Financial due diligence

The Chairperson tabled a draft resolution on the issue of financial due diligence based on the consensus reached yesterday (Briefing Notes N° 13). Despite the fact that the substance had been agreed yesterday and the text was submitted for any editorial amendments considered necessary, the debate was reopened and rapidly polarized. The showdown came on a proposal by Mexico supported by Uruguay, Iran, Malaysia, the US, Japan to delete part of a sentence "regarding the application of financial due diligence" in an operative paragraph. The proposed deletion was made on the ground that this was tantamount to instructing a Plenipotentiary Conference on what to do and was prejudging the outcome of the evaluation to be made by WRC 00. The Netherlands on behalf of European countries said that this proposal was totally unacceptable because it was moving away from the already compromise text of the draft and was leaving the process open-ended, thus making matters only worse as time would go by.

The Chairman therefore ruled that the last part of the sentence would be put into square brackets (this shows lack of agreement) and that the text, otherwise approved, would be sent to the Plenary meeting for a full debate on the disputed text.

Review of the satellite filing procedures

A proposal by Luxembourg, the Netherlands and Sweden aimed at instituting an on-going review process of the satellite filing procedure led to an equally hot debate. The proponents of the concept argued that an on-going review process would ensure that the procedures reflected the latest technologies. They also said that it could be possible to further simplified the procedures with the resulting cost savings for both the ITU and the administrations. Several countries expressed concerns over the proposal because they viewed it as a way to address the due diligence. Despite clarifications that, what was at issue, was the regulatory process of satellite filing and not the due diligence and despite the proposal by the authors to include a safeguard in the text to clearly spell out that due diligence measures were not covered by the resolution, no consensus could emerge. The chairperson therefore asked the authors of the text to hold further informal discussions with Iran, Syria, Tanzania who had difficulty with the proposal and wanted more time to consider it.

Processing charges for satellite network filings

In 1997, the ITU Council decided on the principle of full recovery of processing costs for the production of special sections of the Weekly Circular for space radiocommunications services. Weekly circulars for space radiocommunications services are the media through which all administrations are informed of the proposed satellite systems together with all the technical information required for the purpose of coordination. Currently, the top 10 countries plus five International Operating satellite organizations account for around 80% of the total workload of the section of the Radiocommunication Bureau dealing with satellite notifications. Under the present arrangements, all countries fund this service, yet many nations, mostly from developing regions, have no demand for this service, hence the move to what many consider the more equitable users-pays approach. (see http://www.itu.int/newsroom/press/PP98/Documents/CostRecovery.html for more details)

In 1998, the Council agreed on the methodology and the criteria for the development of fee schedules based on full cost-allocation but could not agree on a date of application. The timescale of implementation was a hot issue given the fact that the date would affect those satellite notifications awaiting to be processed in the backlog and the fact that administrations had to establish mechanisms domestically to pass on the costs to the respective "owners" of each satellite project. Three possible dates were offered: 27 June 1997 which was the date at which the decision was taken. This meant that the charges would apply to all applications received by then; 1 June 1998 i.e. at the close of Council this year, in which case, charges would apply only to applications received as from now; and 1 January 1999 which would give more time to develop the recovery at the country level. At Minneapolis, attempts were made to re-open the debate, questioning the methodology, the competence of the Plenipotentiary Conference, the need to coordinate with Committee 7 who is also discussing general cost-recovery issues, etc. The discussions also tackled the issue of the date with as many choices as interventions and with several concerns on the possible retroactivity effect. In view of the lack of any concrete decision on the date of application and the late hour, it was decided that a draft resolution would be prepared and that empty square brackets would be included instead of the required date , leaving it to the Plenary to pick the date. The Chairperson would also discuss with the Chairperson of Committee 7 to ensure that there was no duplication of work between the two committees in the discussions on cost-recovery.

