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Bangladesh Telecommunications Regulatory Commission. Unified Licensing Regime Consultancy Stakeholder Meeting 27 September 2009. Today’s Agenda. The purpose of today’s meeting is to:
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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: david@dba.org.nz
What is a Unified License Old licenses were issued based on specific technologies, and services to vertically integrated businesses Unified Licenses are technology-neutral and service-neutral Content Services Service Licence ISPlicense Applications Services VA license Telecom fixed line license Mobile license Network Services Network Licence Network Facilities ULR licensing promotes vertical separation between facilities, network, applications, and content All activities related to the provision of a particular service are vertically integrated for the provision of that service
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
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),
Best Practice Objectives • FINDINGS ITU 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? • RECOMMEDATIONS We 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
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.
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.
Multiple Categories BTRC Objective Decision Response Objective: Neutrality, Flexibility, Efficiency Unified License Regime 1 Single or Multiple? 2 Categories or Facilities-Services split 3 3 Single Authorisation Services (SBO) Many Categories Facilities (FBO) Individual-spectrum Individual – dominant Exemptions Exemptions Exemptions Exemptions Design Authorisation
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: • either a complete national network including backbone network (backhaul or core), local access networks (local Loop) and the collection network, or • one or more parts of a national network described above.
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.
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.
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.
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.
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.
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.
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.
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.
Service Application VoIP Hosting & Content IP Transit IP VPN Internet Transport IP CORE Network / VPNs IP Network Platform SCDMA CDMAWCDMA Access GPRS DSL IXC Ethernet TDM Frame/ X.25 WLAN ULRs aim at facilitating Next Generation Networks (NGN) Service Convergence via an IP Network Digital Platform
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!
