JOB(05)/208
26 September 2005
Council for Trade in Services
Special Session
TELECOMMUNICATIONS SERVICES
Information Note by the Secretariat1
I.
INTRODUCTION
1.
Members' submissions recognize the growing economic and social importance of
telecommunications services and the impact of liberalization of the sector on economic growth and
development.2 Its infrastructural role is also acknowledged in relation to the success of other service
sectors, the conduct of domestic and international commerce, and in promoting overall economic
efficiency. Nearly all economic activities have come to rely on telecommunications.
2.
Both developed and developing country Members seek to achieve as extensive commitments
as possible in the course of this trade round. One Member notes, for example, that since market
conditions have changed and what was not technically or politically viable five years ago is now
feasible, commitments during this round of negotiations should reflect the new reality of trade in
telecommunications services.3
The proposals submitted are remarkably uniform in calling for
further improvements in market access and national treatment, the undertaking of commitments by
Members that have not yet done so, and more widespread adoption of Reference Paper commitments.
While all proposals call for improving market access on the full range of services, some specify that
value-added, satellite and Internet-based services should not be overlooked. Among the various
market access barriers most commonly mentioned are limits on the number of suppliers (including
monopoly rights) and foreign equity restrictions.
3.
Most Members stress that regulatory issues have important implications for both the success
of telecom reforms and preserving the value of commitments made. Regulatory issues raised include
licensing requirements, technical standards, management of the spectrum and universal service.
4.
Other issues raised include MFN and autonomous liberalization. Some proposals call for
efforts to eliminate the MFN exemptions taken in the sector. Some Members encourage recognition
of the extensive autonomous liberalization of the sector that many developing countries have
undertaken. Proposals also highlight the importance, particularly for developing countries, of
extending access to modern communications through universal service policies and of Article IV on
increasing their participation in trade.
1
This note has been prepared upon a request by Members at the meeting of the Special Session of the
Council for Trade in Services held on 1 July 2005. Its aim is to assist delegations and capital-based officials in
their assessment and consideration of sector- and mode-specific issues raised in the negotiations. It has been
agreed that the scope of the note should exclude analysis of existing commitments and of offers submitted in
current negotiations, nor should it contain additional information from external sources or from the Secretariat.
The content should not be used in dispute settlement proceedings.
The document has been prepared under the Secretariat's own responsibility and without prejudice to the
positions of Members and to their rights and obligations under the WTO.
2
See, among others, TN/S/W/50, jointly submitted by 10 Members.
3
Negotiating proposal by Mexico (S/CSS/W/101).
05-4244
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II.
CLASSIFICATION AND SCHEDULING ISSUES
5.
With respect to classification, many negotiating proposals stress the value of continued
application of a broad, technology neutral interpretation of listed telecommunications services. One
Member recalls that schedules of commitments in the telecom sector were made according to two
notes of the basic telecom negotiations4 and that commitments made under the Fourth Protocol need
to be read in the light of those notes, while Members who acceded to the WTO afterwards explicitly
based their schedules on these notes.5 The notes reflect principles proposed to resolve classification
and scheduling concerns that arose during the dedicated telecom negotiations.
6.
However, a number of proposals indicate a need to consider the coverage of telecom
commitments. Considerations mentioned include media convergence, a blurring line of distinction
between telecom and on-line computer services, and integration of basic and so-called value-added
telecom services. One proposal points out that for services sectors such as telecommunications,
characterised by rapid technological change, classification is an on-going issue.6 Defining the
services to be covered is the first step in formulating commitments, so it is inevitable that
classification concerns have a direct bearing on the drafting of initial and revised offers.
7.
During 2005, classification proposals were submitted by both the EC and the United States.
