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TRA Strategic Plan Date: November 2008

TRA Strategic Plan Date: November 2008. Table of Contents. The benefits of liberalization The urgent need for reform TRA vision and roadmap The way forward.

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TRA Strategic Plan Date: November 2008

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  1. TRA Strategic PlanDate: November 2008

  2. Table of Contents The benefits of liberalization The urgent need for reform TRA vision and roadmap The way forward

  3. The GoL, recognizing the need for reform, has committed to open the telecommunications sector to competition and has recognized it as an important lever for economic development International  Conference for  Support to  Lebanon” - Paris III Conference • “… there is a need to reduce the cost of production resulting mainly from unreliable supply of electricity, the high cost of telecommunication …” • “The Government of Lebanon will implement reforms in order to improve competitiveness and reduce the cost of doing business in Lebanon…” • “The government will seek a greater private sector role in sectors such as telecommunications…” البيان الوزاري للحكومة 2008 حكومة دولةالرئيس فؤاد السنيورة • (§ 56)إن قطاع الاتصالات هو محرّك أساسي للاقتصاد الوطني وهو يسهم في تعزيز الإنماء المتوازن. ولبنان يعمل على تقديم رؤية لهذا القطاع تهدف إلى بناء مجتمع المعلوماتية من أجل مواكبة ثورة الاتصالات العالمية وريادتها في المنطقة، والحكومة اللبنانية تلتزم في هذا السياق بتحرير قطاع الاتصالات وفتح السوق لاستثمارات القطاع الخاص والمنافسة وحماية حقوق المستهلك. Telecommunications Law 431 / 2002 • The TRA is charged with promoting competition in telecommunications (Telecommunications Law, Art. 5.1(C)). • The Law provided for the liberalization of the telecommunications market by privatizing state-owned telecommunications entities and opening the market to private sector investments and competition. GoL Governmental Declarations in 2005 and 2008 commit the CoM to the liberalization of telecommunications

  4. After Telecom Law 431 Before Telecom Law 431 The Telecommunications Law 431 requires the creation of a proper structure for a competitive telecommunications market Ministry of Telecommunications • MoT • Policymaker • Set the general guidelines for telecom policy • Recommend to CoM the award of some broadband licenses ( Mobile, int’ll voice & fixed) • Review and propose to CoM the pricing of Radio Frequency • Approve TRA budget & other TRA documents as per Law 431 1 • TRA • Regulator • Draft and implement regulations • Award telecom licenses • Ensure competition and prevent anti-competitive behavior • Manage on behalf of GoLradio frequencies 3 Policymaker Regulator Operators • MoT: policymaker, regulator and service provider • CoM: Arbitrary regulatory role (e.g. issuing all licenses) • No formal regulatory regime • Operators • Incumbents & New Entrants • Provide telecom services to the public • Install own and manage telecom networks and facilities • Abide by TRA regulations, decisions and licenses 2

  5. There is a wide range of benefits stemming from liberalization that TRA hopes to achieve Benefits the Customer Increase Penetration • Increase service penetration • Increase customer choice • Improve price to quality ratio • Introduce new technologies and services • Reach underserved areas Lower Prices Increase Customer Choice Benefits the Telecommunications Industry Efficient Industry • Keep up with technological advances • Ensure more effective infrastructure • Improve sector productivity • Increase overall telecom revenues • Attract private and foreign capital • Improve connectivity and penetration of ICT Attract Investments Leading Edge Technology Benefits the Economy • Generate revenues from privatization and from licenses • Spur job creation throughout the economy • Join international trade organizations (e.g. Union for the Mediterranean) and global trading systems (e.g. EU association) • Catalyze growth of information economy • Improve global competitiveness of the economy • Improve general economic performance Trade Integration ( OMC, UM) Job Creation Increase Growth

  6. Table of Contents The benefits of liberalization The urgent need for reform TRA vision and roadmap The way forward

  7. The Lebanese market for fixed and mobile services has been stagnant and the data and internet services have been constrained Strengths Weaknesses Fixed Voice • Relatively good copper infrastructure • Competitive price per minute compared to regional countries • De jure MoT monopoly • No incentive to upgrade the infrastructure and introduce new technologies • Low penetration rate • Stagnant growth Mobile • Pent up demand for mobile services • High mobile revenues • High charges • Lag behind in terms of new technologies • Low market penetration • Limited choice in mobile packages • Shortage of adequate investments leading to congestion in Mobile network and bad service quality Data • Relatively competitive market • Lucrative segment • New wireless technologies deployed • Pent-up demand for data and internet services • Shortage in International bandwidth • Slow DSL launch • Access hindered by incumbent operator • High international bandwidth prices • Discriminatory allocation of bandwidth • Uncertainty over regulatory framework

