Promoting Competition Piecemeal in International Telecommunications

Evan Kwerel.  

OSP Working Paper 13 (Dec 1984) examines the impact of growth in competition in international telecommunications on the U.S.’s relationship with foreign telecommunications authorities.  Kwerel applies his theoretical analysis to five international common carrier policy issues facing the FCC in 1984:  (1) FCC approval of entry by additional U.S. carriers, (2) intermodal competition, (3) private international satellite and cable systems, (4) direct access to INTELSAT, and (5) ownership of U.S. international earth stations.

Kwerel argues that Increased competition among U.S. suppliers of international telecommunications services could result in a reduction in the U.S. share of the benefits from such services unless the U.S. government takes appropriate action.  The risk, then, is that all the benefits could be captured by the public sector monopolies in charge of telecommunications in other countries. 

Kwerel concludes that, of the policy options he considers, the most promising is to promote competition among U.S. firms while strengthening the FCC's power to counter the resulting increase in market power accruing to foreign telecommunications authorities.  One way of counteracting the loss of bargaining power of U.S. firms, he suggests, is by increasing the FCC's oversight of international accounting rate agreements.  This option would require the foreign monopolies to satisfy a representative of overall U.S. interests while giving U.S. consumers a choice of providers.