RESTRICTED  WORLD TRADE  
ORGANIZATION  S/L/148/Rev.1 
1 March 2004 
 (04-0917) 
Council for Trade in Services Original:   English 
  
IMPLEMENTATION OF SPECIFIC COMMITMENTS IN 
TELECOMMUNICATIONS SERVICES  
REQUEST FOR A WAIVER 
Communication from Albania
 
 
Revision  
 
 The following communication, dated 24 Februa ry 2004, from the delegation of Albania is 
being circulated to the Members of the Council for Trade in Services.  
_______________ 
 
1. The Government of Albania hereby submits to the Council for Trade in Services a request for 
a waiver to allow Albania to postpone until 1 January 2005 the application of commitments 
undertaken in its GATS Schedule with respect to the exclusivity granted to Albtelecom SH.A 
("Albtelecom") for the transmission through its network of internati onal public voice telephony 
services.  This request is presented in accordance with paragraphs 3 and 4 of Article IX of the Marrakesh Agreement Establishing the World Trad e Organization.  The exceptional circumstances 
justifying the grant of the waiver, which are set out more fully in the communication from the 
Minister of the Economy attached as An nex III, may be summarized as follows. 
2. In moving toward the full liberalization of th e telecommunications sector, the Government of 
Albania has decided that, to enable Albtelecom to re spond to competition in a fully liberalised market, 
it should benefit from a two-year period of exclusivity. 
3. Although the privatisation of Albtelecom was e xpected by the end of 2000, it was announced 
only in January 2002.  The causes of the delay incl uded investors’ insecurity over the war in Kosovo;  
the effects on international financial and te lecommunications markets of the 11 September 2001 
attack in New York;  increasing ope rator costs for third generation cellular technology;  declining 
investor interest in expanding into fixed telephony markets;  and a delay in the implementation of a 
tariff rebalancing program for Albtelecom planned for 1999, but which did not begin until September 
2001, and will now only conclude  in 2005.  So far, there has been no investor interest expressed in the 
privatisation of Albtelecom. 
4. On 3 July 2003, the Council of Ministers decided that, as a compensation for its investment 
commitments, Albtelecom should enjoy an exclusiv e right to supply international telephony services 
based on its own network until 31 December 2004.  Only  exclusivity for international, not national,  
telephony services was to be maintained.  The Council of Ministers further specified that international 
telephony services shall be ope n to competition in 2005. 
5. The Government of Albania has already taken m easures for further market liberalisation, such 
as the removal of Albtelecom's exclusivity in fi xed telephony services in urban areas, and introducing 
a third mobile operator in the market.  The experien ce of other countries shows that strategic investors 
have been granted a minimum period of two years between the privatisation and the liberalisation. S/L/148/Rev.1 
Page 2  
 
6. Accordingly, the Government of Albania re quests the Council to consider favourably its 
request for a waiver, of which a proposed draft is  attached as Annex I.  An excerpt from Albania's 
Schedule of Specific Commitments is reproduced in Annex II. 
 
_______________ 
 
  S/L/148/Rev.1 
Page 3 
 
 
ANNEX I 
  
DRAFT DECISION
 
 
ALBANIA  
IMPLEMENTATION OF SPECIFIC COMMITMENTS IN 
TELECOMMUNICATIONS SERVICES  
 
Request for a Waiver 
 
Decision of [   ] 20041 
  The General Council,  Conducting  the function of the Ministerial Confer ence in the interval between meetings 
pursuant to paragraph 2 of Article IV of the WTO Agreement; 
 Having regard to paragraphs 1, 3 and 4 of Arti cle IX of the Marrakesh Agreement 
Establishing the World Trade Organi zation (the "WTO Agreement"), [the Guiding Principles to be 
followed in considering applications for wa ivers adopted on 1 November 1956 (BISD 5S/25), ] and the 
Decision-Making Procedures under Articles IX and XII of the WTO Agreement agreed by the 
General Council (WT/L/93); 
 Taking note  of the request of Albania for a waiver  from its commitments under Article XVI 
(Market Access) of the GATS, with respect to international public voice telephone services (CPC 
75212); 
 Referring  to the explanatory note presented by Albania and circulated on 21 November 2003; 
 Taking into account  the exceptional circumstances arising in  Albania as a result of the war in 
Kosovo, which caused  substantial direct damage  to the Albanian economy,  thereby creating 
disruption in and serious impediments to the g overnment's ability to implement planned economic 
reforms and programs, including the full implem entation of its GATS Article XVI commitments 
regarding international public voice telephone services;  
 Considering  that Albania has requested a brief waiv er to implement the commitments cited 
above and hereby commits itself fully to impl ement its GATS commitments by 1 January 2005; 
 Taking note of the foregoing exceptional circumstances;  
 Decides  as follows: 
1. Subject to the terms and conditions se t out hereunder, the commitments undertaken 
by Albania under GATS Article XVI (Market Access)  with respect to international public voice 
telephone services (CPC 75212) are, with respect to  the exclusivity granted to Albtelecom for the 
transmission through its network of these ser vices, waived until 31 December 2004.   
                                                     
