Report of the Third Regulatory Colloquium
held at the ITU Headquarters
9 -11 November 1994
TABLE OF CONTENTS
PART I GMPCS SYSTEMS: UNIQUENESS AND CONTEXT
Are such systems unique, and if so, how?
Some special features
Placing these systems in context
PART II LICENSING ISSUES-SPACE SEGMENT
Some Questions
Some Points for Consideration
PART III LICENSING ISSUES - GATEWAYS, SERVICES AND
HANDSETS
Gateways
Service Provision
Handsets
ANNEX :Suggested points for consideration by national policy makers
List of participants
Discussion outline
I am extremely pleased to introduce the Report of the Third Colloquium on the Changing Role of Government in an Era of Telecom Deregulation, which was held at ITU Headquarters in Geneva from 9-11 November 1994.
The Colloquium represents an important continuing initiative to consider, in an informal, expert and practical way, some of the fundamental issues of telecommunications regulation that arise from today's fast-changing telecommunications environment. The Colloquium is non-governmental in nature, privately financed, and brings together, in their individual capacities, high level officials and experts from a diverse range of countries. The participants meet in Geneva for three days to formulate practical advice designed to be of immediate benefit to policy makers, regulators and business communities in developed and developing countries alike.
The First Colloquium met in Geneva in February, 1993, with funding provided by the New ITU Association of Japan, and considered a range of options for national telecom regulatory institutions and processes.
The Second Colloquium was made possible by funding from the Friedrich Ebert Foundation of Germany, and considered how regulators can promote universal service and facilitate the application of innovations in telecommunications.
The Reports of the first two Colloquia were translated into French, Spanish, and Arabic, and distributed to all members of the ITU, as well as others.
The Third Colloquium was made possible by funding again generously provided by the Friedrich Ebert Foundation of Germany, and considered some of the regulatory issues posed by the proposed new global mobile personal communications systems using non-geostationary satellites - in particular the so-called "Big Leos".
This topic was selected on the basis of a widespread sense among the participants at the Second Colloquium, strongly shared by me, that the issues posed by these new global systems merited analysis. Although the subject is complex and the object of considerable discussion I believe that the now-proven Colloquium format provides an appropriate vehicle for examining such current issues informally, with the right balance and breadth of outlook.
As I noted in my Introduction to the Report of the First Colloquium, the concept originated with David Leive when he was Chairman of the ITU's Telecom '91 Regulatory Symposium in Geneva in October 1991. An extensive round of informal consultations with experts in telecommunications regulations from many countries led Mr. Leive, Ambassador Gerald Helman, who provided critical assistance, and me to conclude that the Colloquium would meet a significant need and be of great practical value to many countries. This forecast was more than justified by the success of the three Colloquia, and by the widespread interest in this activity, and by the widespread use of the reports produced by the first two Colloquia. The Colloquium concept, and the experience with this activity so far, were described in detail by Mr. Leive at the 1993 Session of the ITU Council and at the ITU Regional Development Conference for Asia held in Singapore in May 1993.
Our experience with three Colloquia has led us to conclude that the format and approach of these meetings is sound and should continue. In view of his dynamic and imaginative leadership, and with the unanimous support of the Colloquium participants, I asked David Leive after the Second Colloquium to continue as its permanent Chairman.
The results of the Third Colloquium are reflected in the following Chairman's Report by Mr. Leive. Together with several of my senior colleagues, I participated throughout the three day session just as I had at the First and Second Colloquia.
The Report describes the consensus of the participants on the principal issues discussed, but does not represent individual participants' views.
Following also is an executive summary of the Briefing Report prepared by a distinguished independent expert, Michael Tyler, which was presented to the Colloquium in draft form to serve as a basis of the discussions. The full Briefing Report will be translated and distributed to all administrations later this spring. Both the executive summary and the Briefing Report reflect Mr. Tyler's own research and views, and are not products of the Colloquium discussions themselves.
Planning is now underway for subsequent meetings. The Fourth Colloquium will take place in April 1995, and will consider interconnection issues. It will be funded by the World Bank. The Fifth Colloquium is tentatively scheduled for late 1995 or early 1996, on a topic to be selected.
The participants in the Third Colloquium also concluded that efforts should be made to more widely disseminate and present the results of these Colloquia, bearing in mind that the main purpose of this activity is that the wide global community of telecom policy makers, regulators, and industry participants should benefit from the collective focused effort brought to bear at the Colloquia. Accordingly, we are now actively examining the best means of achieving this, for example through the preparation of standard "packages" to be made available at ITU and World Bank meetings and workshops; through presentations at various international conferences; through preparation of tailored mailing lists and distribution by electronic means; and through a mass circulation version and advertising in trade publications.
Finally, I want to reiterate the importance I place on innovative methods
such as the Colloquia that can provide practical help to the telecommunications
community throughout the world who must deal with the complex challenges
that arise inexorably from changing industry structures, evolving economic
policies and new technologies.
Pekka TARJANNE
Secretary-General
Geneva, December 1994
This Report summarizes the highlights of the Third Colloquium on the Changing Role of Government in an Era of Telecom Deregulation, held at the headquarters of the International Telecommunication Union (ITU) in Geneva, Switzerland on 9-11 November 1994, under the auspices of the Secretary General of the ITU.
This Report considers some of the regulatory issues, on both the national and international levels, that are posed by the proposed new global, mobile personal communication systems (GMPCS) using nongeostationary satellites.