  8. 35% 30% 25% 20% 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 Fixed line penetration Mobile penetration Broadband penetration Internet penetration Penetration of telecommunications service in Lebanon between 2000 and 2007 has increased very slowly Source: Globalcomms, operator data, ITU, Arab Advisors Group

  9. The telecommunications marketis still underdeveloped when compared to other countries Fixed Line Penetration vs. GDP per Capita (2005) Mobile Penetration vs. GDP per Capita (2005) Internet Penetration vs. GDP per Capita (2005) PSTN Penetration Mobile Penetration Internet Penetration GDP per Capita (USD/ Year) GDP per Capita (USD/ Year) GDP per Capita (USD/ Year) Sources: Economist Intelligence Unit, interviews with industry

  10. The cost of a mobile postpaid minute in Lebanon is among the highest in the region due to the lack of competition and the legacy of a high excise tax Mobile Prepaid Peak On-net Minute Rates (2006) (US$ per peak minute) Mobile Postpaid Peak On-net Minute Rates (2006) (US$ cents per peak minute) More than double the lowest regional rate 60% higher than the lowest regional rate Note: All Rates corresponds to the lowest first minute rate

  11. A typical internet user in Lebanon will spend eight times more than in similar countries due to low download ceilings Source: Operators Websites

  12. The penetration of DSL services in Lebanon is the lowest in the Region, due in part to the late start Source: Operators Websites

  13. Lebanon shouldhave much higher broadband connectivity given its GDP per capita Broadband Connectivity versus gdp per capita Broadband Penetration (subscribers per 100 inhabitants) 2007 GDP per capita (US$, 2007) Source: UN E-Government Readiness Survey, 2008

  14. The limited bandwidth available to Lebanese users means that only a limited range of applications and services can be offered Indicative Application Bandwidth Demand (Mbps) Current Limit on Residential Broadband Telepresence Services technically not feasible Virtual Reality 5 second CD download Quality Video Streaming Multi-Channel TV Video on Demand Video Streaming Services not offered due to bandwidth limitations Multiplayers game Video Conference MP3 streaming Online games Teleconference Web Surfing VOIP Email 0.01 0.1 1 10 100 • Estimation of bandwidth requirements for the UK households: • By 2008, demand for the most bandwidth intensive households could reach 18 Mbps downstream and 3 Mbps upstream • By 2012, the bandwidth demand for the most intensive bandwidth households could reach 23 Mbps downstream and 14 Mbps upstream Sources: New Zealand National Broadband Strategy , Broadband Stakeholder Group UK

  15. Table of Contents The benefits of liberalization The urgent need for reform TRA vision and roadmap The way forward

  16. As a first step in assuming its duties as per Law 431, the TRA has defined its mission statement and objectives TRA Prerogatives ( Non-exhaustive list) • Issue regulations and draft Decrees (Art 5) • Liberalize the market and take any necessary measure to reach a competitive market (Art 30) • Manage Radio Frequency, Interconnection agreements, numbers, equipment import, etc.. (Art 29) • License telecommunications service providers and radio frequency bands (Art 20) • Resolve disputes between service providers (Art 43) Mission Statement • 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 • إيجاد بيئة مُنظِمة من شأنها أن تساعد سوق الاتصالات في تقديم آخر ما توصلت إليه التكنولوجيا في مجال خدمات الاتصالات بأسعار تنافسية، ومعقولة، وعلى أوسع نطاق ممكن للمواطن اللبناني وللشركات اللبنانية.

  17. The TRA's draft Liberalization Roadmap proposes introducing competition across all telecommunications markets while allowing LibanTelecom some exclusivity over some services for a limited period of time 3 * 1 ** 5+ *** Open licensing Market Review License Award Notes • * Liban Telecom expected • ** TRA is still considering the appropriate number of NBLs to issue • *** Two for the mobile licenses, one for Liban Telecom and two others for the NBLs for data traffic only

  18. TRA's objective is for Lebanon to become a global leader in broadband communications within 10 years Target: 400,000 Broadband accounts in 2018

