Global Universal Service and International Settlement Reform

Francesco Castelli, José Luis Gómez Barroso and Claudio Leporelli

Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, 2000, vol. 69, issue 4, 679-694

Abstract: The objective of this paper is to analyze the international settlement system and its implications for the development of a global telecommunications network in an industry scenario that is moving beyond international accounting rates. The international dimension of funding developing countries’ universal service policies is then discussed. It is pointed out that increasing competition in international markets, diverting traffic flows and retail price collection from developing to rich countries could lower the total revenue that the former obtain from international services, even when the received net settlement payments increase. The expected international settlement reforms asked for by the ITU and the US federal regulator could also intensify this phenomenon. Therefore, our conclusion is that such reforms may require adequate safeguards to deliver financial support to developing world network infrastructure, also considering the positive externalities accruing to rich countries.

Date: 2000
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