TRA Roadmap for the Liberalization of TRA Roadmap for the Liberalization of TelecommunicationsTelecommunications

Broadband WorkshopIn cooperation with the Partnership for Lebanon

January 17, 2008Beirut, Lebanon

TRA Vision for BroadbandTRA Vision for Broadband

Market ObjectiveMarket ObjectiveMarket ObjectiveMarket ObjectiveIntroduce competition in 2008 in all the markets for telecommunications services except basic telephony services

FocusFocusFocusFocus

Liberalize national data services to promote broadband services Open market for mobile telecommunications and international (voice and data)

services Liberalization of basic telephony services planned for January 1, 2010

Promoting CompetitionPromoting CompetitionPromoting CompetitionPromoting Competition

Introduce various forms of competition to the market: Facilities-based competition Service-based competition

Encourage competition between different technologies

2

Broad View of Market SituationBroad View of Market Situation

3

ADSL Recap Signing of MoU in January 2006 between private and MoT Unbundling the local loop Stating principles of fair competition Project launch delayed till Q2 2007

Bit Stream and Line Sharing Guidelines drafted by MoT Line-sharing, and retail prices are set by MoT and issued by decree Key elements are missing

ADSL Market Overview Market share unevenly split between private and MoT No clear and publicly announced timetable for further CO preparations Limited service offering Recent price reductions by private companies have introduced some competition Severely limited international bandwidth leading to high contention ratios International bandwidth allocation regime not transparent and favors one of the providers -

MoT

Current SituationCurrent SituationCurrent SituationCurrent Situation

TRA Actions to Promote BroadbandTRA Actions to Promote Broadband

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Issue 3 Metro / Core / International licenses

Regularize existing ISP/DSP licenses (duration, scope of services, etc)

Open licensing for access

Issue 3 Metro / Core / International licenses

Regularize existing ISP/DSP licenses (duration, scope of services, etc)

Open licensing for access

Interconnection and Access regulations

Infrastructure Sharing

Unbundling Regulations (and MoT Reference Offer for Data Access)

Accounting separation for Liban Telecom

Efficient spectrum use

Optimum spectrum pricing

Interconnection and Access regulations

Infrastructure Sharing

Unbundling Regulations (and MoT Reference Offer for Data Access)

Accounting separation for Liban Telecom

Efficient spectrum use

Optimum spectrum pricing

Market Structure Market Structure & Licensing& Licensing

Market Structure Market Structure & Licensing& LicensingLLLL Regulatory Regulatory

Framework Framework Regulatory Regulatory Framework Framework RRRR

** Two licenses for the mobile operators and two others for the core broadband providers

* Assuming that Liban Telecom will be formed in 2008

Proposed Liberalization RoadmapProposed Liberalization Roadmap

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LLLL2008 2009 2010 2011

Mobile Network Operator

Virtual Network Operator

Fixed Network Operator

Reseller

Broadband Access

Metro / Core

International Access

Facilities Service Provider

Reseller

Broadcasting Transmission

Value Added Service Provider

3

License Award

Open licensing

Market Review

*

?

3**

4

Core/metro/access

Nationwide service

International gateway

10-15 year license

Awarded through auction if competing applications

New Broadband LicensesNew Broadband Licenses

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Core/metro/access

Nationwide coverage

International gateway

LLLL

TRA is considering whether and how to award one of these licenses to a consortium of DSPs

TRA is considering how to license geographically- restricted metro licenses (including municipalities)

Liban Telecom LicenseLiban Telecom LicenseLiban Telecom LicenseLiban Telecom License Two Metro / Core / International LicensesTwo Metro / Core / International LicensesTwo Metro / Core / International LicensesTwo Metro / Core / International Licenses

New metro/core licensees have access to international gateway at fair, reasonable rates

Licensees obligated to provide interconnection to other licensed operators

Allowed interconnection at international gateway, national nodes, IXPs

Open Access obligation to metro/core and international gateway

New metro/core licensees have access to international gateway at fair, reasonable rates

Licensees obligated to provide interconnection to other licensed operators

Allowed interconnection at international gateway, national nodes, IXPs

Open Access obligation to metro/core and international gateway

Regularization of DSP LicensesRegularization of DSP Licenses

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TRA is preparing draft DSP licenses

