TELECOMMUNICATIONS, MEDIA & TECHNOLOGY

Telecoms
regulatory
developments
in the region

Dr Martyn Taylor
Partner

martyn.taylor@nortonrose.com
June 2012
1

Overview

1.

Analyst predictions

2.

Regulatory developments in Asia

3.

Regulatory developments in Australasia

4.

Regulatory developments in Middle East

5.

Regulatory risk profiles

Dr Martyn Taylor
Partner
+61 2 9330 8056
martyn.taylor@nortonrose.com

TELECOMMUNICATIONS, MEDIA & TECHNOLOGY

Analyst
predictions

Mobile telecom networks in 2012 and 2013

1. 3G now has >50% global penetration. 4G LTE is the growth focus
for advanced economies. 2G network closures will be considered.
2. 4G mobile spectrum will dominate most regulatory agendas,
including digital dividend spectrum. MVNOs will be recognised
as a more politically expedient way to liberalise telecom markets.
3. Tower sale and leaseback deals may unlock value from passive
infrastructure in order to fund CAPEX for 4G spectrum and LTE.
4. Smart phones and tablets will continue to accelerate mobile data
usage. Mobile internet traffic is becoming an increasing
proportion of all global Internet traffic, currently at 10%.
5. Mobile payment systems, machine to machine (M2M), and near
field communications (NFC) are key areas of potential innovation.
6. Mobile advertising is in need of innovation. Mobiles account for
10% of media consumption, but only 1% of advertising spend.
4

Fixed telecom networks in 2012 and 2013

1. One third of the worlds population are now on the Internet.
Developing economies have >100% growth in Internet access.
2. NGN rollouts will dominate national policy agendas as nations
seek to achieve ubiquitous broadband Internet access.
3. NGN rollouts will provide an opportunity to revisit many
regulatory policy settings, including to recognise convergence.
4. TDM traffic will continue to be substituted for VoIP as
broadband penetration increases and OTT applications such as
Skype increase in popularity in the mass market.
5. Traditional distinctions between platforms will continue to be
removed via a shift to generic Internet access and IP
everywhere. Mobile and fixed are becoming substitutable.
6. Smartphones and tablets will drive fixed data traffic growth via
the use of home WiFi as a cheaper alternative to cellular data.
5

Importance of broadband deployments

Digital divide once measured as differences in communications access

is now measured in terms of differences in the quality of access.

Slow download speeds result in lost opportunities. A 10% increase in

broadband penetration in developing nations increases GDP by 1.4%.

Broadband is an enabling ICT platform that can influence entire economy:

Improves variety, utility, value of services/applications offered by

providers, to benefit users, society, multiple sectors of economy.

Positive externalities of that can spillover into economic growth.

Human Rights Council of the UN General Assembly has declared access

to the Internet a basic human right which enables individuals to exercise
their right to freedom of opinion and expression.

The Internet is a cross-border resource for aggregate human knowledge

that far surpasses any individual library. Broadband Internet access is the
key that unlocks this knowledge in todays information society.
6

Government policy objectives

A common policy objective is universal broadband Internet access

Advanced nations: superfast broadband speeds > 24 Mbit/s.

Developing world: basic broadband speeds up to 2 Mbit/s.

Best illustrated by United Nations Call to Action for the Rio+20

sustainable development summit later this month:

UN has called on all Governments to promote universal

broadband access, including policies to expand access to health
and education through broadband.

UN has stated that its aim is to ensure that at least 50% of the
developing worlds population and 40% of households have
access to broadband Internet by 2015.

UN has called for the private sector to contribute to this goal by

developing innovative business models that increase broadband
penetration, particularly in developing countries.
7

Speeds required for different applications

BASIC BROADBAND

500kbit/s to 1Mbit/s

1 to 5 Mbit/s

HIGH SPEED BROADBAND

5 to 10 Mbit/s

10 to 100Mbit/s

SUPERFAST BROADBAND

100Mbit/s to 1 Gbit/s

1 to 10 Gbit/s

VoIP

Complex web browsing

Complex telecommuting

Telemedicine

Telemedicine HD

Research applications

SMS

Email with attachments

Large file-sharing

Educational services

Multiple educational

HD telepresence

Basic e-mail

Remote surveillance

IPTV SD (many channels)

Broadcast video SD/HD

Broadcast video full HD

Digital cinema streaming

Simple web browsing

IPTV SD (1-3 channels)

Switched digital video

IPTV HD

Full IPTV channel support

Complex telemedicine

Low-quality video

Simple telecommuting

Video on demand SD

Complex gaming

Video on demand HD

Scientific remote control

Basic social networking

Digital broadcast (1 ch)

Broadcast video SD

Complex telecommuting

Gaming (immersion)

Virtual reality

Small file sharing

Streaming music

Video streaming (2-3 ch)

Complex telepresence

Full telecommuting

Terabyte file sharing

Music downloads

Advanced social networking

Video download HD

Surveillance HD

Video download (Blu-Ray)

