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Country Case Studies:
The Changing Telecommunications Environment

The adoption of the WTO basic telecommunications services agreement in Geneva of 15 February 1997 marked a new departure from the traditional rules and transactions of international telecommunications. The resulting accelerated liberalization of telecommunications services markets is expected to expose more than 90 per cent of the world’s international telephone traffic to increased competition. And as competition increases, governments and operators are seeking to lower costs and make international telecommunication settlement rates more transparent and cost-oriented.

For consumers, the benefits of lower cost and better quality international telecommunications services are clear. But for some countries, particularly low-teledensity developing countries, the liberalization of trade in telecommunications and the reform of the international accounting rate and settlement system are likely to have a markedly greater impact. This is because these countries gain a proportionately greater share of their revenue from international traffic. As a result, some countries fear that competition and rate-cutting may undermine the network expansion and service improvement efforts of operators.

For example, many governments have concerns about how such market-driven initiatives will affect the abilities of the incumbent national operators, and economies that depend on international telecommunication services revenues, to fund universal service efforts.

For all operators and regulators, understanding the effects of the changing telecommunications environment is a difficult but necessary task. For many developing countries, building the regulatory and cost-accounting frameworks necessary to compete and to leverage competition to their benefit will be an even greater challenge.

The agenda of the second World Telecommunication Policy Forum includes discussion of "actions to assist Member States and Sector Members in adapting to the changes in the telecommunications environment, including analyzing the current situation and formulating possible co-operative actions . . . .to facilitate adaptation to the new environment" .  The Policy Forum has been invited to consider the "evolution of the international telecommunications environment, particularly the accounting and settlement system" .

In preparation for the WTPF, the ITU commissioned a series of case studies of a representative range of economies likely to be seriously affected by changes to the international telecommunications environment. A case studies working group, comprised of experts from Member States and Sector members and representatives from the ITU-T, the ITU-D, and the Strategic Planning Unit,  met to develop and finalize the proposed case studies.

Interested countries were then contacted and expressions of interest for preparation of the studies were sought from a wide range of respected telecommunications consultants. The successful consultants were then selected through an international bidding process.

The studies were prepared in cooperation with each country's administration and various multilateral organizations, in order to get the most accurate picture possible of the likely impact of the changes to the international telecommunication environment .

Funded by the ITU’s Telecommunication Development Bureau and the Commonwealth Telecommunications Organization, in association with the World Bank’s InfoDev programme, the case studies explore the impact of the changing international telecommunications environment on the economies of the Bahamas, Colombia, India, Lesotho, Mauritania, Samoa, Senegal, Sri Lanka and Uganda.

The case studies will be discussed on 15 March 1998 at the WTPF 98
Information session.

Selection of countries (teledensity, 1996)


Low income

Middle income

High income

Latin America   Colombia
(9.8ml/100 inhabitants)
(27.82ml/100 inhabitants)
Asia/Pacific India
(1.53ml/100 inhabitants)
(5.48ml/100 inhabitants)
Asia/Pacific Sri Lanka*
(1.39ml/100 inhabitants)
Arab States Mauritania
(0.43ml/100 inhabitants)
Africa Lesotho
(0.90ml/100 inhabitants)
(1.11ml/100 inhabitants)
Africa Uganda*
(0.24ml/100 inhabitants)

Funding sources:

funding by ITU, except* funded by CTO
ITU World Telecommunication Indicators Database

Costs, Settlement Rates and Universal Service

Historically, settlement rates have been negotiated bilaterally between government-owned operators, and are loosely based on estimates of the cost of terminating international telecommunications traffic.

For developing countries, the cross-subsidization model – keeping local access charges low and subsidizing access and network development using the surplus from high international call revenues generated by the business sector and more affluent consumers – was often seen as the only way of increasing teledensity. Thus, prices for international calls stayed high and some operators came to rely on income from settlement payments for their network growth and maintenance costs.

