VZCZCXRO9483
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #3913/01 1951855
ZNR UUUUU ZZH
R 141855Z JUL 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 2166
INFO RUEAFCC/FCC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE

UNCLAS SECTION 01 OF 02 MEXICO 003913 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX AND EB/CIP 
STATE PLEASE PASS TO USTR JONATHAN MCHALE AND FCC EMILY 
TALAGA 
 
E.O. 12958: N/A 
TAGS: ECPS ECON MX ETRD EINV
SUBJECT: AT&T OFFICIALS WITH CALLING PARTY PAYS WOES 
 
REF: A. MEXICO 02511 
 
     ¶B. MEXICO 02844 
     ¶C. MEXICO 0537 
 
 ------ 
Summary 
------- 
 
¶1.  (U) AT&T officials met with Econoff June 29 regarding 
Mexico's transition to a Calling Party Pays (CPP) system for 
national and international long distance calls where the 
destination is a user of the mobile local service. 
Controversy surrounding the recent passage and implementation 
of the new Radio and TV law as well as the appointment of new 
Federal Telecommunications commissioners has delayed 
publication of rules on how to implement the CPP Resolution 
published on April 13, 2006.  The delay will make it more 
difficult for U.S. carriers to physically comply with the 
rule's implementation date of October 11, 2006.  End Summary. 
 
--------------------------------------------- 
AT&T ON IMPACT ON U.S. CARRIERS AND CONSUMERS 
--------------------------------------------- 
 
¶2.  (U) Rick Resnick, President of AT&T Mexico, Rich 
McCormick, Regional Vice President for AT&T, and Karina 
Duyich Acuna from AT&T Regulatory Affairs met with Econoff 
June 29 regarding the October 11 implementation of a 
long-distance Calling Party Pays system for national and 
international long distance calls to mobile cell phones. 
Although most companies, including AT&T believed the GOM 
would eventually implement a CPP system, the overall cost of 
doing business in Mexico under CPP system remains unclear. 
Some telecom analysts estimate it could cost U.S. industry 
and its consumers 200 to 400 million dollars annually. 
 
¶3.  (U) The Calling Party Pays resolution for long distance 
was published in the Mexican Federal Register on April 13, 
2006 but it did not include specific guidelines for industry 
to follow regarding the technical installation of code 
identifiers, rate determinants, and other implementation 
issues.  Additionally, U.S. carriers need sufficient time to 
tell their customers that Mexican phone numbers will change 
and that mobile calls will be subject to different rates than 
fixed line calls.  Resnick said that it will be very 
important for U.S. companies to educate customers on the 
increase in rates imposed by Mexico.  Resnick estimates that 
the termination rate will most likely be 14 to 18 cents. 
However, the Federal Telecommunications Commission (COFETEL) 
has failed to share their rate model with industry or other 
governments and they have been unable to resolve rate 
disputes between companies utilizing local CPP. 
 
------------------------- 
GOM PICTURE STILL UNCLEAR 
------------------------- 
 
¶4.  (SBU) Since the newly appointed COFETEL commissioners 
have little time to hash out rules for CPP, Resnick is 
concerned that the guidelines will be drafted, reviewed, and 
issued too quickly and that some items or steps may be 
accidentally left out, making it more difficult for the 
settlements process to take place correctly.  Normally, a 
company needs 30 days to test a new system and process.  He 
also finds it unsettling that the three fixed carriers, 
Avantel, Alestra, and Axtel, which recently filed a lawsuit 
asserting that the national CPP system represents higher 
costs for consumers in benefit of mobile phone companies and 
against fixed telephone companies, may be excluded from 
participating in CPP while his company and others will have 
to comply.  He noted that if this happens, AT&T will most 
likely file suit but at this time they are taking a "wait and 
see" approach. When asked how Telmex is proceeding (AT&T has 
a 10 percent share in Telmex and Resnick's office is located 
in the Telmex office building), Resnick admitted that Telmex 
should become more active on the issue. 
 
¶5.  (U) Resnick insisted that the GOM needs to ensure that 
rates are cost-constructed and that COFETEL creates a clearly 
defined and transparent plan for industry.  If they lack 
this, then he believes more consumers will move towards using 
Voice over Internet Protocol (VoIP) to communicate. 
 
¶6.  (U) AT&T plans to meet with the new COFETEL President and 
its new set of commissioners later this month or in August. 
Resnick said they are concerned that some of the new 
 
MEXICO 00003913  002 OF 002 
 
 
commissioners are not well-informed of the COFETEL agenda. 
McCormick added that by adding two Senators to the COFETEL 
mix, special interests may fare well and that dispute 
outcomes and policy changes could be difficult to predict. 
Both stated that AT&T is open to teaming up with U.S. Embassy 
to meet with COFETEL on the CPP issue and will continue to 
keep Econoff abreast of its meetings with COFETEL. 
 
------- 
COMMENT 
------- 
 
¶7. (SBU) Prior to the resolution's publication, Embassy, FCC, 
State, and Commerce Department Representatives requested a 
copy of the model COFETEL will use to determine termination 
rates.  So far this request has not been answered.  The good 
news is that the new COFETEL board met the week of July 3 and 
briefly discussed CPP.  However, the commissioners have not 
yet set a clear agenda meaning that it could get hijacked by 
post-election special interest cases such as the much debated 
topic of Telmex's adoption of video services.  Also, despite 
a previous COFETEL ruling that Telcel must interconnect its 
line with Nextel's Short Messaging Service, it is likely that 
Telcel will appeal the ruling with the new COFETEL board. 
These types of cases will only side-track the COFETEL board 
from drafting a well thought-out national plan to prepare for 
"new generation" technologies and convergence. 
 
 
 
 
 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
GARZA