Trade Pact Would Boost U.S. Access to Mobile Markets

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By Bryce Baschuk

Nov. 5 – The telecommunications chapter of the Trans-Pacific Partnership agreement would reduce barriers to market entry, helping U.S. companies access 11 other telecommunications markets with an estimated value of over $300 billion per year, the Office of the U.S. Trade Representative said.

The pact broadly seeks to curb prohibitions on investment, reduce anti-competitive behaviors, increase access to spectrum and provide a common regulatory framework similar to the one in the U.S., leveling the playing field for U.S. firms to compete abroad.

“The provisions in the telecommunications chapter – not surprisingly — mirror the major elements of federal telecommunications law – which remains a very good framework in theory,” said Brad Ramsay, the general counsel at the National Association of Regulatory Utility Commissioners.

The text includes language aimed at increasing competition for mobile services in TPP markets and includes various provisions to address spectrum allocation, mobile roaming rates, pole access, network interoperability, interconnection and number portability.

The mobile network provisions of the 12-nation pact could provide a boon to wireless carriers such as Verizon Wireless Inc., AT&T Inc., and Sprint Corp. and T-Mobile US Inc. by opening markets that were previously too challenging or too expensive to enter.

A footnote under Article 13.3 of the agreement excludes U.S. wireless carriers from the chapter's provisions regarding anti-competitive restrictions on established telecommunications companies in the various 12 nations. The provision adopts the concept that the U.S. wireless marketplace is considered more competitive than in other foreign markets and thus should be subject to less stringent requirements under the terms of the treaty.

In addition, U.S.-based rural local exchange carriers are exempted from the treaty's market access rules.

The trade pact was negotiated by the 12 countries — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. The official release of the text Nov. 5 starts the clock ticking for ratification by all the nations involved.

Mobile Roaming

The TPP is the first free trade agreement to address the issue of “unreasonable” mobile roaming rates for voice and data services, according to the USTR. The agreement broadly seeks to address the way foreign wireless carriers price international roaming rates, an issue that has long been a thorn in the side of U.S. travelers abroad.

Specifically, article 13.6 of the text urges TPP parties to seek greater transparency and pursue “reasonable” rates for international mobile roaming services via rate regulation, if deemed necessary —though they are not required to do so under the treaty.

Companies in TPP countries are encouraged under the agreement to exchange information regarding their retail international roaming rates and reduce impediments that may prevent consumers from using their mobile devices to access networks while abroad.

The mobile roaming section also includes terms by which TPP parties may negotiate wholesale international mobile roaming rates with other TPP members and ensures that such rates and conditions adhere to the treaty's most-favored-nation (MFN) requirements.

The MFN trade policy — outlined in the WTO's General Agreement on Tariffs and Trade — extends concessions or beneficial trade terms to every country that is subject to an agreement.

Incumbent Restrictions

Once enacted, the treaty will help U.S. telecommunications companies enter markets in the Pacific region by reducing obstacles to network construction and minimizing other financial and operational hurdles, according to the USTR summary of the telecommunications provisions.

The TPP also “closes a loophole that has prevented the use of trade disciplines in markets where a dominant mobile operator has been able to thwart competition,” USTR said.

Specifically, article 13.7 ensures that “major telecommunications suppliers” in any of the participating countries offer “no less favorable treatment” to other TPP-based companies than it would accord to its affiliates or non-affiliated service suppliers.

The section applies to the availability, provisioning, rates and quality of similar public telecommunications services among other terms.

Interconnection

“In a competitive environment, telecommunications depends on the ability of suppliers to access each other's facilities and services,” USTR said.

The telecommunications chapter contains language aimed at ensuring that companies offer interconnection to their facilities and equipment on a reasonable and timely basis. The provision includes safeguard measures to protect the confidentiality of commercially sensitive information.

The parties to the TPP also urge incumbents to provide physical co-location of equipment necessary for interconnection or access to unbundled network elements under reasonable, non-discriminatory rates, terms and conditions. In the context of the TPP, incumbents are companies that are deemed to have an advantage over new entrants via market control or control of physical network assets.

The text further urges that incumbents provide leased circuits, and make their services available for resale and under reasonable, non-discriminatory rates, terms and conditions.

Anti-Competitive Practices

The chapter includes other competitive safeguards to ensure that incumbent providers, acting alone or in a group, are barred from engaging in anti-competitive practices. In particular, article 13.8 prohibits parties from:

• engaging in anti-competitive cross-subsidization;

• using information obtained from competitors with anti-competitive results; and

• failing to readily provide technical information about essential facilities and commercially relevant information.

Market Forces

In the telecommunications industry “reliance on market forces and commercial negotiations are the preferred means of achieving policy goals, absent market failure or monopolistic behavior,” the USTR summary said.

Article 13.3 of the TPP pact specifies that telecommunications regulators have a free hand to:

• “engage in direct regulation either in anticipation of an issue that the party expects may arise or to resolve an issue that has already arisen in the market;

• rely on the role of market forces, particularly with respect to market segments that are, or are likely to be, competitive or that have low barriers to entry, such as services provided by telecommunications suppliers that do not own network facilities; and

• use any other appropriate means that benefit the long-term interest of end-users.”

Network Access

The treaty also sets out new terms that encourage TPP governments and regulators to offer “fair access to scarce resources” such as spectrum, telephone numbers, and government-controlled rights of ways, the USTR said.

Specifically, article 13.4 permits companies in the participating countries to access and use any public telecommunications service — such as spectrum, rights of way and phone numbers — offered in each territory on reasonable and non-discriminatory terms and conditions.

Network providers are urged under the agreement to offer counterparts from other TPP member countries number portability and access to telephone numbers on a nondiscriminatory basis. The text includes temporary exemptions to the number portability provision for Brunei Darussalam, Malaysia and Vietnam, for whom the provision is not yet technically feasible.

Article 13.14 outlines provisions whereby major suppliers in TPP countries must provide access to poles, ducts, conduits and rights-of-way or any other structures necessary for the construction of a telecommunications network.

Article 13.15 includes a provision to ensure that TPP members have access to the landing stations for international submarine cables.

Public Service, Privacy

The text includes network access restrictions to preserve the “public service responsibilities” or protect the “technical integrity” of incumbent networks.

The chapter specifies that members may impose other conditions for access to public communications networks pertaining to:

• specialized technical interfaces and protocols;

• interoperability;

• terminals that interface or attach to the networks; and

• licensing procedures.

The text includes provisions to ensures any company based in a participating country may use another participating country's public telecommunications network to transmit information across borders — including “intra-corporate communications, and for access to information contained in databases or otherwise stored in machine-readable form.”

The agreement permits TPP parties to ensure the security and confidentiality of messages and to protect the privacy of personal data of end-users “provided that those measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade in services.”

Transparency

“The telecommunications chapter ensures the opportunity for stakeholders on all sides to provide input, including for innovative suppliers to demonstrate how they can meet policy objectives more efficiently, for example through the use of technology, or innovative service offerings,” USTR said.

Specifically, the text delineates how participating countries should implement licensing procedures, and prods them to publish the current state of their respective spectrum allocations and ensure that their telecommunications regulators have adequate enforcement authority.

Article 13.21 defines the process by which telecommunications companies may seek legal recourse in case of disputes.

The treaty further seeks to establish a TPP committee on telecommunications to review the implementation of the telecommunications chapter, discuss and report any relevant findings related to the chapter and carry out other functions.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com