Mexico and China top a list of countries with major trade barriers to U.S. telecom companies, the U.S. Council for International Business (USCIB) said in comments to the U.S. Trade Representative (USTR). It also accused France, Germany and India of failing to meet telecom obligations under the World Trade Organization (WTO). USCIB stressed the importance of: (1) Strong, effective and independent telecom regulatory authorities with effective enforcement powers. “In all markets, such regulatory authorities would enhance compliance with trade commitments and minimize barriers to foreign participation,” it said. (2) Ensuring compliance with the WTO Reference Paper requirements for cost-oriented interconnection. Mexico’s failure to open its telecom market to foreign competition is “a top concern for U.S. firms,” USCIB said, saying Mexico’s telecom market was worth $14 billion annually and that country reperesented the 2nd largest international route for U.S. calls. It complained Mexican telecom regulator Cofetel, whose authority was limited to issuing recommendations to the Mexican Ministry of Communications & Transport, “repeatedly [had] failed to effectively regulate and enforce its regulations” that hurt competition. “The current regulatory climate continues to serve to sustain market dominance by Telmex,” which has “denied competitors phone lines needed to provide service, priced its own services at predatory rates, refused to allow other carriers to interconnect to its network and withheld fees it owes competitors,” it said. USCIB urged Mexico to eliminate its prohibition on foreign control of Mexican carriers authorized to own and operate basic telecom facilities. It also expressed concern about the impact of tax measures on telecom. For example, it said, effective Jan. 1, 2002, the Mexican govt. imposed a new 10% luxury tax on some mobile telecom that “unjustly burdens the mobile communications sector, particularly considering that it has been levied in addition to an existing 15% value-added tax.” While recognizing the positive steps China has taken to implement WTO commitments, USCIB said the country’s “overly narrow” interpretation of market access, coupled with its lack of an independent regulator, harmed U.S. companies and contravened China’s WTO commitments. “We are especially concerned by China’s unreasonably high capitalization requirements for basic services, which will greatly limit market access,” USCIB Pres. Thomas Niles said. USCIB also expressed concern that several European Union (EU) members had failed to implement a new EU framework on telecom liberalization in 2003, saying “warnings from the European Commission to member states were not being taken seriously.” It said it was particularly concerned about France and Germany, which it said were unlikely to adopt new national legislation implementing the new EU regulations until at least the 2nd quarter: “The governments of Germany and France maintain significant ownership in their respective incumbents, and therefore have an incentive to delay transposition of the new EU regulations as long as possible.” USCIB said there were “substantial failings” in the implementation of the rules on cost and accounting information that “underpin the working of the entire regime.” It said the EU had been unable to secure compliance in the long term, noting that while several members had been taken to the European Court of Justice for failure to implement those rules, “this process has proven to be quite lengthy, and it can take upwards of 4 years to secure a final determination.” Except in the U.K. and Ireland, “no effective regime is in place to ensure the WTO obligations on cost-orientated pricing for interconnection and non- discrimination can be met.” USCIB urged the USTR to monitor developments closely and “maintain appropriate pressure on the relevant national authorities in this regard.”
Court of International Trade activity
CTIA Pres. Steve Largent, who took over the helm of the Assn. this month, said in an interview he would like to focus the group on being “transparent and collaborative and a team player, because that’s a reflection of my personality.” Largent, a pro football Hall of Famer with the Seattle Seahawks, said he would like to see the group get ahead of issues, “as opposed to being just reactionary.” Separately, he praised the removal last week of Northpoint language from the Senate appropriations bill.
A new congressional caucus opposed to international piracy of intellectual property will “look like a laser beam” at the subject, one of its co-chmn. said at a news conference Tues. House Internet Caucus Co-Chmn. Goodlatte (R-Va.) was joined by Senate Foreign Relations Committee ranking Democrat Biden (Del.), Sen. Smith (R-Ore.) and Rep. Schiff (D-Cal.) in introducing the 59-member caucus. After the conference, Schiff, whose district includes many TV and movie studios and recording labels, told us he was preparing legislation targeting unauthorized file sharing. Piracy “is a big deal,” Biden said, and “the question remains, ‘What are we going to be able to do about what is in essence a theft of American assets?'”
ORLANDO -- Cooperation within the competitive telecom industry is needed to win regulatory wars, many said at the CompTel trade show here last week. “The lesson to be learned” from the results of the FCC’s Triennial Review Order (TRO) is that “we need to create a public policy debate that clears” CLECs’ views, Covad Vp-Govt. & Internal Affairs Susan Davis said. She said the TELRIC procedure recently initiated by the Commission showed “that if you say something long enough people will start to believe it.”
AT&T filed a lawsuit against MCI/WorldCom and Onvoy in U.S. Dist. Court, Alexandria, Va., Tues. seeking damages for what it charged were violations of the civil provisions of the federal Racketeering Influenced & Corrupt Organization (RICO) Act and other laws. It also filed an objection to the MCI/WorldCom Official Committee of Unsecured Creditors’ request for discovery in U.S. Bankruptcy Court, Manhattan. AT&T said it sought post-(bankruptcy) petition damages resulting from MCI/WorldCom’s continuing business operations.
