Federal regulators yesterday proposed changes in the billing system for international telephone calls that they said could bring down prices consumers pay by as much as 50 percent.
If successful, the changes could also reduce the U.S. trade deficit by $1 billion, representing the imbalance in the long-distance rates that U.S. consumers pay to foreign carriers.
In a meeting yesterday, the Federal Communications Commission passed a proposal that would give U.S. carriers flexibility to negotiate a new billing system with overseas telephone companies that it believes will ultimately result in lower rates. The proposal came amid FCC findings that the difference between the international calling prices to and from the United States resulted in a deficit of $2 billion in 1988.
FCC Chairman Alfred C. Sikes said yesterday that "it is clear that a significant transfer of wealth now occurs as a result of little-known or understood accounting rules dealing with international phone calls."
Michael Mandigo, a lawyer for the FCC's international policy division, explained, however, that the proposed reforms will not necessarily bring down calling rates. "If accounting rates are reduced, it provides more opportunities and incentives to lower rates," he said.
The estimated 50 percent rate reduction is based on what the commission says is $1 billion in overpayment by U.S. consumers to foreign carriers out of the $2 billion deficit. At present, it is generally cheaper to call Europe or Asia from the United States than the other way around.
Based on its findings, the commission noted that under present arrangements, approximately 75 cents of every dollar collected by U.S. carriers for international calls goes to foreign carriers. People calling out of the United States generally pay 25 percent less than people calling into the United States.
The country's major long-distance carriers said they favored lowering the accounting rates, but they warned that it may not necessarily lead to lower rates for consumers.
Herb Linnen, director for media relations with American Telephone & Telegraph Co., said the company favors the FCC proposal. AT&T, which serves 70 percent of all international calls from the United States, petitioned the FCC early this year to look at accounting rates.
"If accounting rates are reduced, it helps AT&T cut overall costs and enhance its ability to reduce costs." He added that lowering accounting rates does not automatically lead to reduced international calling prices.