WORLD TRADE
ORGANIZATIONS/C/W/110/Add.9
24 June 1999
(99-2627)
Council for Trade in Services
Special Session on Telecommunications Services
COMMUNICATION FROM AUSTRALIA
Interconnection
Addendum
1. As part of the negotiation on basic telecomm unications, many Members agreed to implement
the Reference Paper on regulatory principles concerning trade in basic telecommunications.  Animportant element of the Reference Paper is its provisions on interconnection. Wider implementation
of nondiscriminatory interconnection will foster  competition in domestic and international markets,
through the provision of wide ranging services by a variety of service providers, without requiring
costly duplication of network infrastructure as a condition of market.
2. This paper sets out Australia's efforts to implement its obligations on interconnection
contained in the Reference Paper.  It also sets out Australia's understanding of some of the
interconnection provisions contained in the Reference Paper.
3. The Reference Paper defines interconnection as:
“…the linking with suppliers providing public  telecommunications transport networks or
services in order to allow the users of one supplier to communicate with users of another supplier
and to access services provided by another supplier, where specific commitments are
undertaken”.
4. The Reference paper continues:
“interconnection with a major supplier will be ensured at any technically feasible point in the
network…”
I. AUSTRALIA'S INTERCONNECTION REGIME
5. In July 1997, Australia introduced open competition to its market for basic
telecommunications services.  This included an interconnection regime designed to maximise
effective competition.
A. O
UTLINE OF INTERCONNECT REGULATION
6. The Trade Practices Act establishes a telecommunications industry-specific regime for
regulated access to carriage services. This regime enables carriage services to be 'declared' by the
competition regulator, the Australian Competition and Consumer Commission (ACCC).  The services
to be 'declared' are those which are essentially bottleneck or monopoly services, without access to
which new entrants would not be able to provide competitive services.  Declarations may be made onS/C/W/110/Add.9
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the recommendation of an industry body (the Telecommunications Access Forum) or after a public
inquiry by the ACCC.  The consequence of services being declared is that carriers and carriage
service providers supplying them are under an obligation to supply the declared services to requesting
carriers and service providers.  These may include ancillary services such as interconnection services.
The access regime enables the terms and conditions of access to be determined by any or acombination of three methods: commercial nego tiation, an undertaking submitted by individual
carriers which has been accepted by the ACCC, or arbitration by the ACCC.  The framework allows
for the industry to develop voluntary, parallel mechanisms to deal with access issues, such as
alternative dispute resolution procedures. If developed, such mechanisms will not affect the rights of
parties to notify disputes to and seek intervention of the ACCC.
B. P
OLICY OBJECTIVE
7. The object of the telecommunications access regime is to promote the long-term interests of
end-users of carriage services or of services provided by means of carriage services.  When
considering whether regulatory decisions will promot e that objective, the ACCC must have regard to:
• the objective of promoting competition in markets
• the objective of achieving any-to-any connectivity
• the objective of encouraging the economically efficient use of, and investment in, infrastructure.
C. ROLE OF THE REGULATOR
8. The determination of the terms and conditions on which access is provided is primarily a
matter for commercial negotiation, however, the ACCC has a role in:
• determining whether the terms and conditions proposed in an industry-developed 'access code' are
reasonable
• determining whether the terms and conditions proposed in an access provider's access undertaking
are reasonable
• arbitrating disputes about the terms and conditions of access.
D. EXTENT OF INTERCONNECTION OBLIGATION
9. Once a service is declared, any carrier or carriage service provider supplying that service is
under an access obligation to:
• supply the declared service
• provide interconnection necessary to enable the access seeker to make use of the declared service
• provide billing information
• where the declared service is supplied by means of conditional access customer equipment (such
as set-top boxes for pay TV), provide services necessary to enable the access seeker to supply itsown services for the means of that conditional access customer equipment.
E. E
NFORCEMENT OF THE INTERCONNECTION OBLIGATION
10. Compliance with access obligations are a carrier licence condition and a service provider rule,
enforced by the ACCC. Failure to comply with the conditions and rules is punishable by pecuniary
penalty.  In addition, access obligations are enforceable by third parties through the Australian Federal
Court.S/C/W/110/Add.9
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F. TECHNICAL ASPECTS OF INTERCONNECTION
11. The standard access obligations imposed once a service is declared, includes an obligation to
provide interconnection at a technical and operational quality and timeliness equivalent to that which
the access provider has itself.  Where parties to commercial negotiations on any terms and conditions
of access to declared services are unable to reach agreement, they may notify the ACCC of a  disputeand seek arbitration.
