Telecommunications and WTO discipline: An assessment of the WTO agreement on telecommunication services

Telecommunications Policy

Volumn 21, Issue 6, 1997, Pages 477-491

  Fredebeul Krein, Markus ^a   Freytag, Andreas ^a  

^a UNIVERSITY OF COLOGNE   (Germany)

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMIC AND SOCIAL EFFECTS; INTERNATIONAL COOPERATION; PUBLIC POLICY;

GENERAL AGREEMENT ON TRADE AND TARIFFS (GATT);

TELECOMMUNICATION SERVICES;

EID: 0031186660     PISSN: 03085961     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0308-5961(97)00029-3     Document Type: Article

References (55)

1. Value-added services are those telecommunication services for which suppliers 'add value' to the customer's information by enhancing its form or content or by providing for its storage and retrieval.
2. Schwandt, F., Internationale Telekommunikation: Der Übergang vom Monopol zum Wettbewerb2E Springer-Verlag, Berlin, Heidelberg, New York, 1996.
3. Thereby the carriers pay each other for terminating each other's transmission. The price, called the settlement rate, is usually half the price of the accounting rate.
4. Schwandt op cit Ref 2, 40-43.
5. However, the accounting rate system comes increasingly under pressure by new service suppliers, which provide services through call-back arrangements and the resale of network capacity, leased from the incumbent provider; see OECD, The Changing Role of Telecommunications in the Economy: Globalisation and its Impact on National Telecommunications Policy. OECD Working Papers, No. 79, Paris, 1995.
6. There are several proposals for an accounting rate reform: (1) facilities-based payments, where the originating carrier pays according to the use of facilities provided by the terminating operator; (2) sender-keeps-all, which allows the originating carrier to keep all revenues; and (3) the call-termination fee system, under which the rate for incoming international traffic should not be higher than the rate for interconnection in the domestic market; see Matsudaira, T., The Activities of CCITT Study Group III on International Accounting Principals. Paper presented on the IIC Telecommunications Forum, January 25, 1993, Washington D.C.
7. Only in very few cases are telecommunication networks provided internationally (for instance in the case of INTELSAT, a satellite organisation which offers international satellite communications channels).
8. For more detailed information about restrictions on foreign ownership in the telecommunication sector of OECD countries see OECD op cit Ref 5.
9. OECD op cit Ref 5, p. 8.
10. These costs result from interconnection charges, which have to be paid to the network operator.
11. With the conclusion of the Uruguay-Round the GATT includes an agreement on trade-related investment measures (TRIMs) which requires WTO members to eliminate trade-restrictive and distorting investment measures. However, the agreement applies only to goods and not to services.
12. New Zealand, for instance, has no restrictions on the number of licences for telecom services.
13. Kruse, J., Lizenzierung und Wettbewerb im Mobilfunk. Springer-Verlag, Berlin, 1993, 141-142.
14. Ungerer, H., Telekommunikation in Europa. Freie Wahl für den Benutzer im Europäischen Binnenmarkt des Jahres 1992. Amt für amtliche Veröffentlichungen der europäischen Gemeinschaften Brussels, Luxembourg, 1989, p. 37.
15. Besen, S. and Saloner, G., The economics of telecommunications standards. In Changing the Rules: Technological Change, International Competition and Regulation in Communications, ed. R.W. Crandall and K. Flamm. Brookings Institute, Washington D.C., 1989, p. 205.
16. Fredebeul-Krein, M., Veränderte Anforderungen an eine europäische Standardisierung in der Telekommunikation. IWP Diskussionspapier 96/2, Köln, 1996.
17. For instance, price distortions could arise if a foreign monopoly uses its facilities in an open market in order to bypass international accounting rate payments, while its competitors are unable to do likewise.
18. WTO, Background Notes on the WTO Negotiations on Basic Telecommunications, 22 February 1996, http://www. inicc.org/wto/Whats_new/ta3-tlf.html.
19. Some argue that there is still a natural monopoly in the local loop. Yet, technological innovations make competition possible in local networks. Many countries such as Germany have a local network for both voice telephony and cable TV, which today can also be used for telecommunication services. Although in Germany both networks belong to Deutsche Telekom, the problem is a political one rather than an economic one; see Freytag, A., and Jäger, B., Der künftige Ordnungsrahmen des deutschen Telekommunikationsmarktes: Anmerkungen vor dem Hintergrund des Telekommunikationsgesetzes, ORDO, 1996, 47, 217-218.
20. Due to the existence of network externalities in the provision of telecommunications services, competitors would otherwise not reach the necessary number of participants for the service they offer; see Knorr, H., Ökonomische Probleme von Kompabilitätsstandards: Eine Effizienzanalyse unter besonderer Berücksichtigung des Telekommunikationsbereichs, Nomos Verlagsgesellschaft, Baden Baden, 1993.
21. The established carrier should be obliged to publish the costs of interconnection. Otherwise, there is the danger that costs which are partially not directly related to the expenses of interconnection, would appear in the calculation of interconnection rates.