Remote supercomputing

Basic smartphone content

Medium file-sharing

Low-quality telepresence

Intelligent buildings

Video download SD

Gaming

Low quality gaming

Basic medical file sharing

Simultaneous devices

Basic remote diagnosis

3D HDTV channels

Remote education
Building management

A future world defined by IP addresses

TELECOMMUNICATIONS, MEDIA & TECHNOLOGY

Regulatory
developments
in Asia

10

1400

1200

600

400

Population without
mobiles

0
$4,000

$2,000

Singapore
Hong Kong
Australia
Taiwan
Japan
South Korea
New Zealand
Malaysia
Thailand
China
Indonesia

Population (millions)

China
India
Japan
South Korea
Indonesia
Australia
Taiwan
Thailand
Pakistan
Malaysia
Philippines
Hong Kong
Singapore
Vietnam
Bangladesh
Sri Lanka
New Zealand
Myanmar
North Korea
Cambodia
Laos

800

China
India
Pakistan
Bangladesh
Myanmar
Vietnam
Cambodia
Laos
Sri Lanka

1000

China
India
Indonesia
Pakistan
Bangladesh
Japan
Philippines
Vietnam
Thailand
South Korea
Myanmar
Malaysia
North Korea
Taiwan
Australia
Sri Lanka
Cambodia
Hong Kong
Laos
Singapore
New Zealand

What are the key Asian jurisdictions ?

Aggregate income (USD billions)

$12,000

$10,000

Individual income
(GDP per capita)

$60,000

400

200
$8,000
$40,000

$6,000
$20,000

0
$0

200

$0

11

Many jurisdictions rely heavily on wireless networks

140%

120%

Jurisdictions that do not

yet have 100% fixed
network penetration by
household

100%

80%

60%

Very heavy reliance on

wireless telecoms

40%

20%

0%

Mobile penetration
(by population)
Fixed penetration
(by household)

12

Singapore

Low regulatory
risk

1. Singapore has a population of just over 5 million, which is a small market

by Asian standards. However, it has the greatest income per capita.

Mobile market
shares 2012
46%

2. The World Economic Forum has described Singapore as Asias most

connected country, noting it leads the Asian region in ICT development.

5. Singapores mobile phone penetration is 150% by population. Around

75% of subscribers receive 3G services. 100% of Singapore households
have access to fixed broadband access of some kind.

M1

STARHUB

4. To give effect to iN2015, the Government allocated SGD 1 billion funding

for the deployment of the Singapore Next Generation Network (NGN).
The NGN is unique in the world in promoting four layers of structural
separation: ducts/exchanges, dark fibre, operation, retail.

26%

SINGTEL

3. The Government actively promotes the ICT sector and has a 10 year ICT
Master Plan, labelled the Intelligent Nation 2015 (iN2015) which is
administered by the Infocommunications Development Authority (iDA).

28%

150% MOBILE
PENETRATION
(POPULATION)
100% FIXED
PENETRATION
(HOUSEHOLD)
13

Singapore recent developments

1. NGN: iDA intervened in the Singapore Next Generation Network (NGN) regulatory framework to
address concerns regarding operational delays in connecting customers and resolving faults:

iDA conducted a review of OpenNets Interconnection Offer and directed a number of operational
refinements. The acceptability of those changes is currently awaiting final iDA approval.

Further regulatory instruments to give effect to the NGN have also been approved, including CityNets
reference access offer for access to lead-in ducts.

2. Spectrum: iDA is undertaking consultation on the refarming of spectrum for 4G mobile,

including the potential closure of 2G networks, the reservation of some 2.5GHz spectrum for a
fourth mobile operator, and the auction of 1800MHz, 2.3GHz and 2.5GHz spectrum.
3. Competition: iDA issued a 2012 version of the Telecoms Competition Code, now including an
amended version of Chapter 10 which regulates M&A in the Singapore telecoms sector.
4. Data protection: The Government undertook a third round of public consultation on the
proposed new data protection regime in April 2012. The Personal Data Protection Bill is planned
to be tabled to Parliament in the third quarter of 2012 and will regulate the collection, security
and privacy of personal data as well as introducing a Do Not Call register.
14

Mobile market
shares 2012
51%

2. Indonesia faces difficult challenges in building telecoms infrastructure

over a complex geography. Around 80% of fixed network customers are
served by fixed wireless.

5. Telekomsel dominates the mobiles market with a 51% market share.

6%

OTHER

4. Internet access has been historically restricted by the limited availability

of copper wireline infrastructure for DSL. While mobile and wireless
broadband is overcoming this access bottleneck, Internet penetration still
remains low at only 10% of the population

21%

TELKOMSEL

3. Indonesias mobile market passed 260 million subscribers in early 2012

with penetration at 107%.

23%

XL AXIATA

1. At 240 million people, Indonesia is the third largest market in Asia behind
China and India. It also ranks fifth in aggregate income but 11th in
individual income per capita.