Frequency assignment

International capacity (voice excluded)

LLLL

Status of revenue sharing (and percentage)

Frequency pricing

Current SituationCurrent SituationCurrent SituationCurrent Situation

Pending IssuesPending IssuesPending IssuesPending Issues

Licensing RoadmapLicensing RoadmapLicensing RoadmapLicensing Roadmap

Broad View of TRA RegulationsBroad View of TRA Regulations

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RRRR

Spectrum Management Regulation

Spectrum Management Regulation

Price Regulation

Price Regulation

Interconnection Regulation

Interconnection Regulation

Drafting Drafting StageStage

Draft Ready Draft Ready StageStage

Consultation Consultation StageStage

TRA Review TRA Review StageStage

IssuedIssued

Type Approval Regulation

Type Approval Regulation

National Frequency

Plan

National Frequency

Plan

Accounting Separation Regulation

Accounting Separation Regulation

Interconnection Interim Pricing

Decision

Interconnection Interim Pricing

Decision

Spectrum Pricing

Regulation

Spectrum Pricing

Regulation

Consumer Affairs

Regulation

Consumer Affairs

Regulation

Quality of Service

Regulation

Quality of Service

Regulation

Significant Market Power

Regulation

Significant Market Power

Regulation

Unbundling Regulation

Unbundling Regulation

Infrastructure Sharing: Infrastructure Sharing: Benefits and RisksBenefits and Risks

Infrastructure Deployment

Infrastructure Deployment

Shared Infrastructure Costs – Capex reduced

Shared Infrastructure Costs – Capex reduced

Resource Maximization

Resource Maximization

Reduces waste caused by infrastructure redundancy and duplication

Reduces waste caused by infrastructure redundancy and duplication

Competition and Prices

Competition and Prices

Reduces barriers to entry, increases competition and lowers prices to end-

users

Reduces barriers to entry, increases competition and lowers prices to end-

users

EnvironmentEnvironment Reduces impact on landscapeReduces impact on landscape

Investment may be discouraged if cost of building network far greater than

cost of sharing

Investment may be discouraged if cost of building network far greater than

cost of sharing

Reduces backup infrastructure in case of high usage, security risks, or

environmental crises

Reduces backup infrastructure in case of high usage, security risks, or

environmental crises

Price collusion – though mitigated by appropriate regulation

Price collusion – though mitigated by appropriate regulation

No significant risksNo significant risks

9

RRRR

BenefitsBenefitsBenefitsBenefits RisksRisksRisksRisks

Infrastructure Sharing: TRA PolicyInfrastructure Sharing: TRA Policy

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Civil engineering and non-active elements of a network (e.g. ducts, towers,

and masts)

Geographical areas where it is not economic for multiple operators to build

infrastructure

Geographical areas where environmental concerns are particularly important

(e.g. proliferation of mobile network masts)

RRRR

TRA wants to promote infrastructure-sharing especially regardingTRA wants to promote infrastructure-sharing especially regarding::TRA wants to promote infrastructure-sharing especially regardingTRA wants to promote infrastructure-sharing especially regarding::

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Radio Frequency Assignment & PricingRadio Frequency Assignment & Pricing

Appropriate frequency pricing

Technology neutral Licenses

Frequency assignment regime tailored to scarcity of, and demand for, spectrum

Freeing up much of the spectrum for commercial activity

Optimal use of frequency

Encourage efficient use of frequency

Encourage investment in wired infrastructure

Free up unused frequencies and open room for newcomers

Auction

Beauty Contest

First Come First Serve

RRRR

ObjectiveObjectiveObjectiveObjective

TRA PolicyTRA PolicyTRA PolicyTRA Policy

Efficient Pricing willEfficient Pricing will……Efficient Pricing willEfficient Pricing will…… Allocation MethodsAllocation MethodsAllocation MethodsAllocation Methods

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Long Term GoalsLong Term Goals

Provide state-of-the-art telecom services and infrastructure

Attract investments

Widen public access to telecom services

Increase consumer choice and improve customer experience

Increase competition in the Lebanese telecom market

Develop capital markets

Create high value-added jobs

TelecomTelecomTelecomTelecom

ConsumerConsumerConsumerConsumer

EconomyEconomyEconomyEconomy