International telephony revenue settlement reform

Andreas Thuswaldner

Telecommunications Policy, 1998, vol. 22, issue 8, 681-696

Abstract: The method preferred by the majority of carriers for revenue settlement in international telephony is the Accounting Revenue Division Procedure (ARDP). It was developed for a monopoly environment, and it is becoming less suitable in an increasingly competitive global environment. This paper presents a model to relate the ARDP to revenue settlement in a free economy. We conclude that, in general, cost-oriented accounting rates cannot exist, that symmetrical settlement rates are likely to benefit carriers of developed countries, and that policies intended to adapt the ARDP to a competitive environment, cannot succeed unless it is recognized that accounting rate reductions must go hand in hand with the modification of the 50/50 revenue sharing principle of the ARDP.

Date: 1998
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