INDOSAT

Indonesia

Moderate to high
regulatory risk

127% MOBILE
PENETRATION
(POPULATION)
66% FIXED
PENETRATION
(HOUSEHOLD)
15

Indonesia recent developments

1. SMS interconnection: Indonesia announced in May 2012 that its existing sender keeps all
regime for SMS messages would be replaced by an SMS terminating access payment model.
2. Convergence: The Ministry of Communications and IT (MCI) is drafting legislation to achieve
convergence of telecommunications, broadcasting and the Internet.
3. New spectrum: MCI is considering releasing a further 10MHz of 2.1GHz spectrum and some
2.3GHz spectrum to support 3G services and broadband wireless. There are also proposals to
accelerate the switchover to digital television in order to re-farm the 700MHz spectrum.
4. Content: Indonesia is considering reforms to its laws relating to the regulation and censorship
of content and reforms to its cross-ownership rules in relation to broadcasting assets.
5. NGN: The Government has continued to promote major telecoms infrastructure development:

The Palapa Ring project will connect Eastern Indonesia regions with the remainder of Indonesia.
Telekomunikasi Indonesia will invest $233 million to build a national broadband network, known as
True Broadband that will cover 497 cities and 13 million homes by the end of 2015.

6. VoIP and IPTV: Indonesia has commenced formally licensing VoIP and IPTV services.
16

4. Mobile penetration is one of the highest in Asia at 134% of the population

with 37 million subscribers in a competitive market. Malaysia is a heavy
user of SMS by world standards.
5. Growth in mobile broadband is currently rapid. Around one third of
mobile subscribers in Malaysia are currently on 3G, resulting in Malaysia
achieving its target of 55% household broadband penetration in 2011.

33%
25%

2%
OTHER

3. Malaysias Vision 2020 aims to see it described as a developed nation

by 2020. Telecommunications is an important part of Malaysias plan.

40%

DIGI

2. Malaysia is mobiles-focussed but is focussed on deploying fixed network

infrastructure. Around 43% of households in Malaysia are currently
connected to fixed network infrastructure.

Mobile market
shares 2012

CELCOM

1. Malaysia has a population of 28 million and some of the most advanced

telecommunications infrastructure in the developing world.

MAXIS

Malaysia

Moderate regulatory
risk

134% MOBILE
PENETRATION
(POPULATION)
43% FIXED
PENETRATION
(HOUSEHOLD)
17

Malaysia recent developments

1. New spectrum: The Malaysian Communications and Multimedia Commission (MCMC)
intends to award 2.6GHz spectrum to nine companies to assist 4G rollout and the deployment
of wireless data technologies. The MCMC is also considering refarming 850/900/1800MHz
spectrum and 700MHz digital dividend spectrum once switchover from analogue to digital
television occurs.
2. HSBB Network: Under the National Broadband Initiative, Telekom Malaysia has a publicprivate partnership agreement with the Government to deploy a High-Speed Broadband
(HSBB) network. Deployment is well underway with the first subscribers connected from
2010. A regulatory holiday will be provided until 15 September 2015.
3. 4G sharing arrangements: The MCMC has commented that it expects to see further
rationalisation and co-operation in the Malaysian industry in order to reduce the costs of
deployment of 4G mobile infrastructure. Maxis and U Mobile entered into a 3G RAN sharing
deal in 2011. Celcom and Digi had also entered into an infrastructure sharing deal in 2010.
4. Competition law: The new Competition Act took effect from 1 January 2012, but does not
apply to any commercial activity regulated under the Communications and Multimedia Act.
18

4. Most of the growth rates and intense competition are occurring in mobiles.
The Indian mobiles market is divided into 23 geographic circles along
state boundaries. Separate licences have been awarded for each circle.
5. At one point, some circles had up to 13 licensed mobile operators.
However, intense price competition has resulted in industry consolidation.

87% MOBILE
PENETRATION
(POPULATION)
18% FIXED
PENETRATION
(HOUSEHOLD)
19

OTHER

TATA

IDEA

BNSL

3. Fixed line penetration remains at only 18% of the population. The stateowned enterprises MTNL (serving Delhi, Mumbai) and BSNL (serving the
remainder of India) are the key fixed providers. Bureaucracy has
impeded fixed rollout initiatives.

20%
17% 11%
17% 11% 13%
11%

RELIANCE

2. India is the worlds second largest telecoms market behind China. There
are around 903 million mobile users and 123 million Internet users.

Mobile market
shares 2012

VODAFONE

1. India is currently the fastest growing telecoms market in the world,

achieving a growth rate of 26% in 2011.

BHARTI

India

High regulatory
risk

India recent developments

1. Licensing: The 2G spectrum scandal involved allegations of favouritism in the awarding of 2G
licences. The Supreme Court of India revoked all 122 licences in February 2012 covering a third
of Indias 2G spectrum. A number of foreign companies that had entered into joint ventures with
local Indian companies were adversely affected. The spectrum is currently being re-auctioned.
Around USD 10 billion in existing 2G investment is at stake.
2. National Telecoms Policy 2012: India has adopted a new telecoms policy, partly to increase
transparency and provide a more predictable regulatory regime:

A single licence will be available that covers all India, rather than for a specific geographic circle.
Spectrum licences will be unbundled from telecom licences and refarming of spectrum will be permitted.
The use of a single licence will permit the removal of roaming charges between mobile circles and will
enable number portability for users moving between mobile circles.
Use of spectrum will be liberalised, permitting any kind of services over any kind of technology platform.
Rules restricting Internet telephony have been relaxed
M&A restrictions will be liberalised.