Telecommunications revenues and estimated net settlement payments, 1996

Country Total telecom revenues (US$M) Net settlement payments ($USM) % of revenues from net settlement payments
India 3 088.0 389.0 12.5%
Lesotho* 12.8 (0.412) -3.0%
Mauritania 27.4 .218 0.8%
Samoa 7.1 2.9 40.8%
Senegal 121.5 35.6 29.3%
Sri Lanka 166.4 62.3 37.3%
Uganda 47.0 3.0 6.3%
Total/average 3 470.2 493.4 14.3%

* - 1997 figures

The case studies explore the sensitivity of operators in each of the nine countries to a reduction in international settlements in relation to income, network capacity, investment, networked development plans, universal service obligations, provision of various services, quality of service, debt servicing, maintenance, employment, tax payments, and so on.

The Demands of Liberalization

The ability of a country to leverage the changing international telecommunications environment to its benefit is largely dependent on the ability of its telecommunications operator(s) to respond effectively to increased competition, as well as the effectiveness of the national regulatory authority to implement and control a ‘level playing field’ for both incumbent operators and new market entrants. The case study project analyses the effects of possible scenarios for settlement rate reform on countries at various stages of liberalization: from those who are well on their way to implementing WTO agreement commitments, to non-signatories taking initial steps to establish an independent telecommunications regulator and to implement cost accounting and regulatory frameworks.

Possible Scenarios

The case studies look at the potential impact of implementing different proposed settlement rate reform schemes in each of the countries studied. Each study provides an overview of the current economic and telecommunications climate, including network characteristics, consumer demand, the potential for growth, and the policy and regulatory environment. It then forecasts the possible implications of a number of proposed alternatives to the traditional accounting rate system, including:

  • Implementation of FCC benchmarks
  • Gradual staged reductions in accounting rates
  • Unilaterally-negotiated termination charges
  • Very low accounting rates, or sender-keeps-all

The presentation of the case studies will be a key element to furthering the understanding of the difficulties certain operators will face in the changing telecommunications environment.

WTPF Case Studies
Summary of Local Telecommunications Environment



Teledensity (lines per 100 inhabitants)

Current environment

Colombia Signatory - WTO agreement on basic telecommunications; Signatory - GATS


Government-run portion of sector divided into national operator (Telecom), policy maker (Ministry of Communications) and independent regulatory body (CRT) established in 1994. Competition in cellular, local, national and international services.
India Signatory - WTO agreement on basic telecommunications; Signatory - GATS


Two incumbent domestic service operators: Department of Telecoms (DOT) and Mahanagar Telephone Nigam Ltd. Liberalization and licence-bidding process for basic domestic services enacted in 1994; local licence holders must access international network through the DOT. International service monopoly held by Videsh Sanchar Nigam Ltd. Independent regulator, TRAI, established in January 1997.
Senegal Signatory - WTO agreement on basic telecommunications; Signatory - GATS


Regulator officially separated from operator (Sonatel) in 1985. 1996 legislation allowed for the partial privatization of Sonatel, and liberalization of certain telecommunications market segments: 33.3% of Sonatel was acquired by France Telecom in 1997.
Sri Lanka Signatory - WTO agreement on basic telecommunications; Signatory - GATS


Telecommunications Act of 1991 introduced licensing framework for network operators, established independent regulator, and converted operator into state-owned corporation (effective 1996). In March 1996, two new wireless local loop service competitors were licensed. In August 1997, 35% of Sri Lanka Telecom was sold to NTT.
Lesotho Signatory - GATS


Lesotho Telecommunications Corporation holds a monopoly on all service provision. Government currently considering establishment of an independent regulator and partial privatization. Mobile services licensed exclusively to Vodacom Lesotho, a Vodacom/LTC joint venture.
Mauritania Signatory - GATS


Office of Posts and Telecommunications hold monopoly on all telecommunication services provision. Both operations and regulation are handled by the OPT.
Uganda Signatory - GATS


Uganda Posts and Telecommunications Corporation has historically held a monopoly on national, telex, and international service provision. The NTN Uganda Consortium was recently awarded the country’s second network operator licence for network and cellular services. The Uganda Communications Act of 1997 codified plans to establish an independent regulator and privatize a portion of UPT.
Bahamas Non-signatory


BaTelCo holds the monopoly except in paging service provision and Internet access. Plans to privatize in the future.
Samoa Non-signatory


Two public telecommunications operators exist: the Posts and Telecommunications Department, and a joint venture cellular and wireless local loop provider. Full corporatization planned for July 1998.