Plenipotentiary 2002
Stepping Up the Pace of Change

The ITU is preparing to embark on its 16th Plenipotentiary Conference in Marrakesh, Morocco (23 September — 18 October) at a time of unprecedented change and turmoil within the telecommunications industry.

In dramatic contrast to the buoyant climate four years ago, when some 1,500 delegates assembled for the 15^th Plenipotentiary in Minneapolis (US), many telecommunications manufacturers, operators and service providers are now struggling for survival in an economic downturn that has already wiped-out as much as 80% of the value of some of the world’s leading players and driven several into bankruptcy.

Historical background ITU is a global organization where governments and industry coordinate the establishment and operation of telecommunication networks and services and manage global frequency; it is responsible for standardization, coordination and development of international telecommunications to expand the benefits of information and communication technologies to all citizens The origins of the Union date back to the 19th century, when the International Telegraph Union was established by a group of 20 European countries with the aim of streamlining interconnection of the continents then new national telegraph networks. Since its early days, the renamed International Telecommunication Union has presided over a great many changes and innovations, including the invention of the telephone, the birth of radiocommunications, the widespread deployment of communication satellites, the emergence of mobile telephony and other wireless communication systems, and the explosive growth of the Internet. Now headquartered in Geneva, Switzerland as a specialized agency of the United Nations, ITU's strategic direction and priorities are determined by a Plenipotentiary Conference held every 4 years, which adopts the Union's Strategic Plan and Financial Plan covering activities for the coming period, elects its top-ranking officials, and adopts new policies as necessary in light of industry developments.

For the Union and its members, the shockwaves still emanating from the current economic crisis serve as a vivid reminder of the harsh new realities governing a sector that, over the last ten years, has undergone a rapid and profound transformation. Convergence and technological advances have spurred a strong technology shift away from traditional "big iron" circuit-switched hardware in favour of sleek, low profile boxes running Internet Protocol (IP). At the same time, the dominance of national telecoms markets by monopoly carriers has largely given way to privately-held companies and to intense — occasionally, cut-throat — competition. The industry is also witnessing the rapid emergence of strong new national players, particularly in south-east Asia where countries like South Korea and China are now playing an increasingly important role, not merely as large telecoms consumers, but as leading innovators and manufacturers of equipment and services.

The telecoms regulator, a relatively unknown entity just 10 years ago, has quickly become a regular feature of the 21^st century telecoms landscape. With the advent of 2.5- and 3G mobile, multimedia messaging, voice-over-IP, broadband wireless access and DSL and cable-based high-speed Internet, the complexity of the environment in which this industry operates continues to grow. And so does the uncertainty. However, while these are difficult times for suppliers, especially equipment manufacturers and operators, customers have never had it so good. Prices are falling, new services are becoming available and more and more customers now enjoy a choice of supplier. But not customers everywhere. Considering the overcapacity in fibre optics and the number of satellites currently in operation worldwide, the fact that more than half of the world’s population is still struggling to get access to basic voice telephony seems to indicate a major flaw in global telecommunication policy making. That should be at the very top of delegates priority list at the Plenipotentiary Conference.

In addition to a major restructuring of the telecommunication sector which shapes the environment in which ITU operates, other organizations, including global bodies like the United Nations, the World Trade Organization (WTO) and the World Intellectual Property Organization (WIPO) are increasingly finding information and Communication technologies (ICTs) falling within their remit.

It’s within this context that ITU has at last succeeded in taking its first concrete steps towards a long-awaited restructuring designed to ensure it remains relevant to the needs of a new millennium. The crucial question for the Marrakesh Plenipotentiary Conference is this: will the Union push ahead with some of the more radical proposals now on the table, or will it postpone taking the hard decisions needed to effect real and lasting reform?

As today’s industry moves forward in a climate of increasing uncertainty, the case for reform of many of ITU’s ageing regulations, working methods and decision-making structures has never been stronger.

With the impetus for change now gaining momentum within the Union, ITU reformers will be looking for this year’s Plenipotentiary delegates to take some tough decisions in the following key areas:

Defining a new role for private sector members that equitably reflects the enormous and growing contribution made by private industry to ITU work is perhaps one of the most urgent issues on this year’s agenda. While ITU Members States now broadly welcome the idea of an enhanced role for industry, the sticking points revolve around the extent of new private sector rights and the new responsibilities — including increased financial contributions — private sector members should be expected to assume.