 
1 Adopted in accordance with the Procedures on WTO Decision-Making under Article IX of the WTO 
Agreement agreed by the General Council (WT/L/93). S/L/148/Rev.1 
Page 4  
 
2. Albania will, upon request, promptly ente r into consultations with any interested 
Member with respect to any difficulty or matter th at may arise from the waiver of the commitments 
covered by this Decision. Where any such Member considers that its benefits under the GATS are or 
may be impaired unduly as a result of measures put in  place by Albania and covered by this Decision, 
such consultation shall examine the possibility of ac tion for a satisfactory adjustment of the matter. 
3. This decision shall not preclude the right of a Member to have recourse to Articles 
XXII and XXIII of the GATS. 
4. No later than the last formal meeting of the Council for Trade in Services in 2004, 
Albania shall provide a status report on its preparations to fulfil its GATS commitments. 
 
_______________ 
 
 S/L/148/Rev.1 
Page 5 
 
 
ANNEX II 
 
Excerpts from Albania's Schedule of Specific Commitments  
 
Sector or Subsector Limitations on Market 
Access Limitations on National 
Treatment Additional Commitments 
For all sub-sectors of 
telecommunication services 1) & 3) Albanian Telekom 
(AT) has exclusive rights for fixed telephony except in 
rural areas. No limitations 
from 1 January 2003. 
4) Natural persons cannot 
provide telecommunication 
services in Albania if they are not registered as 
juridical persons.  The Government of 
Albania will publish the rules and regulatory 
policy regarding further 
competition in the field of basic telecommunication 
services. The attached 
reference paper on regulatory principles is 
incorporated as additional 
commitments by the 
Republic of Albania 
International public voice telephone services  
(75212) 1) None. 
2) None. 
3) None as of 1 January 
2003. 
4) Unbound, except as 
indicated in the Horizontal Commitments and the 
horizontal section of the 
telecommunications sector. 1) None. 
2) None. 
3) None. 4) None. 
  
 S/L/148/Rev.1 
Page 6  
 
ANNEX III 
 
ALBANIA’S REFORMATORY POLICIES TOWARDS FULL LIBERALISATION  
OF THE TELECOMMUNICATION SECTOR 
  
1. The Government of Albania is totally committed to carry out deep trade reforms aiming at the 
restructuring of Albanian economy, a necessary step  towards the integration of the country in the 
international dimension. These reforms are (are bein g strictly implemented with satisfactory results, 
especially in terms of trade liberalisation of goods in  the Balkans, with a view to establish a free trade 
area in the region. This shall serve as a first step towards the extension of the free trade zone to the 
European Union, thus guaranteeing the successful in tegration of Albanian goods into the European 
market.  
2. Somewhat different is presented the situation in  trade in services that is less developed owing 
to the lack of our experience in this field and to  the characteristics and differences of services that 
influence the modes of international trade transactions. Nevertheless, even  in this field, in cooperation 
with international organizations, we are making effo rts to further liberalise trade in services, initially 
through regional integration policies, and in this r espect the role of telecommunications is essential for 
the economy of a country, not only as a sector on its own right but also as a facility for the development of other services sector and the entire economy, domestic trade and the enrichment of 
citizens’ life.  
3. To guarantee successful reforms in the frame of full liberalisation of such an important sector 
such as the telecommunication, circumspection and caref ully studied steps towards privatisation of the 
fixed telephony company Albtelecom SH.A. are re quired. As the experience of other developed 
countries indicates, this sector is characterized by national monopolies privatised afterwards but 
before the liberalization. Therefore, the Government strategy related to this sector provides that this 
company, after the privatisation process, should enjo y a period of exclusivity, in order to undergo a 
process of modernisation and to become more efficient with a view to respond positively to competition of a future fully liberalised market.  
That is why, by means of this letter I take the opportunity to address the Members of WTO, 
the request to grant Albania a waiver for the obl igation related to the liberalisation of the 
international public voice telephone servi ces based on the network of the company 
Albtelecom SH.A. and the implementation of the commitment in the year 2005. This 
request is presented based on Article IX, par agraph 3 and 4 of the Marrakech Agreement 
Establishing the World Trade Organisation.  
 
