MEETING WITH PAULWELL - NO GUARANTEE OF ACTION IN

UNCLAS SECTION 01 OF 02 KINGSTON 001472

SIPDIS

STATE FOR WHA/CAR (WBENT),EB/CIP/BA (COOPER, BOEHME)

E.O. 12958: NA
TAGS: ECON EFIN JM TIP
SUBJECT: MEETING WITH PAULWELL - NO GUARANTEE OF ACTION IN
JAMAICAN TELECOM CRISIS

REF: A) Salzman/Cooper June 3 E-mail

B) Powell/Boehme June 6 E-mail
C) KINGSTON 1444


1. (U) This is an action request. See Paragraph 14.


2. (SBU) Summary: On June 6, Charge and Econoff met with
Commerce Minister Paulwell to discuss the ongoing blocking
of telecommunications circuits by Jamaican carriers.
Emboffs communicated USG concern about the tactic of
blocking and informed the GOJ officials of the nature of
the potential FCC response, which could include a "Stop
Payment" order making it illegal for U.S. carriers to send
payments to their Jamaican counterparts until the
situation is resolved. GOJ officials denied media reports
that they had ordered the Jamaican carriers to block
incoming signals, but subsequent information provided by
the Canadian High Commision indicated that the mandate for
the signal block originated directly from the Minister of
Commerce. End Summary.


3. (U) On June 6, Charge and Econoff met with Philip
Paulwell, Minister of Commerce, Science and Technology
(with Energy) (MCSTE). Paulwell was accompanied by
Ambassador Peter King, Director of the Jamaica Trade Board
and senior advisor to Paulwell; Jean Dixon, Permanent
Secretary of MCSTE; Colin Campbell, Chairman of the

SIPDIS
Universal Service Fund Company; and Allison Stone, Foreign
Trade Specialist at the Ministry of Foreign Affairs and
Foreign Trade.


4. (SBU) Charge began by stating that the USG remained
concerned about the tactics being used by the Jamaican
telecom operators in their negotiations with the
international carriers over the new levy, especially the
practice of blocking incoming calls. He said that he had
read that Sprint had agreed to pay the levy, and that
there were reports that the other carriers would soon
follow suit.


5. (SBU) Paulwell confirmed that Sprint had signed, and
said that AT&T was, that same morning, holding a
conference call with Cable & Wireless to try to work out
an agreement. He further stated that MCI had raised its
rates to Jamaica effective June 9, which the MCSTE saw as
a move in preparation for signing the levy agreement.
Paulwell said that full services to Jamaica should have
been restored by June 4, as Sprint's network provides
sufficient capacity to carry the normal volume of call
traffic, even with AT&T and MCI still blocked.


6. (SBU) Paulwell then reviewed the history of the
Universal Service levy program. He said he had started
his negotiations with Jamaican service providers in early
2004, and spent months in discussions with Cable &
Wireless, Digicel and MiPhone - each of which he described
as "resistant" to the idea of introducing the levy. His
discussions only included the local carriers. Paulwell
said that it was the responsibility of the local carriers
to inform their international partners of the new fees,
and to work out a payment plan. He said that the standard
timeframe for notification of the international carriers
is 30 days, though some carriers received as much as 70
days notice.


7. (SBU) Econoff thanked Ambassador King for his
clarification, over the weekend, that the 40-day grace
period prior to the imposition of circuit blocking
measures, applied only to Jamaican companies, and not to
international carriers (ref B). Econoff then proceeded to
clarify that the USG was not attempting to stop the levy,
protest the Universal Service program, or intervene to set
a specific termination rate in Jamaica. Rather, the
primary concern of the USG was the tactic of circuit
blocking.


8. (SBU) Econoff delivered the following talking points:

-- The USG considers the rate negotiations to be a
commercial issue to be settled between the carriers, but
the blockage of circuits is an unacceptable tool in the
negotiation process, with broader negative economic
impacts.

-- The USG considers circuit blockage to be an abuse of
market power that may trigger the FCC's enforcement
mechanism.

-- Industry representatives have been in discussions at
the highest levels with the FCC regarding the potential
"Stop Payment" option, wherein the FCC can make it illegal
for U.S. carriers to pay the Jamaican carriers until the
situation is resolved.

-- The USG calls upon the Government of Jamaica to use its
influence to convince the Jamaican carriers to cease the
tactic of signal blocking.


9. (SBU) Campbell defended the hard bargaining tactics of
the Jamaican carriers, contending that the Jamaican
carriers had dropped their termination rates to two cents
per minute from over USD 1 per minute in the belief that
the savings would be passed to consumers. According to
Campbell, the international carriers retained per-minute
rates from the U.S. market at the same levels and pocketed
the difference as profit.

10. (SBU) Econoff reiterated the USG position that the
final arrangement of the pricing schedule is a private-
sector commercial matter to be resolved between the
carriers, but that the tactic of circuit blocking is an
abuse of market power that could, if deemed warranted by
the FCC, result in a "Stop Payment" order. Econoff
further inquired as to the veracity of media statements
wherein Jamaican carriers stated that they would lose
their license if they did not block the incoming calls.


11. (SBU) Paulwell denied that this was the case. He
maintained that the local carriers were responsible for
paying the levy, but that how they sourced the money was
entirely up to them. The tactic of blocking incoming
calls was, according to Paulwell, a decision of the
Jamaican carriers.


12. (SBU) Note: Following the morning meeting with
Paulwell, Canadian Deputy High Commissioner Bryan Burton
shared with Econoff a communique that refers to a letter
to Ms. Camille Facey of Cable & Wireless Jamaica Ltd. from
Minister Paulwell dated June 1, 2005. In the letter,
Paulwell informed Facey that "carriers who fail to secure
rate changes before June 1, 2005 will be forced to block
the international circuits, pending agreement of new
rates, in order to ensure that their licenses are not
placed at risk." On that evidence, Minister Paulwell was
untruthful regarding the GOJ's involvement in the
implementation of blocking. End Note.


13. (SBU) Comment and Action Request: The Jamaican
delegation was initially somewhat defensive, and kept
focusing on their right to implement the levy as they saw
fit. They became more amenable after we clarified that
the primary issue at hand was the tactic of blocking, not
the levy itself. Post now believes that the GOJ
understands the concerns of the USG. However, given
Paulwell's apparent disingenuousness regarding his
involvement in the implementation of the circuit blockage,
and the GOJ's obvious pride in the capitulation of Sprint
(which, they stated, has sufficient capacity to restore
near-normal levels of service),the GOJ is unlikely to
take action on this issue absent additional pressure. As
of June 8, MCI and AT&T have signed agreements, allowing
the Universal Service levy to be funded by the
international carriers and removing the need for the
circuit blockage.


14. (SBU) Comment and Action Request (cont'd): The recent
release of the Department's 2004 Trafficking in Persons
(TIP) report (ref C) downgrading Jamaica to Tier 3 is
still reverberating here, and many in the GOJ have taken
umbrage at the news. Though TIP is completely unrelated
to the telecommunications dispute, it may inadvertently
have strengthened Paulwell's hand in the Cabinet, as he
has been able to "stand up to the Americans." Post
requests that the Department provide instructions on
further actions concerning this issue, now that the levy
payment agreements have been signed by the international
carriers. End Comment.

ROBINSON