The Colloquium is the third in a privately financed series of meetings designed to bring together in an informal setting a small senior-level group of telecom regulators and other experts, participating in their individual capacities, to consider issues associated with telecom deregulation and formulate advice and guidance which, when disseminated, can be of practical value to the many policy makers, regulators and private sector telecom operators grappling with similar problems. Funding for the Third Colloquium was generously provided by the Friedrich Ebert Foundation of Germany.
The Colloquium brought together 23 persons from 15 countries in their individual capacities, representing a variety of disciplines and interests in the telecommunications industry, to discuss these issues. In attendance also were the ranking officials of the ITU, including the Secretary General of the ITU and other elected officers and senior staff of the ITU.
The Colloquium's purpose is two-fold: for the participants to share and discuss practical experiences and insights, and to assist others concerned with public policy and regulation in telecommunications world-wide through publication and dissemination of the key points that emerged from the exchange of views, suggesting useful options and approaches that they can usefully consider as they work with their own particular situation and policy agenda.
As an aid to its discussion, the Colloquium was guided by a discussion outline, prepared by the Chairman.
The Colloquium had at its disposal a draft Briefing Report prepared by Mr. Michael Tyler of Putnam, Hayes and Bartlett. The draft provided a survey of a range of regulatory approaches and processes that may be applicable to these new global mobile systems. It included an analysis of advantages and disadvantages of various options, and the circumstances under which they may be applicable. The Tyler Report is being revised to reflect suggestions made by the Colloquium participants, but it will remain an individual product rather than a report of the Colloquium. The executive summary of the draft Briefing Report is attached. The full Briefing Report will be available by the spring of 1995 and French and Spanish translations somewhat later.
This Chairman's Report highlights those issues discussed which the Colloquium participants as a whole believed to be of general interest and applicability. It makes no effort to fully reflect all of the wide ranging and detailed discussion that took place, nor does it purport to describe the views of individual participants.
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WARC-92 allocated spectrum in the L and S bands to be used by GMPCS, notably (but not only), in the 1610-1626.5–2483.5-2500 frequency MHz bands. WARC participants commonly referred to these systems as "Big Leos" (Low Earth Orbiting Satellites systems). Such systems typically consist of between 12-66 satellites in various sub-geostationary orbital positions, and are intended to provide real time voice and data coverage over large portions of the globe. A number of private and semi-private entities are developing "Big Leo" GMPCS systems, principally U.S. based, but Inmarsat-P, Brazilian and Russian-based systems are also being developed. "Little Leos" operate below 1 GHz, typically use smaller numbers of satellites, and provide a variety of data services, and store-and-forward messaging. This Report is focused primarily on "Big Leo" systems, since these pose particularly pressing domestic and international regulatory and coordination issues, but many of its conclusions are also applicable to "Little Leos". "Little Leos" are likely to be in service before "Big Leos."
The Big Leo systems have attracted much interest and support and some controversy. Concerns have been expressed by the European Commission about the global implications of recent and forthcoming U.S. decisions to license GMPCS systems, and governments and telecommunications regulators in some other countries have also raised questions concerning how new regulatory and operational issues arising from GMPCS deployment will be resolved.
Several countries, principally the U.S. and the U.K. (on behalf of INMARSAT in the 2 GHz band), have already laid claim to the total allocated bandwidth in the most suitable and available frequency bands, and the US Federal Communications Commission (FCC) is now in the final stages of licensing specific GMPCS system operators to build and operate world-wide spacesegment systems and to provide services in the United States.
This Report seeks to identify various regulatory issues involved, and suggests ways in which they might be addressed. It should be stressed that this is not a question of providing answers. The issues are complex and answers can only be forthcoming from national authorities, taking into account their own policies and priorities, and from international consultations between them where appropriate. Rather, the Colloquium and this Report seek to identify the key questions, different possible ways of responding to those questions, and some advantage and disadvantages ("pros and cons") of those different ways.
To set the stage, Part I of this Report identifies the characteristics of GMPCS systems, or their uses that differentiate them from other wireless communications systems; places them in the overall context of the full range of telecommunications services; and seeks to identify whether there are unique regulatory issues that previous systems have not posed, or have not posed to nearly the same extent.
There are in essence two different sets of regulatory issues, although they are interrelated. The first set concerns licensing of the space segment operators by their respective national authorities, such as those of the U.S. and U.K., to establish and operate the satellite part of the overall GMPCS systems. The second set concerns licensing decisions that must be made by each of the great majority of countries which may benefit from, or be affected by, such global systems. These decisions principally relate to licenses for gateway earth stations and associated facilities, the provision of service in particular countries, and the use of portable handsets.
Part II of this Report considers what views or insights can most usefully be addressed to space segment operators and their respective licensing administrations.
Part III concerns the countries other than those where the spacesegment operators are licensed. It asks: Do GMPCS systems pose opportunities, threats, or both? Do such systems matter at all to the majority of countries? Will such systems contribute significantly to the achievement of universal service in the developing countries? Should they be a concern of the regulator? Should they be treated by a regulator any differently from any other communications service offered by a private entrepreneur? Thus Part III deals with licensing issues involving gateways, services and handsets.
These systems have three characteristics that, taken together, distinguish them from previous wireless systems: they are global, mobile, and predominantly private in ownership rather than essentially governmental or intergovernmental in ownership and control. They are costly and complex to develop and implement - with capital costs ranging initially from $1 - $3.5 billion - and thus in practice require the assemblage of broadly international financial and operating consortia.
