Telmex Agrees to 53% Cut in U.S. Call Fees

After months of wrangling, Mexican phone giant Telmex has agreed to a 53% cut in connection charges on calls from the U.S. to Mexico. The calls comprise a $2-billion-a-year market. Telmex, which was privatized in 1990, agreed to reduce the connection fee from 5.7 cents per minute to 2.7 cents, bringing it in line with most international rates. Telmex also agreed to drop a 58% surcharge it had imposed on incoming U.S. calls, another irritant for new competitors in Mexico’s long-distance market. Four of its major competitors agreed to the deal, including Alestra, which is part-owned by AT&T; and has nearly half of the 30% market share that Telmex has lost since long-distance competition began in 1997. However, the second-biggest competitor, Avantel, which is backed by MCI Communications, refused to sign. It said it wanted further negotiations on aspects of the deal. The U.S. Federal Communications Commission had pressured Mexico to reduce the connection fees. It was not immediately clear whether the fee reduction would lead to lower costs for consumers. Telmex last week opened for business in the U.S., in partnership with Sprint Corp., starting operations in Tucson. AT&T; and MCI had delayed the Telmex-Sprint service from launching in the U.S. market in retaliation for Telmex’s alleged unfair competitive practices in Mexico. But the FCC gave final approval this month.