REGULATORS CITE WAYS TO FINE-TUNE WTO TELECOM COMMITMENTS

GENEVA -- In the wake of the recent collapse of World Trade Organization negotiations in Cancun, Mexico, top telecom regulators at the ITU Telecom World 2003 show here Tues. stressed the need to continue to seek market-opening commitments through the 1997 agreement on trade in basic telecom services. Several telecom trade experts cited the work left undone at Cancun, including exploring the possibility of updating the classification of services and the need to continue a moratorium on customs duties on electronic transmissions.

“Further opening up of the telecommunications trade is the only way to ensure sustained and enduring benefits of telecommunications around the world,” said John Tsang, Hong Kong’s Secy. of Commerce, Industry & Technology. “Further liberalization is key to reaching out to those parts of the world that are still waiting to be connected.” Among the important issues repeatedly raised in a late Tues. panel was the need for more countries to sign the WTO Basic Reference Paper on Telecom, which has been used as a road map by many administrations that have deregulated their telecom markets in recent years.

“There is currently scope for further opening up in the current round of the WTO negotiations,” Tsang said. Specifically, he cited: (1) Elimination of market access barriers such as foreign ownership restrictions. “Elimination of ownership barriers will provide a more predictable environment for investors,” he said. (2) Wider acceptance of the basic telecom reference paper. In the last round of WTO negotiations, members agreed to the paper’s principles, which included ways to safeguard competition, ensure interconnection on reasonable, timely and nondiscriminatory terms and ensure the independence of regulators, Tsang said. A majority of participants have adopted the paper in part or in full, but wider acceptance is needed to bring in administrations that have declined to sign, he said. (3) Exploration of the impact of technology convergence to “ensure the relevance of existing telecommunications commitments.” He said that “would help clarify existing commitments and also pave the way for meaningful commitments in the future.”

While WTO processes for dispute resolution are timely, Philippe Chauve, European Union negotiator on telecom services and e-commerce, stressed the importance of having the results “enshrined in trade agreement commitments that are enforceable.” Among areas of those commitments that may need to be updated is how different modes of service are defined, he said. Chauve said the current list dated back to the 1980s and defined some things “in a very peculiar manner.” He cited code protocol conversion, which isn’t in widespread use today. Operators are providing a combination of services, which typically now are known by different names not explicitly broken out in the WTO list, he said: “The list of services that we arduously made in the 1980s may not be up to date and there may be a need to work on this.”

Chauve said the reference paper on telecom had remained relevant in the last 6 years because it dealt with broad principles such as market competition and independent regulators. “Nonetheless, the scope of commitments made by countries in 1997 is not always very clear and is not always covering all kinds of telecommunications services,” he said. Chauve said there had been some suggestions that new principles be added to the reference paper but said he was concerned over administrations that had not been willing to sign the current basic document, saying they wouldn’t be further convinced by having to agree to even more commitments.

Chauve said the EU supported and implemented the moratorium on customs duties on e-commerce, but he noted that value-added taxes continued to be collected on e-commerce cross-border sales from outside the EU. That provides a level playing field, he said, because otherwise foreign operators could offer the same services without facing taxes, which can reach 18 to 21%.

“It seems to me that as we continue our discussions that are so important about new trade opportunities, it is equally important that all the countries of the world that have already made these commitments live up to those commitments,” said David Gross, State Dept. coordinator for international communications & information policy: “It is key for the people in those countries as well as everyone else through this interconnected network world to be able to fulfill those promises.”

Given new technology and least cost routing methodologies, Anthony Hill, of the Jamaica-based Reflexion Group, asked what possible new termination rates or accounting rates could ensure that operators in developing countries would be able to secure enough revenue to maintain networks and provide investment for new rollouts. Timothy Kelly, head of the ITU’s strategy & policy unit, said because least-cost routing internationally meant traffic would follow “the path of least resistance,” or lowest rates, operators in developing countries had concerns about whether they were getting a reasonable share of such “least cost routing… The focus now really has to be on cost- oriented interconnection rates at the local level, especially for mobile services, but also for fixed line services.”

More broadly, the EU’s Chauve said some countries still needed to be convinced of the basic premise that telecom competition was a good idea and that a regulator had no role to manage the market. “There is a growing temptation in some regulators around the world to manage the market and to decide how many operators they need on the market,” Chauve said. “This issue has been creeping back into the WTO in the discussions on safeguards and that is a key issue that we need to have in mind.”