The Cellular Telecommunications Industry

As noted, AMPS was the first generation analogue air-link standard developed in North America and deployed for the first time in the early 1980s. The AMPS air-link was designed primarily for voice service but it did have simple data services including limited short messaging capabilities that were not widely used. In the US and Canada, AMPS-based systems operated in the 800MHz band, and achieved good coverage in most of the populated regions of those countries. Today, with the advent of digital networks, mobile phones that use the AMPS air-link exclusively are now disappearing. In their place have come the `dual-mode’ or Etri-mode’ models that mobile no tracker are backward compatible with AMPS. Although most urban centres will now have digital coverage exclusively, having an AMPS mobile phone may still be necessary when roaming in remote areas that lie beyond the boundaries of digital coverage.

In 1984 the Cellular Telecommunications Industry Association was founded in the United States to provide representation for the growing mobile phone sector and gave its approval for a new digital ‘dual mode’ standard called D-AMPS (ED’ for digital). D-AMPS was the first North American digital cellular standard, which is also known by the official names IS-54 or ANSI-136. An important consideration in creating the first North American digital cellular standard was not only to improve spectral efficiency but also to do so without the need for assigning new spectrum. Spectrum scarcity meant that the digital systems would have to work with the existing allotments for AMPS service. The D-AMPS standard was therefore developed to work with the 30kHz channels established for the analogue system, thus obviating the need for new spectrum allocation and permitting incumbent operators to easily upgrade their 800MHz-based systems from analogue to digital. Like the GSM standard, D-AMPS also uses a time division method for mul-tiplexing and thus earned the name TDMA (Time Division Multiple Access). Whereas each 30KHz of bandwidth in the old AMPS system could support one user only, the D-AMPS version of TDMA could provide service to three callers over the same 30kHz of spectrum because each channel was divided into three unique timeslots. TDMA was developed initially for North America and was adopted by mobile operators in both the US and Canada. It soon faced stiff competition from a second air-link standard called CDMA, which eventually resulted in the rise of two competing standards in those countries. Micromax Canvas 6 pro

This fragmentation effectively split North America into two incompatible mobile phone systems, affecting roaming to some degree and, according to some observers, has been partly responsible for the slow adoption of text messaging in North America. Today, former TDMA-based operators, like Cingular in the United States, are changing over to GSM because of its global roaming and widespread appeal GSM also offers improved spectral efficiency over TDMA and a well defined upgrade path to third generation mobile phone service. The transition between these two air-link standards is being made possible with something called GAIT. GAIT is. yet another acronym and stands for ‘GSM ANSI-136 Interoperability Team’, which is a group of experts that has been working on. technical specifications that enable a GSM overlay for TDMA networks. GAIT is also supporting the development of mobile phones capable of roaming on either GSM or TDMA networks.

The confirming bank

The position of the confirming bank is entirely different from that of the nominated bank. For a consideration, namely a confirmation commission, the confirming bank undertakes to pay, accept a bill of exchange or issue a deferred payment undertaking under another bank ’ s credit. It therefore assumes responsibility for the commercial sukanya samriddhi account details and political risks involved and enters into a contract with the beneficiary from which it cannot withdraw. This is precisely what makes the confirmed irrevocable credit the most secure method of settlement available to an exporter.

Although the confirming bank is usually the one through which the credit is advised, it is not uncommon for confirmation to be added by a third party bank; that bank may even be in a different country. A credit which is available with a bank in Brussels may be confirmed by a bank in Geneva. The reason for this arrangement is simply that sukanya samriddhi yojana form the issuing bank has a confirmation facility with a Geneva bank, but no similar facility with the advising bank. This situation can create problems when the confirming bank stipulates that its confirmation is conditional upon the relative documents being presented to it before they are despatched to the issuing bank.

This is done to obtain the protection of Article 9b. It is only necessary to consider the risks involved in confirming credits to understand the reasoning behind the confirming bank ’ s condition. The beneficiary will receive advice of the credit and should study its terms in order to understand exactly what he has to do to eventually obtain payment. Any terms or conditions which he finds unacceptable must be made known to the applicant, not the sukanya samriddhi scheme calculator advising bank , with a request that the credit be amended. When it fully meets with the beneficiary ’ s requirements he can take whatever action is needed to prepare his goods for shipment.

Eventually he will present his documents either to the nominated or confirming bank for payment or acceptance, or to any bank prepared to negotiate them if the credit is stated to be freely negotiable. He can only be certain of payment or acceptance without recourse if presentation is made either to the issuing bank or the confirming bank. No other bank, nominated or otherwise, is obliged to negotiate.

The advising/nominated bank

The issuing bank selects a foreign bank, or one of its own branches, to act as its agent for the purpose of authenticating the credit and advising it to the beneficiary. That bank is known as the advising or nominated bank and if it declines to advise the credit, as it is entitled to, it must immediately inform the issuing bank.

According to Article 10c, in addition to advising the credit, the nominated bank may agree to undertake certain responsibilities under the credit. If the bank advises the beneficiary of its agreement to comply with Article 10c it could eventually be involved in:

  • making payment under the credit
  • accepting a bill of exchange
  • issuing a deferred payment undertaking.

However, since there is no consideration for the nominated bank giving its agreement, such agreement cannot be enforced against it. There is no IMEI contractual relationship between the nominated bank and the beneficiary.

