A new world telecommunications order

Stabroek News
February 11, 2000

A letter [please note: link provided by LOSP web site] from Mr Gregory Rickford on this page makes it clear that new technology namely VoIP which as he describes it is "the real-time transmission of voice signals using an Internet protocol over the public Internet or a private data network" is going to revolutionise telecommunications and indeed create nothing less than a new world order in telecommunications. He explains that the latest version of the software of Net 2 Phone Inc, one of the pioneers, has the following free features, voice mail, PC to PC calling, ICQ buddy PC to PC calling and PC to fax solutions, in addition to the company's flagship, PC to phone service. "The software is free and can be downloaded from Net2phone.com. The cost of PC-to-phone calls for instance from Guyana to the United States is US l5 cents per minute during peak hours and US l0 cents during off peak hours". This works out at G$27 a minute in peak hours compared to GT&T's rate of $239 plus government tax.

Mr Rickford points out that even the biggest companies have recognised what this means. AT&T Corp have entered into a partnership with Net 2 Phone Inc to bring Net 2 Phone's Internet telephony services to AT&T's global network.

Already, of course, telephone companies in developing countries including Guyana, whether state or privately owned, are faced with the prospect of a huge drop in income as a result of a reduction in the settlement rates of international calls from the USA. These are the fees American companies pay overseas carriers for completing phone calls. The US Federal Communications Commission decided in l997 to slash these rates by as much as 90% by the year 2002. When implemented this will mean a loss of millions of US dollars each year in revenue to companies like GT&T. Already, as a special report in Global Telecom notes, several phone companies in developing companies have felt the squeeze because of the drop in American payments.

What can be done? The special report notes that phone companies in developing countries have reacted in various ways. Sri Lanka Telecom Ltd has doubled the price of a three-minute local phone call and is seeking to develop several new products and services. Chile, Israel and Tonga are cutting settlement rates even more than required by the FCC in order to boost telecoms traffic and spur economic development. Chile has licensed ten companies to battle for international telephone traffic. Israel has licensed two foreign-financed competitors to compete for international calls and they are free to negotiate their own settlement rates.

GT&T subsists today on the high settlement rates and audio text income. These subsidise the domestic telephone service. This is not a viable structure for the future. Understandably, GT&T and phone companies in other developing countries have been most upset at the change ordained by the FCC, primarily done to save America the loss of substantial amounts each year in overseas payments. Indeed the International Telecommunications Union in Geneva, as the special report notes, voted l88 to l last year in favour of slower rate cuts to developing countries than those mandated by the FCC. The US was the only negative vote but the FCC reportedly has no plans to comply with the ITU vote.

It is impossible to hide indefinitely from the new technology and from these changes. We believe, as we have said before, that frank high level talks are required between the government and GT&T at which all the issues should be raised. Ultimately a solution will have to be sought that will embrace, rather than resist, the new low cost opportunities. Whether that can be found within the present context of a monopoly service is another matter. Innovative solutions may also have to be considered such as the initiative taken in Sri Lanka to offer low costs to businesses in neighbouring countries if they route their telephone traffic through Sri Lanka.

The problem must be faced, it will not go away. Blocking web sites is not the answer. GT&T will have to make some major compromises in the present arrangements but at the same time should be given a way out which will involve some increases in the cost of the domestic service. The new world telecommunication order can ultimately neither be ignored nor resisted and efforts must be made to find a fair solution that uses the technology available.