Significance and Needs For
Telecom Licensing
Rizwan Ahmed Hydri
DG(Licensing),PTA
July 2015
Introduction
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Historically State Owned Incumbents
Monopoly Based
Telecom a Branch of Public Administration
No Licensing
Deregulation and Privatization in 1990s
Necessitated Licensing (Incumbents &
Competitors)
Presentation outline
1. What is a Telecommunications License?
2. Fundamentals of Licensing
3. Licensing Objectives
4. Types of Licensing Frameworks
5. Principles of Licensing
6. Latest Licensing Trends – Convergence, Unified Licensing
What is a Telecommunications License?
• An official authorization to provide services and operate networks
• Licenses describe rights and obligations of licensees
• Provide confidence to investors to invest millions or billions
• Clarifies what the licensee is and is not allowed to do
• Can be a small document or a self contained regulatory code that
defines the terms and conditions under which the licensee may
operate.
Licenses Vs Development Status Of Regulatory Framework
Country
Licensing Practice
Development Status of
Regulatory Framework
Canada
Short license
Well developed
USA
Short license
Well developed
UK
License issued to BT in the 80s was a At the time there was no
self contained regulatory code
regulatory frame work
India
Fairly detailed license
Fairly developed
Pakistan
Fairly detailed license
Fairly developed
Fundamentals of Licensing
• Licensing a core element
• Determines degree of competition, revenues earned by
governments, and conditions for operation and supply of
services.
• Effective and forward‐looking licensing framework essential
• An essential public service
• Framework that defines what is regulated, who is regulated,
and how they are regulated. This is the purpose of licensing
Fundamentals of Licensing
Licensing provides a clear scope for regulation
Key regulatory
questions
Potential scope of
Regulation
Defined scope of regulation
What to
regulate?
Which services,
technologies and
facilities are regulated?
Those telecommunications networks or services
that are offered to the public on commercial
terms generally require a license to operate or
provide.
Who to
regulate?
Which network and
service providers are
regulated?
Incorporated entities licensed under a country’s
telecommunications regulatory framework.
How to
regulate?
Which regulations apply
and how are they
administered?
Those general regulations provided the
telecommunications regulatory framework or
within an individual telecommunications license.
Licensing Objectives
• Regulating the provision of an essential public service through some
controls to support the public interest (e.g. safety)
• Assist in expanding network coverage and other universal service
objectives.
• Represent a key element in shaping market structure (e.g. number of
players)
• Establish a competition framework through fair trading conditions
• Fees/taxes to generate revenues for Governments/ regulators
• Fairly and efficiently distribute scarce resources (spectrum, numbers)
• Support consumer protection through mandated license conditions
• By clearly defining rights and obligations, licenses underpin regulatory
certainty
Types of Licensing Frameworks
Type of Licensing
Requirement
Individual Licenses
(Operator Specific
Licenses)
General Authorizations
(Class Licenses)
Open Entry
Main Features
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Issued to a single operator
Usually a customized document
Often contains detailed conditions
Frequently granted through competitive process
 Where significant regulatory objectives can be
achieved by establishing general conditions
 Sets out basic rights and obligations, and
regulatory provisions of general application.
 No competitive selection process; all qualified
are authorized.
 No authorization process or qualification
 No requirements, beyond rules generally
applicable to the ICT sector
 Registration requirements or other rules of
general application are sometimes imposed by
regulation
Examples
 Basic PSTN services
 Mobile & fixed wireless
services (Spectrum)
 Data transmission services
 Resale services
 Private networks
Internet Service Providers
Value added services
EXAMPLES OF LICENSING FRAMEWORKS
Country
Japan
Licensing Category
Open
i.
Notification only
ii. Registration required
Australia
Individual Licensing
Pakistan
i.
ii.
Individual Licensing
General Authorization
(Class Licensing)
India
Individual Licensing
Singapore
Individual Licensing
UK
General Authorization
Business Type
i. to operate a telecom business
ii. to operate a telecom business by
installing telecom circuit facilities
i.
ii.