The beneficiary must therefore be careful not to rely too heavily on any agreement given by the nominated bank. Realistically, it is only necessary to consider the position of a nominated bank which, upon advising another bank ’ s credit, informed the beneficiary that it would be prepared, eventually, to pay, accept a bill of exchange or issue a deferred payment order. If, during the validity of the credit, the creditworthiness of the issuing bank deteriorated, the nominated bank may be obliged to withdraw its agreement and even decline to negotiate the beneficiary ’ s documents. Similarly, a change in the quality of the political risk involved in dealing with the issuing bank ’ s country may mean that although that bank may honour a claim from the nominated bank for a negotiation of documents, the country ’ s central bank may fail to release the foreign currency to meet the claim.

Both of these risks, commercial and political, have already been referred to in cross-border trading and a nominated bank sensibly will not accept them unless it is contractually obliged to; in other words, only if it has confirmed the credit. It may be asked by the issuing bank to add its confirmation to the credit or if the credit provides for pre-shipment finance to make an advance to the beneficiary. Neither of these requests need be acted upon by the advising bank, but if it declines to carry them out it must advise the issuing bank without delay and simply proceed with advising and authenticating the credit. Confirming a credit, as will be shown in later chapters, involves the bank in a number of obligations and risks which it may feel it does not wish to assume.

Additional methods of payment

In addition to the traditional methods of payment there are three special techniques which should be noted at this point.

For faiting: a facility for financing medium- and long-term contracts for exports of capital equipment. The process revolves around a specialist market prepared to buy and sell bills of exchange and promissory notes drawn on foreign importers and bearing the guarantees of their central banks. Exporters are able to finance their sales by non-recourse discounting of those instruments through forfaiting companies.

Countertrade: the creation of deals between importers in countries with little or no foreign exchange to pay for imports and exporters prepared to supply them with essential goods. Payment to the exporters can be in several forms, part goods or services, part foreign exchange and part in switch currency. The deals may involve the movement of goods between a number of different countries before the original exporter is paid. Both for fairing and counter trade deals use all the accepted short-term methods of payment in their overall structure, as will be demonstrated in a later chapter.

Purchase of receivables: provides a means for exporters to raise cash on debts due or becoming due to them from overseas buyers. It is a simple process by which a bank purchases the debts and is repaid by direct settlement from the buyers. The principal factors which may persuade an exporter to enter into this form of finance are firstly the rate of interest he is paying on his overdraft, secondly the time taken by his buyers to settle their accounts, and finally the need to purchase assets with a higher yield. The fact that the exporter is selling on open account suggests that the buyers are a good credit risk, although the bank must verify that. If it agrees to provide a facility, the bank sets limits on each buyer up to which it will purchase receivables on them, estimated for a period of, say, one month. The bank then advances the equivalent of the debts and credits the exporter with the proceeds. Payment by the buyers is made direct to the bank who may or may not accept the risks of non-payment and default without recourse to the exporter.

Documentary credits

The most secure method of payment available to exporters and also provides a high degree of protection for importers. Developed by the banking industry over the past 200 years, it owes its prominence firstly to its flexibility and secondly to the skills of banking operatives who have adapted it for use in every conceivable area of trade finance. The actual credit is an undertaking addressed by a bank (the issuing bank) to a beneficiary (the exporter) on the instructions of the applicant (the importer). It undertakes that the beneficiary will be paid up to the amount detailed, provided that he presents the required documents within the validity of the credit and to whichever bank the issuing bank nominates as its agent. That, perhaps, is an oversimplification, because documentary credits can be rather complicated when structured to meet particular transactions.

It is a guarantee of payment, but a conditional one. Despite the many years that the documentary credit has been in use, it is only in the past 40 years that a true international code of practice has been introduced to provide guidance for operating banks. The International Chamber of Commerce (ICC) produced its Uniform Customs & Practice for Documentary Credits (UCP) in 1933. In 1962 its use became official and banks began adopting it across the world. The code was originally drawn up from the study of documentary credits practice worldwide and was intended to unify procedures developed by international banks. Amended in 1974, 1983 and finally in 1993 (UCP500) the publication has benefited from decisions in a variety of legal actions involving documentary credits. The rules are not law but simply guidelines for all parties involved in trade finance. Strict compliance with UCP500 by any litigant will almost certainly influence the findings of a commercial court. UCP500 will be discussed at length in a later chapter, although at this stage it is important to understand how it is structured and what factors have influenced its development.

The rules deal in sequence with the life of credits from issue and the responsibilities of the banks involved, through to the handling of documents, negotiation, reimbursement, transfer and assignment. Considerable effort has been made in four issues of UCP to differentiate between the numerous transport documents being brought into use. There are criticisms of the UCP500, especially in the way it attempted to improve on certain weaknesses in UCP400 (1983). While the rules were intended to unify world-wide practices, ICC have failed to grasp the difficulties banks face when negotiating documents against credits issued by banks with whom they have no relationship and who present obvious political risks. Banks, shippers, carriers, forwarders and insurers are between them expected to smooth the flow of international trade and banks particularly should be allowed to assess risk and act accordingly while at the same time making every endeavor to assist completion of international transactions. From time to time ICC publishes its decisions on cases submitted to them or makes constructive comment if it is unable to find solutions within UCP500. These publications are useful reading for students of trade finance and highlight the difficulties which often confront banks in their attempts to keep within the rules.