70 Nations Agree to Open Up Their Telephone Markets

Negotiators from the United States and other nations completed a far-reaching agreement Saturday to open up the global telecommunications industry, paving the way for cheaper international phone calls.

The pact, reached at the World Trade Organization in Geneva and negotiated among 70 countries, will cover 95% of the world’s telecommunications business. As it ends state-run monopolies and lifts restrictive regulations, the accord is expected to lower consumer costs, bring modern telephone service to parts of the world where it is sparse and improve foreign access to the Internet and satellite services.

The opening of telecommunications markets represents a huge reversal. More than most industries, telecommunications has been bound up worldwide in strict monopolies and restrictive policies. Communications companies anticipate a bonanza as barriers fall and they are freed to compete for business in new areas.

“Before this agreement, only 17% of the top 20 telecom markets were open to U.S. companies; now they have access to nearly 100% of these markets,” acting U.S. Trade Representative Charlene Barshefsky, whose office represented the United States in the talks, said at a news conference in Washington.

Barshefsky estimated that the cost of international phone calls for U.S. consumers will drop over the next several years by 80%--from $1 a minute on average to 20 cents a minute.

She called the pact “one of the most important trade agreements for the 21st century.”

President Clinton also hailed the agreement, saying it will bring “new jobs, new markets and lower prices and will spread the benefits of a technology revolution to citizens around the world.”

Barshefsky predicted that the industry, already worth $600 billion, will double or triple in value in the next 10 years. The growth could produce a ripple effect of benefits through other industries, such as software development and electronic publishing, that could amount to an added million jobs in this country, she said.

In the 70 countries covered in Europe, Asia, Latin America and Africa, companies will be able to provide voice and data links through hard-wired and mobile services without having to hand off calls to local monopolies, Barshefsky said.

Communications experts predicted the kind of impact on the global scale that telephone deregulation has had in this country in the past decade. AT&T;, MCI and Sprint executives talked eagerly at the news conference Saturday about competing aggressively to sell their services around the world.

A GTE spokeswoman in Thousand Oaks said the agreement will broaden the company’s reach in markets around the world where it is working with other companies to privatize telecommunications services. GTE has government contracts and is working to compile directories in about 18 countries.

“Ultimately, consumers will reap the benefits of competition,” said spokeswoman Carrie Hyun. “I imagine that anything that would accelerate competition would help us provide one-stop shopping not just for customers inside the U.S. but for those outside as well.”

Analysts agree that telecommunications companies hoping to prosper in a deregulated marketplace must provide a mix of services--including paging, cellular, local and long-distance telephone service--to consumers.

The Clinton administration said the agreement does not require congressional approval. But Rep. Edward J. Markey of Massachusetts, the ranking Democrat on the House telecommunications subcommittee, and Sen. Ernest F. Hollings of South Carolina, the ranking Democrat on the Senate Commerce Committee, have indicated they want to examine the agreement.

The accord may signal a wider role for the World Trade Organization, a 2-year-old body that is delving into issues in the global service sector. It is also moving beyond its controversial position as an arbitrator of last resort of trade disputes among nations.

“It’s a big shot in the arm for the WTO,” said Gary Hufbauer, a trade expert at the Institute for International Economics in Washington.

The original deadline for completion of the accord was last April, but the United States walked out of the discussions on the grounds that other countries were not offering enough concessions.

On Saturday, negotiators in Geneva reached their final agreement just hours before the midnight deadline. They had to overcome a plethora of differences--and not all could be surmounted. Under the accord, the United States will not limit foreign ownership of communications companies in this country, but some other nations balked at such unfettered access in their industry, said Barshefsky and Reed Hundt, chairman of the Federal Communications Commission.

Canada, Mexico and South Korea, for example, refused to allow foreign companies to hold majority stakes in their main telephone companies; Japan insisted on limiting foreign participation in its two primary telephone companies to 20%. Canada also balked at opening up satellite communications for incoming television signals.

Those restrictions will continue. But the agreement, which will be phased in over roughly a decade beginning Jan. 1, 1998, allows greater foreign investment, opens market access and commits participants to adopting regulatory policies based on competition.

U.S. telephone companies that provide telephone service from Europe to the United States will be permitted to bypass local monopolies, through which they must now work, and build their own networks within the 15 nations of the European Union. They will be able to offer telecommunications services in markets such as India, Indonesia, Malaysia and South Africa.

But not all of the effects in the United States may be beneficial.

For example, the improvement of telecommunications in developing countries will help U.S. businesses draw on workers there. Thus, an American company will be better able to shift data-processing work to countries where labor is less expensive, saving money--but at the cost of jobs in this country.

The increased competition should eventually lower prices and increase quality, officials said.

The new system “will be especially beneficial for the development of the world’s poorest countries,” said Renato Ruggiero, the director general of the World Trade Organization.

Approximately half the world’s population lives two hours from a telephone and has never placed a phone call, Barshefsky said.

Times staff writer Jennifer Oldham in Los Angeles contributed to this report.