Furthermore, these systems probably represent a first generation which will evolve into future systems which may be more complex and are likely to deploy higher power and greater capacity and capabilities. Accordingly, there will no doubt be initiatives at future World Radio Communication Conferences for increased allocations of spectrum for use by the Mobile Satellite Service.
Communications satellite systems exist today that are global or near global in scope - such as the Intelsat system; there are other systems that are mobile, such as the Inmarsat system, which is also nearglobal in scope; and lastly, there are privately owned and operated systems at both the national, regional and international levels. What distinguishes the new systems is that, for the first time, they combine all three features.
There is a second significant difference presented by such systems: a very limited amount of the frequency spectrum has been allocated to this new service. The entirety of that allocated spectrum will be used by a small number of systems licensed by no more than a few administrations, and all such systems will provide service through portable handsets which by definition can move easily across national borders.
There is an additional element to be considered - though it does not constitute a unique aspect: the systems are likely to be highly competitive with each other. It is difficult to predict the extent of competition in a particular geographic area, partly because different systems may emphasize different services and geographic areas. Nevertheless, it should be assumed that the system owners will be competing globally, and each of them (or their local affiliates) will seek licenses from most national administrations, or at least a very large number of them.
From a policy and regulatory viewpoint, what are the consequences of these operational or organizational differences?
Because system capacity will be largely determined by expected demand in high-usage markets, and incremental cost per call up to this capacity will be low, the space - segment operators may be in a position to make available a limited amount of capacity at low prices for use in underserved regions of the world. Such a low price of space segment capacity, even if added to the cost of the individual terminals, costs of completing calls through national networks, and other costs of connecting calls, may represent a cost-effective new way to extend telecommunications to unserved areas in low-income countries.
Therefore, in addition to the normal commercial traffic being carried by GMPCS systems, it may be possible to add to the ability of countries to contribute to the policy goal of universal service in areas not adequately served by other means. The amount of network capacity that can be added in this way is likely to be modest by the standards of terrestrial networks, but it will enable the provision of service in the most remote areas. Mechanisms could be developed within national regulatory policy to encourage the use of GMPCS capacity to further these social and economic objectives, for example in conjunction with the national licensing process.
First, these new systems need to be placed in the context of overall telecom services. It is estimated that, within the available spectrum, the proposed systems together might, in their first generation, serve a total of some 5-10 million subscribers by early in the next century. Compare this to the estimated 200 million subscribers for terrestrial wireless services (mainly cellular) in the same time period.
These systems will not satisfy a substantial part of total telecom demand, but will serve multiple "niche" markets. They also will provide regional or global transmission capabilities for digital data services as well as voice.
Second, these systems need to be put in the context of the range of regulatory issues now facing most countries. Some of these systems do, in fact, raise questions of bypass of the local Public Switched Telephone Network (PSTN) at one end of each call (or bypass at both ends for mobile-mobile links), though this does not mean that the net impact of GMPCS will necessarily be to reduce traffic on the PSTN. GMPCS will stimulate new traffic and this will almost certainly lead to a net increase of traffic on the PSTN. They also raise questions concerning internal cross subsidies between different services and the continuing need for national operating companies to obtain revenues for infrastructure development. But these questions do not arise uniquely from the prospective deployment of GMPCS systems - they already confront regulators in most countries today.
Nevertheless, while these systems are in this sense not unique, they pose with particular urgency regulatory issues which in any case may be on the telecommunications policy maker's agenda in a particular country. Thus, the prospects of world-wide deployment of several GMPCS systems has raised concerns, and highlighted opportunities, among regulators and others. The debate involved may in a sense be out of proportion to the relative size of such systems or their economic impact in a particular country, but nevertheless the deployment of these systems will require national policy makers to deal with certain regulatory issues that they might otherwise have postponed or not faced squarely.
While these systems may pose new regulatory complexities and new issues, they do not require revolutionary changes in regulatory regimes but rather evolutionary ones, developed in the normal course of regulatory activity.
Before considering specific approaches to space segment licensing, some fundamental questions need to be addressed:
Is it equitable that a single national administration, or a few such administrations, can obtain the rights to use the whole of the allocated bands that are available globally for that service, thus possibly blocking other administrations from obtaining those bands for their planned systems?
On the domestic scene, when faced with contending users of a scarce resource, administrations have resorted to a variety of devices and methods (comparative hearings, or auctions, for example) other than the "first come, first served" method. On the international level, however, there does not seem to be a viable and realistic alternative to the present "first come, first served" approach now in force under the ITU Radio Regulations (RR). The question then is to see whether any improvements can be made to that approach to reduce any serious inequities, or wastefulness.
Two specific characteristics of GMPCS systems, when compared to geostationary satellite systems, that have significant implications for licensing policy are the much larger number of satellites and the relatively short life time of the satellites (410 years), which obliges the operator of the system to periodically launch new satellites in order to keep its constellation in full operation. These repeated replacements may result in a permanent occupation of the spectrum under the original license terms, unless license conditions specify otherwise.
Also, the development and deployment of GMPCS systems require a longer period than necessary for most geostationary satellites, and probably some of the potential licensees will fail to launch and thus lose their licenses.
To address these issues, the Report and Order of October 1994 in which the U.S. FCC set out its licensing policy for GMPCS proposes a six year period within which a system must be established, and a ten year limit on the duration of a license, with the possibility that license terms may be changed at the time of renewal.
