CONVERGED & EFFICIENT LICENSING FRAMEWORK

RECOMMENDATION ON LICENSING REGIME REFORM

LIEUTENANT COLONEL MOHAMMAD ZULFIKAR, PSC

DIRECTORBANGLADESH TELECOMMUNICATION REGULATORY COMMISSION

SCOPE • Individual & Class Licensing Regime [ICLR]

• Sector Statistics : Bangladesh

• What & Why

• How & Efficient Approach

• Licensing Principle

• Unified Licensing Regime [ULR]

• Proposed Transition : ICLR to ULR

• ITU Recommended Model

• Common Practice in Asia-Pacific Region

• International Best Practice

• Convergence in Licensing Regime

• Example : Asia-Pacific Countries

• Case Study : Myanmar

• Vertical Convergence : Bangladesh

• Horizontal Convergence : Bangladesh

• Hybrid Convergence : Proposed Model

• Recommendation2

INDIVIDUAL & CLASS LICENSING REGIME

• Technology Defined Licensing

• 2G CMPO (GSM / CDMA)

• Standardization Based Licensing

• BWA (WiMAX 802.16e)

• Resource Defined Licensing

• 3G CMPO (Allocation of 2100 MHz Frequency-Band)

• Network Topology Based Licensing

• Carrier (SC , ITC) ; Gateway (IGW , IIG) ; Exchange (ICX , NIX) ; Access

Network Service (ISP , IPTSP , PSTN) ; Over The Top (VTS , CC , CP) ; etc.

• Open Licensing Regime

• Remains Open To Acquire by Eligible Applicant(s) , Not-Revenue Focused

• Close Licensing Regime

• Available as per Govt. Wish , Limited Number of License , Revenue Focused3

SECTOR STATISTICS6 CMPOs

11 PSTNs

3 BWAs

482 ISPs

39 IPTSPs

5 NTTNs

6 ITCs

1 SC 29 IGWs

840 VSPs

26 ICXs

37 IIGs

2 NIXs

282 CCs

14 VTSs

8 CPs

Number of License 2000 (approximately)

LICENSING : WHAT & WHY

What Is Licensing

Licensing is a Key Regulatory Instrument that is Integral to the Successful & Efficient Supply

of Telecom/ICT Services to the Citizen. It is a Grant of Right to Operate & Provide Services

by Regulator / Government. It Imposes General & Specific Obligations / Restrictions etc.

Why Licensing

Administrative Control on an Essential Public Service

Expansion of Networks & Services and Other Universal Service Objectives

Privatization / Commercialization [FDI + Innovation]

Regulating Market Structure

Establishing a Competition Framework

Allocation of Scare Resource

Generating Government Revenue

Consumer Protection

Ensuring Availability, Affordability & Quality of Service

Regulatory Certainty [Assurance of Level Playing Field to the Licensees]5

LICENSING : HOW & EFFICIENCY

How to Frame License

• Balance between efficiency and effectiveness

• Key principles of effectiveness are, simplicity, flexibility, certainty of service and

technology neutrality, and equal treatment of licensees

• Efficiency involves reducing use of resources such as costs and time in licensing process

• A key current challenge is how / whether to license “over the top” or OTT services which

are extra-territorial in nature and often do not have any facilities within a jurisdiction

Efficient Approach of Licensing

• An authorization-based approach, which has been adopted in other regions, while

licensing remains the predominant approach in Asia

• Distinguishing between licensing of services that are offered to the public and those that

are offered to a limited group, with no significant impact on public welfare

• Service and technology neutrality allowing operators to maximize their use of the latest

technology while reducing administrative costs

• Adopting a unified licensing regime6

LICENSING PRINCIPLE

International Licensing Principle

Licenses Should be Issued to the Entity Which Can Bring Maximum Socio-Economic Benefits

for the Country

Licensing Principle for BTRC

BTRC is Actively Considering to Move Towards an Effective, Forward-Looking Licensing

Framework Which would Enable the Nation to Realize the Full Potential of

Telecommunications and Information Technology. In fact, this Enables Growth and Support

National Aspirations of Becoming a Middle Income Country.

