Contact: MR. SATYAN N GUPTA Executive Mentor, SAAM CorpAdvisors, India

Email: sg.ngnguru@gmail.com

ASIA-PACIFIC TELECOMMUNITYSATRC Workshop on Policy, Regulation and Services Document No.:

SATRC-WSPRS/INP-13

21 – 23 December 2015, Pokhara, Nepal 21 December 2015

SAAM CorpAdvisors, India

EMERGING LICENSING FRAMEWORK FOR NGN ECOSYSTEM

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SatyaspeakSATRC Workshop on Policy, Regulation and Services

21-23 December 2015, Pokhara, Nepal

Licensing Framework for Next Generation Ecosystem-Regulatory Reforms 2.0

Satya N GuptaExecutive Mentor, SAAM CorpAdvisors

Hon. Secretary General NGN Forum, IndiaJoint-Secretary General ITU-APT Foundation, India

Agenda Next Generation Ecosystem – Introduction

Telecom Institutional Framework -India

Regulatory Regime India - SWOT Analysis

Regulatory Challenges for NGN-India NTP 2012- Salient Features

Way forward Unified Licensing Functional Separation Spectrum Liberalisation

Regulatory Ecosystem for Emerging Markets- Regulatory Reforms 2.0

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NGN - Introduction

Next Generation Networks as the name suggests are the networks of future, based on emerging technology of IP which is leading to convergence of networks, services and markets and providing efficiency and flexibility.

NGN are based on the layered approach wherein services provision is separated from the underlying network infrastructure.

These are enabling the operators to increase their depleting ARPU by providing advanced value added services in addition to plain (vanilla) voice.

The incumbent operators are going for NGN by replacing their existing networks to compete on the technology front and being able to provide innovative value added services, cut down on Opex as well as to make their network future-proof.

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NGN – Digitalise, Packetise, Divide, Virtualise

ApplicationLayer

ControlBearer

Service ControlLayer Softswitch

ControlIP Multimedia

Sub-System (IMS)

ApplicationServices

Transport (Media) Layer(core and access)

PSTN

Internet

MultiservicePacket Switching

XX X XX

CORE NETWORKS

XNational Optical

BroadbandAccess

GbE

DSLAM

ACCESSNETWORK

RAS

F /ATM

Frame/ATM

Wireless

CPE

Media Gateways

Metro Optical

X

XX

X

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Everything Over IP (EOIP)-Emerging NGN Services

Voice over IP Unified Messaging BB - High Speed Internet

Primary line Content Delivery PC to Phone

Second line Games Phone to PC

IP Centrex Downloads (MP3) IP VPN (data)

Voice VPN

HD Voice

Gambling BW- on-demand

Video on demand QOS on demand

TV on demand Quad play

IP offload Cinema of the future Instant messaging

Multimedia Conferencing

IPTV

HDTV

Long distance bypass

Presence management

Tele Presence (TP)

Remote lab

MMS on fixed network

Location Based Services (LBS)

FMC (Fixed Mobile Con.)

M-learning VoLTE 4G & beyond applications

What is NGN Ecosystem?

• Next Generation Services – Converged (Quad-play-VOIP, data, video,mobile)

• Next Generation Access – High speed (Broadband) IP based connectivity(VDSL, G.Fast, Wi-Fi, Digital Cable TV, FTTH, PLC, Li-Fi,White-Fi)

• Next Generation Transport – Carrier Ethernet, PTN• Next Generation Architecture – Service oriented (SOA), Layered (transport,

control, application), VNF• Next Generation Mobile – 4G(IMT-Advanced)• Next Generation Internet – IPv6• Next Generation Interconnect – Cost of Capacity and Quality based• Next Generation Licensing – Unified & Class, technology-neutral and

service agnostic• Next Generation Regulation – Converged, Differentiated/Asymmetric,

Facilitating, Light-handed

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Driving forces for NGN

• Emerging Markets Motivation

• Operational cost savings, new services for increased ARPU

• Predominantly mobile users, less investment in legacy infrastructure, Greenfield Environment

• Low Teledensity and Broadband penetration

• Address space limitations,

• Government’s / Regulator’s NGN initiatives

• Roll-out of networks by more new entrants

• Emergence of third party VAS and OTT players7

NGN- A Regulatory Opportunity

As per ITU:-

“The move to NGNs represents an opportunity to establish in advanceground rules for ensuring the continued passage to effective competitionand minimise damage during transition”.

