USA - criticism of telecoms in China

USTR cites continued struggles for telecom in China

The Bush administration said various trade barriers remain in the world biggest wireless market, China.

Among the concerns flagged by the U.S. trade representative in its annual review of telecom trade agreements are Chinese capitalization requirements regarded as excessive and obstacles that effectively restrict joint venture partnerships to existing domestic telecom licensees.

“Given the de facto duopoly China currently maintains in each of the fixed, mobile and satellite services sectors (six operators total), and the reported restructuring of the industry that may further limit the number of facilities-based telecom companies, such a policy would seem to limit joint venture partners to a commercially untenable number,” stated the USTR report. “In accordance with China’s commitments in its Protocol of Accession to the World Trade Organization, any legally established Chinese company should be eligible to be a joint venture partners with a foreign operator in the telecommunications sector.”

China joined the WTO in November 2001.

While U.S. and other foreign wireless vendors have benefitted from handset and infrastructure deals with China totaling billions of dollars, wireless telecom companies here and abroad have had much more difficulty cracking China’s wireless services sector in any meaningful way. In addition, telecom companies around the world have been collectively wringing their hands for years about whether they can compete for contracts tied to China’s 3G rollout based on its homegrown TD-SCDMA standard. China’s leading cellular carrier, China Mobile, reportedly began commercial trials of 3G service on April 1 in eight cities, and it plans to showcase the mobile technology at the summer Olympic games in Beijing.

The USTR also said China has failed to make good on commitments in recent years to significantly reduce capitalization requirements. “USTR urges China to expeditiously resolve this issue,” the agency stated. It added that transparency in crafting, implementing and disseminating telecom rules continues to be a serious problem in China.

The USTR cited excessively high mobile termination fees in Mexico, Peru and New Zealand. In comments to the USTR preceding the release of the report, NII Holdings Inc., a Reston, Va.-based firm that provides iDEN wireless service in Latin America, made specific reference to competition problems encountered by its subsidiaries in Peru and Mexico.

“Open and competitive telecommunications markets are an important element of U.S. trade policy,” Susan Schwab, the U.S. trade representative. “Barriers that impede U.S. telecommunications operators and equipment manufacturers from effectively competing abroad ultimately hurt the global economy by slowing down innovation, deterring investment, and stifling development. This year’s 1377 Review identifies practices that serve as impediments to achieving our goals of an open and competitive telecommunications market.”