1

GATS Regulatory implications for ICT

Gats

Artic

les

Sche

dules

Refe

renc

e

Pape

r

Telec

omAn

nex

Training on Trade in Information and Communication ServicesWorld Bank - COMESA - WTOGeneva, 23-27 April 2007

Session 5: The Relevance of GATS

2

GATS Fundamentals

Non-discrimination Transparency

Reasonableregulation

Competitionsafeguards

1 2

43

3

What is “reasonable”?

Non-discriminatoryTransparent ObjectiveImpartialTimelyLeast burdensome NecessaryLeast (trade) restrictive

4

Precedent: WTO Panel Reports • appropriate or suitable to the

circumstances or purpose

• Flexibility and balance are also part of the notion of "reasonable"

“Reasonable”

Report of the Panel, Mexico – Measuresaffecting Telecommunications Services

5

FrameworkArticles

- Most Favoured Nation- Transparency

- Domestic Regulation- Monopoly Providers - Business Practices

Annexes Telecom Annex

Schedules ofCommitments

- Market access- National treatment- Reference paper onregulatory princciples

GATS

GATS Obligations & ICT Regulation

6

GATS Annex on TelecomsGuarantees for ICT-enabled services

Telecoms as a “means” of supplyObligations governments must apply to all providers of

public basic telecom services, whether or not telecom regime is open or telecom commitments are made

ACCESS & USEEnsure reasonable and non-discriminatory access to

and use of public telecommunications transport networks and services (PTTNS), for the supply of any services listed in the schedule

7

Additional CommitmentsThe Reference Paper

Competition - avoid abuse of dominanceInterconnection - guarantee fairness Regulator - independent of operators

Universal service - competition friendlyFinite resources - administer fairly (e.g. spectrum, numbering, rights of way)

Licensing - added transparency

Telecom Regulatory Principles adopted by 80 governments

8

Non-discriminationGeneral obligation applying to all services, scheduled or not:

GATS Article II: Most Favoured Nation Treatment

No discrimination among services or service suppliers of other Members

Commitment applying, as indicated, to services specified in Schedules:

GATS Article XVII: National Treatment

No discrimination against foreign services or service suppliers in relation to domestic ones

Reference Paper (Various provisions)

1

9

MFN: How does this work?

MFN may be particularly important in privatization and other licensing or tendering

Why? If foreign firms may bid or apply for licenses or FDI is being permitted, discrimination based on national origin of the firms must be avoided

Moreover...MFN applies whether or not a government has made commitments on telecom in its schedule

1

10

TransparencyObligations applying to all services, scheduled or not:GATS Article III: Transparency

Promptly publish, or make otherwise publicly available, all relevant measures and international agreements

Annex on TelecommunicationsEnsure public availability of conditions affecting access to and use of public telecommunications

E.g. tariffs, technical interfaces, standards bodies, attachmentof terminal equipment & notification, registration or licensing requirements.

Reference Paper (Various provisions)

2

11

Why transparency?

A regulator cannot convince the industry, or any player, to comply by simply saying that its decisions are in accordance with the law. A regulator maintains credibility and accountability by publishing and publicising decisions, backed up by the reasoning in them. Heavy and ongoing investments are needed to keep the industry up-to-date and efficient. It is crucial to have a transparent and predictable regulatory environment. Investors hate uncertainty. If the regulatory environment is opaque then potential investorsare likely to be discouraged.

OFTA (Hong Kong) Virtual Training Centre, “The role of independent regulators”

2

12

Reasonable RegulationObjectivity is Key...GATS Article VI: Domestic Regulation

In services where commitments are undertaken:

Administer all measures applicable to services or service sectors in a reasonable, objective and impartial manner.

Reference PaperIndependent telecom regulator

Separate from, and not accountable to, any basic telecom supplier. Decisions and procedures to be impartial with respect to all market participants.

3

13

Regulatory requirementsGATS Article VI: Domestic RegulationIn services or sectors where commitments are undertaken:

Licensing, qualifications and standards

objective and transparent criteria

not more burdensome than necessary

* Standards of relevant international organizations, e.g. the ITU or the ISO are to be taken into account

3

14

More on Licensing….GATS ARTICLE VIIn services or sectors where commitments are undertaken:Licensing procedures must not restrict service supply

Inform applicant on decision in a reasonable timeOn request, promptly inform of the status of the application

Reference PaperMake publicly available:

All licensing criteria The period of time required to reach a decisionThe terms and conditions of individual licences

On request, give the reasons for denial of a licence

3

15

How about universal service?

Reference PaperAdminister universal service, however defined and

by whatever mechanism, in a way that is:TransparentNon-discriminatory Competition neutral Not more burdensome than

necessary

3

16

GATS for spectrum managers?

Reference Paper Allocate scarce resources, e.g. frequencies, numbers

and rights of way in an objective, timely, transparent and non-discriminatory manner.

Make publicly available the current state of allocated frequency bands

GBT Chairman's noteAlthough spectrum/frequency management can affect the number

of suppliers, it is not, per se, a market access limit:Members have the right to exercise spectrum/frequency

management in a manner consistent with additional commitments & relevant GATS provisions

3

17

Competition Safeguards

GATS Articles VIII & IXMonopoliesAnti-competitive practices

The Reference Paper: Dominant SuppliersCompetition safeguardsInterconnection

The Annex on Telecoms: Public ProvidersAccess and use guarantees

4

18

In GATS ArticlesMonopoly SuppliersGATS Article VIII: Monopolies and Exclusive Service ProvidersEnsure monopoly or exclusive suppliers do not:

act in a manner inconsistent with MFN and scheduled commitments, in supply of their reserved servicesabuse their position in a manner inconsistent with commitments on services in which they can compete

All SuppliersGATS Article XIX: Business Practices

Upon request: Engage in consultations with a view to eliminating anti-competitive practices of service suppliers

4

19

Obligations on"MAJOR" Telecom SuppliersReference Paper

Defines as "major" the suppliers with control over essential facilities or dominant in the relevant market for basic services

General competition safeguards: Must maintain measures to prevent major suppliers from engaging in anti-competitive practices affecting trade in telecom

Examples:engaging in anti-competitive cross-subsidization abusing information obtained from competitorsnot promptly providing other suppliers the technical informationon essential facilities & other commercially relevant information

4

20

Interconnection Guarantees

Reference PaperEnsure interconnection with major supplier is:

at any technically feasible network pointnon-discriminatory terms, conditions, rates, quality

timelycost-oriented ratessufficiently unbundled so supplier need not pay for network components it does not need

4

21

Obligations on PUBLIC Service Providers

Ensure service suppliers access to and use of any PTTNS, including private leased circuits, and that they may:

• purchase or lease and attach terminal or other equipment with the network

• interconnect private leased or owned circuits with PTTNS or with other such circuits

• use operating protocols of the service supplier's choice

• use PTTNS to move information within and across borders and to access data bases

4

22

Regulation, GATS & ICT Trends?Convergence E-business, on-line supply, global outsourcingBroadband, satellites, wifi, wimax, new generation networksMore combination & integration of services, but also more niche services specialization

23

GATS fundamentals &“best practice” for ICT?

Non-discrimination Transparency

Reasonableregulation

Competitionsafeguards