3. Enforcement action: The TRA is currently taking significant enforcement action:

against various licence holders for not meeting rollout obligations.

against 3G roaming agreements which are alleged to be depriving the Government of tax revenue
20

4. While the mobile market is saturated, new technologies and innovation

are continuing to drive growth. Mobile data has ben achieving
exponential growth rates. 4G LTE networks are currently being deployed.
5. Operators are launching triple and quad-play service offerings to drive
average revenue per user (ARPU).

PCCW

SMARTONE

3. Broadband networks reach 85% of Hong Kong households, assisted by

Hong Kongs high population density. Fixed network penetration is at
100% of households.

27%
26%
21%
13%
13%
CHINA MOB

2. Hong Kong is one of the worlds most competitive mobiles markets and
has the worlds highest mobile penetration at 200% of the population.
Tariffs are among the lowest worldwide for some of the highest speeds

Mobile market
shares 2012

HUTCHIISON

1. Hong Kong has a population of 7 million and the second highest per
capita incomes in Asia, behind Singapore.

CSL

Hong Kong SAR

Low regulatory
risk

200% MOBILE
PENETRATION
(POPULATION)
100% FIXED
PENETRATION
(HOUSEHOLD)
21

Hong Kong SAR recent developments

1. New regulator: A new Communications Authority was established on 1 April 2012 which
merged the Office of the Telecommunications Authority (OFTA) with the Broadcasting Division
of the Television and Entertainment Licensing Authority.
2. New competition law: A new Competition Ordinance was enacted on 15 June 2012. The
competition law applies to the telecommunications sector and will give the new competition
regulator concurrent jurisdiction with the Communications Authority in relation to
telecommunications matters. However, various transitional provisions currently apply.
3. Next Generation Networks: OFTA is currently investigating whether further regulatory
measures and reforms are required to address the deployment of Next Generation Networks:

PCCW is at least halfway through migrating its voice network to a Next Generation Network.

4. New spectrum: New spectrum is being released to meet market demand for new spectrum in
order to supply mobile data services:

20MHz of spectrum in the 850MHz band was auctioned in March 2011.

90MHz of spectrum in the 2.3GHz band was auctioned in Feb 2012. Very high prices were paid.
Further spectrum will be made available in the first quarter of 2013.
22

66%

2. Telecoms in China is dominated by the Government which owns more

than 50% of each of the three key telecoms operators. Each of these
operators are joint fixed and mobile operators

4. 3G networks have been deployed and are winning substantial

subscribers, but 4G deployment has been delayed by developments in
the Chinese TD-SDMA standard.
5. Fixed network penetration is relatively high and is being accelerated by a
variety of Government infrastructure rollout programmes.

13%

CHINA MOBILE

3. While mobile penetration has not yet reached the levels of other
economies at 73% of the population, growth rates are significant. China
is the first economy to have over a billion mobile subscribers.

21%

CHINA UNICOM

1. China has the largest population in Asia at 1.35 billion and also has the
greatest aggregate wealth by a very substantial margin. The individual
wealth of Chinese consumers is comparable with Malaysia and Thailand.

Mobile market
shares 2012

CHINA TELECOM

China

High regulatory
risk

73% MOBILE
PENETRATION
(POPULATION)
70% FIXED
PENETRATION
(HOUSEHOLD)
23

China recent developments

1. Next Generation Network rollout: Three Networks Integration Project is underway with the
objective of a consumer connecting to only one communications network for their television,
Internet and telephone needs:

one aspect of the Project is the deployment of Next Generation Network capabilities to reach 300
million users and 200 million households within the next ten years
the project is one of several measures recently undertaken to achieve greater convergence

2. Internet service providers: The Ministry of Industry and Information Technology (MIIT) has
recently promulgated several codes of conduct for Internet information service providers:

Codes are directed at types of conduct that may harm end users, such as deception and interference
MIIT has also been more proactive in taking enforcement action against inappropriate content

3. Deregulation of tariffs: MIIT is seeking to reduce the price of fixed broadband services in the
same manner as has occurred in relation to mobile services. Further deregulation of retail
tariffs is likely to occur.

4. Broadband speed improvements: MIIT is also intending to implement a broadband

connection speed improvement project.
24

Chinas licensing grey areas

Chinese regime has many grey areas: activities of indeterminate legality.

Activities may be tolerated by MIIT until such time as they are the subject of
complaint, typically when the boundaries are pushed too far by foreign firms.
At that point, public action is taken to regulate the conduct.

Recent example voice over IP services in China (VoIP):

Technically all VoIP offered by entities other than the Chinese

operators is illegal. However, all VoIP has been tolerated to date.

December 2010 MIIT announces it will take enforcement action

against foreign VoIP operators in China, presumably following concerns
by Chinese telcos that Skype was depriving them of revenue.

January 2011 MIIT is less absolute and announces it is supportive of

VoIP, but not illegal VoIP. What is illegal VoIP is not clearly identified.
25

Thailand

Moderate to high
regulatory risk

1. Thailand has a population of some 70 million and hence is ranked 9th in

market size in Asia. It is also ranked 11th by individual income.
2. Thailand is heavily mobiles-focussed. Fixed network penetration remains
low at only 35% of households. Further fixed deployment has stalled.

Mobile market
shares 2012
44%
30%
24%

3. By contrast, Thailands mobile market has around 72 million subscribers with

penetration at around 105% by population.

