A landmark deal on Saturday has opened the global telecoms market to competition. Negotiators from 68 countries at the World Trade Organisation telecoms conference in Geneva agreed to open their gates in an industry already worth $600 billion.
The agreement should lift current barriers to foreign competition in countries including Spain and Belgium. It should also drive down costs of international calls by 80 per cent, bringing many countries in line with the US which enjoys one of the lowest tariffs for overseas calls.
For corporate customers calls from the UK to the US currently stands at 10p a minute. The Telecommunications Managers? Association (TMA) predicts this will fall to 5p a minute by the end of the year.
The 68 countries, which account for 90 per cent of the global telecoms market, agreed to open their markets to foreign competition and allow overseas companies to buy stakes in domestic operators.
The pact covers all forms of basic communications including telecoms, voice telephony, data and fax transmissions and satellite and radio communications.
It will come into force on 1 January 1998 along with full liberalisation of the EU telecoms industry.
Phil Barton, finance director of the TMA said: ?The agreement continues to extend variety and competition in the UK. We should also see significant falls in prices where we are currently paying a fortune: UK to Japan for example. Why should we have to pay 40p per minute to call Japan when it is the same distance to California where the cost is 10p per minute??
The TMA voiced concern about two aspects of the pact: the Japanese government limiting the amount of foreign ownership in national operators to 20 per cent, and fear of certain countries including Greece, Ireland and some in Eastern Europe being left behind.
The TMA thinks they will be not ready to compete until after 2000. Ownership of foreign ownership in national Japanese operators would, in effect, lessen competition in the country.
?By saying the maximum ownership is 20 per cent gives an unreasonable disadvantage to other players in that market, ? said Barton.
Ian Taylor, UK's science and technology minister, said: ?The agreement should usher an explosive growth in turnover and investment worldwide. Some analysts have predicted a further $1 trillion additional world trade growth over the next 10 to 15 years -- #20 billion worth in the telecoms sector in the UK alone.?
Taylor continued: ?I predict that soon countries will be competing to attract funds to upgrade their networks to keep up with developments in technology. This is important in keeping our economies competitive: a survey done recently showed that telecoms services are a major factor in decisions of where to place investments, only just after political stability and a trained workforce.?
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