The Telecommunications Sector in the U.S.-South Korea Trade Agreement
The growth and innovation that is the hallmark of the U.S. telecommunications sector is no accident. It derives from pioneering policies of promoting competition and giving both services suppliers and equipment makers freedom to introduce new technologies. As a result of such policies, the United States boasts the largest market by far for Information and Communications Technologies (ICT). Critical to the continuation of such growth and innovation is the ability of leading-edge U.S. firms to access foreign markets, building on success in the United States with new customers for the devices, applications, and services that have enormous global appeal—from Internet services to smartphones and tablets and their associated applications and content.
South Korea is a natural partner for U.S. firms in the ICT sector. It is a market of over $200 billion in annual revenue, the fifth largest in the world; it is also one of the world’s most connected nations, boasting broadband penetration and speeds consistently at the top of world rankings. Thus, gaining increased access to this market has enormous value to our cutting-edge firms and the jobs they support – not only services jobs, but complementary manufacturing jobs right here at home.
The agreement requires South Korea to eliminate the single largest impediment to investment in this sector in South Korea: limitations on foreign ownership of telecommunications operators. Under the agreement, foreign-owned subsidiaries will be able to own 100% of South Korean telecommunications operators, providing the foreign owner of the subsidiary with full managerial control. Given the risks of investing in this dynamic sector, and the bets companies make on new technologies and services, the ability of a U.S. company to control its own destiny has long been a top priority.
South Korea must ensure access to a range of resources and facilities critical to the building of new networks—ranging from fair access to spectrum, leased lines, and submarine cable landing stations. This addresses potential bottlenecks that can hinder entry into the market by nascent competitors.
The agreement contains strong provisions to promote the flexible use of technology in this sector, benefitting service suppliers and equipment vendors alike. Such provisions represent the strongest rules developed so far to counter the temptation of a government to provide an advantage to local suppliers by favoring domestic technologies, to the detriment of the innovative products and services offered by U.S. firms.