Ulr Regime Presentation

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David Butcher and Associates

Bangladesh Telecommunications

Regulatory CommissionUnified Licensing Regime Consultancy

Stakeholder Meeting 27 September 2009


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Todays Agenda

The purpose of todays meeting is to: gain feedback on the discussion document we prepared before we arrived and

circulated in advance of this meeting,

to update all stakeholders on what we have learned in two and a half weeks in

Bangladesh,

give you an opportunity to provide us with verbal comments on what you have

read and what you have heard,

give you a basis on which to write your views.

The Agenda is as follows:

a presentation of our findings,

an open discussion of our findings,

a request for written comments by the 25 October to:[email protected]


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The Assignment

TOR Task

Task-1: Preparing and Engaging in Consultation

Task-2 Identifying an Appropriate Migration Path

Task-3: Final Recommendations on Licensing Regime

Task 4: Preparing the Final License Agreement and completion of all otherRelevant Tasks

Task 5: Capacity building in the BTRC

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Licensing Overall


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What is a Unified License

Network Services

Applications Services

Content Services

Network Facilities

Unified Licenses are technology-neutral

and service-neutral

ULR licensing promotes vertical separationbetween facilities, network, applications, and

content

Mobile

license

Old licenses were issued based on specific

technologies, and services to vertically

integrated businesses

All activities related to the provision of a

particular service are verticallyintegrated for the provision of that

service

Service

Licence

Network

Licence

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Licensing: - International Best Practice


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Details of Licensing

FINDINGS the unusual feature of licensing in

Bangladesh is the licensing of alarge number of activities that arenot normally licensed at all

ISSUES insufficient use is made of

exemption from licensing,

activities such as call centres, ISPproviders are CUSTOMERs of ICTthey are not suppliers of ICT.

RECOMMENDATIONS BTRC should review all existing

licenses

BTRC should exempt fromlicensing those activities that areessentially final users of ICT

(rather than suppliers ofwholesale services),

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Best Practice Objectives

FINDINGSITU defines Licensing Objectives as:

efficient resources allocation

expansion networks-services

privatisation- commercialisation

regulatory certainty

framework for competition

consumer protection

regulatory market structure

generating government cash

ISSUES to which of these objectives

should Bangladesh give priority?

which of these objectives supportthe poverty alleviation goals ofthe GOB?

RECOMMEDATIONSWe recommend the following order

of priorities:

efficient allocation of resources

efficient regulatory structure

digital dividend

framework for competition

regulatory certainty

privatisation- commercialisation

consumer protection

generating government cash

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Efficient Network Configuration

FINDINGS should there be a separate circuit

switched voice and data network?

most administrations haveseparate networks for voice anddata.

ISSUES voice network is more expensive

to operate,

requires more investment and

it is uneconomic to terminate data

calls on a voice network.

RECOMMENDATIONS investors should be able to

recover their investment in theirvoice network before being forcedto terminate data calls.

we need to separate out data

including (VOIP) until we canestablish a clear migration path tothe fully integrated data platform.

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Number of Licenses

FINDINGS there are too many activities

licensed (e.g. including callcentres, ISPs, PSTN operators (toomany) and vendors.

the proliferation of networklicenses complicates rational

network planning and best uses ofavailable capacity.

ISSUES decisions need to be made soon to

exempt many activities, torationalise the network,

what are the requirements of abest practice national architecturethat maximises capacity andminimises costs.

RECOMMENDATIONS non-strategic activities like call

centres and ISPs should beexempt from licensing,

exempted activities shouldregister (like a car driver) with afee that covers administrationcosts.

stakeholders should considerwhat an optimal national networkarchitecture should look like.

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Future Shape of Licenses


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Objective: Neutrality, Flexibility, Efficiency

BTRC Objective Decision Response

Unified License Regime

Multiple Categories

Single or Multiple?

1

Many Categories

Exemptions

Categories or Facilities-Services split

2

Design Authorisation

Exemptions

Single Authorisation

Individual-spectrum

Exemptions

Services (SBO)

3

Facilities (FBO)

Individual

dominant

3

Exemptions

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Which Model is Appropriate for Bangladesh?

