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  1. Technology
February 28, 1988


By CBR Staff Writer

L M Ericsson AB of Sweden, Siemens AG of West Germany, Plessey Co Plc of the UK (through its Stromberg Carlson unit) and Northern Telecom of Canada are all doing big business with US telephone companies – but much of that business could be put at risk by a new requirement from the Federal Communications Commission that they provide an annual report of all their telephone exchange purchases – by company. The FCC is not at this stage actually saying it will seek to block phone companies buying foreign equipment – but the mere existence of the new regulation could be enough to put some firms off buying exchanges from a foreign supplier. Phone companies are particularly jumpy about doing anything to upset the regulators because the FCC calls all the shots on what they may charge for their services. As a Commerce Department telecommunications official asked the Wall Street Journal, How would you like it if every time you bought a Sony television, you had to send in a postcard underlined in red, to the government? The order affects long-distance phone companies doing $100m a year or more, all the Baby Bells, and other big local phone companies. Behind it is the fact that while in 1981, the US had a trade surplus of $817m in telephone and telegraph equipment, the Commerce Department reckons that by 1987, that had swung to a deficit of $2,200m. Commerce reckons that the US also had what amounted to a deficit of $1,200m on international phone calls – mainly because monopoly PTTs, particularly on the continent tend to price international calls very high. British Telecom and Mercury international rates by contrast are very competitive. The effect of high pricing of international calls by the likes of West Germany’s Bundespost is that the US carrier ends up having to pay the foreign PTT between 50% and 80% of the sum it collects from the customer for international calls originating in the US. The FCC is therefore also ordering foreign companies that offer telephone service within the US like Cable & Wireless Communications Inc – to report figures quarterly.

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