tra.lb

1. Telecommunications Regulatory AuthorityAchievements and challengesIn light of Telecommunications Law 431/2002Mahassen AjamBoard Member, Head of Information and Consumer Affairs Unit www.tra.gov.lb

2. Table of contents • Decision mechanisms and national strategic objectives • The core of Telecommunications Law 431/2002 • TRA role, mission and prerogatives • TRA challenges • Questions and answers

3. Telecom sector structure & role separation principle Policymaker Regulator Service Provider MoT Before Law 431 ----------------------------------------------------------------------------------------------------------------------------------------- After Law 431 • TRA • Regulator • Develops/implements regulations • Awards telecom licenses • Ensures competition and prevents anti-competitive behavior • Manages on behalf of GoL radio frequencies • MoT • Policymaker • Sets the general guidelines for telecom policy • Recommends to CoM the award of some individual licenses (mobile/fixed, int’l voice, UMTS) • Reviews and proposes to CoM • Pricing of Radio Frequency • TRA annual budget • Incumbent • Provides telecom services to the public • Installs, owns and manages telecom networks and facilities • Abides by the TRA regulations, decisions and licenses Completed Partially completed Not completed yet

4. Decision-making mechanism Till when and where to? Council of Ministers National strategic objectives Proposal, discussion and approval How? Policy and general rules Minister of Telecommunications TRA Applicable regulatory strategies Role allocation and definition of means Telecommunications Market consumers investors SPs

5. National Strategic Objectives Impact on the Sector Impact on Consumers Liberalizing the telecommunications Sector Providing the latest technologies and services Increased choices Developing the capacity of telecommunication networks Improved Quality of Service Increasing network coverage and penetration rates Affordable prices Impact on the National Economy Any dispute related to the strategic goals requires the amendment of the Law that defined the market liberalization process through the introduction of fair competition Attract investments Create job opportunities Increasing growth & competitiveness Promote economic integration

6. Means of reforming the sector & introducing competition Private Sector (Existing and new SPs) Restructuring of MoT and LT Protecting Consumers Rules and means of liberalizing the telecommunications sector Legal Framework Managing resources • Resource Pricing • Issuing Decrees • Forwarding TRA regulations to State Council • Spectrum • Numbering • Infrastructure • Technical equipment & specialized teams • Prosecution • Periodic Reports Privatization Performance monitoring Tax Policy Licensing • % Revenue sharing rates • IPO • %required foreign investments rates • Coverage • Services/Techniques • Scare Resources • Duration Minister’s Scope of Work TRA’s Scope of Work Coordination and cooperation

7. The foundation of the TRA is a step forward towards the administrative reform • The TRA is the first regulatory body created among the different sectors to organize and monitor the performance of the telecom sector • It is also the first public administration established in the twenty-first century, aiming at becoming a model institution for the upcoming authorities based on its workimethods, its effectiveness and transparency and by the values it has adopted and applied since its inception • The TRA Board has been appointed based on standards of competence and experience in the telecommunications sector

8. What is the TRA? • The TRA is an independent public institution established further to the enactment of Telecom Law 431/2002 in 2007 • It is mandated to liberalize, regulate and develop the Lebanese telecommunications market • The TRA effectively started operations further to the nomination of its board members in February 2007 by the Council of Ministers

9. The TRA mission The TRA mission is to establish a regulatory environment that enables a competitive telecommunications market to deliver state-of-the-art services at affordable prices to the broadest spectrum of the Lebanese population.

10. The TRA values As the TRA strives to meet its mission, it consistently adheres to its key values of independence; transparency, accountability and fairness. The entire organization integrates these values into every step of the work.

11. The TRA prerogatives • The TRA’s duties are set out in full in Law 431/2002. These include to: • Prepare Draft Decrees and Regulations • Promote Competition • Issue Licenses • Manage the Spectrum • Surveillance and prosecution • Manage the numbering system • Approval of Telecommunication Equipment • Monitoring Quality of Service • Protect Consumer Rights

12. Independence of the TRA and control mechanisms COM TRA State Council Minister of Telecom Minister of Finance Org chart and pay scale Budget Decisions Market Regulations Internal Regulations Annual Report • Contains the audited financial report • Should be published on the TRA website • Subject to MOT and MOF approval, in case of disagreement will refer to the COM • Subject to post supervision by the audit court • Publishing the financial report • Should be justified • Challenged before the State Council • Published in the Official Gazette, and at least in 2 other daily newspapers and on the TRA website • Subject to public consultations • Submitted to State Council • Published in the Official Gazette, and at least 2 other daily newspapers and on TRA website • Administrative & financial regulations, Decree 14264 • TRA Financial procedure • TRA employee organization

13. Independence of the TRA and control mechanisms • Article 19: Licenses shall be awarded to providers of the following Public Telecommunications Services by decree of Council of Ministers, further to an international public auction, and according to specifications and conditions prepared by the TRA: • Basic Telephony Services (fixed) • Mobile Telephone Services • International Phone Services • New Licenses categories for the provision of Public Telecommunications Services, including UMTS, at the national or international levels The privatization and taxing scheme for the mobile, international gateway and broadband sectors requires a Council of Ministers decision (and not the TRA). This decision is based on the Government of Lebanon’s telecom vision detailed in the Official Statement and in the general policy for the sector, which is defined by the Minister of Telecommunications and presented to the CoM based on the principles of promoting competition as defined by Law 431.

