World Trade
Organization RESTRICTED S/C/W/74
8 December 1998 (98-4942) Council for Trade in Services

TELECOMMUNICATION SERVICES

Background Note by the Secretariat

Introduction
This note has been prepared in the context of the information exchange programme currently conducted by the Council for Trade in Services in preparation for the forthcoming further round of negotiations on services.
In emerging economies where commitments on wire-based infrastructure and public voice services are often to be phased in later, new providers of liberalized wireless services are increasing the pace of entry into local service markets, supplying service to consumers who have been waiting for fixed lines to be installed.
The competition now in effect in more than forty, countries is already showing benefits not only for customers and new international telecom carriers, who have managed to gain over 11 per cent of the world market, but also for a few incumbent operators who, by slashing prices to face competition, have registered impressive growth.
with the entry into force of the Fourth Protocol of the GATS and its attached commitments on basic telecommunications, the vast bulk of the world market, measured in revenue terms, is subject to open markets for the supply of basic telecom services whether on the basis of simple resale or over a supplier's own infrastructure.
of this list, as well as a variety of "other" services, including mobile communications, providing real-time transmission of customer supplied information (usually listed under sub-sector o.
however, that this breakdown does not necessarily reflect and does not need to correspond to any particular government's national practice with respect to classifying services as basic or value added.
First, where there is partial correspondence there is no way of being certain which portion of a UNCPC description is intended to be relevant and, second, certain elements of the UNCPC descriptions used are either out of date or superseded by understandings developed in the negotiations on basic telecommunications.
Another difficulty with the GATS list of telecom services is that the distinction between many of its subsectors has blurred with the adoption of new transmission technologies, the enhanced ability to integrate different technologies, and the advent of service suppliers who distinguish themselves not by specializing in particular telecom services, but rather by the market segments they seek to serve.
Even distinctions between fixed and mobile telephony are crumbling as some suppliers can now offer both as an integrated package, can arrange to re-route calls to a customer's fixed telephone to its mobile telephone upon demand, and will soon be able to offer a wireless handset that converts itself from fixed service to mobile service if carried out of range of the fixed handset base.
Europe accounted for US$ 204 billion or nearly 32 per cent, Asia for US$168 billion (26 per cent), Oceania for US$ 17 billion (2.
Main line penetration in Europe, at nearly 36 per 100 inhabitants, is slightly higher than in the Americas, which averages nearly 32 per 100, while the reverse is true for cellular use: the Americas records slightly higher cellular
Table 1.
Cellular operators from China, Korea and Brazil made great strides in 1997: China's operator ranked second in the world (in number of cellular subscribers) in 1997, compared with fifth in 1996; Korea's SK Telecom ranked seventh, up from fifteenth in 1996; and Brazil's operator moved to twelfth place, up from twenty-first in the previous year.
This figure comprises the 69 participants in the Fourth Protocol on basic telecommunications, the 4 Members who have subsequently submitted schedules on basic telecoms, 2 recently acceded countries whose commitments resemble those in the Fourth Protocol, and 8 Members that included some basic services in their Uruguay Round schedules.
For example, commitments made in the Uruguay Round are silent on whether firms may build, own or operate their own network facilities for the supply of the value-added services upon which commitments are taken.
It is interesting to note that this means that regulatory commitments were included in more schedules of emerging economy governments than was any single subsector of basic telecom service except for data transmission
Level of commitments by modes of supply

In terms of the extent of market access commitments under the different modes of supply, there were fairly marked differences when basic services (sub-sectors a.
This means that all incidences of "unbound" entries on basic services with respect to particular modes of supply are accounted for by emerging economies, and this was more often done in respect to cross-border and consumption abroad, than in respect to commercial presence.
Whereas emerging economies, although they also record fewer limitations on cross border supply and consumption abroad, have recorded a higher incidence of commitments, overall, on commercial presence, when both full and partial commitments are taken into account.
Overall, emerging economies are about five times more likely than industrialized countries to have maintained limitations on the number suppliers and are almost four times more likely to require that particular types of legal entity be established to provide service.
Suppliers of telecommunications services: Trends in market structure

infrastructure
owners (

Retailers (
Full service (
National ( Long distance Regional City International
Business only (
National ( Long Distance Regional City International

Wholesalers(
International ( Fixed ( Submarine Dry Satellite
National ( Long distance Regional City
RESELLERS (

