Significant Impact on Developing Countries

This state of affairs has a significant negative impact on developing countries, where the payments from the settlement mechanisms that applied to international telephony have been a source of revenue that helped to subsidize universal service and/or to finance investment in telecommunications infrastructure. The ITU estimates that, between 1993 and 1998, net flows of telecommunications settlement payments from developed countries to developing ones amounted to some $US40 billion.³

As more telecommunication traffic is shifting to the Internet, this revenue is disappearing. According to the World Bank,

…in 2002, US operators alone paid US$223.9m to African operators for terminating calls onto African networks, and received US$14.6m in return for terminating calls from Africa onto US networks and US $20.4m for transit to third countries. Under protest from US carriers and with changes to the international settlement regime this position has changed, eroding these revenues. In 1998 US carriers paid US$413.8m to African operators, whilst African operators paid US$67.3m to US carriers to terminate on their networks and US$260.5m for transit traffic to third countries. The revenue earned from terminating calls from the US has nearly halved over this period.⁴

Other research estimates that the global benefit derived by United States from inbound transmission and transit costs was US$1.3 billion in 2003, and is expected to rise to US$2.7 billion in 2006.⁵