This research investigates the relation of pricing policies for international telecommunications services to U.S. competitiveness, capacity utilization, and technological development of telecommunications facilities. The research is empirical, but is based on theoretical modeling of international trade, econometric analysis and case studies. The study uses pooled time-series and cross-section data for prices, international traffic, and other variables to examine (a) the demand for telecommunications services by country of origin in the U.S. and 17 Western European countries, (b) the determinants of current pricing policy, (c) determinants of the division of revenues between U.S. carriers and foreign carriers, (d) the effects of alternative pricing structures on economic efficiency and on the distribution of gains and costs to users, and (e) the effects of pricing and revenue sharing arrangements on future net dollar outflows (in 1985 over $900 million were paid by U.S. carriers in net settlements with worldwide foreign counterparts). The research is significant and timely in that it examines a number of issues that will affect information technology development and use. The research results will provide a foundation on which important policy decisions can be based.