The EC proposal argues that the classification used so far is based on business concepts and words
that do not clearly match today's reality and creates legal uncertainties about the scope of
commitments. It suggests that defining telecommunications as the services of "transmission and
reception of signals by any electromagnetic means", as in the Annex on Telecommunications, would
better reflect a coverage of all telecom services. The EC suggests placing this definition in the sector
column of the schedule would avoid the legal uncertainty, by identifying the scope of services covered
in a functional manner. This approach would be consistent with the notion that regulators should not
discriminate among telecom suppliers on the basis of different technologies, content, or business
models.7 In its reaction, the US supports the effort to clarify telecom commitments, but suggests that the
proposed approach might potentially limit the scope of the sector or add greater uncertainty, particularly
for value-added services. Focus on the transmission function alone might not clearly account for the
services that add functionality to the basic transport layer (e.g., storage, forwarding, processing and/or
retrieval). Any classification that does not specifically cover value added services could risk
diminishing the scope of existing commitments. In this sector, the US suggests, there is value in
specificity because a generic definition, standing alone, could render the scope of commitments
unclear. In order to accommodate negotiating objectives a classification scheme needs to provide for
the potential to be both more comprehensive and more precise.8
8.
The EC and US proposals both generally support maintaining use of the Notes on scheduling
of telecommunications. According to the US, extending their application to all telecommunications
could be useful to secure technological neutrality for value-added services. However, the proposals
differ to some extent on whether Members should continue to use the W/120 classification for
telecommunications, with the US favouring the added specificity of W/120. Positions also appear to
differ on how best to deal with the potential areas of overlap between telecommunications and
computer and related services, with the EC suggesting that certain services currently listed in W/120
for telecoms fall within the computer services classification list.
4
The Note for Scheduling Basic Telecom Services Commitments (S/GBT/W/2/Rev.1) and Market
Access Limitations on Spectrum Availability (S/GBT/W/3), later annexed to the report of the telecom
negotiations (S/GBT/4, 15 February 1997) and to the revised scheduling guidelines (S/L/92, 28 March 2001).
5
Communication from the European Communities (TN/S/W/27, S/CSC/W/44) 10 February 2005,
para. 27.
6
Statement by Japan, Report of the Meeting held on 21, 22 and 25 February 2005, TN/S/M/14, para.
46.
7
Communication from the European Communities (TN/S/W/27, S/CSC/W/44) 10 February 2005.
8
Communication from the United States (TN/S/W/35, S/CSC/W/45) 22 February 2005.
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9.
Other Members also put forward comments and reactions regarding classification. One
Member suggests that W/120 and the definitions in the GATS Annex and the Reference Paper should
continue to be used as a basis for negotiations.9 Another Member expresses concern that the EC
approach could affect legal certainty, because it reclassifies telecom services to other services and sets
aside basic and value-added sub-categories and other sub-sectors in W/120. The Member also
observes that the line drawn in the approach between telecom services and other services uses a
criterion of "intrinsically linked to the transmission and reception" that is not necessarily adequate.
While it proposed that using the approach could be voluntary, a common approach on telecoms
among all Members ensures legal certainty, transparency and comparability of commitments.10
Another Member stresses two objectives to be born in mind on classification, namely, the need to
reflect business practices in the sector and the need to ensure the legal stability of the commitments.
However, the Member suggested that the definition of telecom services should exclude visual
transmissions, which it considered to be audio-visual services.11 In relation to UNCPC classifications,
a Member said it agreed with the EC that that the functional definition of telecom services in the
Annex on Telecommunications was preferable; a technology-neutral classification would cover
services not envisaged when CPC was developed.12 It was also observed that in the development of
any possible classification solutions, Members should bear in mind developing countries' constraints
with regard to negotiating capacity.13 Also, it was pointed out that since not every activity of the
sector in developing countries was at the same stage, flexibility would need to be factored into any
classification.14
10.
Potentially relevant issues:
(a)
What are the advantages and disadvantages of the current scheduling guidelines
(W/120, the Chairman's Notes, etc.) for the telecom sector?
(b)
Are adjustments might be needed to ensure that telecom classification and scheduling
can accommodate modern commercial and technological developments?
(c)
What classification and scheduling features might best permit flexibility in
undertaking different levels of commitments, yet ensure an acceptable degree of
clarity and comparability of schedules?
