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To: djane who wrote (3863)	4/12/1999 1:26:00 PM
From: djane	Respond to of 29987

U.S., China strike telecom deal but fail to seal WTO pact April 12, 1999 By Jeffrey Silva WASHINGTON—The United States and China, submitting to a hostile political atmosphere that will delay any decision on Chinese entry into the World Trade Organization until year's end, still managed last week to reach major agreements to open wireless telecom equipment and service markets in the giant Asian nation of 1.2 billion people. Telecom market-opening commitments by Chinese Premier Zhu Rongji, while not everything American negotiators sought, represent one of the most significant trade breakthroughs for the U.S. wireless industry in modern times. The U.S.-Sino pact, among other things, includes China's vow to remove barriers to American-developed Code Division Multiple Access technology and not to discriminate against any technology as general matter. That will be a major boost for U.S. wireless vendors Qualcomm Inc., Lucent Technologies Inc. and Motorola Inc. ‘‘This agreement will bring tremendous benefits to the U.S. telecommunications industry,'' said Matthew Flanigan, president of the Telecommunications Industry Association. ‘‘U.S. telecommunications services companies will have new opportunities in a market where only one in 10 households has a telephone.'' China, which until now has severely restricted sales of telecommunications services and barred foreign investment in telecom carriers, agreed not only to relax some of those restrictions but to do so within a pro-competitive regulatory framework in which rules are transparent and accessible to all. Under the accord, China will allow 49 percent foreign ownership in all telecom services and permit 51 percent foreign ownership for paging and value added services in four years. In addition, China agreed to phase out geographic restrictions on the provision of telecom services in Beijing, Shanghai and Guangzhou—areas that represent about 75 percent of all domestic traffic in China today. Paging will be allowed in those regions in four years, mobile phone service in five years. The concessions will enable China to become a member of the WTO basic telecom services agreement. In addition, by agreeing to phase out tariffs on telecom equipment, information technology products, semiconductors, computers and other high-tech gear by 2003, China becomes a part of the global Information Technology Agreement. The U.S.-Sino telecom accords, as ground-breaking as they are, were largely overshadowed by the failure of the two countries to agree on Chinese WTO membership. ‘‘We have made significant progress toward bringing China into the World Trade Organization on fair commercial terms, although we are not quite there yet,'' said President Clinton, in a press conference with Zhu last Thursday. In a joint statement, Clinton and Zhu said they were committed ‘‘to work all remaining issues this year.'' In a statement, Motorola, a top U.S. mobile communications exporters to China, said, ‘‘It is vital to the expansion and health of international commerce that the most populous nation in the world fully participate in the organization responsible for more open and fair global trade.'' The administration desperately wanted to announce an agreement in support of Chinese WTO membership during Zhu's visit here. But it was virtually impossible politically, given allegations accusing China of stealing U.S. nuclear secrets, securing sensitive satellite technology from U.S. firms, illegally funneling money into the Clinton-Gore campaign and contributing to the U.S.' $57 billion trade deficit with the Asian nation. Senator Majority Leader Trent Lott (R-Miss.) signaled a deal on Chinese WTO entry would not be welcomed. Weeks before Lott spoke out, Senators Jesse Helms (R-N.C.) and Ernest Hollings (D-S.C.) waged a campaign to deny Chinese WTO membership. Other lawmakers weighed in against a deal as well. Had Clinton and Zhu reached an agreement on Chinese WTO entry it likely would have set up a high-octane political fight this summer over renewal of most-favored-nation trade status for China. Rep. Chris Cox (R-Calif.), chairman of a select House committee probing U.S.-China high-tech trade, is set to release a 700-page report in the next week or so that is expected to be highly critical of the administration. ‘‘While much hard work remains to complete China's accession to the WTO, including addressing specific areas which we believe are critical to U.S. interests, these market access terms reflect the administrations commitment to a comprehensive, far-reaching commercially-meaningful agreement,'' said Charlene Barshefsky, the U.S. trade representative. Latest Issue Copyright 1999, all rights reserved. Please report problems to webmaster.rcr@inlet.com April 12, 1999 rcrnews.com

To: djane who wrote (3863)	4/12/1999 1:31:00 PM
From: djane	Read Replies (1) \| Respond to of 29987

Motorola confirms Defense contract for Iridium phones April 12, 1999 By Antony Bruno Motorola Inc.'s Worldwide Information Network Services group confirmed the Defense Information Systems Agency of the U.S. Department of Defense awarded it a three-year contract valued at up to $219 million for the purchase of Iridium phones, pagers and airtime. Under the contract, Motorola will provide the agency with an undetermined number of Iridium handsets and up to 28 million airtime minutes annually. The company will provision the service through the U.S. government-dedicated Iridium gateway located in Hawaii. This is an extension of the Enhanced Mobile Satellite Services contract signed almost two years ago with DISA, which commissioned the construction of a government-dedicated gateway in Hawaii. According to John Weidman, vice president and general manager of M-WINS, cost of the gateway construction is not a part of this most recent contract. The extension allows the government to buy an undetermined number of products and up to 28 million minutes of airtime a year, at a total cost cap of $219 million for three years. Should the government require products and airtime for more than that figure, the contract again will be modified. Weidman said he expects a typical government customer to use between 1,000 to 2,000 minutes a year. If the government uses all 28 million minutes of airtime accounted for annually at the rate of 2,000 minutes a year per user, the contract can handle up to 140,000 customers. While the contract is with DISA, an office of the DOD, it was arranged in a way that will allow any government agency to take advantage of Iridium service, Weidman said. ‘‘U.S. government contract negotiations are very complicated,'' he said. ‘‘This contract vehicle makes it easy for any government user to sign up. We expect that its significance will spur the sales of Iridium.'' One possible hindrance to adoption, however, is that all government transmission uses what is called STU-III security encryption technology, which Iridium phones are not expected to have until the end of the year. Until that time, Weidman said government customers will use the regular commercial Iridium service and handsets without STU-III. Much has been made of Motorola's efforts to secure Iridium subscribers. Motorola owns 19 percent of the satellite carrier, and its stock price is affected by Iridium performance, whether positive or negative. Government contracts are expected to play a decisive role in the success of Iridium's business plan, although it is unclear exactly what effect this particular contract will have on the company's ailing subscriber list. As such, Motorola likely will play an increased role in securing large customer contracts, and Weidman said M-WINS is negotiating with governments in other countries for similar contracts. Iridium does not sell its own service but rather relies on a network of service providers to do so. M-WINS merely is one such service provider. Iridium's challenges in attracting the subscribers it needs to operate have become well known. Last month, the company said it most likely will miss revenue and subscriber targets necessary to meet the covenants of its bank loans. The lending covenants required Iridium to post cash revenues of $4 million and 27,000 satellite customers and 52,000 overall customers by the end of the first quarter. The company received a 60-day waiver on those covenants from lenders under its $800 million Senior Secured Credit Facility. Under the terms of the waiver, Iridium now has until May 31 to meet these targets. It also will renegotiate its future milestones to avoid similar problems in the future. Latest Issue Copyright 1999, all rights reserved. Please report problems to webmaster.rcr@inlet.com April 12, 1999 rcrnews.com