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Viewing cable 07ANKARA49, TURKEY'S TELECOM SECTOR - VOIP AND OTHER REGULATION: SLOW

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Reference ID Created Released Classification Origin
07ANKARA49 2007-01-10 16:08 2011-08-24 01:00 UNCLASSIFIED Embassy Ankara
VZCZCXRO4510
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHAK #0049/01 0101608
ZNR UUUUU ZZH
R 101608Z JAN 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 0534
INFO RUCPDOC/USDOC WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHIT/AMCONSUL ISTANBUL 1906
RUEHDA/AMCONSUL ADANA 1512
RUEAFCC/FCC WASHDC
UNCLAS SECTION 01 OF 02 ANKARA 000049 
 
SIPDIS 
 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
FCC FOR A THOMAS AND A WEINSCHENK 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECPS EINT EINV TU
SUBJECT: TURKEY'S TELECOM SECTOR - VOIP AND OTHER REGULATION: SLOW 
PROGRESS 
 
REF: A) 06 State 202978 
B) 06 Ankara 6055 
 
ANKARA 00000049  001.2 OF 002 
 
 
1.  SUMMARY: While Turkey's Telecom sector achieved a critical 
milestone with privatization of Turk Telekom (TT) in early 2006, the 
six-year old regulatory body Telecom Authority (TK) is still 
struggling to gain competence and maintain its independence vis a 
vis still dominant TT and the Ministry of Transportation and 
Communication.  Pending telecom legislation is aimed at bringing a 
patchwork of legislation under one umbrella and assuring consistency 
with EU legislation.  In response to the ref A request for the 
status of VOIP (Voice over Internet Protocol) regulation, the TK 
told us imminent issuance of fixed telecom services licenses would 
provide a EU-consistent, over-arching, and technology-neutral 
approach.  The TK is carefully studying worldwide experience with 
VOIP and other services and technologies and aims to maintain a 
hands-off approach.  VOIP is currently used by long distance license 
holders, but it is not currently allowed to compete with TT on local 
service.  The TK is planning a trip to visit the FCC in early 2007. 
End Summary. 
 
------------------------------------------- 
VOIP as an Example of a New Budding Service 
------------------------------------------- 
 
2.  Ref A transmitted the U.S. VON Coalition comment to the USTR on 
compliance with Telecommunications Agreements (Section 1377) with 
respect to Turkey and USTR requests information on when VOIP 
regulations will be issued by the Council of Ministers. 
 
3.  The Telecom Authority (TK) gave a two-step response, noting that 
issuing regulations was under its authority.  The Council of 
Ministers, however, approves license duration and fees and opines on 
major new developments like third generation GSM service (3G) and 
WiMAX.  TK board member Galip Zerey told us that VOIP could be used 
by current long-distance license holders, but local competition with 
TT -- whether VOIP or otherwise -- is not yet allowed.  However, 
competition with TT on calls from one city to another and calls to 
cellular operators exists.  Zerey said the board was actively 
studying worldwide experiences with VOIP with an eye for quickly 
normalizing its use in Turkey.  He noted that companies like Skype 
and Vonage freely operate to and from Turkey without restriction. 
 
4.  Secondly, the TK board member claimed that the issuance of fixed 
telecom service licenses is imminent.  The text is prepared and 
would soon be published in the Official Gazette.  The intent will be 
to establish an over-arching telecom environment and expand telecom 
service to include local (TT continues to have a monopoly on local 
land lines, as opposed to long-distance where out of forty licenses, 
half are operating, but with some difficulty).  VOIP could be 
employed, but the intent of the license was technology neutrality; 
i.e., specific technologies were not defined in the license.  TK 
will also tender new licenses for telephone number portability.  New 
regulations will also clarify interconnection (TT has long sought to 
take advantage of its dominance by making interconnection difficult 
or expensive), and would clarify legal interception by the GOT.  The 
TK made a recommendation for fee structure still under consideration 
by the Minister. 
 
---------------------------------------- 
The Brave New World - WiMAX, ADSL, cable 
---------------------------------------- 
 
5.  As in previous discussions with TK Board Members, Zerey stated 
that licensing for 3G GSM service, which will provide broadband 
services over cell phones, and WiMAX are key elements of the board's 
work plan, but timing is uncertain.  The TK President and The 
Minister of Transport and Communications announced that the 3G 
tender will be held at the beginning of summer.  Again, the board's 
intent is to license specific frequencies, but not to prescribe a 
specific technology.  Zerey noted that the Minister would define the 
license duration and fee structure (likely viewing this as a revenue 
source for the GOT). 
 
6.  Zerey admitted that TT maintained dominance over provision of 
broadband ADSL Internet service.  He noted that four infrastructure 
licenses had been granted, but there is still no activity or 
competition.  There is limited resale and remarketing of ADSL from 
TT.  In recent years TT has expanded provision of ADSL to 2.5 
million subscribers at "reasonable" prices (approximately $33 per 
month for unlimited 256 kbps service) to apparently meet demand, but 
penetration remains low.  Zerey noted that despite the board's 
provision of four licenses for new cable infrastructure, the cable 
sector is troubled and inactive, because state company Turksat took 
new license holders to court.  (The existing cable network was 
 
ANKARA 00000049  002.2 OF 002 
 
 
separated from TT prior to privatization and transferred to 
state-owned Turksat.) 
 
7.  The mobile sector continues to display modest competition and 
Turkcell remains dominant.  Telsim, acquired by Vodafone last year, 
appears to be gearing up its investment and marketing, in 
cooperation with Motorola.  The third operator Avea's shares were 
consolidated by TT when Telecom Italia sold its interests after 
becoming a shareholder of Turk Telekom.  The competition is expected 
to increase after telephone number portability licenses are issued. 
 
--------------------------------- 
Comment and Proposed Visit to FCC 
--------------------------------- 
 
8.  Turkey is still endeavoring to provide the level playing field 
envisioned by the recent privatization of Turk Telekom.  Although TT 
has remained aggressive and dominant in the marketplace and the 
regulatory process, seeking to maintain its revenues against 
competitors, TT's main competitor has become GSM companies, in 
particular Turkcell, whose subscriber numbers and revenues now 
exceed those of Turk Telekom.  The government maintains an important 
presence in the satellite communications market via its ownership of 
Turksat.  The Telekom Board seeks to increase its expertise by 
gaining worldwide experience.  After fruitful contact with the FCC 
at the November International Telecommunications Union meeting in 
Antalya, a regulator team is planning to visit Washington as soon as 
possible in 2007 to learn more from FCC experiences. 
 
McEldowney