Overview of ITU work
on tariff and accounting
matters, international
mobile roaming,
international Internet
connectivity,
and taxation
issues
APT-ITU workshop on the International
Telecommunications Regulations
Bangkok, 6-8 February 2012
Richard Hill, ITU
Presentation Outline
1.
2.
3.
4.
Tariff and accounting matters
International mobile roaming
International Internet connectivity
Taxation of ICT/Telecommunication services
1) Tariff and accounting matters
Background:
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In 1885, an article consisting of five general paragraphs devoted to the “international
telephone service” was added to the Telegraph Regulations.
In 1932, the Telegraph Convention of 1875 and the Radiotelegraph Convention of 1927
were combined into a single convention embracing the three fields of telegraphy,
telephony and radio.
The 1932 and 1938 Telephone Regulations did not apply to all countries, but only to
European countries and countries that voluntarily chose to join the “European system”.
The actual tariffs agreed between countries were not included in the treaty, they
were published elsewhere.
In 1973 the Telegraph Regulations and the Telephone Regulations were last revised and
drastically simplified focusing on general principles, more detailed operational
provisions were moved to Recommendations.
Throughout all these developments, the basic principles dealing with tariffs remained
unchanged, including the rate for a communication between two countries.
The Telegraph Regulations and Telephone Regulations were superseded in 1988
by the International Telecommunications Regulations (ITRs).
The 1988 International
Telecommunications Regulations (ITRs)
Background:
• The ITRs contained a key provision in Article 9, Special Arrangements.
• It was only in 1988 that, private operators were explicitly allowed to use leased
lines to provide services, including data services. Facilitating the expansion of
networks (TCP/IP protocol) and the Internet services.
• Although tariffs were supposed to be based on costs, in practice they often were
not: high prices for international connections were used to subsidize national
services.
• The privatization and liberalization of telecommunications markets were
facilitated by the Global Agreement on Trade in Services (GATS) in 1994 and in
1996 (Reference Paper on Basic Telecommunications Services).
Provisions included requirements related
to interconnection Tariffs:
to be cost-oriented, transparent, and reasonable
Main difference between the
traditional accounting rate system
and the new regime
Traditional system
New regime
Accounting rates
International interconnection rates
Normally symmetric (accounting rate
split 50/50)
Asymmetric (charges may vary between
countries)
Bilaterally negotiated
Set unilaterally, but subject to trade discipline
Discriminatory (different rates with
different correspondents)
Non-discriminatory (same reference
interconnect offer offered to all carriers)
Half-circuit regime (not normally
unbundled)
Full-circuit regime (can be unbundled)
A new regime for international interconnection has become prevalent since
the mid 1990s. The main differences between the traditional accounting
rate system and the new regime is summarized in this table.
Average cost of one minute of
fixed telephony
The changes in national
regulatory practices
resulting from the general
trends towards
liberalization and
privatization resulted in
very significant decreases
in the cost of international
telecommunications.
ITU work on tariff and accounting
matters (1)
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In order to adapt the remuneration system to the new, more competitive
telecommunication environment, and to respond to the growing expectations of
the international community, Study Group 3 started an overall review of the
remuneration system as from 1991.
The topic has generated considerable interest and, delegates representing more
than 80 countries exchanged opinions and participated actively in the meetings.
The following represent common objectives for the work:
– to develop general principles and guidelines for the establishment of
accounting rates;
– to determine cost components to be included in the telephone accounting
rates;
– to expedite work on developing appropriate costing methodologies;
– to establish a transition period to avoid drastic changes, particularly for the
developing countries.
ITU work on tariff and accounting
matters (2)
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Study Group 3 developed ITU-T Recommendation D.140 on accounting rates
principles for the international telephone service. Five principles were adopted:
– cost-orientation of accounting rates and accounting rate shares;
– application of the cost-orientation principles to all relations on a nondiscriminatory basis;
– implementation on a scheduled basis of one to five years, if a transitional
timeframe is necessary;
– periodical review of accounting rates by NRAs;
– to survey and publish global accounting rates movement yearly.
ITU work on tariff and accounting
matters (3)
• Study Group 3 continued its work on reform of the accounting rate
system to reflect the new telecommunication environment.
• In December 1998, Study Group 3 approved a revision to ITU-T
Recommendation D.150.
• It agreed on three new procedures for remunerating the party that
terminates international traffic:
Termination charge procedure
allows governments or operators to establish
a single charge for terminating traffic in their country
Settlement rate procedure
allows them to negotiate cost-orientated and asymmetric
settlement rates
Commercial arrangement
between countries that have introduced liberalization,
allows any other bilaterally negotiated commercial
arrangement
ITU work on tariff and
accounting matters (4)
• Study Group 3 also developed guidelines on transitional
arrangements, as a new draft Annex to Recommendation D.140.
• The regional Tariff Groups made a number of useful cost studies
related to the provision of international telephone services.
• During 2001, the ITU-D sector developed a cost model
(COSITU)that takes in to consideration the above mentioned ITU-T
Recommendations and methodologies.
• ITU-D, activities in this area largely focused on assisting Members
to determine the cost of regulated services in light of changing
market and technological developments through out workshops,
training and direct assistance.
BDT and TSB continue working together to study the evolution
of tariffs and accounting matters in the changing market and
technological developments
Proposals made to CWG-WCIT by the membership
on Tariff and accounting matters
• Leave the substance of the current ITRs unchanged: the provisions
are still valid and useful.