It is in contrast to the regulation of the legacy networks, which cameafter the networks were actually in place. That is why, NGN isdifferent and needs proactive approach by regulators.

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Numbering

Regulation of“Plain Old Telephone

Service (POTS)”

Quality of Service

“Next Generation” Long term issues

Emergency Access

Privacy

Security

Competition

Consumer protection

Interconnection

Core policy areas:• Competition (level-playing field)• Interconnection• Consumer (QOS, Privacy, Emergency Access)• Security & Legal Interception

Interconnection

Regulatory implications of NGN

Institutional Framework for the Indian Telecommunication-Deconverged

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Govt. of India (MOCIT,MIB)

Wireless Planning & Coordination

Wing (WPC)

DOT/ Telecom Commission/TERM

Cell/ USO Fund

Telecom Engineering

Centre (TEC)

TRAI

Parliament of India

Operators

Manufacturers and System Integrators

TDSAT

Subscribers

Policy Implementation, Licensing,Rural,

Security

Recommendation

Interface Approval

Spectrum Management

Policy

Regulation (Tariff, Interconnection, QOS)

Dispute Resolution & Appeal for DOT & TRAI

Directives

Standardization & Technical Inspection

Service Provision

Act/ Legislation

Equipment and Network

Centre for Development of Telematics (C-DOT)

Telecom R&D

End Usage

Security Agencies

(MHA)

Competition Commission of India (CCI)

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Trend Towards Convergence – NGN

• Evolving Networks leading to Convergence of Voice, Data &Video services on a common infrastructure resulting intocost saving and performance improvements as well asleading to new avenues for revenue generation.

• Convergence of Telecom, Broadcast and Internet leading toMultimedia services.

• Evolving NGNs and virtual networks capable of guaranteedQOS and high level of Security, Reliability and Flexibility.

• Emergence of single “Information Plug” (Quad-Play).

• Customers aspiration – Better, Faster, Cheaper, One StopShop, Single Bill ( Sasta, Sunder and Tikau).

Licensing Evolution in India- Competition in Phases

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Monopoly

Duopoly in Access, Monopoly in Long

distance

Nation wide Duopoly

Monopoly in Access,

competition in Long distance

Unlimited Open competition

3-4 operators

Unified Licensing/ Authorization (Class licensing)

Mobile Fixed

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3 Unrestricted entry in all segments

Duopoly

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Single service-agnostic license for all telecom services and class license (authorization) for all value added services

Unified Access

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VAS/OTT

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Service specific licensing in India- Legacy Regime

Type of Service Service Area Connectivity with PSTN

Entry Fee Annual License Fee (% revenue share)

ILD International Full PSTN/PLMN

Interconnection

Rs.25 million 6%

NLD National -do- Rs. 25 million 6%

Unified Access (Fixed and Mobile) (UASP)

Circle -do- Different for each Circle ( Rs. 16.5 billion for

all India)

Type A - 10%

Type B - 8%

Type C - 6%

VSAT National No Interconnection

Rs. 3 million 6%

Internet Service Providers

National, Circle wise

-do- Rs. 2 Million (All India)

Nil (6% for Internet Telephony)

Public Mobile Radio Trunked Service

City wise and Circle wise

Limited One way

Nil 5%

Infrastructure Providers Cat I

National NA Nil Nil

OSP (Other Service Providers)

Site Specific Application services

Nil Nil

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Salient features of existing regime- India

• Unified Licensing (Technology-neutral, service- agnostic) – Single license for Mobile (GSM/ CDMA), Fixed, Voice, Data, Internet, Local, Long Distance, International. Spectrum delinked from service license.

