Carriers unite for wider market access

Global operators press Asian governments for an end to telecoms policies favouring domestic players

South China Morning Post

Wednesday, September 15, 2004

Ten global and regional telephone companies have formed a coalition to press Asian governments for greater access to national telecommunications markets.

The Asia-Pacific Carriers Coalition is particularly targeting the policies of China and India that limit foreign participation in favour of domestic players. It says the restrictions are keeping prices unnecessarily high.

“Incumbent carriers in Asia typically remain dominant in their markets, with ubiquitous networks deployed over many years as the monopoly provider of all communication services,” coalition president Joe Welch said.

Mr Welch, who is MCI Asia-Pacific’s regional director of regulatory affairs, said key Asian markets remained rigged in favour of dominant carriers despite governments allowing new market players to develop.

“Relatively recent liberalisation in the main has not yet resulted in markets that are competitive, or that provide access to [last-mile connections] that are unrestricted or reasonably priced,” he said. Carriers such as AT&T, BT, Cable & Wireless, T-Systems (a division of Deutsche Telekom), Macquarie Corporate, MCI, Pacific Internet and StarHub are among those in the coalition.

Asian countries are generally in the early stages of liberalisation and have explicitly limited foreign operators’ direct market access to sectors that threatens incumbents’ core revenues, such as home line rentals or backbone call and data traffic.

The group is seeking to offer one-stop-shop services to multinational companies that are moving their operations to Asia. However, they must typically rely on incumbent carriers to provide last-mile access to users due to restrictions on ownership or wholesale leasing to foreign operators.

The coalition says last-mile access can often cost up to 60 per cent of service delivery. Matt Healy, Macquarie Corporate’s national regulatory manager, said Asian economies would benefit from more competitive markets even at the expense of national operators’ earnings.

“Yes, opening markets does take profit away from incumbent carriers, but it will unlock the value that should be in the hands of consumers,” Mr Healy said.

China limits foreign carriers’ participation in its telecommunications market but – under its World Trade Organisation commitments – it must progressively increase the stakes that foreign players can hold in domestic operators.

Beijing has pursued an aggressive policy of domestic liberalisation that has resulted in strong price competition, particularly in the mobile sector.

“Excessive profits made by incumbent carriers ultimately stem from excessive prices consumers pay for telecoms services. Conversely, removing excessive charges results in lower charges for customers and, in turn, may accelerate the growth of the economy,” the lobby group said.

Telcos unite in fight for fair prices

Hong Kong Standard

Georgine Lee

Several leading telecom operators including Britain’s Cable & Wireless, AT&T and StarHub have formed a regional coalition to attack anti-competitive pricing. 

The Asia Pacific Carriers Coalition (APCC) hopes to work with government regulators in the region to develop policies that are conducive to new investments and encourage competition. 

APCC president Joseph Welch said one way to do that is to work with these regulators to restrain price squeezing by operators, who have the network to wholesale to other service providers and are themselves telecom retailers.

Welch is also the regional director of regulatory affairs for MCI, the second-largest long-distance service provider for United States residential customers and a global IP network carrier.

A main priority on the agenda for APCC, Welch said, is to tackle the issue of incumbent carriers raising the barriers for new entrants. 

“In Hong Kong, the rate for local-leased circuits is probably the highest in the region, excluding Japan, and the business customers are being hurt by it, he said. 

Already, APCC members have made some early successes by making Singaporean telecom regulator, the Info-communications Development Authority (IDA), aware of the problem, as the IDA forced incumbent SingTel to reduce its last mile rate of the dedicated leased line by 30-50 per cent.

Welch said that more than 80 per cent of the buildings in Manhattan are still served by one network provider, but their local leased circuit rate is lower than that of Hong Kong. 

Next week, APCC members will speak at a telecommunications working group conference in Singapore. They will introduce a regulatory assessment model, or a “scorecard” to government delegates. 

The “scorecard” system aims to measure the regulators’ effectiveness in areas such as consistency, dispute procedures and timeliness.

Telecom Giants Unite to Lobby For Opening of Markets in Asia

By REBECCA BUCKMAN

Staff Reporter of THE WALL STREET JOURNAL

September 14, 2004

HONG KONG — Several global telecommunications companies, upset about regulatory hurdles they say are impeding competition in fast-growing Asian telecom markets, are forming a new industry group to push for more liberalization of the region’s telecom sector, according to people involved in the plan.

The companies include AT&T Corp. and MCI Inc. of the U.S., BT Group PLC and Cable & Wireless PLC of Britain, T-Systems, a unit of Germany’s Deutsche Telekom AG, and several others. The same companies successfully lobbied regulators in Singapore last year for a significant reduction in the so-called last-mile fees charged by state-linked Singapore Telecommunications Ltd., the country’s former phone monopoly.

Those fees — applied to domestic and foreign companies that lease the local circuits needed to connect businesses with global networks of voice and data traffic — are higher in Asia than in the U.S. and most countries in Europe, the group says. Reducing such fees will be a key goal of the group’s efforts, because many of its members are focused on selling services like data networks to businesses. The companies also say more competitive markets will bring benefits for consumers and help Asian economies.

Formation of the lobby group, to be called the Asia Pacific Carriers Coalition, is expected to be announced today. The group is modeling itself on the European Competitive Telecommunications Association, a similar industry grouping that lobbies European regulators for open markets. The new coalition is expected to target developed markets such as Singapore and Japan as well as less-developed ones, including China, India and Vietnam, members say.

Members of the coalition contend that big Asian telecom operators “typically remain dominant in their markets,” even in countries where new operators, including foreign companies, have been allowed to challenge them, says Joe Welch, an MCI regional director for regulatory affairs who will be the APCC’s president.

Many of the dominant Asian telecom companies continue to wield market power through excessive fees, the APCC believes, including those charged for last-mile data connections and completing calls to mobile phones. In much of Asia, unlike in the U.S., an individual subscriber’s phone company must pay a fee every time he or she places a call to a mobile phone, even if the call is local.

“Whilst we have liberalized markets, we’re still a long way off from effective competition,” says Matt Healy, the national regulatory manager for Macquarie Corporate Telecommunications Holdings Ltd., a telecom company now competing against Australia’s former telecom monopoly, Telstra Corp. Macquarie will also be a member of the APCC, along with Pacific Internet Ltd. and StarHub Pte. Ltd., both of Singapore.

While big telecom concerns such as MCI and AT&T operate their own international networks, in most countries a local provider owns most of the last-mile connections to individual buildings. In Singapore, for example, SingTel — as Singapore Telecommunications is known — owns those connections.

SingTel has called the Singapore government’s decision in December ordering it to cut its last-mile fees by 30% to 50% inconsistent “with the stated regulatory approach of placing primary reliance on market forces.” SingTel notes that it recently signed a three-year contract with Singapore mobile-phone company MobileOne Ltd. to provide local leased circuits. The deal “clearly shows that win-win, market-driven outcomes can be arrived at without the need for regulatory intervention,” a SingTel spokeswoman says.

The APCC is also expected to express concern about restrictions on foreign investment in less-developed telecom markets, such as China. There, foreign investors can’t invest in telecom companies offering basic services, such as fixed or wireless networks — though that will change soon because of China’s membership in the World Trade Organization.

In India, meanwhile, the group says high license costs keep many foreign companies from entering the market. Foreign telecom companies trying to do business in the U.S. don’t often face the same type of restrictions, it says.

Write to Rebecca Buckman at rebecca.buckman@wsj.com