Another question relates to the ability of other licensees to use spectrum that becomes available as a result of an unused license, in whole or in part. Provisions in the Radio Regulations authorize the Radio Communication Bureau to cease protecting any registered assignment which is not brought into use within a total period of nine years starting from the date of the advance publication. The Bureau may also take the initiative to inquire about any assignment which, to its knowledge, was not in use for more than a specific period and to take appropriate action if the fact is confirmed. These provisions, and the established practices of national administrations, need to be revised to ensure that the risk of inefficient (or nonuse) of assignments is minimized to be extent practically possible. The Plenipotentiary Conference, Kyoto, 1994, called for a review of the coordination and registration procedures for satellite radiocommunications, and that review should address this issue as it affect the frequencies allocated within the Mobile Satellite Service (MSS) essentially for GMPCS use.
Some national administrations have already addressed this issue. The abovementioned U.S. policy specifies that licenses will be revoked if the licensed systems are not brought into service within six years.
Given the limited size (bandwidth) of the frequency allocations available, should the administrations licensing the space segment for one or more GMPCS systems require the space segment to have broad global geographic coverage, so that its use of the allocated bands has the potential to benefit most or even all ITU Member countries?
Should the provision of services in particular countries in some way be linked to the right to participate in the ownership of GMPCS systems? For example, the government of one country (Canada) in late 1994 announced a policy for GMPCS requiring, as a condition of licensing in Canada, a proportion of Canadian ownership of the satellite system related to the level of usage of that system in Canada.
Should regulatory policy require unrestricted access to the use of the GMPCS space segment by authorized operators and by resellers (generally known as "service providers" in the field of mobile telecommunications) who perform sales and customer service functions? Resolution 70 of WARC-92 calls for "equitable standard conditions of access". Competition policy at the national level and in the European Union as a whole may favor an "open network" approach in which multiple service providers are allowed rights to resell the capacity of the public infrastructure (in this case, the GMPCS space segment). On the other hand, GMPCS space segment operators may wish to grant certain exclusive operating and marketing rights to local entities in the course of commercial negotiations, and this may play an important part in mobilizing capital to build and launch the space segment.
What exactly is a GMPCS space segment operator that is licensed in country "A" thereby authorized, or not authorized, to do in countries "B", "C" and so on? Several considerations must be taken into account: existing domestic and international law (including the Radio Regulations); the benefits of wide GMPCS deployment; and the right of administrations to determine and apply national policies.
There are no universal answers to the questions outlined above, as each country will have its own responses, based on its own needs and policies. Nevertheless, there are several points which participants in the Colloquium considered worthy of consideration by policy makers and regulators in the country licensing the space segment, as they develop and then implement their decision-making process to grant a license or licenses to one or more space segment operators. It should be emphasized that these points are not intended to prescribe solutions, but to be helpful inputs to the national decision-making process. National regulators may wish to take such points into account in the conditions of the license granted to the space segment operator. The various points seek to balance the interests of the countries licensing the space segment operators, with the interests of the many other countries which might benefit from the rapid introduction of an important new technology.
Two cautionary comments should be made about the points suggested below. First, it needs to be recognized that licenses will soon be issued by the U.S. At this late stage, the scope for taking into account new inputs into the FCC space segment licensing process is inherently limited although in practice several of the points discussed below have in fact already been taken into account in the FCC's published licensing policy for GMPCS. Through the normal course of bilateral coordination and multilateral discussion, there will be opportunities for new approaches to influence GMPCS licensing by other administrations, such as the U.K., Brazil and Russia, which in future might license other global systems, or by the FCC for second generation systems. Second, the approaches suggested below are not intended to be the basis of a legally binding international agreement. As a practical matter, this is not a realistic alternative at this time, and in any event it is far from clear that a new international agreement is necessary.
These points are:
There are several constraints that limit the number of GMPCS systems: the present scarcity of the spectrum allocated to the Mobile Satellite Services in general, and the part designated in practice for GMPCS in particular; the need to use nongeostationary satellite constellations; and the large investments needed. (It seems probable that there will not be more than 3-4 viable operational systems.) The space segment part of each of these few systems will be licensed by only a few ITU Member countries. The other ITU Member countries should also be afforded the possibility of benefiting from the new technology by being able to use the licensed systems. The national licensing authority licensing each GMPCS satellite constellation should therefore ensure that it covers most of the world to the extent reasonably achievable.
First Point: Licenses for each GMPCS space-segment constellation should require the constellation to provide coverage over most of the Earth's habitable surface and commercially-used ocean regions.
The need for prior agreement has to be examined from two separate aspects: first, technical and operational matters governed by the Radio Regulations, and second, other matters relating to the provision of service.
i) Radio Regulations
When GMPCS satellite constellations are designed and operated in conformity with the ITU Radio Regulations, including the related technical principles and limitations, the other radiocommunication services using the same frequency bands are protected, and consequently the prior agreement of countries whose territory is covered by the constellation is not required for coverage of the country by assigned down-link frequencies in so far as the Radio Regulations are concerned. (If the country intends to bring the ground portion into service, the receiving handset terminals are notified to the ITU as "typical", which are necessary steps to protect such handsets from interference.) Therefore, global coverage in itself does not require the agreement of countries whose territories are totally or partially covered.
ii) Handsets
Where the up-link is concerned, the handset transmitter requires a license by the ITU Member Government having jurisdiction over the territory in which the handset is used (see No. 2020 of the Radio Regulations). That license may be made available directly to the user or indirectly through a service provider. Handsets or other terminals may be individually licensed or may be covered by a generic ("blanket") authorization such as a type approval, or "class license" which is preferable to individual licenses. In any event, approval of terminals will be contingent on national rules concerning the use of the spectrum, such as avoidance of spurious emissions, and possible health and safety considerations.