Industry groups such as the 42-member European Telecommunications Network Operators association (ETNO) or the US-based Telecommunications Industry Association (TIA), which represents more than 1,000 industry members, favour greater involvement in the agenda-setting and the adoption of more business-oriented methods based on results-oriented programmes with clear outcomes and critical dates rather than procedural debates. They push for better cross-sectoral coordination at the ITU and the avoidance of duplication of work with other telecommunication standards-setting bodies, a greater facilitating role between governments, regulators and private sector members in developing partnership opportunities.

The increasingly important role played by private industry in the development and delivery of telecommunications services is thus prompting Sector Members to seek a stronger voice in ITU affairs, with more decision-making powers in areas that directly affect them, such as technical standards-setting and use of the global radio-frequency spectrum. They also seek a voice on how funds are allocated to the various Sectors and activities to more closely match their own priorities and view this requirement as very important given the market pressures on cash-strapped companies to cut costs and get more value for money.

Since the need to trim operating expenses is one of the top priorities, discussions at Marrakesh are expected to cover a number of areas relating to organizational efficiency, including new or enhanced cost-recovery measures, improved information sharing between ITU’s three Sectors, closer cooperation with regional telecommunications and development agencies.

Private sector is also demanding greater transparency in financial management . They also seek further delegation of authority from the four-yearly conferences and assemblies — the policy-making bodies of the three sectors, to the Advisory Groups where they participate on an equal footing with Member States in the review of priorities, programmes, operations, financial matters and strategies for the Sector’s activities.

As regards financial responsibilities, while most industry groups accept the need for increased contributions, a few also support a change to the Union’s funding structure which would give Sector Members the right to contribute directly and exclusively to their Sector of interest, rather than the general budget which meets the organization’s overhead costs. In response, Member States argue that overheads are intrinsic to the functioning of each Sector, with ITU’s corporate services providing much of the conference, legal, communication and travel arrangements support, documentation, linguistic services (interpretation and translation) and technical and IT systems essential to their operation and effectiveness. Funding of overheads by all constituents through costs and revenue centres is not very different in business. Moreover, in certain areas, economies of scale would make the decentralization of certain functions more costly with a great degree of redundancy and overlap across the organization.

Also, according to this second point of view, restricting Sector Member financial contributions to each company’s specific area of interest would fragment the structure of the Union and unbalance its funding structures, creating a scenario whereby Sectors could find themselves polarized into ‘rich’ and ‘poor’, depending on their membership. A Sector-specific funding approach also raises the spectre of reduced impartiality, with Sectors potentially coming under pressure to appease high-paying private sector members or risk losing a substantial proportion of their budget.

Budgetary concerns are also high on the agenda, with ITU and the industry it serves under considerable pressure to peg or reduce expenses, yet with the Union now involved in a greater range of activities than ever before.

To improve accountability and transparency and effect a more efficient use of funds, industry members are expected to push for the adoption of results-based budgeting as the best-practice model for future financial planning. Such a model would enable easy cross-links between ITU’s five-year Strategic Plan, biennial Financial Plan and general operational plan.

In addition, many delegates are likely to argue that a stable balance between income and expenditure will only be possible through a decision to undertake a comprehensive prioritization of ITU activities in the context of available resources. With ITU conferences increasingly taking initiatives on matters of broad policy, effective prioritization should help avoid the growing problem of conferences "promising too much" — that is, adopting a work programme which, while ambitious and impressive, could not be achieved without an increase in member contributions.

If many agree that current and future budgetary constraints mean that ITU cannot continue trying to "be all things to all people", determining which priorities to adopt seems certain to be a source of much debate at Marrakesh. While this year’s conference probably cannot hope to deliver a final blueprint for future ITU activities, coming to grips with this issue through the definition of broad areas of focus will go a long way towards helping ITU reshape itself as a more effective and viable organization in the long-run.

With budgetary constraints making themselves acutely felt throughout all sectors of the industry, this year’s Plenipotentiary delegates will also be concerned to find more ways to implement cost-recovery systems to help bolster the Union’s financial base.