(d)
If changes were made, how would legal certainty in relation to the existing schedules
(services covered and levels of commitments) be maintained?
III.
ISSUES RELATED TO ARTICLES XVI AND XVII
A.
COVERAGE OF COMMITMENTS
11.
All of the telecom negotiating proposals call for greater consolidation and liberalization of
market access and national treatment commitments by as many Members as possible. They emphasize
a need to remove existing market access and national treatment limitations and to extend the services
covered by commitments to include both basic and value-added telecommunications. They also call
for the acceleration of liberalization dates by Members that undertook phased-in market access
commitments.15 Moreover, proposals strongly urge the scheduling of new commitments by Members
that do not already have them. Many proposals emphasize the need for the fullest possible
9
Proposal by Mexico (S/CSS/W/101).
Statement by Japan, Report of the Meeting held on 21, 22 and 25 Feb. 2005 (TN/S/M/14) para. 46.
11
Statement by Senegal, ibid., para. 50.
12
Statement by Norway, ibid., para. 56.
13
Statement by Uganda, ibid, para. 53.
14
Statement by India, ibid, para. 60.
15
E.g. proposal by Canada (S/CSS/W/53).
10
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commitments on a broad range of the sub-sectors because, as one Member notes16, the supple of the
services has become increasingly integrated. In addition, the importance of extensive liberalization
based on the principle of non-discrimination was confirmed.17
12.
Proposals stress a need for commitments that cover all forms of technology and all modes of
supply. The importance of technology-neutral scheduling of commitments covering all forms of
wire-based and wireless services (including mobile, satellite and Internet delivery and other Internetbased services) was also reconfirmed in light of continuing technological advances.18 Such
developments have led to greater emphasis on commitments on cross-border supply and consumption
abroad (modes 1&2), while commercial presence (mode 3) remains important, as well.19 A need to
consider the commitments in light of technological innovations and media convergence was also
identified.20
13.
Developing country Members, in particular, call attention to the link between commitments
and national policies, legal frameworks and levels of development and the need to recognize
autonomous liberalization. For example, one member saw a need for greater market access with a
view to promoting national development, combined with due respect for national policy objectives
and the level of development of individual Members.21 Another notes that the negotiation of
commitments should respect national policy goals and levels of development.22 And another
emphasizes that liberalization must be effected within the framework of each Member’s legal system
and institutional regulations.23 Regarding autonomous liberalization, it was suggested that since many
developing countries have autonomously liberalized both basic and value-added services, their
scheduling of open markets in telecoms, especially commercial presence, could be furthered by
granting improved access in other sectors of interest to them.24
B.
BARRIERS IDENTIFIED
14.
Barriers affecting telecommunications services, as identified in the proposals, include the
following:
(a)
restrictions on the foreign equity/participation of foreign capital
(b)
quantitative limitations on new entrants
(c)
monopolies, either privately-owned or state-owned
(d)
joint venture requirements
(e)
restrictions concerning types of technology, e.g. satellite or radio-based services
(f)
limitations on type of legal entity
(g)
restrictions on resale or leasing of infrastructure capacity
(h)
lack of privatization of operators and networks
16
Proposal by the United States (US S/CSS/W/30).
Proposal by Chile (S/CSS/W/88).
18
E.g. proposals by Switzerland (S/CSS/W/72), Norway (S/CSS/W/59) and Australia (S/CSS/W/17).
19
E.g. proposal by the European Communities (S/CSS/W/35).
20
Proposal by Chile (S/CSS/W/88).
21
Proposal by Mexico (S/CSS/W/101).
22
Negotiating proposal by Korea (S/CSS/W/83).
23
Negotiating proposal by Chile (S/CSS/W/88).
24
Negotiating proposals by Colombia (S/CSS/W/119), Cuba (S/CSS/W/2) and Mexico (S/CSS/W/101).
17
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15.
IV.
(i)
nationality and residency requirements for board members and other management
personnel
(j)
differing restrictions by sub-central governments
(k)
domestic procurement requirements
Potentially relevant issues:
(a)
Are new elements needed to improve clarity regarding the scope of the services
covered by market access and national treatment commitments? If so, should such
elements be left to the to individual Members to decide or should a common
approach be developed?