FINDINGS Options are:

single authorization (license),

multiple categories or

two categories focused on facilities(infrastructure) and servicesrespectively?

currently in Bangladesh there isno coherent demarcation betweeninfrastructure and services, butboth have to be licensed alongwith many other things, such ascall centres, sim cards etc

ISSUES

ICT businesses dual nature: (1) management of easements

and the construction andmaintenance of networks.

(2) a sophisticated servicesoperation (including exchanges).

RECOMMENDATIONS there should be two forms of license:

infrastructure - services.

an infrastructure operator shouldbe able to hold a service license,

a party holding only a servicelicense should have to apply

separately for an infrastructurelicense.

infrastructure should comprise:

1. either a complete nationalnetwork including backbonenetwork (backhaul or core), localaccess networks (local Loop) and

the collection network, or2. one or more parts of a national

network described above.

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What is Efficient use of Infrastructure?

FINDING efficient use is shared use and

equal charges for associatedparties using infrastructure andexternal users,

in Bangladesh sharing of networks

by operators and entrants helpsmake best use of facilities.

ISSUES competition issues can arise

where incumbents:

offer only low quality lines,

overcharge for interconnection and

use the money to compete unfairlyin complementary markets,

use information gained from usersto poach customers.

regional franchises do not create acompetition framework.

RECOMMENDATIONS sharing should be obligatory, for

infrastructure license holders,

charges for shared infrastructureshould be equal for own use andfor external users,

stakeholders should comment onthe necessity or otherwise ofunbundling wholesaleinfrastructure and service tariffs,

service providers should beallowed to provide their own localaccess,

regional franchises should beremoved.

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Technological Neutrality

FINDINGS in Bangladesh licenses are

currently technology specific,

ISSUES the license holder should be able

to choose the most appropriatetechnology or the mostappropriate service,

the regulator does not need to beinvolved in the choice oftechnology or service.

RECOMMENDATIONS all licenses should be technology

neutral and flexible,

infrastructure licences shouldallowing the use of any technologyand

service licences should allow the

provision16 of any service.

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Content and Applications

FINDINGS Bangladesh currently has no

regulation of content orapplications,

ISSUES is there a role for licensingcontent and applications?

some other jurisdictions (e.g.Malaysia) have licensing forcontent and applications.

RECOMMENDATIONS we can identify no useful purpose

served by licensing content andapplications,

most international jurisdictions donot have any form of censorship

through the ICT licensing system.

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Appropriate Fees, Charges, Revenue Shares


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Revenue Sharing

FINDINGS the total of fees and revenue

shares currently account for about9 percent of the national budget,

this figure was calculated byAMTOB and agreed by others.

ISSUES how much should the telecom

sector contribute towards thegovernment budget?

is the current revenue share

inhibiting sector growth? is the revenue share making it

harder to expand both network orservices?

RECOMMENDATIONS the government should seek a

declining percentage of a growingsector.

in most countries the share ofgovernment revenue from

telecoms is less than 3 percent, focus should be on the

contribution of the sector to GDPand business activity.

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Bangladesh has Many Fees

FINDINGS fees include acquisition, annual

renewal, sales taxes, revenuesharing, taxes on equipment (simcards), radio equipment etc.

the total amount collected from

the sector is inhibiting sectorgrowth, long-term profitabilityand inhibiting long-termgovernment revenues,

the large number of collections isproving to be an impediment toefficient management of firms.

ISSUES a rational and fair method of

collecting taxes, fees and revenueshares from the sector is urgentlyrequired.

RECOMMENDATIONS SHORT TERM: the GOB and BTRC

should phase down and removemany of the smaller fees andcharges on the sector.

LONG-TERM: an appraisal isneeded of the level of contributionto the national budget from thesector and

a fair system of collection isrequired that no longer inhibitsinvestment and growth and long-

term government revenues.

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Migration Issues


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Content of Licenses

FINDINGS most licenses have a term of 15

years, some are due to expiresoon (2012?).

ISSUES should licenses be rolled over or

should they be reissued as ULRs?

to what extent should existingpractices be grandfathered?