The general principle of cost-recovery was originally put forward by the ITU-2000 task force (see box The History of Reform) as an effective mechanism for reigning back expenses, so that rising costs could be covered without the need to raise the level of the ITU contributory unit. This "user pays" principle, of which the processing fee for satellite coordination is one example, is based on the premise that those who use and benefit from a service, particularly a service that is limited to a small user community, should bear the brunt of that service’s cost. Interestingly, a growing number of stakeholders is also pushing for ITU standards to be freely available, effectively meaning that the production costs of the standards would be supported by the entire membership rather than by those needing them — a step back on the "user-pay" principle.

The introduction of a new cost-attribution system and an extended cost-recovery programme for specific ITU products and services are considered by many to be among the most effective ways of maintaining future funding for the Union’s increasingly vital activities without increasing the financial burden on the ITU membership.

On the other hand, many view the growing list of products subject to cost-recovery with concern and warn that past a certain threshold, this may force them to review the value of their membership. Reverting to participating within national delegations, they argue, would allow them to continue to have access to information and have the possibility to lobby other participants during negotiations without the obligations of membership. The savings thus achieved on their contributions could be used to meet the costs of products subject to cost-recovery with corresponding revenue losses for ITU. They therefore advocate a greater use of resource-saving means as a way to increase the funding of the organization.

Resolutions taken by ITU Council and previous World Telecommunication Standardization Assemblies (WTSAs) have seen many improvements in the functioning of the Telecommunication Standardization Sector (ITU-T), such as a streamlined Study Group structure, more flexible working practices including the use of the Accelerated Approval Process (AAP), increased emphasis on online collaboration, the setting up of specialized ‘focus groups’ to accelerate progress in difficult areas, closer correspondence between Study Group work programmes and industry needs. They have also given an enhanced role for the Telecommunication Standardization Advisory Group (TSAG) that gives it authority previously falling within the competence of a World Telecommunication Assembly.

To further build on this progress, many delegations and private sector now support similar arrangements for the Development and Radiocommunication Sectors, whereby the role of the Telecommunication Development Advisory Group (TDAG) and Radiocommunication Advisory Group (RAG) would be strengthened in order to speed up responsiveness and increase flexibility.

In the area of telecoms standardization, industry groups continue to favour greater cooperation with other regional standards setting agencies, as well as a higher-level role for the WTSA which would see it move away from nuts-and-bolts discussions about technical matters to focus more on strategic priorities and financial issues.

Also under consideration is the establishment of new, lower-level category of ITU standard in the form of an ITU-endorsed technical proposal which would give a broad technical direction to manufacturers, enabling them to respond quickly to emerging market demands and fostering a harmonized ongoing technical development effort. While proponents say this would help obviate the current situation where manufacturers are frequently forced to choose between disparate, competing technical models or risk losing their first-to-market advantage, others argue that establishing an alternative to ITU-T Recommendations could put the technical authority of the Standardization Sector at risk. They also stress that with the introduction of the Accelerated Approval Process (AAP) in 2001, over 300 technical standards have been approved with around two-thirds in less than 6 weeks and not one has been put to vote, thus clearly demonstrating that yesterday’s delays in the timely delivery of standards are no longer.

As regards ITU meetings, the sheer volume of work generated by today’s highly dynamic industry continues to put undue strain on the resources of both the Union and the private sector members who participate in Study Groups and complex meetings like the World Radiocommunication Conference (WRC), which itself requires a number of preparatory meetings to organize agenda items. Some members believe better use of new technologies, such as online collaboration and even videoconferencing systems, could help private companies defray mounting expenses associated with regular participation in these important meetings.

The space services sector has attracted much interest at recent Plenipotentiary Conferences and WRCs, partly because of the cost and complexity of coordinating satellite orbital "slots" (essential before any new satellite can be launched), and partly because of the nagging problem of "paper satellites" — that is, the registration of non-existent satellites expressly for the purpose of hoarding desirable orbital positions for possible future use or resale to other users.

With demand for new satellite services steadily rising, this issue was a focal point at WRC-97 and Council 98, culminating in the Minneapolis Plenipotentiary’s setting of a commencement date for the introduction of a processing fee to cover all satellite applications, along with a time limit on planned satellites which would see the orbital position and spectrum allocation of systems that fail to launch after five years returned to a central pool for reallocation to another user (that five-year period can be extended by two years for special cases such as launch failure, launch delays due to circumstances outside the control of the administration or operator; financial circumstances outside the control of the administration or the operator; or force majeure.