6. The pace of reform of telecommunications in Thailand has been slow.

OTHER

117% MOBILE
PENETRATION
(POPULATION)

TRUE

5. In 2010, the National Telecommunications Commissions ability to hold 3G

spectrum auctions was successfully challenged. As a result, the National
Broadcasting and Telecommunications Commission (NBTC) was formed as
a combined broadcasting and telecoms regulator with the relevant powers.

DTAC

4. Thailand has not yet deployed 3G mobile services due to delays to 3G

spectrum auctions. In turn, this has lead to poor network quality and an
absence of mobile broadband.

AIS

2%

35% FIXED
PENETRATION
(HOUSEHOLD)
26

Thailand recent developments

1. 3G spectrum auctions: Thailands National Broadcasting & Telecommunications
Commission (NBTC) has released draft rules for new 3G spectrum auctions:
The rules are less stringent and permit bidding by telcos with less reserve capital.
NBTC will impose a maximum 3G tariffs.
NBTC will divide the 2.1-GHz spectrum into nine slots, each containing 5 MHz.
A 3G licence auction will be scheduled for the fourth quarter. The event will feature
simultaneous ascending-bid auctions.
Each bidder will be permitted to obtain a maximum bandwidth of 20 MHz under a
bandwidth cap restriction.
2. CAT-True 3G marketing investigation: The NBTC has determined that a 3G marketing
partnership between state-owned CAT Telecom and private sector operator True Corp
violates the Frequency Allocation Act. CAT is the only current holder of 3G spectrum in
Thailand and has put its 3G expansion plans on hold.
3. Delays to 3G number portability: NBTCs mobile number portability regulation will allow
mobile subscribers to retain their mobile numbers while switching networks. However, CAT is
raising concerns of subscriber overflow.
27

1. At 96 million people, the Philippines is the 7th largest market in Asia.

However, the population is poor by global standards.

Mobile market
shares 2012
68%

2. The Philippines is heavily mobiles-focussed. Notwithstanding policies to

promote fixed network rollout, only around 17% of households are
currently served by fixed telephony services.

32%

3. A historic problem preventing fixed network rollout was under-utilisation

of existing fixed network assets with only 50% utilisation rates.

5. Growth in mobile broadband is occurring, driven by smartphones and

social networking. The Philippines has 3G networks and is progressively
rolling out 4G (both mobile and broadband wireless).

GLOBE

PLDT

4. Mobile penetration is around 107% of the population with 98 million

subscribers, but Internet access remains lower at around 20% of the
population. The Philippines is a heavy user of SMS and is a global
leader in SMS volumes.

>1%
OTHER

Philippines

High regulatory
risk

107% MOBILE
PENETRATION
(POPULATION)
17% FIXED
PENETRATION
(HOUSEHOLD)
28

Philippines recent developments

1. PLDT-Digitel: The National Telecommunications Commission (NTC) approved the merger
of PLDT and Digitel with the merger subsequently implemented in October 2011:

The merger has left PLDT with a 68% market share in Philippine mobiles.

The Philippines does not have merger rules, but Government approval was required.

2. 3G spectrum: A condition of the merger between PLDT and Digitel, was that PLDT would
return of 10MHz of 2.1GHz 3G spectrum to allow further market entry:

The spectrum is due to be auctioned following its return in July 2012.

Four 3G licences were awarded in 2005, but significant consolidation has

subsequently occurred, including the PLDT-Digitel merger.

3. New wireless entrants: NTC has approved licence applications by Multi-Lane and BellTel
to supply wireless broadband and local loop services in various locations. The NTC is
intending to introduce further competition following the PLDT and Digitel merger.
4. 4G rollout: Globe has deployed 4G LTE in Manilla City and is undertaking a broader
rollout. Previously, 4G services had been limited to broadband wireless.
29

Mobile market
shares 2012
42%

2. Bangladesh has some of the most underdeveloped fixed telecoms

infrastructure in the world. Fixed line penetration remains at less than
4% of households and halved in 2010 when the regulator took action to
shut down 5 illegal VoIP operators.

4. Broadband internet remains almost non-existent in Bangladesh.

Broadband Internet penetration is in the order of 0.5% of the population.
5. The mobiles market in Bangladesh has 6 operators and is dominated by
Grameenphone with a 44% market share. Only 2G is supplied.

20%
7%

OTHER

AIRTEL

4%
GRAMEEN

3. However, Bangladesh does have a competitive mobiles market and is

heavily reliant on mobiles. Bangladeshs mobile market has over 90
million subscribers with a penetration over 63% of the population.

27%

ROBI

1. At 142 million people, Bangladesh is the fifth largest market in Asia.

However, it is also one of the poorest, most densely populated, least
developed countries in the world.

ORASCOM

Bangladesh

Moderate to high
regulatory risk

63% MOBILE
PENETRATION
(POPULATION)
4% FIXED
PENETRATION
(HOUSEHOLD)
30

Bangladesh recent developments

1. 3G spectrum licences: The BRTC is proposing to award four 2100MHz licences (10MHz
each) for 3G/4G services:

One will go to state-owned operator Teletalk, two will go to other existing mobile
operators, and the last one will be reserved for a new entrant.

