Polish communications law: telecommunications takes off in transition countries but at what price are they becoming wired?

• Author: Feltham, Jennifer Laura

ABSTRACT

Internationally, the urge to expand and improve telecommunications services is spreading. Transition countries, attempting the leap from Third World status to becoming world leaders, have caught the fever and have attempted to reform their regulations governing telecommunications. In large part these laws have induced slow liberalization of the communications sector with an intrusive regulatory agency guarding every step taken towards privatization. The World Trade Organization's General Agreement on Trade in Services (GATS) encourages transition countries to use privatization as a way to increase funding for communications equipment. Many transition countries signed the GATS agreement in the hope of attracting international capital, while they slowly reform their domestic communications laws.

Poland, a signatory to the GATS agreement, is slowly refocusing its domestic communications law to allow some privatization. This Note examines the liberalization of the basic telecommunications sector in Poland and the role of GATS in this process. It includes a comparison of the legal reforms in Poland to those of other Eastern European countries. It also suggests ways in which transitional countries such as Poland can keep some domestic control over their telecommunications sectors, while continuing to comply with GATS objectives.

1. INTRODUCTION

   Spurred on by advances in telecommunications technology, the international arena has attempted to expand growth in communications. The need for an efficient, modern telecommunications sector is now regarded as crucial to economic development in transition countries.(1) The basic telecommunications industry(2) comprises a vast portion of the world's economy.(3) The development of new technologies has increased the need to communicate internationally, to spread new ideas and new technologies, and to stay competitive with the growth of new telecommunications technologies in domestic spheres. Government agencies, the institutions responsible for telecommunications regulation, and Transnational Corporations (TNCs), which have traditionally supplied most transitional countries with equipment and technology, have largely dealt with problems of technology transfer and local industrial development.(4) Recently, the World Trade Organization (WTO) has entered the equation with the General Agreement on Trade in Services (GATS)(5) specifications on international communications policy. These new regulations show an international commitment to privatization from those Member(6) countries participating in the negotiations. However, this commitment poses unique problems for transition countries.

   Issues such as equity, public participation, economic and power distribution, welfare benefits, social accountability, and the protection of national, cultural, political, and personal sovereignty come into play when discussing the effects of increased access to public telecommunications. TNCs have become the major suppliers of increased telecommunications technology in developing countries; therefore, these companies seem to gain the most from the WTO's commitment to freer trade in the GATS agreement.(7) Developing countries such as Poland need to structure domestic telecommunications laws to take advantage of the Basic Telecommunications Act's [paragraph] 5(g) exception that a developing country may "place reasonable restrictions on access to and public use of public telecommunication transport networks and services necessary to strengthen its domestic telecommunications infrastructure and service capacity and to increase its participation in international trade in telecommunications services."(8)

   This Note examines the liberalization of the basic telecommunications sector in Poland and the role of GATS in this process. Part II explains the provisions of GATS as they provide a mechanism for multilateral liberalization efforts. Part III presents a description of the reforms taking place in the Polish telecom regime and how these reforms fit in with Poland's obligation to comply with GATS objectives. Part IV compares the privatization of telecommunications in Poland with developments in other Eastern European countries, such as the Czech Republic, a country that has been slower to privatize its communications industries. A discussion of how Transnational Corporations have effected the move toward privatization follows in Part V. Part VI posits the ways in which transitional countries, such as Poland, can keep some domestic control over their telecommunications sectors, while continuing to comply with GATS objectives. One possible way to achieve privatization without loss of domestic control is through domestic infrastructure reforms. This gain in domestic control can be accomplished without subrogating the effort to achieve privatization or moving backward toward a government monopoly. Finally, Part VII concludes that a more efficient telecommunications sector would better serve Polish interests, while continuing to comply with GATS.

2. GATS AS A MECHANISM FOR MULTILATERAL LIBERALIZATION EFFORTS

   In February of 1997, sixty-nine governments formed a far-reaching agreement on a series of market-access commitments in the basic telecommunications sector within the framework of GATS.(9) The purpose of the GATS agreement is to "facilitate the increasing participation of developing countries in trade in services and . . . [to strengthen] their domestic services capacity and its efficiency and competitiveness."(10) The agreement takes a wide view of what constitutes trade and defines "trade in services" as the supply of a service through any of four modes.(11) Modes One and Three identify the telecommunications sector as a "trade in service."(12) Mode One deals with the cross-border supply of a service.(13) International phone calls fall into this category. Mode Three "entails the commercial presence of a supplier of one Member in the jurisdiction of another Member."(14) This includes foreign direct investment in telecommunications services.(15)

   Once GATS defined telecommunications markets as "trade in services," the negotiating Members established basic commitments to one another, as well as terms and conditions of market access.(16) Three documents are crucial in interpreting the GATS objectives in relation to its bearing on the telecommunications sectors of Member countries: the Annex on Telecommunications, the Fourth Protocol on Basic Communications (Fourth Protocol), and the Reference Paper on Regulatory Principles (Reference Paper).

   1. The Annex on Telecommunications

      The drafters of the GATS agreement included an Annex on telecommunications issues in order to make it clear that "[e]ach Member shall ensure that any service supplier of any other Member is accorded access to and use of telecommunications transport networks and services on reasonable and nondiscriminatory terms and conditions."(17) This obligation includes ensuring that a supplier is permitted to lease or purchase equipment, which interfaces with the Member's telecommunications network in order to provide the supplier's services,(18) to interconnect private leased or owned circuits with public telecommunications' transport networks,(19) and to use the supplier's own operating protocols.(20) These provisions illustrate the WTO's "freer access" policy favoring the opening of telecommunications services.

      The GATS Annex on Telecommunications also contains a list of limitations on the rights of suppliers to free access of Member States' telecommunications networks in GATS [paragraph] 5(d)-(g).(21) Section 5(g) specifically adds protection for developing countries, allowing a developing country to "place reasonable conditions(22) on access to and use of public telecommunications transport networks and services necessary to strengthen its domestic telecommunications infrastructure and service capacity and to increase its participation in international trade in telecommunications services."(23) These limitations do not frustrate the competitive nature of the Annex, due to their limited application. Thus, the Annex can be seen as a pro-competitive instrument within telecommunications regulation.(24)

   2. The GA TS Fourth Protocol on Basic Communications

      In an effort to foster international telecommunications, the WTO negotiated the Fourth Protocol to GATS in 1996.(25) Currently fifty-five governments, including many Eastern European countries, are signatories to the negotiation.(26) In order to participate in the Fourth Protocol, a WTO Member must adhere to the guidelines set forth in the agreement, which sometimes significantly alters the Member's existing approach to the delivery of basic telecommunications services.(27)

      GATS requires each Member country to file an individual schedule(28) of commitments indicating the particular services it seeks to conform to the GATS guidelines.(29) The GATS general service principles require most-favored nation (MFN) treatment(30) of service suppliers from WTO Members, except where countries take specific exemptions in their schedules.(31) Key GATS participants were concerned that their markets would be harmed by the MFN status accorded to some foreign competitors who were WTO Members.(32) MFN treatment would require all WTO Members with open markets to grant all other WTO Members access to their markets on a non-discriminatory basis.(33) This would allow those WTO Members with closed markets(34) access to other Member's open markets without having to give up their closed systems. Likewise, a Member who commits to open its market cannot close its market on a selective basis to service suppliers from WTO Member countries.(35) This disparate result showed the need for market-opening policies to accompany the GATS agreement.

      Recognizing this inequality, fifty-five countries under the auspices of the WTO negotiated the Fourth Protocol to GATS.(36) The Fourth Protocol contains many key provisions...