Just over three years on, this system has failed to make significant headway in resolving the problem and discouraging the filing of spurious systems. The considerable backlog in processing requests and the lengthy timeframe (up to 2.5 years) for handling satellite applications are consequently necessitating urgent additional practical help in the form of streamlined processing procedures, increased resources, or a higher application fee that would serve as an effective deterrent to frivolous applications.

Only one thing is certain; with the pile of outstanding requests continuing to grow month-by-month and the mounting backlog further complicating the life of national regulators and undermining ITU’s credibility as an effective coordinator of international satellite systems, debate will be lively as the Radiocommunication Bureau seeks to finally push through a definitive resolution to this long-standing problem.

The World Summit on the Information Society (WSIS), a result of Resolution 73 of the Plenipotentiary Conference in Minneapolis 1998, presents both a challenge and an opportunity to redefine in a very public manner, ITUs ability to respond to the challenges of a new age of telecommunications.

The UN General Assembly, which endorsed the ITU resolution, describes the purpose of the Summit as being the "development of a common vision and understanding of the information society and the adoption of a declaration and plan of action for implementation by Governments, international institutions and all sectors of civil society".

While the UN resolution requires the process to include active participation by all stakeholders including the private sector, identifying the nature of their participation and a process that will successfully engage them remains a challenge. The expressed desire by a number of ITU sector members to be considered more than just observers at WSIS and to be an integral part of any action plan is likely to trigger a number of lively debates at PP-02. Another challenge facing the Plenipotentiary conference in regards to WSIS centres on the need to ensure that the mission and work of ITU is adequately reflected in the themes and outcomes of the Summit. The discussion on WSIS during the Plenipotentiary should help identify the themes that align most closely with the strategic plan for ITU to be endorsed during the conference and with the central role of ITU on global ICT affairs.

A significant developmental milestone has been met since the last plenipotentiary conference. The world’s Least Developed Countries (LDCs) surpassed the threshold of one telephone subscriber per 100 inhabitants. However, much work still needs to be done if these countries are to reach the global average (fixed and mobile) of 32 telephone subscribers per 100. As well, amore focused approach to activities and resources in the area of telecommunication development will be necessary if this target is to be reached. The Action Plan developed at the last World Telecommunication Development Conference, held in Istanbul in March 2002, outlines a comprehensive six-point programme aimed at improving access to information and communication technology in the world’s poorest nations. However, it already seems clear that ITU resources will not be able to implement the very broad scope of this programme single-handedly. If programme objectives are to be met, areas need to be identified where constructive ITU/government/private sector partnership could represent a practical solution. But demands that resources be foreseen in the financial plan will no doubt be made, begging the question of prioritization of activities across all three Sectors.

In addition, the move to make ITU field offices capable of delivering a full range of ITU services — not just development-oriented, along with a recognized need for a stronger field presence in terms of both the number of offices and programmes of local activities, will prompt discussion on how best to mobilize available resources so that local communities can be better served and that will promote the benefits of ICTs at the level of community economic development.

The election of the Union’s five highest-ranking officials inevitably attracts much interest at each Plenipotentiary, and this year will be no exception.

The five posts are: Secretary-General, Deputy Secretary-General, Director, Telecommunication Standardization Bureau (TSB), Director, Radiocommunication Bureau (BR), and Director, Telecommunication Development Bureau (BDT). With the exception of BR Director Bob Jones, who has already served the maximum two four-year terms, all incumbents are seeking re-election.

Stable election procedures that were called for by the Minneapolis Plenipotentiary Conference of 1998 will be submitted for approval at Marrakesh.

The idea behind the decision of Minneapolis is that in order to save valuable conference time, the election procedures should become permanent rules, as is the common practice in other United Nations agencies. Also, to allow Member States sufficient time to develop national positions on the candidates prior to the Conference, a deadline would be set for announcing candidatures. Finally, in order to concentrate the work of the Plenipotentiary Conference on strategic and policy issues, elections would be held in the first week of the Conference.

No doubt however that this year’s elections will be very much in the mind of delegations when discussing the adoption of these procedures.

In the long-term, the effectiveness of the ITU’s future role in the industry it has nurtured and helped grown and mature will largely reflect the decisions taken at this critical conference.

For further information on views and positions, see on our website "Regional Perspectives" and "Private Sector’s Voice" published in the ITU News Special PP-02 edition as well as the Opinions and Position Papers included in the press kit.