|FCC Tell Mexican Telephone Company to Reduce Rates|
|Subject||Barriers to Entry, Social Welfare|
|Key Words||Joint Venture, Cost, Monopolies, Anticompetitive Practices, Surcharge, Public Interest|
Sprint Corporation and Telephonas de Mexico (Telmex) are involved in a joint venture providing telephone links between Mexico and the US. The Federal Communications Commission (FCC) has rejected Telmex's proposed "settlement" rates that are charged to other long-distance carriers: Telmex had been wanting to charge 37.5 cents per minute in 1998 and 34.5 cents in 1999. (Settlement rates tend to be well above the cost of completing a call, especially where there are dominant state-owned telephone monopolies.) The FCC also has criticized other anticompetitive practices, such as a 58 percent surcharge on calls to Mexico.
According to the FCC, US consumers have been paying too much to contact friends and family in Mexico. Calls generated some $700 million in payments in 1997 to Telmex. The joint venture has retorted that it provides a service that is wanted and needed, and that other carriers and the public interest have not been hurt.
(Updated February 1, 1999)
|Source||Stephen Labaton, "F.C.C. Says Sprint and Telmex Overcharged on Some Rates", The New York Times, November 25, 1998.|
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