• Very low mobile termination rates (< 0.3 cent/min) (NIL for fixed)• Very low carriage charges (0.5-1 cent/min)• Very low mobile tariff (0.5 cent/min)• Very low long distance tariff (1 cent/min)- Death of Distance• Very low voice ARPU (3 US$/month)• Low Average Broadband charges (4 US$/month)• Low rural tele-density (< 40%)• High Mobile additions per month- (> 8 million)• Overcapacity for international bandwidth (17 Tbps/ 1300 Gbps)• Wide spread national backbone (18 lakhs Km) • Dominance of wireless access (1 billion mobiles vis-à-vis 30 million wire

lines)• Large cable TV homes population - (120 million)

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Regulatory Regime India – A SWOT Analysis

• Strength/Drivers

• Weaknesses/Challenges

• Opportunity/ Benefits

• Threats/ Risks

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Strength of present licensing framework

• Open unrestricted competition in all segments (including mobile)• Service licensing unified (broadband, triple play, internet telephony

permitted in addition to voice, fixed/ mobile/ WLL, Long distance)• General technology-neutrality (technology option left to operators)• General tariff forbearance (except leased lines where competition is

not enough)• National Broadband Plan in place and under execution as NOFN

(BharatNet) through BBNL• (120 million cable TV homes and 30 million wirelines• Spectrum for 3G and 4G allocated through transparent e-auctions• Proactive regulator (initiatives on emerging issues like IP based

NGNs,IPv6,UnifiedLicensing,Resale in IPLC, VOIP, MVNO, MNP,CPS through Calling cards, Abolition of ADC, Cost basedMTC,CPNP,NBP etc.)

• Forward -looking NTP 2012 and NBP in place and underimplementation through SPV.

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Weaknesses/Challenges• Multiple regulatory agencies - licensor (DOT), spectrum management

(WPC), USOF admn, technical regulation (TEC), interconnection, tariff & QOS regulation (TRAI), dispute settlement (TDSAT), TERM Cell and Security Agencies, Competition Commission- “ Problem of Plenty” leading to coordination-complexity

• All the regulatory/autonomous bodies manned by Govt./Incumbents officers on Secondment or ex-Civil Servants- Case of “ Regulatory Capture” and “Specialization Expertise-Deficite”

• Both policy making and its implementation in Govt. domain –Autonomous Regulatory Body only a recommending agency as far as policy implementation is concerned

• Legacy interconnection regime (Minutes of Usage, MOU based), CPNP (Calling Party Network Pays)

• General Resellers (non-facility based operators) not permitted • Grey area regarding regulation of VAS/OTT players. • Unrestricted VoIP not permitted yet for ISPs• No Functional Separation and Active Infrastructure Sharing Regime

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Opportunity/ Benefits

• Large unmet demand for telecom services (Rural tele-density< 40%,Broadband penetration – 1.5%)

• Mobile coverage still 75% (Rural greenfield areas to expand)

• Rationalization of network resulting into simplicity and reducedOPEX

• Network expansion by using future- proof technology (NGN)

• EX-ANTE regulation for NGN to remove uncertainties

• Involvement of industry in various issues fully in a pro-active manner

• Bring Quad- play services to rural area (bridge digital divide)

• Next Generation Access through new Technologies ( FTTX, X-Fi)

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Threats/ Risks

• Standards and interoperability issues yet to be settled

• Technical challenges in Emergency access/ Security monitoring

• High CAPEX without guaranteed corresponding increase in ARPU

• Project oriented risks due to huge scope and costs in migration

• Regulatory Uncertainties, ROW issues, High Licence fee, highspectrum cost ( Winners Curse) , NBP execution delays, Grey areas forVAS/OTT players.

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NGN Regulatory Challenges

• Death of distance and blurring of the traditional boundaries between Access (local) providers and long distance carriers.

• VOIP as a “disruptive technology” putting a challenge for the regulators to perform a balancing act.

• On-going technological developments causing drastic impact on the telecom scenario forcing a re-look at the service based licensing and geographical area based regulatory regime including Numbering systems.

