ITU Forum on Trade in Telecommunications Begins

Geneva, 16 March 1998 — The International Telecommunication Union’s second World Telecommunication Policy Forum opened today, with more than 700 policy makers and government delegates converging on the Geneva International Conference Centre for three days of intensive discussions aimed at smoothing the transition to a competitive global environment for telecommunications services.

The Forum, which will run from March 16-18, has as its theme Trade in Telecommunications, and is focused on the implications of the World Trade Organization agreement on trade in telecommunication services, which came into effect on the 5^th of February this year.

The event was officially opened this morning by WTPF Chairman, Neil McMillan, CMG, who headed the WTO negotiating group which developed the organization’s agreement on trade in telecommunication services. Addressing the delegates gathered at the CICG, McMillan spoke of the need to develop outputs that would help countries most affected by current changes in world telecoms markets. "Telecoms can only benefit mankind to its full potential if there is a framework to allow it to do what it does best - overcome distance and join people together.

Mr McMillan went on to lament the fact that, despite improvements in technology which have allowed operators to deliver telecommunications services at a cost up to 1,000 times lower than 30 years ago, a great many people in the world are still without telecommunications access.

Mr McMillan’s welcoming address was followed by a keynote speech by ITU Secretary-General Dr Pekka Tarjanne. Dr Tarjanne said coming to grips with the new telecommunications environment would entail learning a new language for both the telecoms and trade communities. He noted that liberalization which has already taken place in world markets now means that around three-quarters of all telecommunications traffic is provided under competitive market conditions, compared with just 35% in 1990.

Dr Tarjanne urged countries which have not yet made commitments under the WTO agreement to ‘ join the club’. Even though these countries represent only 7% of global telecommunications traffic, they nonetheless represent 116 of the ITU’s 188 Member States. He emphasized the need for a gradual transition, especially for developing nations, and reaffirmed the ITU’s intention to assist as far as possible, those countries which most require help in implementing cost-based accounting systems.

Dr Tarjanne’s comments were followed by a keynote speech by the Director-General of the WTO, Mr Renato Ruggiero. Mr Ruggiero said the subject of trade in telecommunications has been one of the dominant themes of the work of the WTO over the past three years. He went on to predict that, within 10 years, there would be very few telecoms monopolies left in the world. He said the WTO agreement had "reflected and codified what [had been] happening in the markets", adding that "the [WTO] negotiation expanded and accelerated the liberalization process and that it has changed fundamentally the legal environment in which the industry operates."

Mr Ruggiero said the vision of a global village outlined so strikingly by Marshall McLuhan some 30 years ago was now close to becoming a reality, as advances in digital technology brought the world to the verge of a borderless global economy. He went as far as to postulate that the opening of markets and the development of new kinds of telecommunications systems could play a key role in the elimination of world poverty. "Poverty is receding: for the first time in the history of the world it may even become possible to envisage the elimination of poverty as developing countries are enabled to leap-frog phases of industrial development which in the North have taken decades to accomplish."

The introductory speeches were followed by important announcements of funding assistance to help developing nations make the transition to the new environment. Mr Ahmed Laouyane, Director of the ITU’s Telecommunication Development Bureau, pledged one million Swiss francs for the purpose of carrying out follow-up case studies, and funding regional seminars and training programmes. Mr Laouyane said the ITU’s forthcoming World Telecommunication Development Conference in Malta (March 23 - April 1) would develop a work programme for the use of these funds.

Mr Laouyane’s commitment of ITU funds was followed by the announcement, by Carlos Braga of the World Bank’s infoDev programme, of grants totalling US$250,000 for the organization of regional seminars specially geared to aid developing nations through their transition phases. Mr Braga’s colleague, Emmanuel Forestier, then announced that the World Bank intended to develop a programme designed to help the 30 countries identified as most in need of assistance in reforming their accounting rate structure. Further details of this initiative will be unveiled at the World Telecommunication Development Conference.

The morning’s announcements were followed by the formal presentation of the Secretary-General’s Report, a comprehensive analysis of the changes in the telecommunications sector which will serve as the Forum’s only working document. For the first time at an ITU conference, proceedings were webcast – that is, broadcast over the Internet – in both audio and video formats. The new system allowed interested parties to listen to the Forum proceedings in real time, and to see and hear video of the keynote speakers just four hours after they made their presentations.