14. Coordination & cooperation between the TRA and other government entities • Consumer Protection • MoU to receive & follow up consumers complaints HCP • Partial or full privatization or a public asset • Inspection Powers • Regulations • TRA decisions Ministry of Justice • TRA Budget • Customs fees for import of telecom equipment + MoU for customs coordination State of Council Ministry of Finance & Customs Ministry of Economy and Trade Work in Progress Ministry of Public Works and Transport • TRA Advice on all Telecom Matters • Frequency Fees • TRA Budget • Complete transfer of regulatory functions Ministry of Telecommunications • Frequency Assignment • Rights of Way TRA Work in Progress Ministry of Information Ministry of Interior • Frequency Assignment • Broadcasting Ministry of Defense • Frequency Assignment • Import authorization • Security escort Municipalities • Frequency Assignment for security reasons • Import authorization • MoU • Rights of Way

15. What has been achieved to date? 2- Establishing Regulatory framework 1- Building the institution • Other crucial regulations • Service Providers Licensing Draft Regulation • Consumer Affairs Draft Regulation • Quality of Service and KPI Regulation • Interconnection Regulation • Significant Market Power Regulation • Type Approval Regulation • RFP for Mobile Auction • Numbering Draft Regulation & National Numbering Draft Plan • Human EMF exposure Limit Draft Regulation • Code of Practice for Value Added Services Draft • Broadband related regulations • Issuing interim licenses for current Service Providers • Spectrum Management and Licensing Draft Regulations • Lebanese National Frequency Allocation Table Draft • Rights of Way Decree • Draft Decree on Spectrum Right To Use Fees • Transferring of some prerogatives from the MoT to the TRA • Preparing and issuing internal regulations • Contracting mechanism, organization structure and salaries • Signing MoU’s with public institutions • Launching of public consultation process • Awareness campaigns • Hard & soft copy publications(including annual and financial reports) • Securing financial resources

16. The broadband agenda will benefit from clarity on a number of policy issues The exclusivity period of Liban Telecom over basic telephony and international voice services should be defined but should not exceed a 5-year period (incl. “managed” VOIP) • Liban Telecom exclusivity • Mobility or No Mobility Mobility –or the ability to provide mobile services- requires a COM decision to be included in the Broadband licenses • Rights of Way (including access to the ducts) Ensuring RoW and access to the ducts will incentivize new entrants by reducing significantly the sunk costs and eliminate needless duplication of infrastructure Spectrum Fees & Administrative Charges TRA has prepared a draft decree for setting up the spectrum Right to Use (RTU) fees based on Administrative Incentive pricing and the Spectrum Administrative Charges (SAC) based on cost accounting • Revenue Sharing To be applied to all licensed Service Providers operating in the same markets and holding licenses with similar terms and conditions (incl. LT) - Revenue sharing should be offset against RTU fees • Building Code TRA has prepared a draft decree to amend the current building code to enable new buildings to be ready for Fiber access (decree to be presented to the Minister of Public Work and Transportation)

17. Some of the challenges faced by the TRA • The absence of a clear public telecommunications policy from the Lebanese government • The absence of a mid - long term plan issued by the Council of Ministers with a national consensus • Some of the draft regulations issued by the TRA are not being forwarded to the State of Council • The TRA prerogatives are permanently challenged before the State Council and the Authority’s decisions are not being implemented • The TRA is under financial pressure • The inability to ensure the independence of the Authority’s regulatory decisions • The TRA is currently unable to finance itself because some of the crucial regulations and decrees have not been issued in the OG yet • The inability to ensure the TRA’s financial independence • The inability to fully apply Law 431 • Liban Telecom has not been created yet • The process of prerogatives transfer has not been completed yet

18. Decisions required at the general policy level The vision for the sector’s strategy in the GoL official statement, once clarified through the implementation of major decisions, will allow a better development for telecommunications and the TRA to reach its objectives Moderate Impact High Impact ICT National Strategy Lebanon's role in the export of the content at the regional level Cyber – Security GoL to adopt strategy to ensure security of national networks Liban Telecom Establish the company and grant a license that will allow the provision of fixed, mobile and broadband services Digital Switchover GoL to support the migration from analog to digital TV by 2015 Issue the necessary decrees to guarantee the success of broadband services and increase penetration rates Decrees Social Policy` GoL to promote the access by people with special needs to broadband services Illegal Service Providers GoL to clarify its policy towards illegal operators Universal Services GoL to clarify the policy on universal service • Raising LT value • Establishing solid ground and work conditions among operators • Increase competition in the mobile and broadband markets

19. Conclusion GoL • Increase of national treasury resources by virtue of market size growth • Economic boost induced by the creation of jobs and opportunities • TRA • Complete transfer of regulatory functions • Ensuring independent funding • Nominating the 5th board member Stable regulatory framework that ensures fair competition and equal opportunities • Wider choices • Better quality • Low prices Consumers Service Providers Clear regulatory framework that creates investment opportunities Investors

20. Conclusion • The implementation of Telecom Law 431/2002 whilst ensuring the administrative and financial independence of an empowered authority will allow an effective and constructive interaction between all stakeholders; • The effective implementation of Law 431 whilst ensuring the financial and administrative independence of the TRA are the conditions for the development of the telecommunications sector in Lebanon allowing the required qualitative leap