Spectrum auctions are due to occur in September this year.

3G licence holders would be able to upgrade their licences to 4G at no extra charge.

The BTRC is proposing a fee USD 18 million for every megahertz of bandwidth, with an
auction floor price of USD 180 million.

The BRTC has permitted Teletalk to trial 3G services for a 6 month period from July.

2. VoIP licences and issues: BTRC sent a draft guideline to the telecom ministry for issuing
licences to VoIP service providers, but a dispute within Government is delaying any licensing.

3. VoIP enforcement: BRTC has threatened to impose fines on any mobile operators supplying
VoIP services over mobile phones. A key concern has been the use of VoIP services by
foreign carriers to avoid payment of termination fees for inbound calls, an important source of
revenue. An estimated 20% of traffic terminated illegally using VoIP.
31

Summary of developments in Asia

1.

Most Asian jurisdictions are heavily focussed on mobiles-based competition, particularly

many of the developing economies with low fixed network penetration.

2.

Many mobile markets have reached saturation with mobile penetration greater than the
number of users. In such circumstances, growth is still being achieved by the rapid
growth in mobile data, handset innovation and new technologies such as 4G.

3.

Mobile spectrum is increasingly viewed as a scare resource, driving up auction prices and
leading to novel solutions (such as industry consolidation and spectrum sharing). Many
nations are seeking to release more spectrum, including by refarming existing spectrum.

4.

A number of Asian jurisdictions are deploying Next Generation Networks (NGN) or have
programmes and incentives in place to encourage greater fixed network deployment.

5.

A number of Asian jurisdictions are recognising the need for regulatory convergence,
particularly in relation to broadcasting and Internet technologies. As part of this trend,
difficult issues of Internet content regulation and VoIP technologies are being considered.
32

TELECOMMUNICATIONS, MEDIA & TECHNOLOGY

Regulatory
developments
in Australasia

33

Mobile market
shares 2012
45%

2. Telecoms has traditionally been dominated by Telstra with a roughly 42%

share of all telecoms services, but current reforms will see a form of
structural separation occur. Telstra will close its fixed network and migrate
its fixed customers to the National Broadband Network.

4. Telstra currently has the only 4G LTE network. Optus and Hutchison are
currently in a joint venture to share mobile sites and improve coverage.
5. The National Broadband Network will result in broadband access being
deployed throughout Australia. 92% of the population will receive
broadband fibre. The remaining 8% will receive fixed wireless or satellite.

23%

TELSTRA

3. Mobiles currently accounts for more than 50% of revenue in Australian

telecoms. Recent consolidation saw the merger of Vodafone and
Hutchison, leaving three key network operators.

32%

VODAFONE

1. At 24 million, Australia has a modest population by Asian standards but

has the 6th highest aggregate income in Asia and the third highest
individual income, assisted by Australias substantial mineral resources.

OPTUS

Australia

Low regulatory
risk

126% MOBILE
PENETRATION
(POPULATION)
98% FIXED
PENETRATION
(HOUSEHOLD)
34

Australia recent developments

1. Next Generation Network: The National Broadband Network (NBN) is dominating issues:

NBN Co will be a wholesale-only, open-access, state-owned, FTTH local access monopoly

principal benefit is delivering superfast broadband to rural Australia, but at a high cost (USD 38 billion)
network will cross-subsidise from metro to rural to achieve a uniform national price for basic access

2. Structural separation of Telstra: Telstra will migrate its fixed customers to the NBN over a
period of 8 years in return for migration payments: a form of structural separation:

migration will ultimately be forced, but end users have around 18 months to voluntarily migrate
regulatory impediments will exist to deter superfast fixed network build by NBN competitors
regulation is heavily reliant on regulatory undertakings to the ACCC: a new regulatory paradigm

3. Content regulation: The Government is currently considering plans to reform the regulation of
broadcasting and content in Australia under a streamlined regulatory framework.
4. Mobile spectrum: The digital dividend 700MHz spectrum is due for auction next year.
Spectrum renewal fees for existing spectrum licences have been higher than expected, hence
Australia is considering implementing different models for spectrum licensing fees.
35

New Zealand

Low regulatory
risk

1. At 4 million, New Zealand has one of the smallest populations in Asia, but
has the seventh highest individual income.

Mobile market
shares 2012
48%

2. The telecoms market one of the first in the world to be liberalised, but
historically suffered from an absence of Government intervention to
restrain the market power of the Telecom New Zealand.

38%

5. Mobile penetration rates are among the highest in Asia at 132% of the
population. Fixed network penetration is at 100%. A rollout by Chorus of
ultra-fast broadband will further increase broadband penetration.

2 DEGREES

4. The New Zealand mobiles market was historically a duopoly. A new

mobile operator, 2degrees, was launched in 2010 and has been rapidly
gaining market share while creating significant price-based competition.

TCNZ

3. Telecoms reforms from 2001 created a new framework formarket access

and competition. In 2011, Telecom New Zealand voluntarily demerged to
create Chorus as the structurally separated network business.