Switched resellers (
Arbitragers ( Call back Aggregators IP Telephony

Service Providers (
Wholesalers( Value-added messaging Virtual private networks Calling cards
Retailers ( Internet service providers Calling cards Value-added
Messaging ( IP-based Non IP-based

Switchless
resellers ( Arbitragers ( Aggregators Call back
Service providers ( Special numbers ( Premium services Freephone Location services ( Messaging "Follow me" services Source: CommunicationsWeek International,
Both traditional telecom providers and new entrants are acquiring not only other telecom companies but also other kinds of businesses in an effort to prepare for the broader,
This does not, suggests the article, represent the much-feared advent of a handful of mega-companies set to dominate the telecom industry, but while "a relatively small number of colossal deals are inflating overall deal value, there is a much larger number of smaller, discrete transactions whose significance goes well beyond their apparent scale.
Both traditional and new operators are engaging heavily in acquisitions of internet service providers and other data communications or computer service/software providers to help capture portions of the growing customer demand for voice over data networks, data communications, and information technology services, generally.
As cellular network operators assume larger market shares, it is possible that other service suppliers may find that access to a major cellular operator's network, to terminate customers' communications, to be inordinately costly, potentially as a result of the operator's market position rather than competitive forces.
A host of obligations typically required of telecom licensees, to help satisfy various social and regulatory objectives, include public service obligations, obligations to service specific groups or areas, quality of service targets, tariff controls, treatment of customers, competitive behaviour, and obligations to publish selected information.
For example, for services in which governments have committed to dispense with limits on the number of suppliers, except perhaps involving use of radio spectrum, the practice of requiring suppliers to await the issue of tenders for licenses may no longer be suitable.
com/

International Telecommunications Users Group (INTUG)
6 rue St Jean,
B-5000 Namur, Belgium Tel: +32 81 26 05 16
Fax: +32 81 26 05 17 E-mail: intug@mail.
be

Australian Telecommunications Users Group (ATUG)
Arbeitsgemeinschaft fuer Datenverarbeitung (ADV), Austria

Belgian Telecommunications Users Group (BELTUG)

Canadian Business Telecommunications Alliance (CBTA)

Danish Data Association (DDA)

Central Chamber of Commerce (CCC), Finland

European Council of Telecommunications Users Associations (ECTUA)

Association Française des Utilisateurs du Téléphone et des Télécommunications (AFUTT)

Hong Kong Telecommunications Users Group (HKTUG)

Hungarian Telecommunications Users Group (TE3)

Associazione Nazionale Utenti Italiani di Telecomunicazioni (ANUIT)

Netherlands Association of Business Telecommunications Users (BTG)

Telecommunications Users Association of New Zealand (TUANZ)

Norwegian Telecommunications Users Group (NORTIB)

Spanish Association of Telecommunication Users (AUTEL)

Swedish Telecommunications Users Group (NTK)

Associaton Suisse d'Usagers de Telecommunicatons (ASUT)

International Press Telecommunications Council (IPTC), UK
Telecom eV (Germany)

Telecommunications Managers Association (TMA), UK
International Communications Association (ICA), USA
Tele-Communications Association (TCA), USA

REFERENCES

Berendt,
Bond, James, "The Drivers of the Information Revolution—Cost, Computing Power, and Convergence", Public policy for the Private Sector, Note 118, June 1997, The World Bank Group at http://www.
European Commission, "Fourth Report on the Implementation of the Telecommunications Regulatory Package", Communication from the Commission to the European Parliament, the Economic and Social Committee and the Committee of the Regions, 25 November, 1988.
Smith, Peter, "What the Transformation of Telecommunications Markets Means for Regulation", Public policy for the Private Sector, Note 121, June 1997, The World Bank Group at http://www.
Wellenius, Bjorn, "Extending Telecommunications Service to Rural Areas—The Chilean Experience: Awarding subsidies through competitive bidding", Public policy for the Private Sector, Note 105, February 1997, The World Bank Group, at http://www.
Private leased circuit services 7522** and 7523** 7523 (see above) 7522 Business network services
75221 Shared network services - Network services necessary to establish telephone communications between selected (point-to-point or multi-point) locations (terminals) via a public (shared) network.
This type of service is primarily used to establish voice communications between distant PBX's (tie line), between a distant location and a PBX (off premises extension), between a PBX and a distant exchange area (foreign exchange) or between designated telephone sets, but may also accommodate data transmission.
Other
- Terrestrial-based Mobile CB 4 4 2 11 CA 1 4 1 8 CP 30 1 20 21 33 - Satellite-based Mobile CB 2 4 2 9 CA 1 4 1 6 CP 24 1 20 18 31 Source: WTO
Legend: CB - Cross border supply
CA – Consumption abroad
CP - Commercial presence a) Number of suppliers
c) Number of operations
d) Number of natural persons
e) Types of legal entity
f) Participation of foreign capital
g) Other measures 1 Data in this table does not take into account horizontal measures listed in schedules.
Other
- Terrestrial-based Mobile CB 1 7 4 4 4 CA 6 4 4 4 CP 1 12 5 3 1 6 4 - Satellite-based Mobile CB 1 7 4 4 4 CA 6 4 4 4 CP 1 9 4 1 1 5 4 Source: WTO
Legend:
CB – Cross border supply
CA – Consumption abroad
CP – Commercial presence