(b)
What are the main types of telecom services on which market access and national
treatment commitments are either missing, under-represented, or unclear in relation to
the negotiation of improved coverage of commitments?
(c)
What are the kinds of market access and national treatment limitations for which
reduction or elimination is considered top priority in securing improved
commitments?
(d)
What modalities or combinations thereof (e.g. bilateral, plurilateral, and multilateral)
would be most effective in securing mutually acceptable commitments on market
access and national treatment in this sector?
(e)
Are there any particular approaches that might facilitate the recognition of
autonomous liberalization that has taken place in the sector?
REGULATORY
ARTICLE XVIII)
ISSUES
(INCLUDING
PROPOSALS
RELATED
TO
16.
While affirming the value of the GATS Annex on Telecommunications and the additional
commitments on the Reference Paper in the liberalization process, Members note a continued need for
the examination of regulatory issues.25 Developing countries also suggest that effective regulation is
key to ensuring the sector's growing contribution to national economic and social development
objectives. Every negotiating proposal submitted on this sector urges Members to adopt the
Reference Paper as additional commitments in their schedules. One member also noted a need for
more concerted efforts to fully implement the obligations of the Reference Paper.26
17.
A number of specific suggestions concerning telecom regulation were made. One Member
urges Members to reduce regulatory restrictions on the sector to the minimum necessary to ensure
quality of service, including universal service, and to address the issue of scarce resources.27 Others
suggest that domestic regulation of the telecommunications sector should be subject to a necessity test
and greater transparency28 and that unreasonably high licensing charges should be addressed.29 One
Member calls for recognizing Internet delivery services as a basic telecom service covered by the
Reference Paper's competition and interconnection disciplines.30 Another Member observes that
regulatory success is facilitated by factors such as streamlined numbering practices, carrier pre25
26
Proposals by Australia, Chile, Colombia, Cuba, Japan, Mexico, Switzerland, the United States.
Proposal by Australia (S/CSS/W/17).
27
Proposal by the European Communities (S/CSS/W/35).
28
Proposal by Australia (S/CSS/W/17).
Proposal by Japan (S/CSS/W/42).
30
Proposal by Australia (S/CSS/W/17).
29
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selection, interconnection guarantees, interconnection based on long run incremental cost
methodology, transparency, a credible arbitration procedure, an independent regulator, competitionfriendly universal obligations and mechanisms, and competition-enhancing methods for allocating
radio frequencies.31
18.
Although Members generally do not recommend a revision of the current Reference Paper
template, some support the possibility of strengthening the disciplines by other means. One Member
suggests working on an understanding to help clarify Reference Paper obligations, particularly with
respect to best practices in the areas of, for example, spectrum use and spectrum-related standards and
criteria for independence of regulators, while using the Article VI work programme to address
licensing issues and technical standards.32 The suggestion was also made that some of the principles
of the Reference Paper be added to the Annex on Telecommunications.33 Another delegation urged
Members to explore the risk of telephone operators, who are major suppliers, expanding into valueadded sectors that rely on their networks and services and abusing their market power, but stressed
that regulation of value-added services should be avoided.34 One developing country Member
cautions that competitive principles should not be subject to negotiations only for certain sectors of
interest to some Members, but rather form part of wider negotiations that take into account the
interests and different levels of development of all Members.35
19.
While generally cited as important by all Members, the role of universal service regulation
was particularly emphasized by developing country Members. They note the developmental impact of
such requirements stressing that liberalization should be accompanied by a policy that extends the
coverage of basic services and enhances access to information networks.36 However, Members who
emphasize these concerns do not identify any particular need to revise the existing provisions of the
Reference Paper on universal service.
20.
V.
Potentially relevant issues:
(a)
Are there any pressing regulatory concerns for which existing GATS disciplines and
Reference Paper commitments may be considered insufficient at this time?
