TRA Roadmap for the Liberalization of Telecommunications

1. TRA Roadmap for the Liberalization of Telecommunications Broadband WorkshopIn cooperation with the Partnership for Lebanon January 17, 2008 Beirut, Lebanon

2. TRA Vision for Broadband Market Objective Introduce competition in 2008 in all the markets for telecommunications services except basic telephony services Promoting Competition • Introduce various forms of competition to the market: • Facilities-based competition • Service-based competition • Encourage competition between different technologies Focus • Liberalize national data services to promote broadband services • Open market for mobile telecommunications and international (voice and data) services • Liberalization of basic telephony services planned for January 1, 2010

3. Broad View of Market Situation Current Situation • ADSL Recap • Signing of MoU in January 2006 between private and MoT • Unbundling the local loop • Stating principles of fair competition • Project launch delayed till Q2 2007 • Bit Stream and Line Sharing Guidelines drafted by MoT • Line-sharing, and retail prices are set by MoT and issued by decree • Key elements are missing • ADSL Market Overview • Market share unevenly split between private and MoT • No clear and publicly announced timetable for further CO preparations • Limited service offering • Recent price reductions by private companies have introduced some competition • Severely limited international bandwidth leading to high contention ratios • International bandwidth allocation regime not transparent and favors one of the providers - MoT

4. TRA Actions to Promote Broadband L Market Structure & Licensing R Regulatory Framework • Issue 3 Metro / Core / International licenses • Regularize existing ISP/DSP licenses (duration, scope of services, etc) • Open licensing for access • Interconnection and Access regulations • Infrastructure Sharing • Unbundling Regulations (and MoT Reference Offer for Data Access) • Accounting separation for Liban Telecom • Efficient spectrum use • Optimum spectrum pricing

5. Proposed Liberalization Roadmap L * 3 ? 3 ** 4 * Assuming that Liban Telecom will be formed in 2008 ** Two licenses for the mobile operators and two others for the core broadband providers Open licensing Market Review License Award 5

6. New Broadband Licenses L Liban Telecom License Two Metro / Core / International Licenses • Core/metro/access • Nationwide service • International gateway • 10-15 year license • Awarded through auction if competing applications • Core/metro/access • Nationwide coverage • International gateway • TRA is considering whether and how to award one of these licenses to a consortium of DSPs • TRA is considering how to license geographically- restricted metro licenses (including municipalities) • New metro/core licensees have access to international gateway at fair, reasonable rates • Licensees obligated to provide interconnection to other licensed operators • Allowed interconnection at international gateway, national nodes, IXPs • Open Access obligation to metro/core and international gateway 6

7. Regularization of DSP Licenses L Current Situation • TRA is preparing draft DSP licenses Pending Issues • Status of revenue sharing (and percentage) • Frequency pricing • Frequency assignment • International capacity (voice excluded) Licensing Roadmap

8. Broad View of TRA Regulations R Drafting Stage Draft Ready Stage Consultation Stage TRA Review Stage Issued Price Regulation Type Approval Regulation Interconnection Regulation Spectrum Management Regulation Significant Market Power Regulation National Frequency Plan Spectrum Pricing Regulation Consumer Affairs Regulation Accounting Separation Regulation Interconnection Interim Pricing Decision Quality of Service Regulation Unbundling Regulation 8

9. Infrastructure Sharing: Benefits and Risks R Benefits Risks Shared Infrastructure Costs – Capex reduced Investment may be discouraged if cost of building network far greater than cost of sharing Infrastructure Deployment Competition and Prices Reduces barriers to entry, increases competition and lowers prices to end-users Price collusion – though mitigated by appropriate regulation Resource Maximization Reduces waste caused by infrastructure redundancy and duplication Reduces backup infrastructure in case of high usage, security risks, or environmental crises Environment Reduces impact on landscape No significant risks

10. Infrastructure Sharing: TRA Policy R TRA wants to promote infrastructure-sharing especially regarding: • Civil engineering and non-active elements of a network (e.g. ducts, towers, and masts) • Geographical areas where it is not economic for multiple operators to build infrastructure • Geographical areas where environmental concerns are particularly important (e.g. proliferation of mobile network masts)

11. Radio Frequency Assignment & Pricing R Objective • Freeing up much of the spectrum for commercial activity • Optimal use of frequency TRA Policy • Appropriate frequency pricing • Technology neutral Licenses • Frequency assignment regime tailored to scarcity of, and demand for, spectrum Efficient Pricing will… Allocation Methods • Encourage efficient use of frequency • Encourage investment in wired infrastructure • Free up unused frequencies and open room for newcomers • Auction • Beauty Contest • First Come First Serve

12. Long Term Goals Consumer • Widen public access to telecom services • Increase consumer choice and improve customer experience Telecom • Provide state-of-the-art telecom services and infrastructure • Attract investments Economy • Increase competition in the Lebanese telecom market • Develop capital markets • Create high value-added jobs