a) Tax measures
d) Nationality requirements
e) Residency requirements
f) Licensing, standards, qualifications
g) Registration requirements
h) Authorization requirements
l) Ownership of property/land 1 Data in this table does not take into account horizontal measures listed in schedules.
11,668 3,640 46,550 20% 250,662 0% 4 MCI 13,400 25,907 10% 19,653 299 60,409 8% 325,332 0% 5 BT 2,588 3,735 20% 26,067 5,367 124,700 -2% 209,035 0% 6 China Telecom 2,355 21,632 14% 15,821 - 970,000 -24% 16,311 100% 7 France Telecom 2,106 3,200 6% 26,122 3,313 165,042 0% 158,274 75% 8 KDD 1,864 1,196 3% 2,708 67 5,275 -2% 513,334 0% 9 Sprint 1,636 22,759 11% 14,873 952 47,500 -1% 313,116 0% 10 Telecom Italia 11,605 2,381 12% 16,721 2,483 82,317 -5% 203,129 5% 11 Telmex 1,432 1,184 6% 7,534 2,679 54,758 -1% 137,592 0% 12 Stentor 11,391 21,778 8% 9,939 1,320 77,000 -9% 129,074 3% 13 Swisscom 11,386 2,093 9% 6,931 -61 22,170 1% 312,622 100% 14 Singapore Telecom 1,263 753 22% 3,051 1,576 10,793 4% 282,648 80% 15 WorldCom 11,249 21,400 65% 7,351 799 14,700 25% 500,068 0% 16 Teleglobe 1,050 21,112 22% 1,400 211 1,204 -56% 1,162,557 0% 17 KPN Telecom 1,031 488 6% 7,622 1,722 32,709 1% 233,030 44% 18 Telstra 914 705 1% 11,458 2,959 57,122 -16% 200,593 66% 19 Telefonica de Espana 882 1,566 32% 10,509 1,013 62,666 -7% 167,694 0% 20 VSNL 778 428 11% 1,630 362 2,861 0% 569,663 65% 21 Korea Telecom 686 657 27% 4,834 76 59,753 -1% 80,903 71% 22 Chunghwa Telecom 684 826 11% 5,272 1,355 34,748 -3% 151,727 100% 23 Telia Group 675 2747 6% 5,827 506 33,930 0% 171,746 100% 24 Telintar 646 183 3% 646 150 700 1% 922,351 0% 25 Telkom 585 306 5% 4,024 707 57,813 0% 69,603 70% Source: CommunicationsWeek International, 23 November 1998
Figures are for the 1997 financial year.
Top 20 fixed telephone line operators, ranked by 1997 main telephone lines
Rank Main telephone lines Local telephone service revenue 97 96 Operator (Country) Total (000s) 1997 Change (96-97) Total (US$ million) 1997 Change (96-97) As % of revenue 1997 1 2 DGT (China) 70'310 28.
03 Antigua and Barbuda X X X X X X X X X X X X X X X X X Argentina X X X X X X X X X X X X X X X X Australia X X X X X X X X X X X X X X Austria X X X X X X X X X X X X X X X Bangladesh X X X X X X X X X X Barbados X X X X X X X X X X X X X X X X X Belize X X X X X X X X X X X X X X X X X Bolivia X X X X X X X X X Brazil* X X X X X X X X X X X X X X X X Brunei Darussalam X X X X X X X X Bulgaria X X X X X X X X X X X X X Canada X X X X X X X X X X X X X X X X Chile X X X X X X X X X X X X Colombia X X X X X X X X X X X X X X X Congo RP X Côte d'Ivoire X X X X X X X X X X Cuba X X X X X X X Czech Republic X X X X X X X X X X X X X X X X X Djibouti X X X X X X X X X X Dominica* X X X X X X X X X X X X X X X X X Dominican Republic X X X X X X X X X X Ecuador X X X X X X X X X El Salvador X X X X X X X X X European Community X X X X X X X X X X X X X X Finland X X X X X X X X X X X X X X Gambia X X X X X X X X X X X Ghana X X X X X X X X X X Grenada X X X X X X X X X X X X X X X X Guatemala* X X X X X X X X X Guyana X Hong Kong X X X X X X X X X X X X X X X Hungary X X X X X X X X X X X X X X X X X Iceland X X X X X X X X X X X X X X India X X X X X X X X X X Indonesia X X X X X X X X X X X Israel X X X X X X X X X X X X X Jamaica X X X X X X X X X X X X X X X X X Japan X X X X X X X X X X X X X X Kenya X X Korea RP X X X X X X X X X X X X X X X X Kyrgyz Republic X X X X X X X X X X X X X X X X X Latvia* X X X X X X X X X X X X X X X X X Lesotho X X X X X X Liechtenstein X X X X X X X X X Malaysia X X X X X X X X X X X X X X X Mauritius X X X X X X X X X X Mexico X X X X X X X X X X X X X X X Mongolia X X X X X X X Morocco X X X X X X X X X X X X New Zealand X X X X X X X X X X X X X X X X Nicaragua X X X X X X X X X X X X X Nigeria X X X X X X X X X X Norway X X X X X X X X X X X X X X Pakistan X X X X X X X X X X X X Panama X X X X X X X X Papua New Guinea* X X X X X X X X X Peru X X X X X X X X X X X X X X X Philippines* X X X X X X X X X X X Poland X X X X X X X X X X X X X X X Romania X X X X X X X X X X X X X X X X Saint Kitts & Nevis X X X Senegal X X X X X X X X X X X Singapore X X X X X X X X X X X Slovak Republic X X X X X X X X X X X X X X X X X Slovenia X X X X X South Africa X X X X X X X X X X X X X X X Sri Lanka X X X X X X Suriname X X X X X X X X X Sweden X X X X X X X X X X X X X X Switzerland X X X X X X X X X X X X X X X X Thailand X X X X X X X X Trinidad and Tobago X X X X X X X X X X X X X X Tunisia X X X X X X Turkey X X X X X X X X X X X X X X X X X Uganda** X X X X X X X X X X USA X X X X X X X X X X X X X X X X X Venezuela X X X X X X X Zimbabwe X X X X X X X X X X X Total 69 63 64 59 47 59 59 55 51 57 48 46 45 43 65 57 46 Source: WTO