II. INTERCONNECTION AT TECHNICALLY FEASIBLE POINTS
12. The Reference Paper does not define “technically feasible point” and this creates
opportunities for a wide range of disparate interpretations and applications.  The “technically feasible
point” can be defined in a manner that could constitute a non-tariff barrier to entry into a market.
Australia considers "any technically feasible point" to be:
any point in a telecommunications network where a point of interconnection can be
established, including the international exchange, the trunk exchange, the local exchange, a
radiocommunications base station, or any other point that may or may not be within national
borders.
13. A carrier which either owns or controls telecommunications facilities should be required to
permit, on request, the interconnection of those facilities with an international carrier seeking access
to those facilities, on the same terms as permitted to a national carrier.
III. RECIPROCITY VERSUS MFN
14. Interconnection should occur on the basis of Most Favoured Nation (MFN) and National
Treatment, according to the agreed trading rules established by the GATS and Agreement on BasicTelecommunications (ABT).   Australia considers that reciprocity requirements on interconnection
may undermine the nondiscriminatory MFN principle by introducing barriers that could adversely
affect a service provider’s ability to enter the market.
15. It is rare to find identical regulatory structures in different national markets.  Governments are
naturally concerned about offering open access in their own markets to foreign commercial operatorswho enjoy protection in their home markets. Instead of bilateral reciprocity, however, competition can
be safeguarded through multilateral agreements and through competitive safeguards contained in
domestic regulation.
16. In any event, bilateral reciprocity can only be an effective strategy where the regulator
controls a significant market and maintains an interventionist, ex ante control of market entry.  This is
contrary to a light touch regulatory approach, where commercial factors are allowed to determine as
much as possible market conditions.
17. On the other hand, multilateral agreements help to establish further market opportunities for
domestic businesses in foreign markets.  Multilateral agreements also establish a climate of greater
certainty for both domestic and foreign investment in domestic markets, ultimately benefiting end
users in competitive pricing of services, wider variety of services, etc.S/C/W/110/Add.9
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18. Market asymmetry may be addressed through the establishment of competitive safeguards
that are transparent, nondiscriminatory and ex poste  (that is, regulation by exception).  Such
safeguards should be consistent with multilateral commitments.  Australia has implemented such
safeguards in its domestic market. These safeguards enable Australia to stop carriers from engaging in
"unacceptable behaviour".  Such unacceptable behaviour includes the abuse by carriers of:
• carriage services
• the operator’s power in a market for carriage serv ices; goods or services for use in interconnection
with the supply of carriage services; or the installation of, maintenance of, or provision of accessto telecommunications networks or facilities
• any legal rights or legal status that the operator has because of foreign laws that relate to: carriage
services; goods or services for use in connection with the supply of carriage services; or theinstallation or, maintenance of, or provision of access to, telecommunications networks or
facilities.
19. In the two years since opening the Australian market to full competition, Australian
telecommunications services users have benefited from the free market entry and exit of foreign
service providers regardless of the conditions in the markets from which such operators may have
come.  Moreover, this has not resulted in any erosion of fair competition in Australia's market.
IV. CROSS-BORDER SERVICES AND COMMERCIAL PRESENCE
20. Australia considers that interconnection should not be conditional on a carrier having a
commercial presence in the country where the carrier is providing a carriage or content service.
Technological advances mean that carriage services can be provided by a carrier irrespective of
whether or not that carrier has a commercial presence in the country where the service is to be
supplied.
21. Currently, most competitive markets have adopted interconnection rules that require one
service supplier that has a commercial presence to supply other service suppliers that have a
commercial presence with termination and access services on reasonable terms and conditions.  This
type of condition should be extended to cross-border supply so as to eliminate a regulatory barrier to
market entry that denies National Treatment.
22. Australia considers that, under National Treatment, the measures applying to interconnection
should not be less favourable for cross-border supply than for commercial presence.
V. ISSUES FOR FUTURE CONSIDERATION
23. The above highlights some of the limits and ambiguities of the WTO regime on
interconnection.  Australia proposes that Members give consideration to the following issues in the
future:
• A definition for "technically feasible points" for interconnection
• Clarification that interconnection arrangements should be MFN-consistent
• Given the importance of interconnection in international telecommunications trade, this should be
a general commitment that requires exception, not a specific commitment- the fact that exceptions may be scheduled would allow enough flexibility for
Members in a process of transition to competition to adjust
• Clarification that the terms of interconnection should not be conditional on commercial presence.
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