RECOMMENDATIONS there should be voluntary

movement to ULRs until licenserenewal,

renewed licenses should bereissued as ULRs,

any license with a term beyond 5years should be reissued as ULR 5years from the date ofintroduction.

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Amortization of Legacy Investments

FINDINGS the proliferation of licenses has

led many investors to consumelarge proportion of Bangladeshsinvestment capital in businessesthat are not viable withoutgovernment protection,

a migration plan will not beacceptable must amortize theseinvestments.

ISSUES a migration plan will not be

acceptable unless a way can be

found for these investments to beamortized and liquidated withinreasonable timeframe (e.g. 5

years)

RECOMMENDATONS BTRC should facilitate formation

of at least two national networksfor otherwise stranded investorsto join.

legacy license holders need at

least 2-5 years to reorganisethemselves before exposure toadded competition.

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Asset Registers

FINDINGS currently there are many licenses

issued for PSTN,

it is not clear if there are sufficientPSTN assets in place to allow theformation of a national network

provider.

ISSUES need a nation infrastructure plan

or maybe plans so that BTRC canbe assured there is capacity in thesystem to provide nationwideservice

RECOMMENDATIONS all license holders should submit

asset plans and registers to theBTRC, along with totals ofsubscribers connected,

BTRC or a cooperative of

operators need to review allexisting asset registers todetermine if there isinfrastructure in place to provide anationwide service.

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ULR i t f ilit ti N t G ti N t k (NGN)


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ULRs aim at facilitating Next Generation Networks (NGN)Service Convergence via an IP Network Digital Platform

IP Network Platform

IP CORE Network /

VPNs

Access

WLAN

DSL

TDMIXC

Frame/ X.25

GPRS

SCDMA

Ethernet

CDMAWCDMA

InternetTransport

IP Transit

Hosting & ContentVoIPService

Application

IP VPN

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Schedule of Interventions

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Time Total

Name Activities30/08/09

6/09/09

13/09/09

20/09/09

27/09/09 4/10/09 11/10/09 18/10/09 25/10/09 1/11/09 8/11/09 15/11/09 22/11/09 29/11/09 6/12/09 13/12/09

David ButcherT1, T2, T3,

T4Field 0.5 0.5 1.0 0.5 0.5 0.5 1.0 0.5 5.00

6.00Home 0.5 0.5 1.00

Shaan Stevens T1, T2, T3 Field 1.0 0.5 1.0 1.0 3.504.50

Home 0.5 0.5 1.00

John Durkin T1, T2, T3 Field 0.5 1.0 0.5 1.0 1.0 4.004.50

Home 0.5 0.50

Chris Doyle T1, T2, Field 1.0 1.0 2.00 2.50Home 0.5 0.50

SharfuddinAhmed

T1, T2, T3 Field 0.003.50

Home 0.5 0.5 0.5 0.5 0.5 0.5 0.5 3.50

I

nceptonBrief

ConsultationPaper

M

igrationPaper

Stake

holderWorkshop

Analysisof

S

ubmissions-

WorkshopReport

Reco

mmendationson

Regime

DraftLicence

Agreement

WorkshshoponDraft

Agreement

FinalLicence

Ag

reement-Final

Report

14.50

TASK 1 2 1 1,3 3 3 3 4 Total

LEGEND 3.00 21.00

stakeholderworkshop 3.50

deliverabledeadlines


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Common Issues to Address

Irrespective of the structure of the license the same issues need to beaddressed in detail in the new licenses,

Major issues include:

criteria that must be satisfied to obtain a license, infrastructure and

services respectively the criteria will be different, revenue share that will be enjoyed by the national government,

other charges that will apply to license holders,

services that will be covered by the license,

content of schedules.


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Conclusion

A lot of work has to be done and the time is short,

We appreciate the importance of the task for Bangladesh bringing the ITsector into the Next Generation,

The priority must be given to the proposed ULR text and the accompanyingpolicy decisions,

We need: input on the current industry structure in Bangladesh,

analysis of the constraints facing the ICT sector operators,

useful suggestions on how a ULR might work,

potential benefits and pitfalls,

frank and pertinent comment on our proposals, advice on where we misunderstand or have the wrong information!

Ulr Regime Presentation

Documents

Transcript of Ulr Regime Presentation