The FCC’s International and Wireless bureaus concluded NextWave had met regulatory conditions on its C-block licenses on foreign ownership requirements. The conditions required NextWave to either restructure and bring its indirect foreign ownership in line with the 25% benchmark of the Communications Act or demonstrate that it would be in the public interest to exceed that mark. The bureaus’ clearance on the foreign ownership question appeared to be the last regulatory hurdle that NextWave had faced at the FCC on its licenses. Sec. 310(b) of the Act set a 25% benchmark for indirect investment by a foreign entity in a common carrier radio license, but gave the FCC discretion to allow higher ownership stakes if they were deemed in line with the public interest. Based on NextWave’s original 1997 petition for a temporary waiver of its restructuring options under the foreign ownership limits, the FCC held that NextWave’s indirect foreign ownership complied with the Commission’s foreign participation order. At that time, it said NextWave’s level of foreign equity share ownership was less than 27%, and more than 95% of its total equity ownership could be traced to U.S. citizens and citizens of other World Trade Organization countries. “We find no basis to attribute to NTI [NextWave] a level of foreign voting interests that is higher than the level of attributable foreign equity,” the Commission said. In a letter to the FCC in May 2003, NextWave said its Series A stock, which represents legal and actual control of the carrier, was held by U.S. citizens or companies, with a “de minimis” share owned by foreigners. The FCC also concluded that NextWave’s current level of indirect foreign equity and voting interests fell below the 25% benchmark for foreign ownership. It said NextWave’s ownership was divided, with 80.9% of issued and outstanding shares held by domestic interests, 14.5% by foreign individuals or companies and 4.6% by U.S. brokerage houses on behalf of individuals or firms whose citizenship wasn’t known to NextWave. “NextWave appreciates the attention the Commission and its staff have given to this matter in recent months, and we're glad that it’s now put to rest,” a company spokesman said. Petitions previously filed by AT&T Wireless, Verizon and VoiceStream questioned NextWave’s foreign ownership status, but the carriers later rescinded those filings. Questions also were raised in 1997 when 2 failed C- block bidders, Antigone Communications and PCS Devco, asked the FCC to dismiss NextWave’s conditional license approval based on alleged violations of foreign ownership limits. Before the FCC had taken final action on that petition, the agency cancelled NextWave’s licenses for nonpayment. The U.S. Supreme Court earlier this year upheld a U.S. Appeals Court, D.C., ruling that had held that the FCC had erred in cancelling the licenses.
A federal judge granted EchoStar’s motion for summary judgment, holding that Gemstar-TV Guide International didn’t fully own the patent covering aspects of its electronic program guide (EPG) and therefore couldn’t enforce it. U.S. Dist. Court Judge Willis Hunt, Atlanta, said Gemstar didn’t have standing to enforce a patent granted to inventor Michael Levine in 1990 that largely covered the system for programming automatic operation of VCR over an extended period, but also described a technique for storing TV schedule data. The decision clears the way for EchoStar’s antitrust suit involving Gemstar to go to trial in 2004, EchoStar said.
Taking advantage of the telecom meltdown and the slackening of private sector investments, a significant number of municipalities are exploring options for entering the telecom and broadband business, but are meeting with stiff opposition from the private sector at the local level, city officials and lawyers said. The latest example, they said, was the battle being waged in the tri-cities of Geneva, Batavia and St. Charles in Ill. over the cities’ proposal to provide joint broadband services in competition to Comcast and SBC.
China continues to impose “major” barriers to U.S. carriers that interfere with their ability to compete in China’s telecom market, U.S. Council for International Business (USCIB) said in comments to U.S. Trade Representative (USTR). USCIB Pres. Thomas Niles urged USTR to work closely with China to create regulatory body separate from any basic telecom supplier: “Given that the Chinese government owns and controls all of the major operators in the telecommunications industry, it is impossible for China to establish a regulator that is truly independent.” USCIB said China’s “overly narrow” interpretation of market access opportunities for foreign carriers and lack of independent regulator had “negatively impacted market opportunities for U.S. telecommunications companies contrary to China’s WTO commitments.” USCIB said countries such as Canada, France, Germany, Japan and Mexico also imposed barriers to U.S. carriers violating their WTO obligations. It said Canadian Radio-TV & Telecom Commission (CRTC) failed to ensure that independent ISPs have access to cable networks on reasonable terms and conditions that would drive them from market, allowing dominant cable operators to preserve their dominant position preventing fair competition. European Union (EU) enforcement of its rules regarding telecom services has been “far from uniform” that negatively affects investment through this area, USCIB said. It said EU demonstrated its inability to secure compliance in long term. It said while some member states had been taken to European Court for failure to implement those rules, that process could take up to 4 years. Those problems are particularly evident in France, Belgium and Germany, USCIB said. It said with exception of U.K. and Ireland, there was no effective regime in place to ensure WTO obligations on cost orientated pricing for interconnection and nondiscrimination could be met. USCIB said USTR should monitor very closely any progress within EU and “maintain appropriate pressure” on its national authorities. Germany also clearly violates its WTO compliance, USCIB said. It said RegTP was incapable of enforcing its rulings in timely and effective manner. It said German regulator lacked basic tools, such as ability to impose fines for violations of its orders. Moreover, it said, German law doesn’t give competitors opportunity to examine evidence presented by Deutsche Telekom (DT) to RegTP to justify telecom rates. USCIB said RegTP should be granted statutory authority to implement and enforce Germany’s trade commitments. It also said German courts should have statutory authority to hear appeals in timely manner and to enforce country’s trade commitments. USCIB said Mexico failed to implement its WTO obligations, which “if fully implemented, would allow effective competition to flourish.”
Governors in 13 states are considering nominees to fill 19 seats on state commissions between now and end of March. Some appointments may be affected by political shifts that occurred in Nov. elections. Fla. also would have been on list but Gov. Jeb Bush (R) acted early to fill expiring PSC seats.