International Telecommunication Regulations

On a proposal by Australia to amend the International Telecommunication Regulations (ITR) on the ground that they had become increasingly irrelevant in today’s telecommunication environment, the United Kingdom, supported by several countries, expressed their surprise at the implicit assumption of conflict between the WTO agreement on basic telecommunications and the ITR. They recalled that their governments had carefully examined both treaties and made sure before joining the WTO agreement that there would be no breach of other international agreements. Although there was agreement on the need to update the ITRs, there was opposition at the proposed process (i.e. having a Plenipotentiary Conference carry out the amendments and requesting the ITU Council that it reviews the rights and obligations of Member States as they relate to the ITRs). The Chairperson decided to ask Australia to redraft the text of the proposed resolution it had tabled to take account of the concerns expressed for re-consideration by Committee 5.

Alternative process

Recommendation 17 on the possibility for industry members to have the right to adopt along with Member States, technical recommendations was finally adopted after several drafts had been submitted by Working Group 5/2 (Brazil) to Committee 5 (Briefing Notes N° 10). The resolution provides for the appropriate body in each Sector to develop guidelines to be followed by study groups when approving each Question and Recommendation. It also provides that the process will not to apply for Questions (i.e. programme elements) and Recommendations (result of the work on a Question) having policy and regulatory implications such as those related to relevant numbering and addressing plans, tariffs and accounting issues (Standardization Sector), Questions and Recommendations relating to regulatory, policy and financial issues (Development Sector), Questions and Recommendations relevant to the work of radiocommunication conferences (which are treaty-making) and other categories that may be decided by the Radiocommunication Assembly. In all other cases, it confirms the right of industry members to approve with Member States, Questions and Recommendations.

Memorandum of Understanding (MoUs)

After a short discussion on the draft resolution tabled by Ad Hoc Group 5/5 (Singapore) on the role of the Secretary-General as depository of MoUs, the text was returned to the Chairperson of the Working Group to solve editorially some of the concerns expressed on the wording concerning the possibility to act as depository while also being signatory of the MoUs.

The text requests the Council to formulate criteria and guidelines for the Secretary-General to respond to requests to serve ad depositary and sets out the principles that Council should follow. At the evening session, the text was finally approved. The Committee also decided to exceptionally approve the depositary role of the Secretary-General for the DRM MoU, requesting Council to ensure that MoU is consistent with the criteria it will have developed. The move was based on the fact that several of the DRM MoU signatories are members of the ITU and that the purpose of the MoU is to produce, as input to the ITU study group responsible for broadcasting, a system for short-wave, medium-wave and long-wave broadcasting that would be the single, tested, open non-proprietary, consumer-oriented digital broadcasting world standard. The view that this was an concrete illustration of mutually beneficial partnerships that would demonstrate to new players the value of the ITU, contributed to the adoption of the decision.

Call-back, accounting rates and settlement of disputes

The rest of the meeting addressed the contentious issues of call-back and accounting rates and the proposal to establish dispute settlement procedures in the establishment of settlement rates between administrations. On the call-back and accounting rates issues, there was a general feeling of impatience expressed by developing countries (Kuwait, Saudi Arabia, Syria, Trinidad and Tobago, Pakistan, India) on the work of Study Group 3 of the ITU and its Focus Group established by the 1998 World Telecommunication Policy Forum. Several delegates expressed their frustration at the methods adopted by the Focus Group which, they said, had been largely rejected. They said that the reason why the matters were here at the Plenipotentiary Conference was that the results achieved so far in other bodies of the ITU on those issues had yielded no results. The sense of powerlessness led several countries to favour the establishment of procedures to settle disputes arising from disagreement over the calculation of settlement rates. It was said that the issue of settlement and accounting rates were perhaps the most important item on the Conference agenda because it was touching upon the income of all operators. The proposed amendments to the existing arbitration procedures call for a more active role of the ITU in the arbitration process, under a strict timeline.

