david butcher and associates bangladesh telecommunications regulatory commission unified licensing...

David Butcher and Associates

Bangladesh Telecommunications Regulatory Commission

Unified Licensing Regime Consultancy

Stakeholder Meeting 27 September 2009


Today’s Agenda

• The purpose of today’s 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]


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 other Relevant Tasks

Task 5: Capacity building in the BTRC

3


Licensing Overall


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 separation between facilities, network, applications, and

content

Tel

ecom

fix

ed l i

neli c

ense

Mob

ile li

cens

e

ISP

lice

nse

VA

lice

nse

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 vertically

integrated for the provision of that service

Ser

vice

L

ice

nce

Net

wo

rk

Lic

en

ce

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Objectives of Licensing

• FINDING– PSTN and mobile operators

report that licenses conditions make them unprofitable,

– too much money taken from the sector will stunt its growth,

– inappropriate design of licensing distorts the technological relationships in the sector.

• ISSUES– it is difficult to discern the

principal objective of licensing in Bangladesh,

– is it to promote an efficient sector, to promote some activities or others – we find it is not clear?

• RECOMMENDATIONS– the principal objective should

be to encourage the efficient development of the sector,

– licensing should have as its Long Term objective a converged ICT sector,

– the goal should be a sector that operates like any other sector: under general economic, health - safety rules

6


Licensing: - International Best Practice


Details of Licensing

• FINDINGS– the unusual feature of

licensing in Bangladesh is the licensing of a large number of activities that are not normally licensed at all

• ISSUES– insufficient use is made of

exemption from licensing, – activities such as call centres,

ISP providers are CUSTOMERs of ICT they are not suppliers of ICT.

• RECOMMENDATIONS– BTRC should review all

existing licenses – BTRC should exempt from

licensing those activities that are essentially final users of ICT (rather than suppliers of wholesale services),

8


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 support the poverty alleviation goals of the 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 have separate networks for voice and data.

• 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 their voice network before being forced to terminate data calls.

– we need to separate out data including (VOIP) until we can establish a clear migration path to the fully integrated data platform.

10


Number of Licenses

• FINDINGS– there are too many activities

licensed (e.g. including call centres, ISPs, PSTN operators (too many) and vendors.

– the proliferation of network licenses complicates rational network planning and best uses of available capacity.

• ISSUES– decisions need to be made

soon to exempt many activities, to rationalise the network,

– what are the requirements of a best practice national architecture that maximises capacity and minimises costs.

• RECOMMENDATIONS– non-strategic activities like

call centres and ISPs should be exempt from licensing,

– exempted activities should register (like a car driver) with a fee that covers administration costs.

– stakeholders should consider what an optimal national network architecture should look like.

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Future Shape of Licenses


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 services respectively?

– currently in Bangladesh there is no coherent demarcation between infrastructure and services, but both have to be licensed along with many other things, such as call centres, sim cards etc

• ISSUES– ICT businesses’ dual nature: – (1) management of easements

and the construction and maintenance of networks.

– (2) a sophisticated services operation (including exchanges).

• RECOMMENDATIONS• there should be two forms of license:

infrastructure - services. – an infrastructure operator

should be able to hold a service license,

– a party holding only a service license should have to apply separately for an infrastructure license.

• infrastructure should comprise: 1. either a complete national

network including backbone network (backhaul or core), local access networks (local Loop) and the collection network, or

2. 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 associated parties using infrastructure and external users,

– in Bangladesh sharing of networks by operators and entrants helps make 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 unfairly in complementary markets,

• use information gained from users to poach customers.

– regional franchises do not create a competition framework.

• RECOMMENDATIONS– sharing should be obligatory,

for infrastructure license holders,

– charges for shared infrastructure should be equal for own use and for external users,

– stakeholders should comment on the necessity or otherwise of unbundling wholesale infrastructure and service tariffs,

– service providers should be allowed to provide their own local access,

– regional franchises should be removed.

15


Technological Neutrality

• FINDINGS– in Bangladesh licenses are

currently technology specific,

• ISSUES– the license holder should be

able to choose the most appropriate technology or the most appropriate service,

– the regulator does not need to be involved in the choice of technology or service.

• RECOMMENDATIONS– all licenses should be

technology neutral and flexible,

• infrastructure licences should allowing the use of any technology and

• service licences should allow the provision16 of any service.

