Telecommunications pact opens markets Nations agree to disband telephone monopolies

February 16, 1997|By NEW YORK TIMES NEWS SERVICE

GENEVA -- More than 60 countries endorsed a landmark agreement in Geneva yesterday to open their telecommunication markets to all rivals.

The pact legally commits governments to unlocking the state telephone monopolies that still control more than half of the world's communications business.

The agreement came after weeks of bruising negotiations in which the United States pushed for greater liberalization and slowly coaxed concessions from countries around the world.

The United States did not get everything it wanted. American negotiators failed to persuade Canada and Japan to give up rules against foreign companies' buying controlling stakes in their dominant telephone carriers.

But the pact does augur steep price reductions in many parts of the $602 billion worldwide communications market. As such, it marks vindication for the United States, which essentially vetoed a much tamer agreement last April.

Consumers are likely to feel the biggest impact in Asia, Latin America and Africa. Most governments there have done little or nothing to reform creaky state-controlled monopolies, which provide shabby service at home and charge wildly inflated prices for international calls.

But the deal will also force the United States and Europe to follow through on opening every segment of their markets to rivals: local and long-distance telephones, international service and wireless communications.

The most fiercely contested part of the accord allows a company based in one country to acquire a controlling stake in the telephone carrier of another country.

That is likely to intensify the scramble among industry titans such as AT&T, British Telecom and NTT of Japan to buy or build their way into world markets.

Jeffrey Lang, the deputy U.S. trade representative who led the talks, said the pact marked a milestone in both international trade and the communications industry.

After months of negotiations in early 1995, the United States abruptly announced that it would not go along with a tentative agreement. The decision infuriated many European governments, which warned that the United States was holding out for too much and would wreck the prospects for a good, if imperfect, move toward freer trade.

The gamble paid off. When negotiations resumed last month, the Americans led by Lang won concession after concession from countries such as Mexico, South Korea and Malaysia.

A result was that 67 countries made firm commitments yesterday to liberalize their markets at least to some degree.

In recent days, moreover, many countries have improved their offers. Mexico and South Korea, for example, agreed to let foreign companies own as much as 49 percent of phone carriers within their borders. Indonesia and Malaysia agreed to adopt the broad regulatory program of allowing competition, as did a host of smaller participants.

Several European countries agreed to deeper changes as well. Spain, Portugal and Italy, for example, had refused to unravel their state monopolies until 2000, two years after most other members of the European Union had committed to take that step. But they now say they will do so on Jan. 1, 1998.

Pub Date: 2/16/97

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