They argued that significant revenues were lost, hampering the possibility of developing their telecommunication infrastructure and that they were left unprepared in the negotiations with foreign countries on cost-based accounting rates in view of the lack of an agreed methodology. Developed countries (US, UK, New Zealand) on the other hand said that the Focus Group was near a solution and that a spirit of cooperation had to prevail in order for the efforts already invested to bear fruits. They also reiterated the view that it was inappropriate for a Plenipotentiary Conference to deal with tariffs matters which should be dealt with by tariffs experts in Study Group 3 of the ITU. A UK draft resolution was proposed urging Study Group 3 to expedite its work in agreeing the additional alternative arrangements for the settlement of accounting payments.

The Chairperson ended the discussion by recognizing that Committee 5 was not to solve issues that years of discussions had not solved and asked the authors of the various proposals to see with the Chairman of Study Group 3 who was present in Minneapolis, how the various issues raised could be addressed through resolutions addressed to Study Group 3. The matter will be considered at an additional meeting of Committee 5 scheduled for Saturday morning. If a way forward could not be found, the matter would be referred to Plenary.

Internet issues

Two draft resolutions were presented to Committee 5 by Ad Hoc Group 5/7 on Internet issues: one on ITU’s involvement in Internet Protocol-based networks and one on the management of Internet names and addresses.

To associate or not to associate world radiocommunication assemblies with world radiocommunication conferences…

Committee 6 today hit a snag on the question of associating world radio assemblies in time and place with world radiocommunication conferences (WRC). To date, the two events have been associated in time and place and were normally convened every two years. Committee 5 and now Committee 6 have agreed to change that periodicity to two to three years.

While there was agreement that the radiocommunication assemblies would also be convened at the flexible interval of two to three years, delegations parted company on the current practice of associating these assemblies in time and place with WRCs. Instead, they proposed that flexibility be introduced in the Convention so that assemblies may or may not be associated in time and place with WRCs.

Concerns were expressed over the financial implications that such flexibility would entail. No agreement was reached and the matter has been left in abeyance.

Interruption of telecommunications

Another long debate took place on Article 34 of the Constitution, concerning the right for a State to cut off or interrupt private telecommunications if, according to its national legislation, such telecommunications were considered dangerous to the country’s security. While the proposed amendment was considered by some as a delicate balance, given the sensitivity of the issue, others believed that the old text of provisions 180 and 181 of that Article should be left unchanged at this Conference and reviewed at a future conference. The Committee will continue informal consultations and come back on this Article at a future meeting.

Administrative Regulations

The afternoon started with a protracted discussion on Administrative Regulations (Article 54 of the Constitution), but to no avail. At the heart of the debate was a number of proposed new amendments. For example, the new provision 217 A which states that: "[Ratification, acceptance or approval of amendments to this Constitution or to the Convention in accordance with Article 55, shall also constitute consent to be bound by any revision of the Administrative Regulations, either partial or complete, adopted by a competent conference before the signature of the amendments to the Constitution or to the Convention]".

The big question was the use of terms such as "commitment" and "consent" on a provisional basis in a legal instrument. Moreover, the provisional application of such treaties was not possible in some countries. Many felt that such provisions were unduly complicating the legal instruments of the Union at a time when the Conference should, in fact, be simplifying them. These amendments have also been left in abeyance, pending further consultations.

Of assemblies and conferences

The Committee discussed and agreed that while World Telecommunication Standardization Conferences would be called assemblies, World Telecommunication Development Conferences would continue to be called conferences, assemblies being more technically-oriented.

Gender sensitivity takes hold

The proposal to modify Provision 69 of the Convention to stress that decisions taken on recruitment should "ensure equitable geographical distribution and representation of women in the professional and higher categories in the staff of the Union" , met with some resistance. Some delegations considered that rather than to single out women, it would be more appropriate to simply talk of an equitable approach to recruitment in the Union, with a gender perspective. It was also argued that some passages were not treaty language, and while it was in a Resolution already approved by the Plenary, more suitable language would have to be found. This provision, like many others, was left in abeyance.