(b)
Are bilateral request-offer mechanisms in themselves sufficient to adequately reflect
and address some of the regulatory concerns raised in this sector?
(c)
To what extent might the horizontal work on domestic regulation accommodate some
of the regulatory concerns raised in the telecom context?
OTHER RELEVANT ISSUES AND QUESTIONS RAISED IN NEGOTIATING
PROPOSALS
21.
A number of other issues have been raised. Some Members propose the removal of MFN
exemptions in this sector, particularly those related to the application of accounting rates.37 Attention
was also drawn to accounting rates in relation to the moratorium included in the Report of the Group
on Basic Telecommunications38 and the question of whether or not it has expired.39 Another issue
relates to Internet charging arrangements and the cost of interconnection by national Internet
31
Proposal by Switzerland (S/CSS/W/72).
Proposal by Australia S/CSS/W/17).
33
Negotiating proposal by Colombia (S/CSS/W/119).
34
Negotiating proposal by the United States (S/CSS/W/30).
35
Negotiating proposal by Mexico (S/CSS/W/101).
36
Negotiating proposals by Colombia (S/CSS/W/119), Cuba (TN/S/W/2) & Mexico (S/CSS/W/101).
37
Negotiating proposals by Colombia (S/CSS/W/119) the EC (S/CSS/W/35) and Japan (S/CSS/W/42).
38
S/GBT/4, 15 February 1997.
39
Negotiating proposals by Australia (S/CSS/W/17), Cuba (S/CSS/W/2) and Mexico (S/CSS/W/101)
32
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providers to the international networks.40 In this context, some Members cite possible examples such
as the APEC principles on "International Charging Arrangements for Internet Services".41
22.
Developing country Members, in particular, emphasize the broader economic impact of
telecom commitments and liberalization. One Member stressed the significance of new telecom
technologies and their wider availability as key to reducing the digital divide and to enhancing
economic productivity across the economy, as well as in particular sectors such as tourism and
financial services.42 It was noted that in securing foreign capital, Members also seek to strengthen
national capacities through technology transfer; but the technological divide in communication
technologies has not been bridged, particularly in rural and remote areas.43 Another suggestions was
to give closer consideration to the various interrelationships between telecom services and areas such
as electronic commerce, information technology, investment, and intellectual property.44
40
Negotiating proposals by Australia (S/CSS/W/17) and Colombia (S/CSS/W/119).
TELMIN4, adopted by APEC Ministers in May 2000.
42
Negotiating proposal by Colombia (S/CSS/W/119).
43
Negotiating proposal by Cuba (TN/S/W/2).
44
Negotiating proposal by Chile (S/CSS/W/88).
41
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ANNEX 1
List of Documents Used
Negotiating proposals on telecommunications











Negotiating Proposal for Telecommunications Services, Communication from Australia
(S/CSS/W/17) 5 December 2000.
Market Access in Telecommunications and Complementary Services: the WTO’s Role in
Accelerating the Development of a Globally Networked Economy, Communication from the
United States (S/CSS/W/30) 18 December 2000
GATS 2000: Telecommunications, Communication from the European Communities
(S/CSS/W/35) 22 December 2000.
Initial Negotiating Proposal on Telecommunication Services, Communication from Canada
(S/CSS/W/53) 14 March 2001.
GATS 2000: Telecommunications, Communication from Switzerland (S/CSS/W/83) 4.5.01.
Negotiating Proposal for Telecommunication Services, Communication from Korea
(S/CSS/W/83) 11 May 2001.
Telecommunications Services, Communication from Mexico (S/CSS/W/101) 10 July 2001.
Telecommunications Services, Communication from Colombia (S/CSS/W/119) 27
November 2001.
Negotiating Proposal on Telecommunications Services, Communication from Cuba
(TN/S/W/2) 30 May 2002.