I. WHAT IS THE ALBANIAN GOVERNMENT STRATEGY AIMING AT IN THE 
FRAMEWORK OF THIS SECTOR 
(a) The Government of Albania puts the development of this sector on the basis of the 
Policy Paper for the Development of the Telecommunication Sector aiming at: 
(i) The sustainable and long-term development as well as the growth of the 
economic efficiency, through the restructuring of the sector.  
(ii) Increase of market efficiency through the promotion of the competition – as a 
power for an optimal utilisation of capitals - and through a number of S/L/148/Rev.1 
Page 7 
 
 
deregulations, market liberalisation a nd the institutionalisation of regulatory 
entities. 
(iii) Attraction of foreign private capitals as  an important factor for the economic 
growth, through investment not just in monetary terms, but also in terms of managerial skills, international financia l and capital market access, as well as 
strategic alliances in the world market. 
(b) The Policy Paper for the Development of the Telecommunication Sector in the 
Republic of Albania constitutes the first st ep in materialising the Government’s 
objectives for the privatisation of mobile phone company Albanian Mobile Communication – AMC and of the Albtelecom SH.A., and it establishes deadlines for 
the conclusion of this process.  
(c) The privatisation of these companies is an objective of the strategy of the 
privatisation, approved by law No. 8306 dated 14.03.1998: “On the strategy for the 
privatisation of the sectors of special  importance”, a process carried out by 
international consultancy, in the framewo rk of the World Bank project “Consultancy 
for the privatisation of strategic sectors”. 
4. The abovementioned Policy Paper provides that the privatisation process of AMC should 
begin as soon as possible and finish within 1999. Immediately afterwards within 2000 the privatisation of Albtelecom SH.A. should terminate too.  
5. Concerning the issue of exclusivity, the Policy Paper for the Development of the 
Telecommunication Sector in the Republic of Albania specified that Albtelecom SH.A. should be 
given an exclusive right to offer national and international telephony ser vices and local telephony 
services in the urban zones based on its own networ k, until December 31, 20 02, thus around three 
years and a half from the time the document was appr oved; or bearing in mind that according to this 
document, the privatisation of Albtelecom SH.A. sh ould terminate within 2000, the strategic partner 
would enjoy a two-years period of exclusivity.   
II. EVOLUTION OF PRIVATISATION AND RESTRUCTURING PROCESS OF THE 
SECTOR  
(a) As a result of investors’ insecurity due to  the Kosovo war, the privatisation of the 
AMC was postponed and was in fact finalised in July 2000. At this moment the bid 
on the second cellular license was announced, a process that was finalised in January 
2001. 
(b) The postponement of the privatisation of the AMC brought about the postponement 
of the privatisation for Albtelecom SH.A. and the bid projected to finish within 2000, was announced only in January 2002. 
(c) In addition, Albtelecom SH.A. did not go th rough a privatisation procedure for other 
reasons related to the bad situation in the international market of telecommunications 
as a result of: 
(i) September 11-th 2001 attack in New York that had a effect on the breakdown 
of the international financial mark et in general and on that of 
telecommunications in particular; 
(ii) Increase of expenses of international companies in the systems of third 
cellular generation and their concentration on these technologies during this S/L/148/Rev.1 
Page 8  
 
period coupled with a lower interest of the international telecommunication 
operators in the extension of their fi xed telephony market. (Bankruptcy or the 
way towards bankruptcy of some global operators of telecommunications was 
the consequence of these factors). 
(d) Moreover, the tariffs re-balancing prog ram did not begin until September 2001, 
although projected in 1999 and it will therefore conclude only in 2005.  
Under these circumstances, and considering that no interest is expressed so far in the privatisation 
process of Albtelecom SH.A., we esteem that the postponement of exclusivity will increase the 
interest of potential operators, who at this moment would feel protected from an eventual competition and be encouraged to invest. 
 