22. Otherwise, the incumbent would provide only a few points of interconnection with the consequence that the communication transport would remain a rather long time in its network. Thus it could charge higher interconnection fees.
23. Almost all countries of the European Union reserve certain basic services to the dominant carrier. Other countries such as the US and Japan reserve local voice services to the dominant telecom operator; see Kennedy, C.H. and Pastor, M.V., An Introduction to International Telecommunications Law, Artech House, Norwood, 1996, pp. 152-154.
24. The danger of misusing the dominant position exists in particular in those areas, in which the established carrier holds bottleneck resources; see OECD, Trade in Information, Computer and Telecommunication Services; Information. Computer and Communications Policy Series No. 21, Paris, 1990, p. 32.
25. Structural and accounting separation are aimed at avoiding cross-subsidies within the company.
26. Petrazzini, B., Global Telecom Talks: A Trillion Dollar Deal. Policy Analyses in International Economics, Vol. 44. Institute for International Economics, Washington, D.C., 1996.
27. Otherwise there would be the threat of cream-skimming. See for example, Blankart, C.B. and Knieps, G., Das Konzept der Universaldienste im Bereich der Telekommunikation, Jahrbuch für Politische Ökonomie, 1994, 13, 241-242.
28. Blankart and Knieps ibid p. 239.
29. Wissenschaftlicher Beirat beim Bundesministerium für Wirtschaft. Orientierungen für eine Postreform III. Studienreihe des BMWi 85, Bonn, 1995, pp. 15-17.
30. If those companies which are active in the relevant sector had to finance the universal service obligation a distortion of resources would take place to the disadvantage of the telecommunication sector.
31. Broadman, H.G. and Balassa, C., Liberalizing international trade in telecommunications services. The Columbian Journal of World Business, 1993, 28(4), 33-34.
32. Sixty-seven governments agreed to attach to the GATS national schedules of commitments.
33. WTO, The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts. GATT-Secretariat, Geneva, 1995, p. 329.
34. Tyler, M., Executive summary of briefing report. In Trade Agreements on Telecommunication: Regulatory Implications, ed ITU. Report of the Fifth Regulatory Colloquium held at the ITU Headquarters, December 6-8, 1995, Geneva, 1996, pp. 82-83.
35. WTO, Final Act Embodying the Results of the Uruguay-Round of Multilateral Trade Negotiations, Document MTN/FA II-A1B, 15 April 1994, Marrakesh, 1994, p. 8.
36. WTO op cit Ref 36, pp. 341-342.
37. WTO op cit Ref 36, pp. 39, 341-342.
38. However, in practice non-discrimination of foreign suppliers requires a mutual recognition or a harmonisation of regulations. Otherwise, national regulators can discriminate foreign suppliers by, for instance, not recognising foreign qualifications, see Hindley, B., Services. In Completing the Uruguay-Round, ed. Schott, J.J. Institute for International Economics, Washington, D.C., 1990, p. 1132.
39. Tyler op cit Ref 34, p. 79.
40. WTO op cit Ref 33, pp. 39, 40, 359.
41. Henten, A., Telecommunication Reform and WTO. Paper presented at the ITS European Regional Workshop, September 6-7, 1996, Vienna, 1996, p. 12.
42. Forty-eight countries (counting the EU as one) listed telecom services in their national schedules of commitments, of which only six countries included voice telephony; see WTO, Background Notes on the WTO Negotiations on Basic Telecommunications. 22 February 1996, http://www.inicc.org/wto/Whats_new/ta3-tlf. html.
43. WTO, WTO Negotiations on Basic Telecommunications. WTO-Focus Newsletter, No. 6, October-November 1995, p. 7.
44. Petrazzini op cit Ref 26, p. 13.
45. The USA, EU and Japan, which account for 75% of world telecoms revenues, and fifteen other countries will be completely open to domestic and foreign competition from 1998. Sixteen countries, among them most Eastern European and Asian countries, have pledged liberalisation over the next seven years.
46. Value-added services were not formally part of these negotiations. Examples include on-line data processing, on-line data base storage and retrieval, electronic data interchange, email or voice mail.
47. For instance, the United States took a m.f.n. exemption with respect to three types of satellite services: direct-to-home; direct television; and digital audio services delivered via satellite.
48. Fifty-three countries guarantee market access to international telecommunication services and facilities and 42 countries concede market access for satellite services and facilities.
49. While Japan limits foreign shares to 20% in its two principal operators, KDD and NTT, Canada and Mexico do not allow majority shareholding by foreign companies.
50. Langhammer, R.J., Nach dem Ende der Uruguay-Runde: Das GATT am Ende? Kieler Diskussionspapiere 228, Kiel, 1994, 12.
51. Financial Times, Pact set to boost world telecoms, 17 February, 1997, p. 1.
52. Among these Countries are the US, the EU countries and Japan.
53. Wellenius, B., Telecommunications: World Bank Experience and Strategy. World Bank Discussion Paper No. 192, Washington D.C., 1993, p. 10.
54. In Germany, such an agency will be set up soon according to the Telecommunication Act of 1996.
55. A study by Ovum Ltd (Number Portability: Numbering for Consumer Benefit in Hong Kong. Report to the Office of the Telecommunications Authority, Hong Kong, 1994) shows that 70% of customers willing to switch to a new carrier would not do so if they would have to change their number.