Bangladesh Telecommunications Regulatory Commission

Unified Licensing Regime Consultancy Stakeholder Meeting 27 September 2009

David Butcher and Associates

Todays Agenda

The purpose of todays 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

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The Assignment
TOR Task Task-1: Preparing and Engaging in Consultation Task-2 Identifying an Appropriate Migration Path

Task-3: Final Recommendations on Licensing Regime

Task 4: Preparing the Final License Agreement and completion of all other Relevant Tasks Task 5: Capacity building in the BTRC
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Licensing Overall

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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

Mobile license

Applications Services Network Services Network Facilities

All activities related to the provision of a particular service are vertically integrated for the provision of that service

ULR licensing promotes vertical separation between facilities, network, applications, and content

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Network Licence

Service Licence

Content Services

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. 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

ISSUES

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Licensing: - International Best Practice

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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 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),

ISSUES

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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

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

ISSUES

to which of these objectives should Bangladesh give priority? which of these objectives support the poverty alleviation goals of the GOB?

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Efficient Network Configuration

FINDINGS
should there be a separate circuit switched voice and data network? most administrations have separate networks for voice and data.

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.

ISSUES
voice network is more expensive to operate, requires more investment and it is uneconomic to terminate data calls on a voice network.

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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. 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.

ISSUES

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Future Shape of Licenses

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BTRC Objective

Decision Response

Objective: Neutrality, Flexibility, Efficiency

Unified License Regime

Single or Multiple?

Multiple Categories

Categories or Facilities-Services split

2
3 3
Facilities (FBO)

Single Authorisation

Many Categories

Services (SBO)

Exemptions

Exemptions

Individual-spectrum

Individual dominant

Exemptions

Exemptions

Design Authorisation

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Which Model is Appropriate for Bangladesh?

FINDINGS
Options are:
single authorization (license), multiple categories or two categories focused on facilities (infrastructure) and services respectively?

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: 1. either a complete national network including backbone network (backhaul or core), local access networks (local Loop) and the collection network, or 2. one or more parts of a national network described above.

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 ICT businesses dual nature: (1) management of easements and the construction and maintenance of networks. (2) a sophisticated services operation (including exchanges).

ISSUES

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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. 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.

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.

ISSUES

regional franchises do not create a competition framework. 15 David Butcher and Associates

Technological Neutrality

FINDINGS
in Bangladesh licenses are currently technology specific,

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.

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.

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Content and Applications

FINDINGS
Bangladesh currently has no regulation of content or 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.

ISSUES
is there a role for licensing content and applications? some other jurisdictions (e.g. Malaysia) have licensing for content and applications.

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Appropriate Fees, Charges, Revenue Shares

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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.

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.

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?

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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. 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 longterm government revenues.

ISSUES

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Migration Issues

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Content of Licenses

FINDINGS
most licenses have a term of 15 years, some are due to expire soon (2012?). 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.

ISSUES

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Amortization of Legacy Investments

FINDINGS
the proliferation of licenses has led many investors to consume large proportion of Bangladeshs investment capital in businesses that are not viable without government protection, a migration plan will not be acceptable must amortize these investments. 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.

ISSUES

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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.

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.

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

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ULRs aim at facilitating Next Generation Networks (NGN) Service Convergence via an IP Network Digital Platform
Service Application
IP Transit IP VPN Internet Transport

VoIP
Hosting & Content

IP CORE Network / VPNs

IP Network Platform

SCDMA GPRS DSL TDM WLAN Frame/ X.25 IXC

CDMAWCDMA

Access

Ethernet

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Schedule of Interventions
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Time Total

Name

Activities

30/08 6/09/ 13/09 20/09 27/09 4/10/ 11/10 18/10 25/10 1/11/ 8/11/ 15/11 22/11 29/11 6/12/ 13/12 /09 09 /09 /09 /09 09 /09 /09 /09 09 09 /09 /09 /09 09 /09

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T1, T2, T3, T4

Field

0.5

0.5

1.0

0.5

0.5

0.5

1.0

0.5

5.00

Home
Shaan Stevens T1, T2, T3 John Durkin Chris Doyle Sharfuddin Ahmed T1, T2, T3 T1, T2, Field Home Field Home Field Home T1, T2, T3 Field Home

0.5
1.0 0.5 0.5 0.5 1.0 0.5 1.0 1.0 0.5 0.5

0.5
1.0 0.5 1.0 1.0 1.0

1.00
3.50 1.00 4.00 0.50 2.00 0.50 0.00

6.00

4.50 4.50 2.50

0.5
Consultation Paper Incepton Brief

0.5
Migration Paper

0.5
Stakeholder Workshop

0.5

0.5
Draft Licence Agreement

0.5

0.5

3.50

3.50

Analysis of Submissions Workshop Report Recommendations on Regime

Workshshop on Draft Agreement Final Licence Agreement - Final Report

3 4

14.50

TASK LEGEND

1,3

Total 3.00 21.00

stakeholder workshop

3.50

deliverable deadlines

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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.

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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!

David Butcher and Associates