III. MEDIUM-TERMS TARGETS AND STEPS TO BE UNDERTAKEN FOR THEIR 
FULFILMENT  
(a) Increase of the number of fix line telephony to 450.000 – 500.000 subscribers in 
2005, corresponding to approximately 15% of  telephonic penetration. Actually, the 
telephonic penetration counts for 220.0 00 subscribers or approximately 8%. 
(b) Extension of access in telecommunicati on services for rural areas through private 
operators’ investments. 
(c) Improvement of quality of the service to the level of international standards. 
(d) Prices for public telecommunication services should go towards the real values. 
(e) In the medium-term, promotion of the s upply of new services such as Internet; the 
objective is to offer it initially to around 100.000 subscribers, the long-term objective 
being 300.000 subscribers.  
IV. CONCRETE STEPS 
6. The new Decision of the Council of Ministers No.464 dated July 3, 2003 “On some changes 
to the Decision No.288 dated June 18,1999 “On the approval of Policy Paper for the Development of 
the Telecommunications in the Republic of Albania, in the paragraph “Privatisation”, it is  stated: 
“Albtelecom SH.A. shall enjoy an exclusi ve right to supply international telephony 
services based on its own network until De cember 31, 2004 as a compensation for 
its investment commitments.” 
 In the paragraph “Liberalisation” it is specified that “International telephony 
services shall be open to competition in 2005”. 
 
7. This decision takes away from Albtelecom SH .A. exclusivity rights for national telephony 
services, which, by the Decision of the Council of Ministers No.692 dated December 27, 2002 was extended at least until June 30, 2003. Only exclus ivity for international telephony services will be 
maintained.  S/L/148/Rev.1 
Page 9 
 
 
8. Albtelecom SH.A. will be given the third GSM cellular license, to be supplied by a new 
company whose sole shareholder shall be Albtelecom SH.A. According to the law, this company will 
conclude an agreement with Albtelecom SH.A. in eq ual conditions with other operators in the market. 
V. CURRENT SITUATION IN THE ALBANIAN MARKET 
9. This last couple of years, the telecommunicati on market structure has changed quite a lot, 
especially in the mobile telephony sector. In real  figures, from June 2000 (when the state cellular 
company Albanian Mobile Communication – AMC, was privatised) until July 2001 (when the second cellular operator Vodafone entered the market ) the mobile telephony market has increased 
considerably: from 20.000 subscribers to a number of 800.000 (both companies together), whereas Albtelecom SH.A. has only 220.000 subscribers. 
VI. REASONS LEADING TO THIS SOLUTION 
10. The Policy Paper for the Telecommunications De velopment considers the privatisation of 
Albtelecom SH.A. a key element to the development of the fix line telephony. This process will be 
implemented in combination with the market liberalisation process, aiming not only at the 
privatisation of the company but also at the de velopment of the whole national market. Due to 
unfavourable conditions in the international market of telecommunications, this process could not be 
carried out; that is why exclusivity is intended to create conditions for a potential augmentation of the 
efficiency of Albtelecom SH.A., which will be offered to the strategic partner. 
11. Extension of exclusivity is a compensation offe red to Albtelecom SH.A. in exchange for its 
obligation to invest, imposed on this operator by the Government, according to which Albtelecom 
SH.A. is obliged to install by the end of 2005, 45 0.000 – 500.000 fix telephony lines; not less than 5% 
of these lines must be installed in rural areas. Furt hermore, within 2005, it has to install in every 
commune centre at least 30 telephony lines instead of 4 operating today. 
12. Some tasks and processes directly influencing social effects of market openness have been 
postponed i.e. the tariffs re-balance the conclusion of which was postponed by the end of 2005. This 
process obliges Albtelecom SH.A. to maintain a ce rtain tariff scheme defined by the Government 
according to a price cap formula. Under these circum stances, it is proved indispensable that until the 
conclusion of the tariff re-balance process Albteleco m SH.A. should maintain its exclusivity in the 
international telephony, a considerable part of its incomes. Actually, incoming and outgoing 
international cellular traffic generates 30% of th e total income of Albtelecom SH.A. while 78% of 
total traffic mobile – fix and fi x – mobile, is international.  
13. According to an analysis effectuated by privati sation consultants, market liberalisation of long 
distance service would have a double impact on the performance of Albtelecom SH.A. causing:  
(a) Price reduction 
(b) Loss of capitals market 
14. This analysis points out that liberalisation w ill lead to about 6% price reduction per year, 
during the first and the second year, over the gene ral reduction of 5% estimated from the tariff re-
balance plans. As far as the capital market is concerned, a 15% loss is foreseen during the first year 
and a 60% the second year following liberalisation. 
15. As a result, the combination of market libera lisation of incoming and outgoing international 
cellular traffic and the market of long-distance se rvices, may lead up to a reduction of Albtelecom 
SH.A. incomes by 8% during the first year and by more than 30% on the second. S/L/148/Rev.1 
Page 10  
 