Unified Licensing Regime : Key Issues of to Consider

Effectiveness, Efficiency, Tech-Neutrality and Convergence of ICLR

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UNIVERSAL LICENSING REGIME [ULR]

Key Elements

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Sim

plifi

ed, U

nif

ied R

egim

e Migrate to ULR

Remove Categories of Licences That Add No Value and Represent Artificial Constraints, Exclusive Licensing Arrangements

Minimize license provisions

Technology & Service Neutral: Ensure That Licensing is as Neutral in Technology and Service Terms as Possible

Cert

ain

ty in L

icensi

ng Clear, Open Processes with Public Consultation

Means of Administrative Appeal

No Open-Ended Discretion

Consi

stent Tre

atm

ent of

Lice

nse

es Enable Private Sector

and FDI Participation on Equal Basis

PROPOSED TRANSITION FRAMEWORK : CLR - ULR

The implementation of ULR requires careful planning and comprehensive assessment of a

range of issues. Industry consultation should be a part of the transition process at each

step. An effective transition process involves:

• Assessment of the current licensing framework and identification of amendments

required to ensure the unified licensing regime fits within the existing legislative and

regulatory framework;

• Assessment of the appropriate level of regulatory intervention required (i.e. individual

licence versus class licence) and the licence terms and conditions;

• Development of the process for issuing new licences and whether there should be any

restrictions on the number of licences issued;

• Determination of which licensing regime is more appropriate, the right licensing

structure/categorisation, and the nature/scope of the new licences;

• Development of the transition/migration process and terms for transition (e.g. whether

mandatory or voluntary migration, and the time period for transition); and

• Undertaking of licence mapping/conversion on how existing service and facilities

specific licences will fit into the new unified licensing categories.9

ITU RECOMMENDED MODEL

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COMMON PRACTICE IN ASIA-PACIFIC

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INTERNATIONAL BEST PRACTICE

• Rights and obligations of licensees should be clear and consistent, with changes resulting

only from transparent consultation

• Licensees should have recourse to independent and transparent dispute resolution or

appeals processes where there are disputes with the regulator

• Regulators should move towards a unified licensing framework by consolidation of

existing service specific license categories

• Licensing framework should consist of both individual licenses for public

telecommunications providers and class licenses for non-public services with limited

scope

• Licensing framework should meet the regulatory requirements of a converged

telecommunications sector, licenses should be technology neutral

• Where there is insufficient competition in a market, licensing should be used as a means

of facilitating competition (including new market entry if needed)

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TOWARDS CONVERGENCE : ASIA-PACIFIC

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Aust

ralia The

Telecommunications Act 1997 regulates ‘carriers’ and ‘service providers’.

‘Carriers’ basically own specified infrastructure facilities or ‘network units’ and subjected to individual licensing.

Service providers’ are ‘carriage service providers’ and ‘content service providers’ and are not subjected to individual licensing requirements.

Hong K

ong Hong Kong

introduced unified carrier licensing in August 2008, which authorizes the provision of any combination of fixed, mobile and converged services.

There is no restriction on the types of services which may be authorized under the said licenses

India India introduced

unified licensing regime in 2003, which was implemented in two phases.

During the first phase, basic (fixed) and cellular services were transitioned to the unified access service license.

The second phase commenced in 2005 and involved full transition of all services to the unified licensing regime and ended service based licensing

Mala

ysi

a Malaysia has two broad types of licenses, namely individual licenses and class licenses, which are applied to four categories of activity, namely ownership of network facilities, network services, applications services and content applications services

TOWARDS CONVERGENCE : ASIA-PACIFIC

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New

Zeala

nd There are no licensing

requirements in New Zealand.

However, the Minister may declare operators to be network operators for the purposes of the Telecommunications Act 2011, thereby subjecting them to the provisions of the Act as they relate to network operators.

Sin

gapore Singapore has two classes

of licenses, namely the facilities-based operator (FBO) license and service-based operator (SBO) license.

FBO license is always an individual license whilst SBO license can be individual or class license

Th

ailand Thailand introduced its

current licensing system in 2001.

This included three licensing categories:

Type 1 licenses for operators who do not own their own network infrastructure;

Type 2 licenses for operators with or without their own network infrastructure but who target only a segment of the market; and

Type 3 licenses for operators with their own network infrastructure who provide services to the general public.

CASE STUDY : MYANMAR

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VERTICAL CONVERGENCE : BANGLADESH

Transmission system is the integral part of

the telecommunication service delivery.

