FCC Warns Sprint-Telmex to Lower Rates as Promised

The Federal Communications Commission on Tuesday dealt a sharp blow to a joint venture between Sprint Corp. and Telefonos de Mexico, saying consumers calling Mexico were overpaying by $700 million a year because Telmex has not lowered rates as promised.

“We granted the Sprint-Telmex application in a spirit of good faith,” FCC Chairman William Kennard said of the agency’s conditional approval in August. “But I’m running out of patience. We want to be good neighbors with Mexico. It’s important that we have a good relationship with that nation, but we can’t do it at the expense of U.S. consumers.”

Telmex, the former government-owned monopoly carrier, had promised to lower the rate it charged carriers in other countries for completing calls in Mexico to 19 cents per minute by Jan. 1, 2000. Mexico also was to eliminate a number of other anti-competitive policies, such as a 58% surcharge on incoming international calls.

But most of the practices remain in place, and Telmex had proposed lowering its so-called settlement rate by only a few cents until Jan. 1, 2000.

The FCC on Tuesday rejected Telmex’s interim settlement rates of 37.5 cents for 1998 and 34.5 cents for 1999. The agency also told Telmex and Sprint to address the delay in completing reforms within 30 days or face further sanctions, including possibly revoking authority for the joint venture.

Sprint said the FCC ought to take its complaints to the Mexican government, but not punish the joint venture.

The joint venture and Sprint “have little, if any, control over the conditions with which the FCC is dissatisfied,” Sprint said.

The FCC said it acted after complaints from the top two U.S. long-distance companies, AT&T; Corp. and MCI WorldCom Inc., that Telmex was continuing to discriminate against other companies in Mexico.