VODAFONE

14%

132% MOBILE
PENETRATION
(POPULATION)
100% FIXED
PENETRATION
(HOUSEHOLD)
36

New Zealand recent developments

1. Next Generation Network: The Ultra-Fast Broadband Network (UFB) and Rural
Broadband Initiative (RBI) have been dominating recent developments:

UFB involves Government subsidy for deployment of FTTH to urban areas in New Zealand
RBI involves Government subsidy for broadband deployment to rural areas in New Zealand
Telecom NZ is rolling out most of the FTTH infrastructure, but some local fibre companies involved
reforms are currently occurring to streamline USO levies

2. Structural separation: Telecom NZ structurally separated (via a voluntary demerger) in

order to win the UFB rights:

Chorus is the network access entity and will deploy FTTH. It will also own legacy copper access.
Telecom NZ will continue to own mobile networks but will be a fixed network retailer.

3. Content regulation: New Zealand Commerce Commission is currently undertaking

extensive public consultation to identify issues that may impede the uptake of broadband.
4. Spectrum: Digital dividend 700MHz spectrum is due for auction and will provide the basis
for LTE 4G deployments and wireless broadband deployments.
37

Summary of developments in Australasia

1.

Both Australia and New Zealand are rolling out fibre-to-the-home network infrastructure in
urban areas and mobile wireless in rural areas. However, significant differences exist in
relation to the extent of fibre rollout and the level of Government funding.

2.

Structural separation of the incumbent fixed network owner is occurring in both

jurisdictions on a voluntary basis. While New Zealand has achieved this immediately via a
demerger of Telecom NZ, Australia will take 8 years to achieve this via a network
migration of end users from Telstra to NBN Co.

3.

Further regulatory reforms are likely to occur in both jurisdictions to promote broadband
uptake. New Zealand is currently identifying impediments to uptake. Australia is seeking
to remove regulatory impediments by converging the regulation of digital media.

4.

The NGN rollouts are providing an opportunity for both jurisdictions to refine and reform
some of the key historic regulatory settings applied to the telecommunications industry.

5.

Digital dividend 700MHz spectrum will shortly become available and provide a basis for
further mobile competition in both jurisdictions. Mobile networks are being upgraded.
38

TELECOMMUNICATIONS, MEDIA & TECHNOLOGY

Regulatory
developments
in the Middle
East

39

Bahrain

Moderate to low
regulatory risk

1. Bahrain is ranked as the 12th most liberalised economy in the world,

reflecting its desire to attract international investment to achieve its
Economic Vision 2030.
2. Pursuant to its National Economic Strategy, Bahrain was one of the first
Gulf States to liberalise its telecoms market. While Bahrain has the
smallest telecoms market in the Middle East by population, its market is
now one of the most competitive.
3. Batelco is the incumbent operator in Bahrain and is subject to substantial
regulation based principally on dominance designations.
4.

The Telecommunications Regulatory Authority of Bahrain takes a proactive

and strict approach to enforcement of that regulation, informed by
competition policy concerns.

5. The TRA often leads regulatory trends in the Gulf and recently won an
award as the most progressive regulator in South Asia, the Middle East,
and North Africa

40

Bahrain recent developments

1. Bahrain is currently finalising its third Telecommunications (five year) Plan.

The Plan has been prepared and is currently awaiting Ministerial sign-off.

2. The Bahrain Electricity & Water Authority is deploying a fibre network, but deployment is not as
advanced as other Gulf States. Bahrain has instead favoured local loop unbundling of
Batelcos legacy copper access network as an immediate means to promote competition.
3. Bahrain recently implemented both fixed and mobile number portability, being the first country in
the Middle East and North African to achieve this.
4. Bahrain has recently implemented detailed Consumer Protection Guidelines which are
unprecedented in the Gulf.
5. The TRA has recently undertaken one of the first complex competition investigations in the Gulf
in the context of an alleged vertical price squeeze

41

Qatar

Moderate to low
regulatory risk

1. Qatar has the world's highest per capita GDP and is one of the worlds
fastest growing economies. During 2011, Qatars telecoms markets
experienced significant growth, driven by expansion of access to
broadband services and by increasing mobile subscriber penetration.
2. Around two thirds of telecoms services in Qatar are now mobile-based.

3. Qatars telecoms sector is not yet fully liberalised, but is still heavily
regulated. ictQATAR is the independent industry regulator in Qatar.
4. Qtel is the incumbent fixed and mobile network operator. The second
licensee, Vodafone Qatar, operates competing mobile infrastructure with
a fixed network deployment underway.
5. ictQatar has indicated it will consider licensing a third fixed operator
during 2012 and may also consider whether a third mobile operator is
required.
42

Qatar recent developments

1. The Qatar National Broadband Network (QNBN) is currently being deployed using FTTH on a
fibre infill basis to supplement fibre rollouts by Qtel as incumbent. QNBN is state-owned.

QNBN will operate under a wholesale-only, open access model.

QNBN will supply wholesale bitstream to the other fixed network licensees, Qtel and Vodafone Qatar.

2. Mobile number portability will shortly be launched in Qatar. ictQATAR as industry regulator will
then investigate fixed number portability.
3. As with Bahrain, Qatar has focussed on enhancing consumer protection:

A new consumer affairs department has been created within ictQATAR with call centre.