Discussions will continue tomorrow and Wednesday on the recommendations of the Secretary-General’s report, which proposes a number of options for reform in the light of new trading relationships, and which includes three draft Opinions which will be considered by delegates with a view to their adoption at the close of the event.

The three Opinions have been prepared by a special group of experts, comprising more than 60 representatives from nations at all levels of economic development. They are designed to facilitate trade in telecommunications services by encouraging the global application of World Trade Organization principles, and by developing programmes and actions that could be taken to aid the transition of developing countries from a regulated to a liberalized telecommunications environment.

One of the most important tasks of the Forum will be the reform of the international accounting rate system, which has long been on the agenda of ITU-T Study Group 3. Lack of progress in work to date in this area prompted the US government to announce last year that it would take unilateral action on accounting rate reduction by establishing benchmarks which would limit the amount US carriers could be charged for completing international calls in other countries.

Many countries, both developed and developing alike, have since registered dissatisfaction over this approach, and Forum delegates will be looking to find a multilateral solution to the problem of accounting rate reform which would be acceptable to all.

Telecoms Growth and the WTO Agreement

The telecommunications sector is today the world’s third largest by market capitalization, and growth shows no signs of slowing. Technological developments in recent years have seen the telecommunications sector transformed from a predominantly voice-based communications network to a key facilitator of economic activity. It is currently estimated that some US$150 billion worth of telecommunication services and equipment is traded each year across international borders, while the SWIFT financial network alone carries over US$2.3 trillion worth of transactions each day. Communications networks have become a vital economic tool, essential to the delivery of other business services.

Recent trends in world markets have seen the telecommunications sector liberalize and become subject to open competition. From a system based on monopoly-to-monopoly based provision, telecommunications is now beginning to be traded domestically and internationally like any other basic commodity.

It is generally recognized that the WTO agreement will have an enormous impact on the way telecommunications services are provided the world over, cementing into place new trading arrangements which have already begun to transform many of the world’s telecoms markets. To date, 72 countries have made commitments under the agreement. Between them, these nations, while representing just over half of the world’s population, collectively account for more than 93 per cent of global telecommunications revenue.

Special Information Session

A special pre-Forum Information Session was held on Sunday, March 15, with the purpose of providing a general overview of the issues which will be dealt with during the three days of the event. The session, which attracted around 300 participants, examined a series of nine country case studies, which were prepared by the ITU and leading telecoms consultants with the aim of focusing attention on the real-life problems encountered by developing nations in the implementation of accounting rate reform.

The morning session comprised a roundtable discussion of regulatory issues in the light of implementation of the WTO agreement. This session was followed in the afternoon by a panel session on possible ways to reform the accounting rate system.

The final session of the day was the presentation of the Country Case Studies. Each study was introduced briefly by a representative of the consultancy which carried out the work, and was followed by comments from representative of the nine countries which served as subjects of the studies – the Bahamas, Colombia, India, Lesotho, Mauritania, Samoa, Senegal, Sri Lanka and Uganda.

Introducing the studies, session chairman Mr Bernard Rouxeville said he hoped the studies would provide a snapshot of the state of the operating climate for many developing nations, and would help delegates over the next three days as they deliberated over how best to implement a move towards a cost-oriented system.

Additional Information

The World Telecommunication Policy Forum is a relatively new event for the ITU. It was created because of widespread recognition of the need for a new kind of event which would address specific and urgent topics of concern. Such issues, by their global nature, were considered beyond the scope of any single country, and would benefit from broad ranging discussion by an international conference which directly involved both government and the industry.

Additional information on the Forum, such as technical backgrounders, feature articles, the Report of the Secretary-General, keynote addresses and other speeches, the draft Opinions, summaries of the Case Studies, and a Forum agenda, can be found on the WTPF website at: http://www.itu.int/wtpf/newsroom.

For press enquiries, please contact the ITU Press Office on tel: +41 22 730 6039/6601/6303/5192: fax: +41 22 730 5939.

For other information, please contact Ms Maija Thynell on E-mail: thynell@itu.int, or by fax on: +41 22 730 6453.