• Level playing field issue between the licensed telecom operators and value added service providers/OTT players.

• Need for new interconnect products based on capacity and quality (V&V) in place of those based on distance and duration (miles & minutes).

• Access to emergency services like police control room, fire services, medical help etc. (PSAP, E 911 (US), 999 (UK), 100 (India))

• Security monitoring like legal interception & monitoring (LIM), Wiretap, CLI etc.

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National Telecom Policy (NTP) 2012-Salient Features

NTP – 2012 released on 12-06-2012 by the Govt. is a revision of NTP – 1999 to take cognizance of emerging scenario in telecom Technologies, Networks & Services leading towards Convergence and Unification.

Salient focus of policy is delinking of Spectrum from Licensing, facilitation of Unified Licensing Regime, special emphasis for Broadband, encouraging next generation technologies and domestic R & D and Manufecturing & treating telecom as Infrastructure.

This policy is mainly a long – term, forward looking, all – encompassing vision statement of the Govt. to provide requisite policy impetus to take Telecom sector in India to next level and to rural areas to bridge the Digital-Divide, without detailing the implementation strategy & timelines.

Though it is a great initiative, lot of efforts will be required by the executive arms of the Govt. & the Regulator to Operationalise and Impliment it

through various legislation amendments, guidelines & regulations.

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Licensing in Convergence Era

• Unified Licensing ( Service Agnostic, Technology Neutral)-Lifting Restrictions on Service Specific Licencees

• Class Licensing/ Authorization

• Open Licensing/Registration

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Need for Unified Licensing 

. Technological Developments 

• Market Trends 

• NTP Objectives

• Draft Convergence Bill 

• International Practices

Need for Unified Licensing (contd.)

Technological Developments

• Fast Pace of Technological developments.

• Blurring boundaries between different carriage systems such as Wireline and Wireless, Circuit and Packet-witched.

• Rendering service based divisions of Telecommunications redundant

• Services covered under one license can also be provided under another license due to such developments e.g. SMS by Cellular operators encroached on Radio Paging. Voice mail, E-mail Services, etc. licensed initially as individual services submerged in Cellular, Fixed service and ISP

• Evolving Convergence Scenario in Telecom services-Convergence in “carriage” of telecommunications, Convergence of media, Convergence of IP based transmission for Voice, Data and Video

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Need for Unified Licensing (Cont’d)

• In 1998, Fixed service operators permitted to provide the last mile connectivity through WLL Systems but the handset was fixed, according to license. This could, however, be moved around since wireline was not involved..

• Despite the fact that allotted spectrum could give unlimited mobility, no mobility was permitted . Due to licensing heritage and competition issues with cellular only limited mobility within SDCA permitted in 2001.

• Artificial restrictions encouraged service providers to find loopholes in licensing regime and they had tendency to use technology to by-pass such restrictions.

Need for Unified Licensing (Cont’d)

Market Trends • Tariff Convergence Convergence of Fixed and Cellular tariff gives rise to

Product Substitution. Falling tariff for Cellular services when 3rd operator and

WLL operators entered in the market. • Same Charging Regime CPP for both fixed and Cellular services -Very high growth

of wireless subscribers• Wireless roll-out costs significantly lower than wireline (1:3

appox.)

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Need for Unified Licensing (cont’d)

NTP ’99 • NTP’99 recognised that• convergence of both markets and technologies is a reality that is

forcing realignment of the industry. • convergence now allows operators to use their facilities to deliver

some services reserved for other operators, necessitating a relook into the existing policy framework.

• However, service specific licensing was stipulated. Evidently, market conditions at that point of time forced service specific licensing.

• Envisaged that due to substantial changes in the existing telecom sector, Indian Telegraph Act (ITA 1885) and Indian Wireless Act, 1933 needs to be replaced with a more forward looking Act.

Need for Unified Licensing (cont’d)

Draft Convergence Bill

• Convergence Bill handles both carriage and content aspect of communications. Convergence of access media has already been discussed in NTP’99. Thus, the convergence phenomenon has already matured in carriage i.e. the telecom sector.