4. Qatar recently reviewed is historic market definition and dominance designations, but made no
material changes. This is not surprising given Qatars markets are not yet fully liberalised.
5. During 2011, Qtel was required to cease using the Virgin Mobile brand as Vodafone Qatar
alleged that this mislead consumers into believing there was a third mobile operator.

43

United Arab Emirates

Moderate to low
regulatory risk

1. The UAE is currently ranked as the 14th best nation in the world for doing
business, based on its economy and regulatory environment. The UAE has
relatively mature telecommunications markets serving business centres in
Abu Dhabi and Dubai that act as a hub for the Middle East region and
surrounding nations.
2. The UAE telecoms sector is not yet fully liberalised, but is heavily
regulated. The Telecommunications Regulatory Authority of the UAE is the
independent industry regulator.
3. Etisalat is the incumbent fixed and mobile operator. Etisalat provides fixed
access in most areas of the UAE and operates a 4G LTE mobile network.
4. The second licensee, Du, operates a rival 3.75G HSPA+ mobile network
and owns significant fixed infrastructure in the free zones and new housing
estates of Dubai.
5. A number of satellite providers have also been licensed to provide services.
44

UAE recent developments

1. The UAE will shortly become one of the first countries in the world to achieve full fibre coverage:

Du deployed fibre in new estates in Dubai.

Etisalat will shortly complete its upgrade from copper to fibre for the remainder of the UAE.

As there is no need for a National Broadband Network in the UAE, the TRA has instead required
Etisalat and Du to provide each other with wholesale bitstream access.

2. Delays have occurred in implementing mobile number portability (MNP) in the UAE.

Once MNP is implemented, the UAE will move to implement fixed number portability.

3. The Telecommunications Regulatory Authority (TRA) of the UAE is currently implementing

enhanced economic regulation and is in the process of issuing regulatory adjustments.
4. The TRA is currently undertaking public consultation on draft consumer protection regulations.
5. In 2010, the TRA threatened to suspend Blackberry services in the UAE until Research in
Motion complied with interception requirements.
45

Summary of developments in the Middle East

1.

Bahrain, Qatar and the UAE are each deploying fibre, but under different rollout models.
The UAE should achieve ubiquitous fibre deployment by early 2012. Bahrain and Qatar
will reach an advanced state of deployment by the end of 2012.

2.

Fixed market competition will occur in each jurisdiction via wholesale bitstream access.
Given Bahrains more advanced state of market deregulation, it has also sought to achieve
immediate broadband competition via copper local loop unbundling.

3.

Each of the Gulf States are implementing fixed and mobile number portability.

4.

Economic regulation remains at different stages of evolution in the different markets. The
UAE will continue to implement regulation. Qatar and Bahrain will continue to refine its
application. Bahrain will also continue to assess whether selective rollback is required.

5.

Each jurisdiction is focussing on consumer protection to a higher degree.

46

TELECOMMUNICATIONS, MEDIA & TECHNOLOGY

Regulatory
risk profiles

47

Level of regulatory risk

LOW REGULATORY RISK

HIGH REGULATORY RISK

All of the following:

Rules are clearly defined
Well resourced regulatory agencies
Low risk of policy reversals
Decisions are predictable

Any of the following:

Rules are not clearly defined
Less resourced regulatory agencies
High risk of policy reversals
Decisions can be unpredictable

Hong Kong

New Zealand

Philippines

Australia

Qatar

Bangladesh

China

Singapore

UAE

Indonesia

India

Japan

Bahrain

Malaysia

Thailand

48

Vietnam

Regulatory risk is factored into commercial risk

SEC filing by ChinaCache - the leading CDN operator in China
As of the date of this prospectus, there is no legal definition as to what constitutes a "content
and application delivery business," nor are there laws or regulations in China specifically
governing the content and application delivery business.
We cannot assure you that PRC governmental authorities will continue to deem our content
and application delivery business and any of our newly developed technologies, network and
services used in our business as a type of value-added telecommunications business
covered under the VAT license of Beijing Blue I.T.
As we expand our networks across China, it is also possible that the MIIT, in the future, may
deem our operations to have exceeded the terms of our existing license. Further, we cannot
assure you that Beijing Blue I.T. will be able to successfully renew its VAT license upon its
expiration, or that its VAT license will continue to cover all aspects of our content and
application delivery business and operations upon its renewal.
In addition, new laws, regulations or government interpretations may also be promulgated
from time to time to regulate the content and application delivery business or any of our
related technology or services, which may require us to obtain additional, or expand existing,
operating licenses or permits.
Any of these factors could result in Beijing Blue I.T. being disqualified from carrying out its
current business, causing significant disruption to our business operations which may
materially and adversely affect our business, financial condition and results of operation.
49

Disclaimer
The purpose of this presentation is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Norton Rose LLP, Norton
Rose Australia or Norton Rose OR LLP on the points of law discussed. No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any constituent part of
Norton Rose Group (whether or not such individual is described as a partner) accepts or assumes responsibility, or has any liability, to any person in respect of this presentation. Any reference to
50
a partner or director is to a member, employee or consultant with equivalent standing and qualifications of, as the case may be, Norton Rose LLP or Norton Rose Australia or Norton
Rose OR LLP
or Norton Rose South Africa (incorporated as Deneys Reitz Inc) or of one of their respective affiliates.