Briefing on the Code of Practice for Competition

in the Provision of Telecommunication Services

20 September 2000

Confidential© IDA Singapore 2000

www.ida.gov.sg

OVERVIEW - SCOPE OF THE CODE

• Integrated Code

• Regulatory principles and framework (Sections 1 & 2) • Consumer protection rules (Section 3)• Interconnection regime (Sections 4 & 5)• Infrastructure sharing (Section 6)• Sector-specific competition rules (Sections 7 & 8)• Mergers and consolidation (Section 9)• Enforcement mechanism (Section 10)• Interconnection Pricing Approach (Appendices I & II)

INTRODUCTION

Formulation of Code

• Further refinements based on feedback from industry (public forums & comments received) and consultants’ experience/expertise

• Reflects international best practices, Singapore’s legal/regulatory environment and policy goals

• Provisions for review as market develops

(Triennial review)

INTRODUCTION

• Goals of the Code• Promote int’l competitiveness of our info-comms

industry• Ensure affordable access to wide range of quality

telecom services• Promote and maintain fair and efficient market conduct• Encourage and facilitate industry self-regulation• Encourage investment in telecom infrastructureto enhance Singapore’s position as hub of choice

• Regulatory Principles• Reliance on market forces and voluntary agreements,

where feasible• Proportionate regulation • Technological neutrality• Open and reasoned decision-making

INTRODUCTION

Categoryof

Licensee

Duty to End-User

Interconnection & Sharing

Competition Enforcement

DominantFBO

Non-DominantFBO

selected

provisions

selected

provisions

selected

provisions

SBO withswitching/routingequip

selected

provisions

selected

provisions

selected

provisions

SBOwithoutswitching/routingequip

selected

provisions

selected

provisions

DealerLicensees

selected

provisions

selected

provisions

CLASSIFICATION OF LICENSEESAsymmetric approach

• Dominant licensees • Control facilities that provide a direct connection to end

users and have:

(a) ability to restrict output and raise prices; or

(b) facilities too difficult and costly to replicate• can seek reclassification or exemption from obligations

on a service/facility basis• required to comply with more stringent requirements on

interconnection and consumer protection and ex-ante tariffing/competition provisions

• Non-dominant licensees• all other licensees• minimum “rules of the road” and ex-post

enforcement

CLASSIFICATION OF LICENSEES

This Approach Reflects different market/bargaining positions of different licensees Focuses IDA effort on areas where need for intervention is greatest given current market devt

• Code provides three paths for reclassification• Petition for reclassification by licensee • Petition from application of relaxation from specific

dominant licensee regulation• IDA’s triennal review of Code

• Code specifies criteria and considerations IDA will apply; but no automatic quantitative “trigger”

• IDA will encourage industry forums to work out detailed operational and technical processes and procedures

CLASSIFICATION OF LICENSEES • Initial Designation of Dominant Licensees

• Singapore Telecommunications Ltd• does not include its subsidiaries such as SingTel

Mobile, SingTel Paging, SingNet

• Singapore Cable Vision Pte Ltd• temporary exemption from interconnection obligations

given current technical difficulties of unbundling its network

• still required to comply with tariffing/competition requirements

• 1-Net• classified as non-dominant

CONSUMER PROTECTIONAll Licensees

• Provision of services to end users at just, reasonable and non-discriminatory terms• Advance disclosure of all prices, terms and conditions• Periodic, accurate and timely bills• No charges for unsolicited telecom services or

equipment • Dispute resolution procedures• Protection of customer information

• Additional duties of Dominant Licensees• Duty to provide services to any end user upon

reasonable request and in a non-discriminatory manner

• Duty to file tariffs with IDA• Duty to provide unbundled telecom services

INTERCONNECTION

Greater emphasis placed on private commercial negotiations

However, recognising that:

• Dominant Licensees lack commercial incentives to voluntarily negotiate and given market situation now

IDA will take more active role to ensure just, reasonable and non-discriminating Interconnection Agreements (IAs), including setting of prices for interconnection services for period of 3-year subject to review if market conditions change

INTERCONNECTION

• Interconnection with Non-dominant Licensees

• Limited IDA role• Reliance on market forces and commercial

negotiations to foster agreements• Confirm that agreements meet minimum

requirements• Mediation• Private enforcement

• Option to seek interconnection with Dominant Licensee Dominant Licensee:interconnection operator of last resort