The allocation of a number or code to each handset user will be necessary and will be regulated by the national government or regulator in each country, (who may delegate the function to other entities) within the broad framework provided by ITU Recommendations on numbering.
iii) Other Service Provision Issues
Independently of the issues concerning conformity with the Radio Regulations, and the licensing of handsets, the provision of GMPCS service in the country concerned obviously is subject to agreement of the local regulatory authorities.
As a general conclusion, then, the operation of a system within a given country must be based on an agreement between the operator of the proposed system (or a national entity contracting with such operator), and the government or telecommunications regulator of the country concerned with regard to these technical and operational matters as well as other aspects of the provision of service.
Second Point: Provision of telecommunication services within, to, or from each individual country using a GMPCS space segment constellation requires prior agreement with the government of the country concerned.
Each GMPCS system operator needs the agreement of each country where it intends to provide a service. There may be situations in which the governments of one or more countries decide not to permit use of a particular GMPCS system within their territories, and each may therefore wish to prevent use originated in its territory. The great mobility of the handsets makes it almost impossible to prevent unauthorized use of the GMPCS space segment by controlling the handset. Even though the amount of traffic involved may be small, a solution needs to be found within the GMPCS system itself.
Given the rapidly evolving technology and potentially substantial costs involved, It is probably neither desirable nor feasible to mandate a particular operational solution. Moreover, it is beyond the scope of this Report to suggest various means to block off unauthorized use. Nevertheless, in order to promote widespread acceptability of the systems, other countries should be reassured that, to the extent reasonably possible, the space segment operator will take measures to prevent unauthorized use.
Third Point: Each system operator should incorporate a capability enabling the operator to prevent use of the system located in any country which has not authorized the GMPCS service.
GMPCS systems capable of carrying traffic throughout the world ought to be available for use in any country without restriction, subject only to any regulatory and public policy requirements that may be established by national governments, and subject to the need of the system operator to reach satisfactory business arrangements. The system operator should not impose any other conditions of an unreasonable or discriminatory character. Specifically, conditions should not be imposed that are incompatible with:
i) the national telecommunications policies of countries where GMPCS-based services are being provided (which might concern, for example, resale of service by "service providers" unaffiliated with the space-segment operator);
ii) national (or, where applicable, European Union) competition law; or
iii) commitments arising from international treaties such as GATT. System operators should not unreasonably limit the resale of services.
Fourth Point: The system operator should not impose unreasonable restrictions upon access to its system, and should avoid any discrimination among different countries or categories of users except where this is justified by specific technical, business or legal considerations or constraints.
Many entities in countries other than the country licensing the space segment of a particular GMPCS system may wish to purchase an equity interest in the system, based on a variety of different reasons: policy, commercial, operational, manufacturing, and so on. It is quite likely, moreover, that different entities from the same country will invest in competing GMPCS systems. Obviously, the precise nature of that participation, including its size, price and terms and conditions should be determined between the space segment operator and the various entities in other countries.
The licensing government should not bar foreign equity participation in systems it authorizes. Because of the uniquely international nature of these systems, licensing countries should not treat them, for purposes of foreign equity participation, as equivalent to other national communications systems concerning which there may be limits or bars to such participation.
As a practical matter, given the size of the investments required and the evident need for international partnerships, barring foreign equity participation is unlikely.
Fifth Point: The country licensing a system should permit foreign participation in the equity of the licensed system, and not limit such participation only to its own nationals. While the broadest possible equity participation in these systems should be encouraged, a country should not mandate equity participation on the part of its own nationals as a condition for local licenses.
On the one hand, a system operator must be free to strike a suitable commercial arrangement with a proposed partner in a particular country or region of the world. Such a proposed partner may be essential to the system operator's activities in that country or region, and the operator should be free to conclude an exclusive alliance. On the other hand, the national government or telecommunications regulator then faced with that situation will have its own legal requirements and policies. It need not accept that the alliance endows the local or regional alliance partner with exclusive rights to provide services based on the GMPCS space segment in question, if its own policy requires open and competitive access to the GMPCS space segment or the GMPCS system elements. The local regulator retains the option to reject exclusive arrangements or to establish an "open network" policy providing multiple service providers with access to the space segment of each GMPCS system licensed in the country concerned. In considering whether to reject exclusive arrangements, the regulator must bear in mind potentially negative effects of doing so, which might include limiting the system operator's ability to mobilize capital investment and perhaps even consequently limiting its ability or willingness to provide service in the country or region, for example by building a gateway facility. A balance needs to be struck between these two different considerations.
Sixth Point: System operators need to make sure that their commercial arrangements in a particular country are consistent with that country's relevant national regulatory policies.
* * *
Should one or more of these six points find favor with national regulatory authorities and gain practical acceptance in licensing decisions, it is possible that they might evolve into an informal code of practice or code of conduct of widespread applicability.
As noted earlier, while for convenience licensing issues here are divided into four categories, in practice these categories overlap and interrelate with each other: a license to establish a gateway may contain service provisions, or handset licensing may specify service limitations.
Due in part to time limitations, the Colloquium did not consider these licensing issues in the same detail as issues covered in Part II concerning space segment operation, but it is useful nevertheless to outline some of the principal questions involved.