Advisory groups

There are two schools of thought on the role and functions of the Radiocommunication Advisory Group (RAG), the Telecommunication Standardization Advisory Group (TSAG), and the Telecommunication Development Advisory Group (TDAG). One was that all three should be treated on an equal footing and that whatever authority was delegated to one should be delegated to the other two. As no consensus could be reached on this issue, the matter will be referred to the Plenary.

Committee 7 in the morning examined the general aspects of cost-recovery (those not related to satellite filings under study in Committee 5) and in particular the criteria to be adopted in order to determine transparently and in a non-discriminatory manner which services or products would be subject to total or partial cost recovery. In the general debate on cost-recovery, it was stated that under the current financial plan, it was difficult to expand activities and that cost-recovery could provide revenue options that could fund projects which otherwise would not have been possible. Concerns were voiced on the possible impact of cost-recovery on developing countries and caution was urged to ensure that the financial burden of cost-recovery would not stifle projects that were still in their infancy. The concept was however broadly supported, particularly for activities used only by a limited segment of the membership.

It was decided to set up an Ad Hoc Group to prepare a resolution requesting the ITU Council to set up a working group tasked with the definition of the general criteria to be applied and to lay down the guidelines on how to apply cost-recovery.

A draft resolution on the review of the current ratio between the contributory unit payable by Member State and that of an industry member (presently 1/5^th) was approved with minor amendments. The Resolution provides for the review of the current ratio in light of the future financial structure of the ITU. Both categories of Members are invited to take part in the review. The ITU Council is tasked with the definition of the terms of reference of the review group, the general guidelines and the specific procedures.

Finally, Committee 7 continued the discussions on the Financial limits. Several countries expressed their support for the abolition of the "ceiling on expenditure" to the benefit of a ceiling on the amount of the contributory unit on the ground that the concept would allow the adoption of a financial plan setting an amount of the contributory unit at an acceptable level for the entire financial period of 4 years. It was also argued that Council would have more flexibility to establish biennial budgets and that the entire process was more predictable and better suited to adjust to prevailing conditions. The existence of the financial plan was sufficient for Council to keep control over the expenditure of the ITU.

At night, the Committee started with a question as to who was to deal with document 67 on the implementation of processing charges for satellite notifications and filings. This initially had been referred to Committee 5 on Strategic policy and plans. However, Committee 5 was of the view processing charges were within the competence of Committee 7 although the date of implementation being of a policy nature was a matter for Committee 5 to address. This Committee has appealed to the Chairmen of the two Committees and the Steering Committee to decide quickly for work to start on this important issue.

When discussing the question of limits for establishing the biennial budget of the Union, and the ceiling for the amount of the contributory unit, a large majority was in favour of amending provision 51, Article 8 of the Constitution. The view was that neither the ceiling for expenditure nor for the contributory unit would be fixed. Instead, Council would be left the flexibility to set the level of expenditure in the interests of the Union within the available income. This new concept is expected to allow the Plenipotentiary Conference to adopt a financial plan on the basis of the strategic plan.

Financial Plan for 2000 -2003

Most delegations supported the idea of maintaining a zero nominal growth in the contributory units and in the level of expenditure which they called a significant improvement from the past.

However, the draft plan does not include the activities that may arise from the decisions of this Conference, for example: the increase in the number of members of the Radio Regulations Board (if this goes ahead), changes in staff conditions, regional presence, the question of extending the use of languages. An ad hoc group of Committee 7 will be meeting tonight (9.30 p.m. to 0.30 a.m.) to determine, among other things, the financial implications of extending the use of languages.

The cost implications for regional presence would also need to be calculated.

Some delegations were concerned that while the proposed zero nominal growth was impressive, the plan failed to show the high-priority activities, which were, instead, only listed in the Addendum to the plan. They argued that the Committee couldn’t simply work on that basis and that furthermore, the data in the financial plan portrayed that the ITU itself was structured with very little flexibility. They appealed to the Conference to be sincere and honest in financing the activities of the Union.