Britain split on landmark WTO telecoms ruling

New entrants fear that giants will benefit most, writes Chris Godsmark

Britain's telecommunications industry was divided yesterday about the implications of the landmark deal signed at the weekend by 68 countries to free up telecommunications markets.

Aggressive new entrants in the UK market, already one of the most liberal in the world, claimed traditional established carriers like British Telecom, as well as AT&T in the US, faced a serious erosion of business.

However, BT argued it would make up in new trade overseas the business that it lost in the UK. They agreed on one thing, though: the deal was hugely significant.

The countries involved have agreed to allow foreign competitors to move into what were in most cases heavily regulated markets dominated by state monopolies. The "offers" tabled by individual states differ. Japan, for instance, has restricted foreign stakes in NTT and KDD, its two main operators, to 20 per cent. Canada and Mexico refused to allow foreign companies to own majority stakes. Yet the biggest breakthrough may well be the agreement to create enforcement regimes, mirroring the work of Oftel, the UK's regulatory department.

Don Cruickshank, the British regulator, explained: "The key to this is that most people signed up to the principle establishing regulators and abolishing unfair arrangements such as cross-subsidies."

However, he warned: "The next stage is the detail. The possibility of using the WTO's established disputes resolutions procedures is crucial."

The total world telecoms market is already worth $600bn (pounds 371bn) and research in the US suggests it could double to $1,200bn by the year 2000, with much of the growth boost coming from the WTO agreement. The UK alone could see additional business worth pounds 20bn over the next 10 years.

Competition should bring dramatically lower prices on long-distance call routes. Traditionally, the wholesale rates for calls on international routes bore little relationship to the cost of providing the service.

Mr Cruickshank explained: "Just in the short term, interconnect prices between companies will fall sharply. Accounting rates average three to four times the true cost of the calls, money which flowed into local monopolies."

Oftel is likely to abolish accounting rates between the UK and US completely later this year, moving to genuinely transparent wholesale charges.

Yet this will hit revenues for the large incumbent carriers, though in the case of the European Union and the US this trend was already well- established. BT's revenues from international calls fell in the nine months to the end of December from pounds 1.486bn to pounds 1.393bn as prices plunged and the pain is set to to continue.

Mike Grabiner, chief executive of Energis, the telecoms group set up by National Grid and a former senior BT executive, argues operators will have to move into higher-value services such as the Internet to compensate. "I think the plain telephony market is going to be hard to grow in the kind of volume needed to make up the cut in profit margins. It's going to be very tough for incumbents like BT, but at Energis we start from a smaller market share so it is easier to grow."

BT, hardly surprisingly, disagrees, claiming it will be a net beneficiary as foreign opportunities and world growth increase. Larry Stone, BT's head of EU affairs, said: "Incumbent carriers are also new entrants in other markets. With our merger with MCI and stakes in European partnerships we're in a good position to get into new markets."

Manufacturers of telecommunications equipment stand to make huge gains as rival firms scramble to build new networks.

Granger Telecom, a medium-sized UK business exporting to Africa, the Middle East and Eastern Europe, said a recent project was to build a pounds 17m wireless fixed phone network in Ghana where they were opening up their industry.

"Some of the smaller countries in this deal are ideal places for us to sell to, with little or no established infrastructure," a spokesman said.

Hamish McRae, page 20

Suggested Topics
Sport
Mourinho lost his temper as well as the match
sportLiverpool handed title boost as Sunderland smash manager’s 77-game home league run
Voices
Sweet tweet: Victoria Beckham’s selfie, taken on her 40th birthday on Thursday
voices... and her career-long attack on the absurd criteria by which we define our 'betters', by Ellen E Jones
Arts & Entertainment
Billie Jean King, who won the women’s Wimbledon title in 1967, when the first colour pictures were broadcast
tv
News
Snow has no plans to step back or reduce his workload
mediaIt's 25 years since Jon Snow first presented Channel 4 News, and his drive shows no sign of diminishing
VIDEO
Life & Style
food + drinkWhat’s not to like?
Voices
Clock off: France has had a 35‑hour working week since 1999
voicesThere's no truth to a law banning work emails after 6pm, but that didn’t stop media hysteria
Arts & Entertainment
Maisie Williams of Game of Thrones now
tvMajor roles that grow with their child actors are helping them to steal the show on TV
Life & Style
Lana Del Rey, Alexa Chung and Cara Delevingne each carry their signature bag
fashionMulberry's decision to go for the super-rich backfired dramatically
Arts & Entertainment
Kingdom Tower
architecture
Life & Style
Sampling wine in Turin
food + drink...and abstaining may be worse than drinking too much, says scientist
Arts & Entertainment
Game of Thrones writer George R.R. Martin has been working on the novels since the mid-Nineties
books
News
Easter a dangerous time for dogs
these are the new ones. Old ones are below them... news
News
Brand said he
people
Voices
Actor Zac Efron
voicesTopless men? It's as bad as Page 3, says Howard Jacobson
Sport
Roger Federer celebrates his victory over Novak Djokovic in the Monte Carlo Masters
sport
Arts & Entertainment
The monster rears its head as it roars into the sky
film
Voices
For the Love of God (2007) The diamond-encrusted skull that divided the art world failed to sell for
its $100m asking price. It was eventually bought by a consortium
which included the artist himself.
voicesYou can shove it, Mr Webb – I'll be having fun until the day I die, says Janet Street-Porter
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Telesales & Sales Support Apprentice

£221.25 per week: QA Apprenticeships: This company is a well established Inter...

Client Relationship Manager - SQL, Python

£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

**Financial Services Tax**

£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit