USTR Urges Reformed Regulations from Foreign Partners on Agreements With Telecom Companies

The free flow of data across borders is critical to the success of the information and communications technology services sector, the review said. It said governments may have legitimate reasons for imposing certain restrictions on data flows, but “such restrictions can be overbroad, having the unintended effect of unnecessarily restricting trade.” The economic benefit of innovative cross-border services, like cloud services, is diluted “when countries impose policies that block, filter or otherwise restrict those services to within national boundaries,” it said. USTR said it will continue to focus on identifying unjustified limitations on cross-border data flows, and to use and develop tools “to ensure that any limitations on data flows do not unnecessarily restrict trade.”

Regulation of VoIP services from certain countries have the effect of restricting trade or creating a preference for local suppliers, said the review. Government restrictions blocking such services or requiring VoIP providers to partner with a domestic supplier unnecessarily restrict trade and investment, it said.

USTR urged China’s regulator, the Ministry of Industry and Information Technology, “to reconcile the administrative conflicts between MIIT and other agencies with regulatory authority in telecommunications, the Internet and broadcast industries.” Conflicts arising from overlapping regulatory authorities can cause serious impediments to market access, it said. USTR continues to urge China to lift its foreign equity caps in the telecom sector, and to stop requiring foreign companies to enter into a joint venture with a state-owned company to obtain a basic service license, the review added.

The trade agency said it’s concerned that the obligation of carriers to offer roaming “does not seem to be effectively enforced in Colombia, despite a regulation requiring such offering.” New entrants will inevitably need roaming options if they are to offer a viable service, it said.

Barriers to supplying satellite services in China and India also raise concerns, the review said. There are just two international companies, AsiaSat and APT, with licenses to provide services directly to end users in China, it said. China requires foreign satellite operators to offer end-user services through China Satcom, which will often be their competitor, it added.

Foreign satellite operators can only provide Ku-band capacity to end-users in India through Antrix, a state-owned corporation, the review said. Antrix, a competitor to non-Indian satellite capacity providers, “has been put in the awkward and unusual position of being the middle man,” said David Hartshorn, secretary general of the Global VSAT Forum. “It’s not to anyone’s advantage that this be maintained any longer.” Open and competitive markets are to everyone’s advantage, he said in an interview. “Imposing artificial constraints on access to competitively provided bandwidth only results in higher artificially inflated bandwidth costs being passed down the line to the end-user,” he said: In a developing country, that means that some end users “will never actually see the service.” The USTR’s review is significant because it takes the issue to the international level, Hartshorn added: The U.S. administration “may be joined by others in signaling their concern about the Indian administration’s maintaining of this approach."

USTR said various governments have taken actions “that encourage an unreasonable increase in the termination rates of calls into their countries.” These actions adversely affect the ability of U.S. telecom operators “to provide affordable, quality services to U.S. consumers and may raise questions regarding those governments’ international trade obligations,” it said.

The review cited an FCC order this year that directed U.S. carriers not to pay termination rates to Pakistani carriers “in excess of the rates that were in effect immediately prior to the rate increase on or around Oct. 1, 2012” (http://bit.ly/10w566J). The action stemmed from a petition from Vonage (http://bit.ly/16zDqke). USTR’s review is “an additional piece to pressure the Pakistan government and the Pakistan carriers,” said Brendan Kasper, senior regulatory counsel for Vonage. However, it’s an indirect attempt, he said in an interview. The commission can order U.S. carriers not to pay the rates, “but Pakistan doesn’t have to accept the lower rates,” he said. “If Pakistan won’t accept the lower rates, the traffic will be terminated indirectly.” The best hope for fixing the rates is in the Pakistan court system, he added.