USCIB Letter to Amb. Barshefsky Regarding Implementation of

E.U. Member States Basic Telecommunications Commitments in the WTO

June 23, 2000

Ambassador Charlene Barshefsky

U.S. Trade Representative

Winder Building – Room 209A

600 17^th Street, N.W.

Washington, D.C.  20506

VIA FACSIMILE:  (202) 395-3911

PAGES: 3

Dear Ambassador Barshefsky:

With the impending WTO trade policy review of the E.U., the USCIB would like to convey to you implementation issues that our members have with several E.U. Member States regarding commitments in basic telecommunications. 

As part of the WTO Agreement on Basic Telecommunications, all E.U. member states made market access and national treatment commitments and commitments to the reference paper with implementation dates of 1998 or 1999.  Members of the USCIB are concerned that some E.U. Member States are not implementing their commitments or are not doing so in a satisfactory or timely manner.  The countries identified below do not represent an exhaustive list of all E.U. member state countries in which implementation problems exist, but represent those countries in which our member companies have the greatest concerns.

BELGIUM

Commitment:  All of reference paper; market access and national treatment in 1998.

 Problem:         

·         Regulator, BIPT, is not separate from and does not operate independently of the national operator, Belgacom.  BIPT is subject to the Ministry of Telecommunications.  Either the Belgian government should divest its remaining ownership share in Belgacom or BIPT should be fully independent of the Ministry and have power to adopt and implement regulations.

·         Transparency is lacking in the licensing regime which also needs to be simplified and streamlined.

·         Not possible to obtain a national license in one application.  Must apply on a municipality basis which is very onerous.  Only the incumbent, Belgacom, has a national license.

·         Not in compliance with interconnection obligations under the reference paper.  The European Commission recently (9/99) filed an action in the European Court of Justice citing Belgium’s failure to ensure that Belgacom’s cost accounting methodology identifies the proper cost components for interconnection charges as well as other areas of non-compliance with EC telecom directives.  At present there are 10 infringement procedures against Belgium.  They relate to:  special access to networks, applicable cost accounting principles and information, financial contribution of telecom operators for R&D and access to the information society, providing interconnection to third parties, BIPT empowerment to rule in interconnection litigation, dispositions regarding leased lines information, and disposition regarding number portability and carrier pre-selection.

Commitment: All of reference paper; market access and national treatment effective 1998.

Problem:  

·         Ministry has not effectively transferred authority to the regulator, ART.

·         Greater transparency is required in decision-making and in permitting access to cost data supporting interconnection rates.

·         Regulator is not adhering to non-discrimination principles of the reference paper.  Process for generating interconnection rates is skewed towards the incumbent.  France Telecom submits a proposal or “opening bid” that is often not in accordance with general guidelines and other operators are forced to attempt changes within a timeframe that is too short.  Interconnection charges are not published clearly and are applied on a discriminatory basis.

·         France recently has begun requiring payment of significant universal service charges as part of the interconnection rates which result in unreasonable rates.   

GERMANY

Commitment: All of reference paper; market access national treatment effective 1998.

Problem: 

·         Regulator, RATP, does not function as an impartial regulator.

·         Need greater transparency in RATP decision-making and in permitting interested parties access to cost data used to justify differences in interconnection rates charged to different operators.  Access to Germany’s market is impeded by lack of interconnection arrangements which provide interconnection facilities on a timely basis and under reasonable rates, terms and conditions (e.g. 7 month lead time for ordering interconnect capacity).

·         Regulator applies onerous process to license applications (requires detailed scaled map of every POP) and takes too long to process applications.

·         License fees are excessive and are not cost based. (e.g.: an area license to operate fixed transmission lines for telecoms services to the public (class 3) is DM 10,600,000 or US$ 5.1 million; a license to provide voice telephony services on the basis of a self-operated network (class 4) is a maximum fee of DM 3 million or US$ 1.5 million; license for point-to-point (class 3) is DM 600/km or US$ 290; license for direct line distance (class 4) is DM 100 or US$ 48 per local line and DM 2000 or US$ 975 (minimum) and DM 10,000 or US$ 4800 (maximum) per long distance line.)

ITALY

Commitment:  All of reference paper; market access and national treatment effective 1998

Problem:

·         Need to establish requirements for interconnection in accordance with the reference paper.  Lack of transparency of Telecom Italia's interconnection terms and charges and excessive lead times impede competition.

SPAIN

Commitment:  All of reference paper; market access and national treatment effective 1998.

Problem: 

·         Licensing process is not transparent and is overly burdensome.

·         Ministry of Development has not effectively transferred authority to the regulator (CMT).  Regulator has authority over interconnection, but Ministry retains authority over retail services.

·         Obligation to establish a POP in each of the regions in Spain within 12 months as a condition of license is unreasonable and deters competition.

·         Not in compliance with interconnection obligations under the reference paper.  Competing carriers have had considerable difficulty negotiating access to Telefonica’s network for switched interconnection, intelligent network services, and backhaul to cable landings and border crossings.  RIO 2000 proposal by Telefonica (yet to be accepted by CMT) contains worse terms than those of current RIO.

We hope that this information is helpful to you as you prepare for the trade policy review of the E.U. 

Please do not hesitate to contact me if you have any questions.

Sincerely,

Thomas M.T. Niles