This record is a partial extract of the original cable. The full text of the original cable is not available.

111151Z Apr 05

UNCLAS SECTION 01 OF 02 ANKARA 002072 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO 
FCC FOR A THOMAS AND A WEINSHCHENK 
 
E.O. 12958: N/A 
TAGS: ECPS EINV ECON TU
SUBJECT: TURKEY'S TELECOM BOARD CHALLENGES - INTEREST IN 
LEARNING FROM FCC 
 
REF: A. ANKARA 1209 
 
     ¶B. 04 ANKARA 6480 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE ACCORDINGLY. 
 
¶1.  (SBU)  Summary: The Turkish Telecom Regulatory Authority 
is planning a visit to the FCC as part of its efforts to 
increase capacity and expertise.  While the state company 
Turk Telekom's privatization and the sector's liberalization 
slowly proceed, the Telecom Regulatory Authority struggles to 
maintain its independence and perform its role of regulating 
the changing market.  End Summary. 
 
¶2.  (SBU)  Reftels reported on Turkey's challenges in 
improving consumer access, service, and cost for telecom and 
internet as a key element of improving its investment 
environment.  A fundamental aspect of this challenge is 
nurturing an independent regulatory authority. 
 
¶3.  (SBU)  In a meeting March 31 with EconOff and Econ 
Specialist, Board Member Galip Zerey expressed enthusiasm for 
a yet-to-be-scheduled expert trip to the FCC Washington. 
Zerey met Ambassador David Gross at the recent 3GSM 
Conference at Nice, France.  He stated that the specific 
purpose of the trip would be to gain knowledge on 3rd 
generation GSM; the more broad purpose would be to gain 
general best regulatory practices from the FCC.  EconOff also 
encouraged the Turkish visitors to meet with State Department 
telecom experts.  Zerey stated that the board has increased 
its outreach to EU members' bodies.  According to Zerey, the 
previous Board President's term ended March 29 and the Prime 
Minister had not yet named a new one.  Zerey said that his 
name was one of two on the short list.  Faruk Comert (another 
regular Embassy contact, also eager to pursue contact with 
the FCC) is acting President. 
 
¶4.  (SBU) Zerey described on-going challenges of regulating 
the liberalizing market, still dominated by Turk Telekom. 
Out of 43 licenses issued to open up long-distance operation, 
only about 20 have signed interconnection agreements with 
Turk Telekom, and only a few are actually in operation - and 
not yet profitable, because of lingering conflict over 
interconnection cost and practices.  The Board issued a model 
agreement to provide guidance and has attempted to respond to 
numerous complaints by new licensees about unfair practices. 
There are about 100 internet service provider (ISP) licenses. 
 Turk Telekom has brought suits against a few for allegedly 
illegally providing Voice Over Internet Protocol service. 
The Board has implemented new rules requiring Turk Telekom to 
allow ISP's to resell broad band ADSL service to customers, 
although to date Turk Telekom has yet to consistently provide 
such access.   There is competition in mobile phones 
(Turkcell; Telsim- also to be put up for tender; Avea), 
satellite service (25 licenses), and data transmission (16 
licenses).  The Board aims to put in place 3rd generation 
service and regulation. 
 
¶5.  (SBU) Zerey expressed optimism that Turk Telekom's 
imminent privatization would be a positive development for 
market liberalization.  Moreover, he averred that while the 
tender process was still underway, the board would avoid 
actions that would be perceived as having a significantly 
negative impact on the company's value.  Zerey emphasized 
that the Turkish judicial system needed to gain specialized 
expertise, and ideally to establish specialized courts to 
competently handle telecom issues.  In the meantime, he 
observed that the courts lacked will or expertise to make 
judgements against the state company Turk Telekom.  He said 
that there might be a role for the U.S. to offer training or 
share best practices. 
 
¶6.  (SBU) Comment:  Officials at the Turkish Telecom 
Regulatory Authority appear imbued with a cautious optimism 
in their quest to gain competence and exercise liberalizing 
regulatory authority in a market dominated by the state 
company Turk Telekom.  They recognize the challenge of their 
task and are eager to pursue contacts and assistance with the 
U.S. FCC.  Echoing concerns raised by the Energy Market 
Regulatory Authority and other independent boards, the 
Telecom Board is deeply concerned about prospective 
legislation at the Prime Ministry, which, they fear, would 
systematically limit their independence by granting greater 
control to the relevant ministry (the Communication Office at 
the Transportation Ministry for telecom).  In addition, a 
separate proposed Electronic Communications Law would further 
threaten the Telecom Board's authority by transfering 
frequency monitoring and licensing to the Communication 
Office.  Many observers question the AKP majority 
government's will to relinquish control of key sectors to 
truly independent and empowered regulatory boards. 
EDELMAN