This subject cannot be considered in the abstract but must take into account specific questions concerning the functions of gateways, their numbers and their cost.
Gateway functions will vary with each system but will normally include a software processing function and a PSTN interconnection function. The numbers of gateways also will vary from one GMPCS system to another, but, generally speaking, there will be substantially more countries than the feasible or economically efficient number of gateways. For some GMPCS systems, it may be desirable to have relatively few gateways to minimize overall system cost. That may not be politically desirable for some countries, because it requires reliance on neighbors. Moreover, a country will generally have a greater ability to influence the operation of the overall GMPCS system and the provision of service if it has a gateway.
From the viewpoint of the regulator, gateways for GMPCS are not fundamentally different from earth stations now in use for other international systems, such as Intelsat. Those systems have had to deal with the question of arranging for transmitting traffic to a particular gateway from neighboring countries who depend on that gateway to communicate with the rest of the world. The potential vulnerability involved of a country having to rely on a neighbor's gateway may be reduced by the competitive pressure of two or three competitive GMPCS systems. Nevertheless, questions may arise concerning the right of a "non-gateway country" to access gateways in other countries on reasonable terms. This issue may be primarily one for resolution in the market place and in bilateral discussions between space segment operators and other entities associated with the particular proposed system.
The issue of gateways is closely linked to issues concerning the routing of domestic and international traffic in relation to the overall GMPCS system configuration, and the associated financial settlement arrangements resulting in a particular apportionment of revenue. It is nearly impossible to discuss these issues in the abstract: there are a bewildering variety of different situations, presenting different challenges to the regulator, and the Colloquium has not sought to catalog or identify these situations. Among the factors to be considered are whether the traffic originates in the gateway country or a neighboring one, whether it is incoming or outgoing; whether it is domestic traffic (i.e., originating and terminating in the same country) routed through an international gateway.
It is not clear whether, or how, the existing international settlement arrangements and associated rules apply in all these cases, or whether in fact there are better alternatives for apportioning revenues among the various entities that have some part in the end-to-end carriage of traffic.
Existing international rules do not provide answers for many of these situations, and it may be timely for a more detailed study to be made, perhaps by an ITU Study Group convened for this purpose.
A series of questions may perhaps best illustrate the issues which will concern the regulator in considering this aspect of public policy for GMPCS:
1) How are GMPCS-based services going to be marketed or sold in each country? That is a commercial decision by the system operator which must be sanctioned by the regulator, according to its own licensing policies. For example, should system operators be permitted to sell to end users directly, or must they do so through locally licensed service providers? If they sell direct, should they nevertheless be required to sell via unaffiliated service providers as well? On what terms?
2) A regulator has to decide how service providers should be chosen. Should they be chosen by the system operator as part of its business arrangements with the local entity; subject to some kind of review by the regulator; chosen initially by the regulator, perhaps through a bidding process; or entitled to open market entry, and therefore "chosen" by market forces alone, perhaps subject to some minimum "threshold" showing that they are qualified?
3) Should PSTN operators be allowed to be service providers; should they be encouraged to be service providers? The same issues concern cellular operators. Should, for example, any cellular operator in a given country be allowed to extend its coverage or offer its customers "global roaming" through "dual-mode" operation using the GMPCS space segment? From a regulatory viewpoint, widening the class of potential service providers may foster competition and promote more open access.
4) Should occasional/itinerant use be permitted by the space segment operator or the local regulator without authorization of a specific operator?
5) What conditions should be imposed in the licenses for that service provider? Should such conditions include terms for further local participation, for example in the supply of handsets?
6) What conditions should be required for interconnection to the PSTN? Do the differences from other types of international service warrant special terms or conditions? Should existing settlement arrangements apply (which in any case may change greatly over the next few years)?
* * *
It may be desirable to consider creation of a mechanism to facilitate alternative forms of compensation. At least two potential areas of application were discussed. First, while many countries have constitutional, legal, or policy impediments to authorizing any "competitor" to their national operator, they might desire to permit (or refrain from attempting to prevent) direct access between LEOs and handsets which are brought into their territory on a temporary basis, if an appropriate compensation mechanism could be developed.
Second, there may be some cases where it will be impossible (and perhaps more cases in which it may be unnecessarily costly) to determine the precise location of a handset originating or terminating a call. Nevertheless, some mechanism should be developed to ensure that the proper party is compensated.
It may be worthwhile to investigate the establishment of a pooling mechanism as has been done in several cases involving intellectual property rights. One possibility is for the pool to be funded by a small charge assessed on system operators or handset providers, and perhaps administered under ITU auspices. The pool could make compensatory payments mutually agreed to by the various parties.
Two aspects are considered: measures to promote the unhampered movement of handsets, and measures to promote a competitive market for handsets.
i) Free Movement
The fundamental point is the general desirability of promoting the free movement of handsets. Regulatory agencies should not be changed into customs departments which sit at the border and make sure that every handset has an attached 3page license. The worst alternative, of course, is to require an individual license for each handset. The question then is, what kinds or type of approval mechanisms would best facilitate the widespread movement of handsets free of unnecessary regulatory restrictions? There is no one "answer" of course, but several possibilities can be suggested:
1) In one approach, a regulatory agency would recognize the type approval given by the regulatory agency in another country. In order for this approach to work, there needs to be agreement on a common standard, or standards, as a basis for type approval for handsets. Such standards may be a formal international standard, or could be a set of common practices that are developed by manufacturers and approved by regulators. Such a standard or standards may take into account various factors such as the need not to cause harmful interference to other radio-spectrum users, concerns of security of communication, and health and safety considerations. One important variant of this approach is a reciprocal arrangement among a group of countries, or between a pair of countries, in which each participating country accepts type approvals or similar authorizations by other participating countries. This approach, known as "mutual recognition of licences," has been followed successfully in the European Union and European Economic Area countries to achieve unrestricted "roaming" for users of GSM digital cellular services, and an open, highly competitive market for the supply of handsets.