INTERCONNECTION• Interconnection with Dominant Licensees

• Dominant Licensee Interconnection Obligations• Must publish a “Reference Interconnection

Offer”(RIO)• that addresses 18 categories of issues identified by

IDA

• Must negotiate in good faith with any Licensee requesting interconnection• Licensees may agree on any terms that meet

minimum requirements & are non-discriminatory

• Must provide designated services at IDA’ determined rates (dark fibre, IPLC)

INTERCONNECTION• Must offer physical co-location where feasible

• Must offer specified Interconnect Related Services (IRS) (e.g, PI, ESF, UNEs, O/T/T)

• Physical Interconnect (PI)physical links between networks• Essential Support Facilities (ESFs)e.g.manholes, cable chambers, trenches, conduits,

masts, towers, poles, space within cable risers• Unbundled Network Elements (UNEs)e.g local loops, sub-loops, line sharing (loop

spectrum), distribution frame access• Origination, Transit and Termination (O/T/T)PSTN Voice

INTERCONNECTION

• 3 options for entering into an IA with a Dominant Licensee:

• Adopting the RIO• dominant licensee must submit RIO for approval• IDA will put up for public consultation

• Opting into an existing IA

• Enter into individualised agreement• Voluntary Agreement• Dispute resolution procedure

INTERCONNECTION

Either party can request IDA Dispute Resolution Procedure after 90 days

If RIO addresses a disputed issue, IDA will apply the RIO provision

If RIO does not address an issue, IDA retains full discretion to impose a solution

INTERCONNECTION PROCESS

1 7 15 30 90 105 150 165 180

Reques

t for I

nter

conn

ectio

n

Initi

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eetin

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Confiden

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Inte

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plem

ente

dReq

uest f

or IDA D

ispute

Res

olutio

n

Licen

see

Response

IDA D

irect

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esolv

ing D

ispute

Submis

sion o

f Confo

rmin

g Agre

emen

t

IDA a

pprova

l or r

evis

ion

INFRASTRUCTURE SHARING

• FBOs may request right to share at cost-based prices “Critical Support Infrastructure” (e.g. masts, poles, ducts, poles, towers) which are

• necessary to provide a service

• cannot efficiently be replicated

• sharing technically and economically feasible

• Voluntary negotiations, supplemented by IDA dispute resolution procedure

COMPETITION REGIME

• Over-view

• Sector-specific rules

• Based on economic principles and international best practices

• ex ante regulation where competition not developed

• ex post regulation and enforcement as competition takes root

COMPETITION REGIMEProhibitions against

• Abuse of Dominant Position such as

• Pricing abuses• Predatory pricing (price cutting)

• Price squeezes (pricing inputs too high)

• Monopoly leveraging

• Cross-subsidisation (monopoly profits to subsidise a competitive svs)

• Discrimination (treating own affiliates more favourably)

COMPETITION REGIME

• Agreements Between Licensees That Unreasonably Restrict Competition (applicable to all Licensees)

• Price fixing (collude to fix a price / output)

• Bid rigging (collude for scarce resources or rights)

• Customer allocation (agree not to compete for specific customers / markets)

• Group boycotts (refusal to serve a customer)

ENFORCEMENT MECHANISMS

• Process• Notice given with opportunity to respond

• Enforcement actions• Warnings• Cease and desist orders• Monetary sanctions, proportionate to the

contravention (Up to S$1,000,000 per contravention)

• In imposing financial penalties, IDA will consider aggravating or mitigating factors of the circumstances

IDA will be reviewing monetary sanctions

Interconnection Pricing

• Costing generally based on FLEC/LRAIC principle• ensure no distortion of “build vs buy” decision• facilitate rapid entry whilst encouraging

infrastructure investment• wholesale prices for some elements based on

retail-minus, and benchmarked against other countries for reasonableness meant to facilitate rapid entry & competition by

entrants in end-user markets and address bottleneck situations when the market is first liberalised

• IDA worked with SingTel to specify availability and pricing of core group of IRS

Interconnection Pricing

• Prices valid for 3 years, but IDA reserves the right to review and modify prices prior to the end of the period to ensure continued relevance

• IRS applicable to FBOs but SBOs only for OTT

• List of Prices Available include:• IPLC & Dark fibre• O/T/T charges• UNEs• ESFs

• For strategic reasons, Interested FBO licensees should write in to IDA directly for this pricing list which will be released subject to confidentiality undertaking

Thank You

www.ida.gov.sg

Policy & Regulation Codes of Practices

Telecom Competition Code