Telmex/WTO

[Eubulides <paraconsistent@xxxxxxxxxxx>]

Telmex: WTO Telecoms Ruling Hurts US
Reuters
Wednesday, November 26, 2003; 10:54 PM
By Pablo Garibian

MEXICO CITY (Reuters) - Carlos Slim, the billionaire owner of Mexico's
dominant telecoms company, Telmex, said on Wednesday the United States
came out worse in a World Trade Organization (WTO) ruling on a dispute
between the two countries.

The WTO said in a recent initial ruling that Telmex is pursuing
anti-competitive practices and should lower the termination fees it
charges U.S. operators to connect their long distance calls to its
network, a Mexican government source said.

However, the source said the WTO panel recognized U.S. operators are using
a technique known as "bypass" in Mexico, disguising voice calls as data
calls in order to place them in networks without paying international
interconnection charges.

"This initial ruling is indicating that they (the United States) are the
ones that did something more delicate, worse, in doing the 'bypass'," Slim
told reporters at his offices.

Since 1997, Mexican operators have lost $2.04 billion due to this
practice, Slim said.

The United States took its complaint to the WTO three years ago, accusing
Mexico of not living up to promises to guarantee telecommunications
competition.

If the WTO panel formally recognizes in its final ruling at the start of
2004 that U.S. operators are using illegal practices like bypass, it could
impose laws or measures to enforce a ban.

"What they are objecting to with Mexico is that the interconnection price
is not the one they want but at the same time, it's lower than that which
they pay other countries."

Slim said Telmex interconnection tariffs have come down gradually to 9.5
cents from an average of 77.9 cents in 1990, and that the trend is for
further falls.

"It's an important decline," he said.

The fees Telmex charges are below the reference level suggested by the
International Telecoms Union, as well as the level the U.S. government
demands for any dominant operator in the world, Slim said.

"The panel has to be told that," he added.

But, the panel also said it is anti-competitive that Telmex, as the
dominant telecom in Mexico, is the only firm authorized to negotiate
termination fees with foreign operators and that all other Mexican
telecoms firms have to abide by the deal.

Telmex owns around 95 percent of local phone lines in Mexico and controls
close to 70 percent of the long distance market.

The company charges between 5.5 cents and 11.75 cents to connect a long
distance call, depending on the city it is going to. The rates were agreed
with WorldCom and AT&T in 2002.

Both governments have until December 5 to submit opinions to the WTO. The
official ruling would be made at the end of December or early in 2004, the
source said.

It is highly likely Mexico will appeal the ruling after it is made
official in 2004, the Mexican government source said.