Joint Verbal Statement on the Quality of Telecom Offers; Statistical Analysis of Services
Tabled by WTO Members,(Australia, Canada, the Separate Customs Territory Of Taiwan,
Penghu, Kinmen And Matsu, EC, Hong Kong China, Japan, Korea, Norway, Singapore,
Switzerland, United States) Room Doc., 1 May 2005
Liberalization of Telecommunications Services, 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
(TN/S/W/50) 1 July 2005.
Multi-sector negotiating proposals that include telecommunications


The negotiations on Trade in Services, Communication from Japan (S/CSS/W/42) 22
December 2000.
The negotiations on Trade in Services, Communication from Norway (S/CSS/W/59) 21
March 2001.
Classification proposals on telecommunications


Classification in the Telecom Sector under the WTO-GATS Framework, Communication
from the European Communities (TN/S/W/27, S/CSC/W/44) 10 February 2005.
Classification in the Telecommunications Sector under the WTO-GATS Framework,
Communication from the United States (TN/S/W/35, S/CSC/W/45) 22 February 2005
Meeting Reports: Special Session


Council for Trade in Services, Special Session, Report of the Meeting held on 28, 29 and 30
March 2001, S/CSS/M/8
Council for Trade in Services, Special Session, Report of the Meeting held on 14 to 17 May
2001, S/CSS/M/9
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



Council for Trade in Services, Special Session, Report Of The meeting held on 9 to 12 July
2001, S/CSS/M/10
Council for Trade in Services, Special Session, Report of the Meeting held on 3-6 December
2001, S/CSS/M/13
Council for Trade in Services, Special Session, Report of the Meeting held on 19-22 March
2002, TN/S/M/1
Council for Trade in Services, Special Session, Report of the Meeting held on 21, 22 and 25
February 2005, TN/S/M/14
Committee on Specific Commitments


Committee on Specific Commitments, Report of the Meeting held on 21 June 2005,
S/CSC/M/37
Committee on Specific Commitments, Report of the Meeting held on11 February 2005,
S/CSC/M/36
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ANNEX 2
List of directly relevant documents prepared by Other International Organizations
 ITU, World Telecommunication Development Report, annual reports. 7th edition, 2003, 6th edition, 2002
5th edition, 1999 4th edition, 1998 3rd edition, 1996/97
 ITU, Trends in Telecommunication Reform, Annual reports. 6th edition, 2004-2005, 5th edition, 2003 4th
edition, 2002 3rd edition, 2001 2000, 1st edition, 1998
 ITU, World Telecommunication Indicators Database, 8th edition, 2004
 OECD, Communications Outlook, Annual reports. OECD Communications Outlook, 2005 edition
 OECD, OECD Trade Policy Working Paper No. 7 - Services Barriers and their Economic Impact:
Examples of Banking and Telecommunications Services in Selected Transition Economies,
TD/TC/WP(2994)32/FINAL, 07 October 2004.
 UNCTAD, UNCTAD E-commerce and Development Report 2004, Annual Reports.
 UNCTAD, World Investment Report 2004 , Part Two The Shift Towards Services, UNCTAD/
WIR/2004, 22 September 2004.
 World Bank, Global ICT Department, Competition in International Voice Communications,
February 2004.
 World Bank, Global ICT Department, Interconnection Challenges in a Converging Environment:
Policy Implications for African Telecommunications Regulators, June 2005 (J. Bezzina).
 World Bank, Global ICT Department, Telecommunications Reform in the OECS: Impacts on
Prices and Services, June 2005.
 World Bank, Global ICT Department, Connecting Sub-Saharan Africa, June 2005 (Pierre Guislain,
M. Ampah, L. Besancon, C. Niang, A. Serot).
 World Bank, Global ICT Department, Financing Information and Communication Infrastructure
Needs in the Developing World: Public and Private Roles, February 2005.
 World Bank, Assessing the Impact of Communication Costs on International Trade, Policy
Research Working Paper No. 2929, November 2002 (C. Fink, A. Mattoo, I.Neagu).
 World Bank, An Assessment of Telecommunications Reform in Developing Countries, Policy
Research Working Paper No 2909, October 2002 (C. Fink, A. Mattoo, R. Rathindran).
__________