Trade in Telecommunication Services: An Economic Perspective.” In Unfinished Business — Telecommunications after the Uruguay Round, edited by G.C. Hufbauer and E. Wada. Institute for International Economics, Washington, DC.
Ergas, H., and P. Paterson. 1991. International Telecommunications Settlement Arrangements: An Unsustainable Inheritance?” Telecommunication Policy 15: 29-48.
Laffont, J.J., P. Rey, and J. Tirole. 1998. “Network Competition: I. Overview and Nondiscriminatory Pricing.” RAND Journal of Economics 29: 38-56.
Lande, J., and L. Blake. 1997. “Trends in the U.S. International Telecommunications Industry.” Federal Communications Commission (June).
Manenti, Fabio. 1997. “The Impact of Call-Back Competition on International Telephony.” Mimeo. University of York.
Scanlan, M. 1996. “Why is the International Accounting Rate System in Terminal Decline and What Might be the Consequences?” Telecommunication Policy 20: 739-754.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Wright, J. International Telecommunications, Settlement Rates, and the FCC. Journal of Regulatory Economics 15, 267–292 (1999). https://doi.org/10.1023/A:1008082314342
Issue Date:
DOI: https://doi.org/10.1023/A:1008082314342