  19. Lebanon has to improve its telecommunications infrastructure and open it to competition Therefore Fixed MoT Infrastructure: currently the only provider of national internet and data transmission, however needs major upgrade of national and international capacity. Competition National Broadband Licenses:Provide a best in class alternative national networks (core, metropolitan and access), enabling the national transmission and provision of high speed communication Broadband Access Licenses:Unleash competition on the access level and provide more choice to consumers ( e.g. incumbent data service providers) • The TRA plans to issue licenses (through an international public auction) in order to establish across Lebanon best in class core, metropolitan and access networks : • Two new NBLs (alongside LibanTelecom) • Unrestricted number of Broadband Access Licenses (for existing DSP and new licenses) taking into account limitations in the availability of spectrum resource

  20. The combination of new licensees will compete in deploying a nationwide high-speed network, international gateway for Data services and access to customers TRA is considering how to license geographically-restricted metro licenses (including municipalities, real esta developers, business parks, etc)

  21. The TRA plans to launch the licensing of national broadband networks in Q1 2009 Licensing Regulation Broadband Policy Statement • IS and RoW Decrees • Spectrum Management • & Licensing Regulation Draft RFA for Consultation Final Broadband Licenses AUCTION Q 1 09 TRA ready to grant licenses that do not require spectrum The TRA is making steady progress in developing a regulatory framework to introduce competition in the provision of broadband services. The auction for the National Broadband Licenses and the Broadband Access Licenses will take place at the end of Q1 2009

  22. The Mobile Auction has been suspended in January 2008, but could be held within 8 weeks from a Government of Lebanon GoL decision T1= T0 + 10 weeks January 2008 Licensing Process Freeze T1 + 8 weeks November 2007 T0 Handover completed Crucial Phase that should be completed smoothly and in the specified time Auction – Announcement of two winning bidders Mobile Auction Launch: RFA published Process Relaunched • Most of the preparatory work for the auction has been completed • Until now, and despite the delay encountered, around 10 major regional and international players of the telecommunications sector have shown interest in the auction • In order to relaunch the process (T0) the following steps should be completed: • Agreement on the revised transaction structure • Draft Law authorizing the selling of the assets and revised RFA approved by the CoM • Law authorizing the selling of the assets enacted by the Parliament

  23. The licensing of the two mobile operations and the opening of the mobile market to competition aims at ensuring lower retail prices, quality of service improvements as well as the provision of advanced services Rights and Obligations of Mobile Licensees • Scope of Mobile Licenses: • Provision of any service over the licensed frequencies, including 3G mobile broadband services. • Installation, ownership and operation of a facilities-based international gateway. • Provision of all international services to their own end users. • Obligations: • Geographic roll-out and coverage obligations • Certain payment obligations: • License fees • Spectrum fees • Numbering Fees • Provision of mobile number portability to their customers to ensure a fair consumer choice. • Provision of national roaming to the third entrant to allow a faster development of competition. TRA will undertake periodic market reviews to analyze the state of competition and the need to introduce new facilities-based operators or services-based resellers

  24. Telecom Law 431 also calls for additional structural reforms Restructuring of MoT – NOT YET STARTED MoT Mandated Structure Under the Telecom Law Current Structure The TRA views the creation and privatization of Liban Telecom as a major step in the history of the telecommunications sector and a central component of future growth LT

  25. In line with EU's best practices,the regulatory framework adopted by TRA ensures the success of liberalization Drafting Stage Draft Ready Stage Consultation Stage Final Review (TRA Board) Issued Significant Market Power Regulation Unbundling Regulation VOIP Policy Statement Spectrum Refarming and Packaging Plan Liberalization Roadmap • Decisions: • VSAT, • Trial IPTV • Spectrum trial Allocation for MoT / OGERO National Roaming Broadband Policy Statement Accounting Separation Regulation Improving FM Broadcasting Licensing Regulation Universal Service Interconnection Regulation CS / CPS Pricing Regulation Type Approval Regulation * Interconnection Interim Pricing Decision Quality of Service Regulation Spectrum Pricing Opinion Decision for establishment of call centers Spectrum Management and Licensing Regulation Lebanese National Frequency Table * Decision approved by the board, but will be issued concurrently with the Mobile Auction Award. Consumer Affairs Regulation

  26. Table of Contents The benefits of liberalization The urgent need for reform TRA vision and roadmap The way forward

  27. Our Commitment • The TRA is committed to bringing the country back to the international telecommunications scene through market liberalization • The TRA is committed to reconnecting the Lebanese population with the world. We intend to accomplish this by building a thriving, innovative, and competitive telecommunications market place, driven by a technologically advanced infrastructure-based sector and offering services at internationally competitive prices and quality • The TRA is committed to promoting the interests of telecom Lebanese consumers in the market to make sure they are getting good quality of service at affordable and competitive prices and that their right to safe, secures and confidential access to telecommunications is safeguarded

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