INFORMATION DOCUMENT:
COUNTRY CASE STUDIES OF THE CHANGING INTERNATIONAL TELECOMMUNICATIONS
ENVIRONMENT
The signing of the WTO basic telecommunications services agreement in Geneva on 15
February 1997 marked a new departure from the traditional rules and transactions of
international telecommunications. The resulting accelerated liberalization of
telecommunication services markets is expected to expose more than 90 per cent of the
worlds international telephone traffic to increased competition. As competition
increases, governments and operators are seeking to lower costs and make international
telecommunication settlement rates traditionally bilaterally-agreed and somewhat
arbitrarily set in some cases more transparent and cost-oriented.
The benefits of lower cost and better quality international telecommunications services
are clear for consumers. However, it is feared that competition and rate-cutting may
undermine the network expansion and service improvement efforts of some operators,
particularly in low-teledensity developing countries. Many governments have concerns about
how such market-driven initiatives will affect the abilities of incumbent national
operators, and economies that depend on international telecommunication services revenues,
to fund universal service efforts.
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Country Case
Studies: Timetable
- 26 March 1997 - Information Group of Experts met in Geneva and proposed country case
studies.
- May-June 1997 - the proposal was endorsed by the ITU Council and ITU SG3.
- June-August 1997 - The case studies working group, comprised of experts from Member
States, Sector Members, and ITU-T, ITU-D, and SPU representatives, met to develop and
finalize the outline for the studies.
- September-October 1997 - Interested countries were contacted and expressions of interest
in performing the case studies were received from consultants. Prequalified consultants
were selected for bidding.
- 29 September 1997 - First call for bids released.
- 17 October 1997 - Second call for bids released.
- 28 October, 7 November 1997 - Briefing meetings for consultants and country
representatives.
- November 1997 - Final agreements issued to consultants; consultants begin field
research.
- 15 December 1997 - Interim reports delivered.
- 31 January 1998 - Final reports due.
- 15 March 1998 - Reporting of case studies at WTPF Information Session.
The Consultants
Bahamas and Colombia - DNTA, USA
India - Tarifica, UK, in association with the Indian Institute of Management
Mauritania and Senegal - ICEA, France
Lesotho and Uganda - Clifford Chance/Booz Allen Hamilton, UK
Sri Lanka - Antelope Consulting, UK/Finland
Samoa - ITU Regional Office, Thailand
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For all operators and regulators, understanding the effects
of the changing international 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, in
many cases, an even greater challenge. The agenda of the second World Telecommunication
Policy Forum (WTPF) includes discussion of "actions to assist Member States and
Sector Members in adapting to the changes in the telecommunications environment including
analysing the current situation (e.g., by case studies) and formulating possible
co-operative actions ... to facilitate adaptation to the new environment." The
Policy Forum is invited to consider the "evolution of the international
telecommunications environment, particularly the accounting and settlement system." In
preparation for the WTPF, and in accordance with Council Decision 475, the ITU has
commisioned a series of case studies of a representative range of economies likely
to be affected by changes to the international telecommunications environment. Funded by
the ITU/BDT and the Commonwealth Telecommunications Organization (CTO), in association
with the World Banks InfoDev program, the case studies explore the impact of
the changing international telecommunications environment on the economies of Bahamas,
Colombia, India, Lesotho, Mauritania, Samoa, Senegal, Sri Lanka, and Uganda.
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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 telecommunication traffic.
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Telecommunications
revenues and estimated
net settlement payments, 1996 |
Country |
Total telecom revenues (US$M) |
Net settlement payments (US$M) |
% of revenues derived from net settlement
payments |
Bahamas |
144.65 |
1.55 |
1.0% |
Colombia |
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162.75 |
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India |
3'088.0 |
389.0 |
12.5% |
Lesotho |
12.8 |
(0.412) |
-3.0% |
Mauritania |
27.4 |
0.2 |
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 |
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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, network development plans, universal service obligations, provision of various
services, quality of service, debt servicing, maintenance, employment, tax payments, etc.
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
analyzes 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 the initial steps to establish an
independent telecommunications regulator and to implement cost accounting and regulatory
frameworks.
Scenarios for analysis
The case study exercise examines the potential impact of implementing different
proposed settlement rate reform schemes in each of the countries studied:
- Benchmarks
- Staged reductions
- Termination charges
- Very low rates or sender-keeps-all
- Revenue stabilisation measures
Summary of the Telecommunications Environment in the Countries Studied
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WTO status |
Country |
Teledensity 1996 (lines per 100
inhabitants) |
Telecommunications environment |
GATS signatory; signatory to basic agreement on
telecommunications |
Colombia |
9.98 |
Government-run portion of sector divided into national
operator (Telecom), policy maker (Ministry of Communications) and regulatory body (CRT);
CRT established independent of Ministry in 1994. Competition in cellular, local, and
national and international telephony. |
GATS signatory; signatory to basic agreement on
telecommunications |
India |
1.53 |
Two incumbent domestic service operators: Department of
Telecoms (DOT) and Mahanagar Telephone Nigam Limited (MTNL). Liberalization and
license-bidding process for basic domestic services enacted in 1994; local license holders
must access international network through the DOT. International service monopoly held by
Videsh Sanchar Nigam Limited (VSNL). Independent regulator, TRAI, established in January
1997. |
GATS signatory; signatory to basic agreement on
telecommunications |
Senegal |
1.11 |
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 1/3% of Sonatel was acquired by France
Telecom+in 1997. |
GATS signatory; signatory to basic agreement on
telecommunications |
Sri Lanka |
1.39 |
Telecommunication s Act of 1991 introduced licensing
framework for network operators, established independent regulator, and converted operator
into state-owned corporation (effectuated in 1996). In March 1996, two new WLL local
service competitors were licensed. In August 1997, 35% of Sri Lanka Telecom was sold to
NTT. |
GATS signatory |
Lesotho |
.90 |
Lesotho Telecommunications Corporation holds 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. |
GATS signatory |
Mauritania |
.43 |
Office of Posts and Telecommunications holds monopoly on
all telecommunication services provision. Both operations and regulation are handled by
the OPT. |
GATS signatory |
Uganda |
.24 |
Uganda Posts and Telecommunications Corporation has
historically held a monopoly on national, telex, and international service provision. The
MTN Uganda Consortium was recently awarded the countrys second network operator
license for network and cellular services. The Uganda Communications Act of 1997 codified
plans to establish an independent regulator and privatize a portion of UPT. |
Non-signatory |
Bahamas |
27.82 |
BaTelCo holds the monopoly except in paging service
provision and Internet access. Plans to privatize BaTelCo in the future. |
Non-signatory |
Samoa |
5.48 |
Two public telecommunication operators exist: the Posts and
Telecommunications Department (PTD) and a joint venture cellular and WLL provider. Full
corporatization of PTD planned for July 1998. |
The full text of the final country case study reports will be available at the WTPF
Information Session on 15 March 1998. Further information regarding the case studies is
available on the WTPF Website, http://www.itu.int/wtpf/wtpf98, or by the ITU Strategic Planning Unit (phone: 41.22.730.6320; fax:
41.22.730.5881).
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