Due to vertical separation of licensing

scope, mobile operators are not allowed

to lay fiber and it has been made

mandatory to get the fiber transmission

service from the NTTN licensee. In most

cases, it is found that NTTN licensees are

unable to cater the demand of service

providers. This is impacting the growth of

sector, infrastructure and telecom

penetration in remote rural areas.

In case of vertical convergence from

Bangladesh context, ULR may consolidate

the business scope of access network,

transmission and gateway services.16

HORIZONTAL CONVERGENCE : BANGLADESH• Next generation telecommunication network are built on common and IT based technology standards like IP, which is

making it possible to run myriad of services on the same network infrastructure built for different access

technologies. The same core network, transmission network, service network and billing/charging could be used to

serve both fixed and mobile customers.

• Segregation of licenses based on access technology would lead to duplicity of infrastructure deployment and

would be a national loss. Convergence on the access side would be allowed and encouraged, and necessary

changes in the regulatory framework would be brought.

• Any new licensing regime should undergo a thorough economical analysis to ascertain whether the country resources

can be used most optimally and the value created for the customer and society is maximum and sustainable.

• License gives an investor or, a service provider the authority to enter into a service market, hence the licensing

process determines the level of competition in the market. To create a competitive environment no artificial entry

barriers should be created and wherever it is possible the entry should be made open; but it has to be ensured that

the policy and licensing criteria should not impede competition among the players.

• The licensing regime should also be non-discriminatory and should not favor any particular type of investor,

ethnicity and nationality.

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HYBRID CONVERGENCE : PROPOSED

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RECOMMENDATION : NETWORK & SERVICE

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Column : Operator Node

Row: Communication Type

Voice Communication Data Communication

ILDC Submarine Cable + ITC = ILDC Operator

Gateway IGW, VSP + IIG

NTTN + Tower & Infrastructure Company

ICX [LI Probe] + NIX [LI Probe]Infrastructure

Exchange

Access Network CMPO, IPTSP, PSTN + CMPO, ISP, BWA = ANS Operator

End User Quad-Play + Cellular Mobile Service

Converged Scenario

ILDC Operator : Raw Bandwidth

Infrastructure Operator : Ex-Gateway + Ex-Infrastructure along with the LI Probe &

Monitoring Platform [International + Domestic Routing]

ANS Operator : Ex-Voice + Ex-Data [Voice + Data : Managed]

End User : Single Connectivity for Quad-Play + Cellular Mobile Service

RECOMMENDATION : REGULATORY ARRANGEMENT

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Operator Type Required Amendment

ILDC Operator Policy : ILDTS ; License : ITC + SC , IGW + IIG , NTTN

Infrastructure Operator Policy : ILDTS ; License : IGW + IIG , NTTN , ICX + NIX

ANS Operator Policy : ILDTS ; License : CMPO , ISP , IPTSP , PSTN , BWA ,

NTTN , ICX + NIX ; Directive & Approval : Several

Implementation Road-Map

Policy Amendment : 1 – 2 Year (If Govt. Understood the Necessity)

Licensing Guidelines : 1 – 2 Year, After Policy Amendment (If Ministry Remains In-Line)

Business Migration/Merger/Amalgamation/etc. : 1 – 2 Year, After Policy Amendment

Commercial Launch of Convergence / ULR : 1 – 2 Year, After License Amendment

Development of License Awarding Matrix (Resource Allocation vs. License Tenure vs. Upstream

Connectivity vs. Downstream Connectivity vs. Revenue Sharing) : 1 Year, after License Amendment

Issuance of Access Regulation, Competition Regulation, Consumer Protection Guidelines,

Standardization & QoS Guidelines, Subscriber Registration & NEIR Guidelines (minimum

requirement for the industry right now) : 2 Years, After License Amendment

Total Time Required for Full Implementation of Converged/ULR : 6 Years [Will Govt. Start Now]

WHAT WE [REALLY] NEED TO DO

• ULR : Let Us Visualize A Smart License Awarding Scheme

• Do Bangladesh Really Need Any Transition Towards ULR

• Technology Based Licensing : Too Many Class License

• Network Topology based Licensing : Too Many Class License

• Difficult To Cater In Synchronized Manner

• Difficult To Set Licensing Principle

• Do We Really Need Any ‘Convergence’ Prior To ULR

• Recommendation on Licensing Regime Reform-Model

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Interactive Session

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