Rising Termination Rates, Regulatory Transparency and Equipment Top Trade Concerns
Rising termination rates, regulatory transparency and equipment trade topped concerns in an annual review of U.S. international telecom trade agreements, the U.S. Trade Representative said. The review is based on public comments filed by interested parties. Eight companies and trade associations and two foreign governments commented or replied to comments.
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“A troubling trend” of higher termination rates in some countries is emerging, the USTR said. Operators acting on government measures are adversely affecting U.S. telecom operators, the USTR said. Countries are mandating rate increases through regulation, taxes on international calls and per-minute contributions to domestic universal service funds, the USTR said.
A 2008 ITU-T recommendation on “network externalities” may “run counter” to World Trade Organization commitments and U.S. free trade agreements, the USTR said (WID Oct 20 p6). The voluntary plan aims to boost calling opportunities by helping developing countries build out networks through a fee, USTR said. The fear is the fee will be used “to raise costs for foreign operators in developing countries,” USTR said. Implementing the recommendation “would raise serious concerns about whether the country was affording MFN [most favored nation] treatment to foreign telecommunication suppliers,” USTR said. The U.S. and 27 other countries opposed approving the recommendation.
Transparency and regulatory independence are crucial for fair competition, the USTR said. China’s 3G licensing effort has lacked transparency and appears to favor domestic technology, the USTR said. Regulatory transparency also was cited as a concern in Egypt, Germany, India, Israel, Mexico and South Africa.
Equipment standards and conformity assessment requirements can be used as a barrier to entry for foreign suppliers, USTR said. China has proposed 13 new technical regulations for routers, smart cards, Wi-Fi encryption, secure databases and operating systems, the USTR said. China also prohibits mobile phones with Wi-Fi, USTR said. Mandatory certification and testing requirements are “areas of concern,” the USTR said, citing China, India, Mexico, Brazil, Thailand and Malaysia. South Korea also is considering requiring new government IP-based wireless telephone systems to have encryption based on a Korean standard, the USTR said.
Access to wholesale network access products is challenging in many markets, USTR said, citing concerns about access to Colombian submarine cable landing station facilities, wholesale transmission services in Germany and Sweden, submarine cable systems in India, and lack of dominant carrier regulation in Mexico.
Market entry opportunities for U.S. telecom providers in China are limited, the Coalition of Service Industries said in a comment. Canada maintains foreign ownership restrictions in telecom, prohibiting U.S. and other foreign investors from controlling facilities-based telecom carriers, the coalition said. The restrictions prevent open competition and discriminate against innovation and price competition, it said. The German Federal Network Agency, BNetzA is subject to inappropriate political pressure, the coalition said. The German government holds direct and indirect ownership interest of 31.7 percent in Deutsche Telekom AG, it added.