* Entry into force subject to acceptance, which is pending.
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Sheet3
Sheet2
Sheet1
Chart1
From 14 to 15
From 10 to13
From 6 to 9
Five or less
No.
Coverage of telecom commitments
From 14 to 15
From 14 to 15
From 10 to13
From 10 to13
From 6 to 9
From 6 to 9
Five or less
Five or less
0.

JOB(05)/252 18 October 2005

Council for Trade in Services
Special Session


COMMUNICATION FROM Australia, Canada, the european communities, Hong Kong China, Japan, Korea, Norway, Singapore, Switzerland, Chinese Taipei and the United States

Statement on the Quality of Telecommunications Offers
at the Special Session of the Council for Trade in Services on 1 July 2005


The subject of this intervention is on the quality of telecommunications offers. I will be speaking on behalf of the delegations of Australia, Canada, the EC, Hong Kong China, Japan, Korea, Norway, Singapore, Switzerland, Chinese Taipei and the US.
If Members recall, at the last CTS in February, a joint statement on liberalization of telecommunications services was tabled by the delegations of Australia, Canada, Chinese Taipei, EC, Hong Kong China, Japan, Korea, Norway, Singapore and the US (subsequently circulated as TN/S/W/50). The joint statement encouraged Members to achieve liberalization of this sec

JOB(05)/253 18 October 2005

Council for Trade in Services
Special Session


COMMUNICATION FROM Australia, Canada, the european communities, Hong Kong China, Japan, Korea, Norway, Singapore, Switzerland, Chinese Taipei and the United States