16. Termination of Albtelecom SH. A. exclusivity in urban and national fix telephony and the 
extension of its exclusivity in international te lephony service does not impede domestic and direct 
foreign private investments; they only channel those investments towards construction of local 
infrastructure. The overcome of the current stag e where the country is actually, with only 8% 
penetration of fix telephony, requires cons iderable investment on local networks. 
17. Taking into account that the Government took measures for further market liberalisation 
(removal of Albtelecom SH.A. exclusivity in fix telephony services in urban areas), aiming at a step by step liberalisation of international traffic, intr oduction of a third mobile operator in the market shall 
bring new values to the company and shall ensure  its better representation in the telecommunication 
market – fixed and cellular service – raising thus the interest of foreign strategic investors. 
18. At the same time, granting of this license w ill increase competition that serves as an engine 
for the further development of the cellular market and will prepare the company during the exclusivity 
period to face the competition of two other cellular operators. 
19. According to law, the new company will also be part of the sale package of Albtelecom 
SH.A. Not less than 51 but not more than 76% of the shares of this new company providing ground 
mobile public telephony service shall be offered for sale to the strategic partner. The cellular service 
will be offered by a new company in order to separate the fix telephony activity from the cellular 
telephony one, avoiding thus subs idization for cellular and fixed services and assuring that operators 
in the market will operate on the same conditions.  
20. The experience of other countries shows that strategic investors have been granted a 
minimum period of two years between the privati sation and the liberalisation. For example, the 
telecom companies of Montenegro and Macedonia, ha ve been privatised in July 2002 (51% of the 
package); for the first the exclusivity period is not  defined yet, as for the second, the termination of 
exclusivity date is December 31, 2004 and the liber alisation of fix telephony services is set on January 
1, 2005. In addition, Bulgarian Telecom comp any was privatised in August 2000 (65% of the 
package) and Bulgaria has not provided any expiry date for the exclusivity and liberalisation of fix 
telephony services in the Specific Commitments Schedule in the WTO, document GATS/SC/122. 
21. Based on these arguments and on the new devel opments concerning gradual elimination of 
exclusivity for Albtelecom SH.A., and taking into account  that liberalisation is an irreversible process 
that generates great benefits for our economy, I w ould like to clarify that the term “modification of 
commitment” that is used in the letter addressed to the Director General of the WTO, does not refer to 
changes of the commitments that Albania has unde rtaken in the telecommunication sector, it does 
really mean “a temporary freeze” of these comm itments to implement them in the year 2005.  
To summarise, the Government of Albania has not any intention to modify or to withdraw 
the commitment for the liberalisation of the te lecommunication services in the Schedule of 
Specific Commitments;  it only requests a te mporary freezing of its implementation.  
  
22. In spite of the actual progress of the priva tisation process, the final objective of the 
Government for the telecommunications, as defined not  only in the Policy Paper but also in the Law 
“On telecommunications in Albania”, is the full liberalisation of telecommunication sector. This is clearly presented by the gradual liberalisation policy of telecommunication sub-sectors such as cellular telephone services, public local telephone servi ce in rural areas, internet services, and finally 
removal of exclusivity rights of Albtelecom SH .A. for public voice telephone services in urban areas 
and public long distance voice telephone services ther eby paving the way for liberalisation even for 
those services.  S/L/148/Rev.1 
Page 11 
 
 
23. The Albanian Government, determined to con tinue the liberalisation reforms towards the 
integration of the country in the global intern ational trade, expresses its confidence that, in 
compliance with its own legal framework and ru les, the World Trade Organization will understand 
and will approve its request. 
24. On this occasion, please allow me to express my highest appreciation for the continuous 
support and the cooperation that the World Trade Organization has provided to Albania. 
Sincerely,  
  ARBEN MALAJ MINISTER 
H
EAD OF NEGOTIATING TEAM TO THE WTO   
  
__________