Muna Nijem Chairman of the Board/CEO Telecommunications Regulatory Commission (TRC)

1. Muna Nijem Chairman of the Board/CEO Telecommunications Regulatory Commission (TRC) Regulating interconnectionThe Jordanian experience1st Regulatory Meeting for the ITU Arab Region, Algeria, 19-21 April 2003

2. Interconnection - Contents • Telecommunications and regulatory background • Interconnection Guidelines • Designation/costs • Lessons learned • Conclusions

3. Background - Jordan • The Hashemite Kingdom of Jordan has a population of approximately 5 million people. • Liberalisation of the telecoms sector commenced in 1987 with a licence being granted to a Radio Paging operator – JRP. • The first mobile telephony operator (FASTLINK) was licensed in 1994. • The telecoms licensees now include: • 1 fixed operator – Jordan Telecom – managed by France Telecom • 2 mobile operators – Fastlink and MobileCom • 1 radio paging operator • 1 public payphone operator • 10+ Internet Service Providers • Competition in fixed line market commences at the beginning of 2005.

4. Regulatory Environment • Defined in the Telecommunications Law passed in 1995 and revised in 2002. • The Ministry of Information and Communications Technology (MoICT) has responsibility for: • Sector policy • The Telecommunications Regulatory Commission (TRC) has responsibility for: • Implementation of sector policy • Licensing operators providing public telecoms services • Issuing guidance (or instructions) to licensees on commercial and technical matters • Managing radio spectrum • Prompting & Protecting interests of end-users • Monitoring Licensees Performance

5. Interconnection – Key to Competition • Telecommunications Law sets broad framework • Licences establish interconnection obligations and in particular, cost based charges • Interconnection Guidelines • Production of Reference Interconnection Offer

6. TRC and Interconnection • Responsibilities of TRC • Ensure adherence to regulatory regime • Stimulation of competitive market • Maintain principle of non-discrimination • Determine general and specific terms for interconnection • Intervention to determine agreements • Resolution of interconnection disputes

7. Interconnection Guidelines • The TRC issued Interconnection Guidelines (November 2002) after a period of consultation with licensees in Jordan • The Guidelines are a product of: • undertaking interviews with all of the main parties • Analysis of the Telecommunications Law, Licences and existing Interconnect Agreements • Drawing on international experience • seeking written submissions by licensees • The Guidelines contain a combination of mandatory requirements and recommendations

8. Objective Principal purpose of The Guidelines is to: • clarify the arrangements for interconnection and provision of services between Licensees; • assist in ensuring that all Licensees are treated fairly and in a non-discriminatory manner; • encourage good practice by Licensees and to promote the provision of high Quality of Service to Users, through technical and economic efficiency; • engender a greater degree of co-operation between licensees; • prepare for fixed line competition; • clearly express the policy for dealing with interconnection disputes.

9. Structure of Guidelines • The Guidelines are structured in a similar way to a Reference Interconnect Offer: • Definitions • Management of Interconnection • Interconnection services • Technical Aspects • Cost basis • Commercial aspects • Dispute resolution • General contract provisions

10. Designation of Licensees • Guidelines apply mainly to Designated Licensees • Designation a question of market power • Tests considered: • SMP - 25% • Dominance - 50% • Benefits of size to supplement above tests, e.g. • Economies of scale • Economies of scope • Using 25% test for national market for interconnection TRC has Designated JT and Fastlink

11. Obligations of Designated Licensees • Cost based charges • RIO • Collocation and facility sharing • Operator services • Emergency services • Directory Enquiries services

12. Cost Basis in Interconnection • Two possible methodologies: • Fully Distributed Costs (historic) • Long Run Incremental Costs (forward looking) • FDC the preferred initial option • Operators concerned to establish network costs • Operators to provide model for establishing costs • TRC to approve outputs of models

13. Adoption of Guidelines • The Provision of Guidelines are being implemented over a 6 month period • The objective of a phased introduction is to: • Develop and agree a RIO • Analyse costs and derive cost based tariffs • Further rebalance retail tariffs • Make any necessary changes to the network systems • Enable JT to update billing systems and OSS • Process: • Establishment of Working Groups

14. Major effects of Interconnection Regime when implemented • Reduction in the charges made by operators to each other, which will be passed to users. • Improved Quality of Service for users. • Increased sharing of buildings and other facilities, reducing licensees’ costs. • Reduction in implementation lead-times • Less potential for disputes between licensees. • Rapid resolution of disputes • Facilitating competition

15. Lessons Learned(1) • The Regulator has to be directly involved with the interconnection process. • Licensees cannot sort out all of their issues on a bilateral basis. • The Regulator requires information from licensees to make balanced and informed decisions. • Reference Interconnection Offers to be published by the Designated Licensee as soon as possible.

16. Lessons Learned(2) • Develop effective consultation and dispute resolution processes • the cornerstone of any regulatory regime • useful source of feedback and knowledge • allows licensees to feel that they are involved in the decision-making process • enables transparency • assists in avoiding legal disputes • forces a decision to be made by the regulator within a fixed time scale • The challenge is to balance the interests of the country, the consumer and the individual licensees.

17. Lessons Learned(3) • Approach to operators • Regulation is not just about knocking the incumbent. • Need to give them time to prepare for full competition. • However, cannot allow them to use their power to attempt to kill-off competition or discourage investment. • It is not sufficient to have appropriately structured Laws, licences, Guidelines and Agreement. It is essential to have: • A critical mass of staff within the licensees and Regulator who fully understand the whole regime, rights and obligations • Determination and willingness to enforce Guidelines and Licence conditions

18. Conclusions • Development of an effective interconnection regime is a key enabler to development of the sector. • The Regulator has a complex role to play. • Direct involvement from licensed operators is important. • Operators should look to a growing total market if a working interconnection regime is introduced. • A win - win situation exists enabling all stakeholders to benefit: incumbent, new entrants, consumers as well as Governments.

19. TRC P.O. Box 850967 Amman 11185 Jordan Tel: +(962 6) 586 20 20 Fax: +(962 6) 586 36 43 Website: www.trc.gov.jo