Statement on Telecommunications Services
at the Special Session of the Council for Trade in Services on 30 September 2005

This verbal statement addresses telecommunications services. It is supported by the following delegations: Australia, Canada, the EC, Hong Kong China, Japan, Korea, Norway, Singapore, Switzerland, Chinese Taipei and the US.
The supporters of this statement agree that telecommunications services are not only important economic drivers in their own right but are key enablers of trade and development. Therefore we believe that active participation of all WTO Members in telecommunications services negotiations would strengthen each Member’s development, efficiency and competitiveness and improve their access to inform

World Trade
Organization TN/S/W/50
1 July 2005
(05-2868) Council for Trade in Services
Special Session Original: English


COMMUNICATION FROM AUSTRALIA, CANADA, THE EUROPEAN COMMUNITIES, JAPAN, HONG KONG CHINA, KOREA, NORWAY, Singapore, THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU, AND THE UNITED STATES

Liberalization of Telecommunication Services


The following communication, dated 1 July 2005, from the delegations of Australia, Canada, the European Communities, Japan, Hong Kong China, Korea, Norway, Singapore, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, and the United States is being circulated to the Members of the Council for Trade in Services.

_______________


We believe telecommunications services are an important element of the GATS negotiations because of the valuable roles such services play in supporting national economies and international trade:
Drivers of Economic Growth: A modern tel

World Trade
Organization WT/DS204/3
18 February 2002 (02-0825) Original: English

MEXICO – MEASURES AFFECTING TELECOMMUNICATIONS SERVICES

Request for the Establishment of a Panel by the United States

The following communication, dated 13 February 2002, from the Permanent Mission of the United States to the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.
_______________

The United States respectfully requests the Dispute Settlement Body (DSB) to establish a panel pursuant to Article 6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) in the dispute Mexico  Measures Affecting Telecommunications Services (WT/DS204) to examine the matter described in this document.
2 require Mexico to ensure that Telmex provides interconnection: at any technically feasible point in the network; under nondiscriminatory terms, conditions, and rates; and on terms, conditions and costoriented rates that are transparent, reasonable, and sufficiently "unbundled" so that suppliers need not pay for network components or facilities they do not require.

For example, Mexico's "International Long Distance Rules", which the Secretariat of Communications and Transportation ("SCT") published in the Diario Oficial on 11 December 1996 ("ILD rules") give Telmex, alone among Mexican basic telecom service suppliers, the authority to negotiate the charge that foreign basic telecom suppliers must pay their Mexican counterparts to interconnect telephone calls originating abroad.
(2) Mexico's Measures Fail to Ensure US Basic Telecom Suppliers Reasonable and NonDiscriminatory Access to and Use of Public Telecom Networks and Services

Section 5(a) of the GATS Annex on Telecommunications (Annex) requires Mexico to ensure that service suppliers of other Members can access and use public telecommunications transport networks and services ("public networks and services") on reasonable and nondiscriminatory terms and conditions to provide a scheduled service.
The excessive, bundled interconnection rate that Mexican suppliers must include in their contracts are not reasonable terms and conditions for accessing and using public networks and services to provide crossborder facilitiesbased services.

(B) CrossBorder and Domestic Commercial Agency Services

Mexican basic telecom service suppliers also will not make private leased circuits available to US or other foreignowned suppliers who wish to provide domestic or crossborder basic telecom service as commercial agencies.
As previously described, the ILD rules – in combination with other measures – make it impossible for foreignowned commercial agencies located in the United States or Mexico to obtain private leased circuits or to connect those circuits to a foreign network.
Far from preventing Telmex from engaging in anticompetitive activities, Mexico's rules empower Telmex to engage in monopolistic practices with respect to interconnection rates for crossborder basic telecom services and to create an effective cartel dominated by Telmex to set rates for international interconnection.
In its Schedule, Mexico made market access and national treatment commitments for "commercial agencies," which it defined as "[a]gencies which, without owning transmission means, provide third parties with telecommunications services by using capacity leased from a public network concessionaire".
These include the Federal Telecommunications Law of 18 May 1995, the "Agreement of the SCT establishing the procedure to obtain concessions for the installation, operation or exploitation of interstate public telecommunications networks, pursuant to the Federal Telecommunications Law," published in the Diario Oficial on 4 September 1995, Rules for Long Distance Service, published by the SCT in the Diario Oficial on 21 June 1996.