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Bush hints at WTO action on standards, interconnect fees

WASHINGTON-The Bush administration last week identified exclusionary wireless standards and high mobile-phone interconnection fees as barriers to telecom trade in a new report, and did not rule out bringing complaints against China and South Korea at the World Trade Organization if disputes over standards are not resolved.

The report of the U.S. trade representative is the second in as many weeks to criticize China and South Korea over how the countries are administering wireless standards that industry officials claim discriminate against American firms. Administration officials have complained to China about its Wireless Authentication and Privacy Infrastructure standard, but the new report also highlights problems with third-generation mobile phones and 450 MHz service standards.

The U.S. is unhappy about Korea’s Wireless Internet Protocol for Interoperability and its 2.3 GHz portable Internet service standards. However, little progress has been achieved during this U.S. election year.

The Bush administration recently filed a complaint with the WTO against China over its tax policy for semiconductors, which favors domestic producers.

It is unclear whether the U.S. plans to pursue claims at the WTO over wireless Internet standards in South Korea and China. But it appears the Bush administration is considering raising the stakes, or at least wants both countries to think that is the case.

“If those countries proceed with implementing rules that are exclusionary and inconsistent with their trade commitments, USTR will consider all possible options to address these barriers,” the agency stated.

The Wi-Fi security standard pursued by China-and set for implementation June 1-will be one of the topics for discussion at a meeting here next week of the U.S.-China Joint Commission on Commerce and Trade.

Making the issue tricky is the fact that some U.S. firms are hurt proportionately more than others by Chinese and South Korean wireless standards and therefore have not spoken out. Indeed, various wireless companies have participated in the development of the standards at issue and are attempting to cut the best deal possible with China and South Korea. However, Intel Corp., the world’s top chip maker, is boycotting China’s Wi-Fi encryption standard.

There has been talk that some U.S. wireless companies are not protesting South Korea’s 2.3 GHz portable Internet standard because they want to be able to have such a standard in place to exploit different frequencies in the United States.

ArrayCom Inc. and Flarion Technologies Inc., both U.S. firms, say they will be left out of the South Korean market if the 2.3 GHz standard goes forward.

Qualcomm Inc., whose CDMA technology enjoys strong support in South Korea, is attempting to finesse a solution to its objection of that country’s WIPI standard.

“TIA supports USTR’s findings that the Korean government is attempting to impose technology mandates designed to exclude several U.S. companies from the market. The commercial needs of the private sector, not government mandates, should determine which technologies are deployed in Korea. We hope that all technologies will be allowed to compete for the business of Korean operators,” commented Matthew J. Flanigan, Telecommunications Industry Association president, on the matter.

Elsewhere, USTR listed Switzerland, Germany, Japan, Australia and New Zealand as key countries of concern on mobile termination fees. But USTR noted some nations have addressed the issue.

“USTR will actively monitor market trends and the results of ongoing regulatory reviews, and will encourage countries where regulatory engagement is lacking where rates are persistently high to justify how this comports with specific trade commitments. In particular, vigilance against rate increases will be heightened,” the agency stated.

The Federal Communications Commission is looking into high mobile termination fees overseas, a move the U.S. mobile-phone industry does not want to lead to new rules.

“Our recent free trade agreements have expanded consumer choice and opportunity, spurred innovation, and will support our dynamic telecom companies as they develop new consumer products and services,” said Robert Zoellick, the U.S. trade representative.

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