2) In an alternative approach, GMPCS system operators would be left to develop standards without regulatory supervision. The risk to avoid in this case is a situation where, if the GMPCS space segment operator is affiliated with a handset manufacturer, the handset markets are thereby closed "de facto" to other manufacturers. One way of ameliorating that risk is for the regulator to provide that the standard developed by the system operator should be published, allowing local manufacture through normal commercial arrangements which provide an appropriate balance between arrangements for use of intellectual property by multiple vendors; protection of intellectual rights; and quality control safeguards.
3) In a third alternative, the GMPCS system operator approves particular types of handsets based on agreed specifications, and regulators in different countries then voluntarily choose, if they so wish, to recognize such handset approvals as being applicable to their terminals. This requires two lists: one of the type approved handsets, and the other the list of countries which have given regulatory approval. The list might be administered as a "central registry" by the ITU.
The basic criteria in evaluating these various options are the most efficient means to promote mutual recognition of handsets, and the widespread ability to produce handsets in a competitive market place.
ii) In order to promote the widespread distribution of handsets with high performance and low prices, the market for GMPCS handsets should be a competitive market open to numerous vendors. To facilitate this, GMPCS operators (including those affiliated with handset manufacturers) should consider making the necessary technical specifications, e.g., for the "air interface", available to all manufacturers. Local manufacture of handsets, or components for handsets, and of other GMPCS system elements may often be economically beneficial. When this capability exists, regulatory authorities should seek to ensure that barriers to such local production are minimized. To the extent that utilization of any intellectual property rights (IPRs) is an essential precondition for additional manufacturers to produce handsets on an economically viable basis, or at all, such IPRs might be made available for licensing on reasonable commercial terms. National governments should determine, case by case, whether rules requiring such licensing are or are not justified.
Some of these handset issues might be usefully addressed by an ITU Study Group.
* * *
There is a general, very practical point applicable to all the licensing issues outlined above. While it is perhaps quite obvious, it may be worth reiterating that the main responsibility has to be on the system operators to work out the necessary arrangements in the countries in which they wish to operate. This can be done directly or, as is the case for some systems, through local "partners" or affiliates.
Discussions need to be conducted with the national regulators (in each country) concerning local requirements and policies for service provision, gateways, handsets and interconnection. This needs to be done in a sufficiently timely manner so as to allow time for negotiation. From the system operator's point of view, transparency and clear "rules of the game" are needed. In this respect, these discussions and negotiations might be facilitated by an informal code of practice, as it may provide guidance and promote uniformity of regulatory treatment.
The conclusions of the Colloquium are found in the text of this Report. The underlying theme is that the issues raised by the new global, mobile systems are complex and can be resolved only by more analysis and discussion and through the operation of existing national and international regulatory mechanisms working with GMPCS operators.
The issues fall into two principal interrelated categories: those relating to the space segment operators and their respective licensing administrations, and those relating to the numerous other countries which will benefit from these new systems and must reach decisions concerning licensing of gateways, services and handsets.
For licensing the space segment operators, this Report suggests a series of practical considerations or "points" which are designed to assist in the most widespread implementation of these systems.
For licensing issues concerning handsets, gateways and services, some of the principal questions are identified, but much more work needs to be done.
* * *
The Colloquium considered possible topics for future meetings, recognizing that the Fourth Colloquium, to take place in April 1995, and funded by the World Bank, will consider interconnection issues. These possible topics included trade/telecom issues in light of the GATT Uruguay Round Agreement and the resulting responsibilities of the new World Trade Organization (WTO), tariffing of international services, "convergence" issues and privatization issues.
The Colloquium held an extensive discussion of the ways in which its Reports could be most effectively disseminated to the many policy makers, regulators and other participants in the telecommunications industry who can make practical use of them. These ways include ITU preparation of a standard package (including slides or overheads) that could be presented at various international conferences; presentations at workshops or seminars conducted by the World Bank and the ITU; and greater emphasis on new and cost effective ways of packaging, advertising and distributing the Colloquia reports.
The Chairman wishes to express his great personal appreciation to Dr. Pekka Tarjanne for his continued support, guidance and encouragement, to the Friedrich Ebert Foundation and Dr. Erich Vogt for again funding the Colloquium, and most of all to the participants in the Third Colloquium for their generous commitment of time and effort.
David M. Leive
Colloquium Chairman
SUGGESTED POINTS FOR CONSIDERATION
BY NATIONAL POLICY MAKERS
1. Licenses for each GMPCS space-segment constellation should require the constellation to provide coverage over at least the majority of the Earth's habitable surface and commercially-used ocean regions.
2. Provision of telecommunication services within, to or from each individual country using a GMPCS space segment constellation requires prior agreement with the government of the country concerned.
3. Each system operator should incorporate a capability enabling the operator to prevent use of the system located in any country which has not authorized the GMPCS service.