• Revise the current provisions to adapt them to the current
telecommunications environment, which is very different from that
of 1988: in particular, consider provisions that would give greater
weight to ITU-T Recommendations and that would shorten the
deadlines currently found in the ITRs.
• Replace the current provisions (which are quite detailed) with
general principles related to the principles agreed in WTO, in
particular introduce principles related to transparency and costorientation.
• Abrogate (delete) the current provisions: they are no longer
appropriate or applicable in the current privatized and
liberalized telecommunications environment.
2) International mobile roaming
ITU work focused on:
• Identify related work and to collect data (various reports
developed by BDT and other organizations),
• Launch of a questionnaire to ITU members to collect information.
On the basis of those reports, contributions from the membership,
and discussions, many members take the view that:
– rates are too high with respect to costs,
– competition does not seem to be driving down the prices
charged for international mobile roaming,
– uncoordinated national measures are not likely to be
effective, and
– regional or international solutions should be envisaged.
The text of a draft ITU-T Recommendation on International Mobile
Roaming has been agreed by Study Group 3 and will be proposed for
formal approval in September 2012
Proposals made to CWG-WCIT by the
membership on international roaming rates
• Ensure transparency of end-user prices
• Ensure that rates are cost-based
3) International Internet
connectivity (IIC)
Work done by ITU:
• After WTSA-2000, Study Group 3 decided to conduct further study on the technical
and economic development related to IIC.
• Study Group 3 decided to establish two Rapporteur Groups:
– The first Rapporteur Group on IIC is in charge of developing further guidelines for
facilitating the implementation of Recommendation D.50,
– The second Rapporteur Group is in charge of examining the possibility of using
traffic flow as a main factor of negotiation for IIC.
• Based on the proposals from those Rapporteur Groups, Study Group 3 adopted a
guideline which complements Recommendation D.50.
• Study Group 3 also agreed the following problem:
– The high costs of the international circuit for Internet connectivity between least
developed countries and the Internet backbone networks,
– The development and use of the Internet in many developing and
in particular in the LDCs,
– The lack of resources for using and producing local content.
3) International Internet
connectivity (IIC)
• Revisions to Recommendation D.50 were approved in October 2008
and April 2011.
• There was considerable work in SG3 after 2008 regarding the use of
measurement of IP traffic flows in connection with billing for
International Internet connections.
• The matter was explored in some detail at a workshop on 24 March
2011 and in April 2011 a Supplement to Recommendation D.50 was
adopted.
• In coordination with ITU-D, a study on International Internet
Connectivity is being developed to discuss international and
national interconnection.
Results from this study had been presented and discussed in the
ITU Workshop on Apportionment of Revenues and International
Internet Connectivity (Geneva on 23-24 January 2012)
Results from the ITU Workshop on International
Internet Connectivity
During the discussions, several measures were noted which might facilitate increased internet connectivity,
in particular (in no particular order):
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Increasing competition, in particular for international connectivity
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Generate an environment that encourages the investment and the implementation of innovative technical
solutions and services
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Implementation of Internet Exchange Points (IXPs) at the national and regional level
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Implementation of national and regional cacheing for frequently accessed content
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Increase usage of national ccTLDs and national hosting of web sites
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Increasing provision of national and regional content
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Policies and programs to stimulate demand and increase usage of Internet
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Implementation of network nodes on the basis of observed traffic flows (this may require additional efforts to
measure traffic flows)
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Transit infrastructure – ownership and management model - development of business plan
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Coordination and participation of all the players (Government , ISP and Operators)
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Infrastructure sharing
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Sharing of the cost of International Internet Connectivity, for example based on traffic measurements, or on the
basis of network externalities.
Summary report ITU Workshop on Apportionment
of Revenues and International Internet Connectivity
www.itu.int/ITU-T/worksem/apportionment/201201/index.html
Proposals made to CWG-WCIT by the
membership on IIC
No specific proposals have been made by the membership to CWGWCIT but many proposals have been made in various other forums,
including ITU workshops and ITU study groups, for example:
• Encourage the development of competitive regimes at the
national level for international internet connectivity (as opposed
to monopoly regimes for international gateways).
• Encourage implementation of Internet Exchange Points (IXPs) at
the national and regional levels.
• Encourage the development of high capacity regional and interregional backbones, in particular via submarine cables.
• Measure IP traffic flows and use the results in
connection with billing.
4) Taxation
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The issue of taxation of international telecommunications is covered in the
current version of the ITRs, in article 6.1.3.
CWG-WCIT/INF-3 presents the results from the ITU workshop held in 2011
on taxation of telecommunications services and related products.
The situation of double taxation needs to be considered as a priority by
Administrations, in order to mitigate its potential consequences and ensure
that tax rules are applied consistently and fairly, a mechanism for avoiding
double taxation should:
– protect against the risk of double taxation in instances where the same
income is taxable in two countries;
– define which taxes are covered by the agreement;
– provide a procedural framework for enforcement and dispute
resolution;
– protect each government's taxing rights; and
– protect against attempts to avoid or evade tax liability.
Proposals made to CWG-WCIT by the
membership on Taxation
• Leave the current text unchanged.
• Revise the current text to clarify that it is intended to prevent
economic double taxation.
• Revise the current text to limit certain types of taxation, in
particular so as to avoid specific taxes on incoming international
traffic.
• Suppress the current text.