• Handling of convergence of both carriage and content is raising certain issues which is delaying the Convergence Bill becoming an Act. Therefore, unification of carriage ie. telecom sector has been considered ahead of the convergence bill.

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Need for Unified Licensing (Cont’d)

International Practices• A number of countries are migrating towards the concept of

authorisation or converged licensing. This has been encouraged due to technological developments, consumer demand, long-term sustainability of telecom service providers and optimum utilisation of resources.

• From the various international practices, it was observed that Unified Licensing regime enhance the scope of applications/ services that can be provided under a given Single license / Authorisation, thereby removing the policy-imposed artificial barriers on innovations and application of technology.

Unified Licensing Regime – One Licence:All Services

Two categories of licences : (Separated from Radio Spectrum)

1. Unified Licence - All Public networks including switched networks,irrespective of media and technology, capable of offering voice and/ornon-voice (data services) including internet telephony. Examples:Unified Access Service, NLDO, ILDO, IPTV. This licence can have twocategories Viz. Network Service Operator (FBO) and Service DeliveryOperator ( SBO)

2. Class Licensing/Authorisation/Registration - Provision of passiveinfrastructure and VAS, IT/ITES services , OSPs, Application services,Over The Top(OTT), Content, etc..

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Functional Separation – A Regulated Wholesale Concept

Spectrum “Issues” Management • First Principle of Spectrum Management -“ If a Telecom service can be provided

through alternate media, no scarce resources( Spectrum) should be allocated for this”

• Public Goods Doctrine, Commons, Spectrum as Free Space vs. Ocean, land

• Distribution of Natural Resources – Auctions, Beauty Contest, FCFS,AIP

• “Winner’s Curse” in Spectrum Auction

• “Sweet- spot” in Radio Spectrum- 900 Mhz, Digital Dividend

• Technology Neutrality – Liberalization of Spectrum ( Technology is not Spectrum -Neutral)

• Spectrum Information carrying Capacity- Shannon Limit

• Trade-off between Spectrum quantity and no. of Towers- Frequency reuse, small cells

• Spectrum Refarming , Sharing,Trading – Capex and Environmental Issues

• Licence Exempt Spectrum- “NINENP”, ISM(Wi-Fi),White Spaces, Cognitive Radio

• Fixed Mobile Convergence (FMC), UMA, FemtoCells, Picocells

• Balancing Act-Maximization of Societal Welfare Versus State Revenue

• Autonomy for Spectrum Manager, Spectrum Act

• Dynamic Spectrum Exchange- Pooled Spectrum Clearinghouse, Pay-as-you-Use, Layered Spectrum Allocation- “Nirvana”

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Next Generation Approach for Spectrum Liberalisation

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Licensing Framework for Next Generation Ecosystem-Regulatory Reforms 2.0

• A converged regulator for ICE (single independent and empowered regulator for Telecom, IT & Broadcasting, Spectrum and Licensing, manned by Professionals selected from all classes of stakeholders i.e. Govt., Public Sector, Academicia, Industry, Consumers)- Autonomy, Expertise and Professionalism in Policy implementation

• A Unified technology-neutral, service-agnostic licence (one licence - one network – all services) to facilitate Efficiencies and Convergence.

• A Class Licensing Regime (Authorisation/Registration) for Value Added Services , ISPs, Niche Operators, MVNOs, Infrastructure Providers to facilitate easy entry and Innovation

• A cost of capacity based, open access (PSTN-IP) interconnect regime and light handed regulation to promote Competition and Investments

• Functional Separation of SMPs to encourage full infrastructure sharing in open manner and to unlock the potential of existing assets to promote Co- Opetition and Collaborations and Turn-around.

• Removing restrictions for VOIP to reduce cost to customers.• Making more spectrum unlicenced as per international norms and permitting

Spectrum sharing, leasing and trading.• Creation of National Broadband Backbone through PPPP at a faster pace,

executed by professionals in a time-bound manner.• Permitting Active Infrastructure sharing and facilitating ROW

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