4. The system operator should not impose unreasonable restrictions upon access to its system, and avoid any discrimination among different countries or categories of users except where this is sufficiently justified by specific technical, or economic considerations or constraints.
5. The country licensing a system should permit foreign participation in the equity of the licensed system, and not limit such participation only to its own nationals. While the broadest possible equity participation in these systems should be encouraged, a country should not mandate equity participation on the part of its own nationals as a condition for local licenses.
6. System operators need to make sure that their commercial arrangements
in a particular country are consistent with that country's relevant national
regulatory policies.
LIST OF PARTICIPANTS
THIRD REGULATORY COLLOQUIUM
9-11 November 1994, Geneva
Mr. Alex Arena
Director-General of Telecommunications
Office of the Telecommunications Authority (OFTA)
Hong Kong
Ms. Sari Baldauf
President
Nokia Cellular Systems
Finland
Mr. Abderrazak Berrada
Former Chairman, ITU/IFRB
Morocco
Mr. S.K. Chemai
Managing Director
Kenya Posts and Telecommunications Corporation
Kenya
Mr. Charles M. Dalfen
Former Vice-Chairman,
Canadian Radio-television and Telecommunications Commission
Dalfen Associates
Canada
Mr. Albert Halprin
Former Chief,
Common Carrier Bureau
U.S. Federal Communications Commission
Halprin, Temple & Goodman
U.S.A.
Mr. Yuji Harada
Director of the Frequency Planning Division Radio Department
Ministry of Posts and Telecommunications
Japan
Dr. Krisztina Heller
Senior Advisor to the Chief Legal and Human Resources Officer
Hungarian Telephone Company
Hungary
Ambassador Gerald B. Helman
Former U.S. Ambassador
to the United Nations and
Other International Organizations
in Geneva
Vice President
Mobile Communications Holdings, Inc.
U.S.A.
Mr. Bruno Lasserre
Director General of Posts and Telecommunications
Ministry of Posts and Telecommunications
FRANCE
Mr. David M. Leive, Chairman
Latham & Watkins
U.S.A.
Mr. Andile Ngcaba
Director
Center for Development
of Information and
Telecommunication Policy
South Africa
Mr. Ali Sabeti
Former Chief, Telecommunications and Informatics Division
Industry and Energy Department
The World Bank
U.S.A.
Mr. Brahima Sanou
Director of Studies and Planning
Onatel
Burkina Faso
Mr. Lennart Tengroth
Head of Media and Telecom Group
Advokatfirman Vinge
Sweden
Mr. Valery V. Timofeev
Deputy Chairman
State Commission on Frequency Management
Russia
Mr. Michael Tyler
Managing Director
Putnam, Hayes & Barlett Limited
England
Dr. Erich Vogt
Media and Communication Dept.
Friedrich-Ebert-Stiftung
Switzerland
Mr. Bjorn Wellenius
Telecommunications Adviser
The World Bank
U.S.A.
Dr. Eberhard Witte
Professor of Business Administration
University of Munich
Germany
Mr. G. Zintelis
Minister of Communications and Informatics
Ministry of Communications
and Informatics of the Republic
of Lithuania
Lietuva (Lithuania)
ITU PARTICIPANTS
Dr. Pekka TARJANNE
Secretary-General
ITU
Mr. Jean JIPGUEP
Deputy Secretary-General
ITU
Mr. Richard C. Kirby
Director
Radiocommunication Bureau (BR)
Mr. Robert W. Jones
Director Elected
Radiocommunication Bureau (BR)
Mr. Arnold Djiwatampu
Director
Telecommunication Development Bureau (BDT)
Mr. Ahmed Laouyane
Director Elected
Telecommunication Development Bureau (BDT)
Mr. Toru Arizono
Head, General Affairs Department
Telecommunication Standardization Bureau (TSB)
Mr. Don MacLean
Head
Strategic Planning and
Operational Analysis Unit (SPU)
General Secretariat
REGULATORY ISSUES FOR GLOBAL
MOBILE PERSONAL COMMUNICATIONS SYSTEMS
a) What are the unique characteristics of these systems that distinguish them from other communications systems in ways that have an important effect on regulatory issues? (e.g., global coverage, no need to interconnect to PSTN, gateway operations, portability of handsets)
b) Which of these characteristics are relevant to the national regulator, and how does this vary with the telecommunications situation in various categories of countries?
a) What are the common and competing interests of the various players in different countries in the development of such systems (e.g., GMPCS operators, prospective users, industrial participants, regulators, other suppliers)?
b) What are the areas of policy involved in the convergence of interests, or tensions between interests? What general tools of public decision-making and action are relevant?
a) What is the significance of the current status of regulatory approval of proposed systems in the U.S. and other countries, in relation to the various interests discussed in Sec. 2, above?
b) What is the significance of the international frequency coordination process under ITU rules and specifically its current status in connection with GMPCS?
What national regulatory action is appropriate? What are the current practices and procedures for national regulation and international coordination, and how can such practices and procedures be improved?
a) Licensing of:
b) Interconnection
c) Access (to the extent not covered above)
d) Frequency spectrum management (to the extent not covered above)
What particular problems arise in recipient countries regarding licensing of the service provided by such systems that are not covered by the three preceding sections?
Given the widespread common interests in the rapid, equitable and economical
development of such systems, can we consider some specific and practical
suggestions that might facilitate this development? The intent would be
not to provide any "answers" or "solutions" but rather
to develop a menu with a variety of pragmatic options, together with their
pros and cons, for consideration by the various players concerned.
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