16


Content and Applications

• FINDINGS – Bangladesh currently has no

regulation of content or applications,

• ISSUES– is there a role for licensing

content and applications?– some other jurisdictions (e.g.

Malaysia) have licensing for content and applications.

• RECOMMENDATIONS– we can identify no useful

purpose served by licensing content and applications,

– most international jurisdictions do not have any form of censorship through the ICT licensing system.

17


Appropriate Fees, Charges, Revenue Shares


Revenue Sharing

• FINDINGS– the total of fees and revenue

shares currently account for about 9 percent of the national budget,

– this figure was calculated by AMTOB and agreed by others.

• ISSUES– how much should the telecom

sector contribute towards the government budget?

– is the current revenue share inhibiting sector growth?

– is the revenue share making it harder to expand both network or services?

• RECOMMENDATIONS– the government should seek a

declining percentage of a growing sector.

– in most countries the share of government revenue from telecoms is less than 3 percent,

– focus should be on the contribution of the sector to GDP and business activity.

19


Bangladesh has Many Fees

• FINDINGS– fees include acquisition, annual

renewal, sales taxes, revenue sharing, taxes on equipment (sim cards), radio equipment etc.

– the total amount collected from the sector is inhibiting sector growth, long-term profitability and inhibiting long-term government revenues,

– the large number of collections is proving to be an impediment to efficient management of firms.

• ISSUES– a rational and fair method of

collecting taxes, fees and revenue shares from the sector is urgently required.

• RECOMMENDATIONS– SHORT TERM: the GOB and

BTRC should phase down and remove many of the smaller fees and charges on the sector.

– LONG-TERM: an appraisal is needed of the level of contribution to the national budget from the sector and

– a fair system of collection is required that no longer inhibits investment and growth and long-term government revenues.

20


Migration Issues


Content of Licenses

• FINDINGS– most licenses have a term of

15 years, some are due to expire soon (2012?).

• ISSUES– should licenses be rolled over

or should they be reissued as ULRs?

– to what extent should existing practices be “grandfathered?”

• RECOMMENDATIONS– there should be voluntary

movement to ULRs until license renewal,

– renewed licenses should be reissued as ULRs,

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

22


Amortization of Legacy Investments

• FINDINGS– the proliferation of licenses

has led many investors to consume large proportion of Bangladesh’s investment capital in businesses that are not viable without government protection,

– a migration plan will not be acceptable must amortize these investments.

• ISSUES– a migration plan will not be

acceptable unless a way can be found for these investments to be amortized and liquidated within reasonable timeframe (e.g. 5 years)

• RECOMMENDATONS– BTRC should facilitate

formation of at least two national networks for otherwise stranded investors to join.

– legacy license holders need at least 2-5 years to reorganise themselves before exposure to added competition.

23


Asset Registers

• FINDINGS – currently there are many

licenses issued for PSTN, – it is not clear if there are

sufficient PSTN assets in place to allow the formation of a national network provider.

• ISSUES– need a nation infrastructure

plan or maybe plans so that BTRC can be assured there is capacity in the system to provide nationwide service

• RECOMMENDATIONS– all license holders should

submit asset plans and registers to the BTRC, along with totals of subscribers connected,

– BTRC or a cooperative of operators need to review all existing asset registers to determine if there is infrastructure in place to provide a nationwide service.

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

IP Network PlatformIP Network Platform

IP CORE Network / IP CORE Network / VPNsVPNs

AccessAccess

WLANWLANWLANWLAN

DSLDSLDSLDSL

TDMTDMTDMTDMIXCIXC

Frame/ X.25Frame/ X.25Frame/ X.25Frame/ X.25

GPRSGPRSGPRSGPRS

SCDMASCDMA

EthernetEthernetEthernetEthernet

CDMAWCDMACDMAWCDMACDMAWCDMACDMAWCDMA

InternetInternetTransportTransport

IP TransitIP Transit

Hosting & ContentVoIPVoIPService

Application

IP VPN

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Schedule of Interventions


Common Issues to Address

• Irrespective of the structure of the license the same issues need to be addressed 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.


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 IT sector into the Next Generation,• The priority must be given to the proposed ULR text and the

accompanying policy 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!

david butcher and associates bangladesh telecommunications regulatory commission unified licensing...

Documents

associates licensing

david butcher

licensing regime task

unusual feature of licensing

serviceneutral ulr licensing

overall slide

efficient sector

associates todays agenda