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RUEHCV/AMEMBASSY CARACAS 3585
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RUEHGL/AMCONSUL GUAYAQUIL 4376
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS QUITO 000455 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV EINT ETRD EC
SUBJECT: ECUADORIAN PRESIDENT MAKES ACCUSATIONS ABOUT U.S. TELECOMS 
 
¶1.  (SBU) Summary: In the May 30 presentation of his weekly radio 
address, Ecuadorian President Rafael Correa sharply criticized U.S. 
telecommunications companies ATT, MCI, and Sprint, accusing them of 
"swindling" Ecuador out of millions of dollars of long-distance 
fees.  ATT maintains that the accusation is based upon a misreading 
of international communications records conducted by a small, 
auditing company looking for business with Ecuador.  End Summary. 
 
¶2.  (SBU) In 2007, ATT, MCI (now Verizon), and Sprint received 
letters from Global Audit, a Virginia-based company, which suggested 
there were discrepancies in the amount of long-distance minutes to 
Ecuador reported by the FCC and the minutes the companies declared 
to Ecuador's state-owned telephone companies Andinatel, and 
Pacifictel. (Note: In September 2008 these two companies merged to 
form the GOE-owned company Corporacion Nacional de 
Telecomunicaciones (CNT). End Note.)  ATT informed EmbOffs that 
company representatives met with a representative from Global Audit 
and sent a written reply to the query in 2007.  ATT informed Global 
Audit that its analysis was flawed because it was "comparing apples 
and oranges."  According to ATT, Global Audit's analysis categorized 
minutes as originating with ATT that, in fact, should have been put 
in the "re-file" category.  The "re-file" category consists of 
third-party calls such as those routed through another country (say, 
Mexico or Brazil).  In these cases, the re-file carrier settles with 
the Ecuadorian carrier.  In its letter, ATT asserted that this error 
explained the supposed discrepancy in the FCC's reported minutes and 
the minutes reported to Ecuador.  Global Audit sent a short reply to 
ATT in 2007 saying it would follow up on the matter, but ATT says it 
never did so. 
 
¶3.  (SBU) The issue did not arise again until President Correa 
mentioned it in his May 30 radio address.  Correa acknowledged that 
the GOE had retained Global Audit's services, and the current 
accusations appear to be identical to the ones from 2007.  Correa 
said that the total amount now owed was roughly $80 million.  He 
claimed that ATT underreported 274 million minutes of calls, costing 
Ecuador $38 million dollars in missed fees; Sprint allegedly 
underreported 148 million minutes, costing Ecuador $23 million; and 
MCI allegedly underreported 138 million minutes, costing Ecuador $19 
million. 
 
¶4.  (SBU) ATT representatives told EmbOffs they believe the current 
accusations are based on the same flawed analysis they saw in 2007. 
The company is currently negotiating a renewal of its Ecuadorian 
Value-Added Service (VAS) license, and does not want Correa's 
accusations to influence those discussions.  ATT believes the 
billing issue will be resolved once it is better understood, so it 
is choosing to keep a low profile in this dispute.  The company said 
it had not yet received any official communication from the GOE 
about this matter.  The Embassy has been unsuccessful in getting 
feedback from Sprint or MCI (Verizon), but we believe their 
situations are similar to that of ATT. 
 
¶5.  (SBU) An Embassy contact who is knowledgeable about Ecuador's 
telecom industry told EmbOffs that he believed the charges were 
politically motivated.  This contact is very familiar with the 
billing practices of Ecuadorian telephone firms, and he flatly 
denied that ATT or the other companies had done anything improper. 
According to this contact, the US and Ecuadorian companies jointly 
reconcile their statements every month.  He also said that the GOE 
regulatory agency Supertel monitors monthly telephone traffic and 
quickly resolves any problems.  This contact said that Supertel has 
started an audit that will be finished in June, which he is 
confident will exonerate the US carriers. 
 
¶6.  (SBU) Little is known about the audit company involved in these 
allegations.  The Embassy telecom source believes that the company 
saw an opportunity in the perceived discrepancies in the data on the 
FCC website and offered its services to Andinatel in 2006. 
Andinatel/Pacifictel eventually signed a one year contract with 
Global Audit, which resulted in the 2007 letters to the companies. 
Global Audit's letters from 2007 have a Herndon, Virginia mailing 
address, but the Associated Press reported it was unable to find any 
listing for the company.  EconOff was similarly unsuccessful in 
finding any records of its existence. 
 
¶7.  (SBU) Comment.  Correa's radio address was the first that the 
Embassy had heard of this issue, which appears to be a 
misinterpretation generated by a U.S. auditing company looking to 
sell its services to Ecuadorian phone companies.  It is 
characteristic of Correa to make a public pronouncement on an issue 
like this without doing sufficient research. 
 
HODGES