Operation and provision of
telecom systems and services
Value Added Services
Operation and provision of telecom
systems and services
Operation and provision of telecom
systems and services
Operation and provision of telecom
systems and services
Licensing Framework Statutes
Examples
Japan’s Registration/Notification Framework
• Before 1 April 2004, telecommunication carriers in Japan were categorized into
two types under the Telecommunications Business Law:
“Type 1
telecommunications carriers,” which offered services using their own facilities,
and “Type 2 telecommunications carriers,” which did not have their own facilities
and which leased their lines.
• Carriers were required to obtain permission to engage in a Type 1 business or
were required to submit a registration or notification of their entry into the
market to engage in a Type 2 business.
• In light of heightened competition and the emergence of numerous substitute
services – and also out of a desire to review the regulations for market entry and
service provision -- the Telecommunications Business Law was completely
reviewed in 2003 and the amended law came into force on 1 April 2004.
Japan’s Registration/Notification Framework
•
The amendments (April 2004):
– abolished the distinction between telecommunication circuit facilities of Type 1
and Type 2 carriers;
– abolished the permission system for market entry and withdrawal and
introduced a registration and notification system in its place;
– abolished tariff regulation; and
– improved consumer protection rules, holding carriers more accountable for
service provision and handling of complaints.
• With regard to registration and notification, the amended
Telecommunications Business Law states that:
– Any person who intends to operate a telecommunications business by installing
telecommunications circuit facilities on a scale exceeding the standards
specified in the applicable Ministry of Internal Affairs and Communications (MIC)
ordinance shall obtain registration from the Minister for Internal Affairs and
Communications.
– Any person (except a person who has to obtain registration) who intends to
operate a telecommunications business shall submit a notification to the
Minister for Internal Affairs and Communications.
Thailand’s licensing framework
• Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and
Telecommunications Services 2010 established the National Broadcasting and
Telecommunications Commission (NBTC).
• Section 27(6) provides NBTC with the power “to license and regulate the operations
of…telecommunications services…and prescribe licensing criteria and procedures,
conditions, or licensing fees.”
• Telecommunications Business Act 2001 requires that any entity carrying out a
telecommunications service must hold a valid license. There are three categories of
telecommunications licenses that can be awarded by the NBTC:
– Type 1 license: For operators who do not own their own network
infrastructure.
– Type 2 license: For operators with or without their own network infrastructure
but who target only a segment or segments of the telecommunications market.
– Type 3 license: For operators with their own network infrastructure who
provide services to the general public.
• Foreign ownership of a Type 2 or 3 licensee is capped at 49%, however there are no
restrictions on the proportion of directors who must be Thai or on the nationality of
a person authorized to sign contracts on behalf of the licensee.
Principles of Licensing
Best practice for licensing processes
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WTO General Agreement on Trade in Services (GATS) and Annex on Telecommunications provide
trade rules that are applicable to telecommunications regulation and licensing. The Reference
Paper provides additional requirements that are legally biding for countries that commit to them.
•
Where a telecommunications license is required, the following shall be made publicly available:
– All the licensing criteria and the period of time normally required to reach a decision concerning an
application for a license; and
– The terms and conditions of all individual licenses.
•
The reasons for the denial of a license will be made known to the applicant on request.
•
Any procedures for the allocation and use of scarce resources, including frequencies,
•
numbers and rights of way, will be carried out in an objective, timely, transparent and
nondiscriminatory manner. The current state of allocated frequency bands will be made publicly
available, but detailed identification of frequencies allocated for specific government uses is not
required.
Principles of Licensing
Fundamental Principles of Licensing
• Transparency - Licensing process be Conducted openly and the criteria
be published well in advance.
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Advance publication of a call for applications
Separation of qualification and selection processes
Return of unopened financial offers
Public opening of sealed financial offers
• Public Consultation- Good understandings of all stakeholders on the
scope , terms and conditions of the license.
• Renewal, Amendment and Renegotiation- Criteria for renewal upon
initial tenure expiry
• License Fees- Various Fees imposed on licensee w.r.t ARD, Spectrum
Fee etc.
 A fee paid to operate systems and provide services
 Administrative charges to manage spectrum
 Administrative charges to regulator for other regulatory functions
Principles of Licensing
Fundamental Principles of Licensing (Continued)
• Balancing Certainty and Flexibility- permitting license amendments with mutual
consent
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Unilateral amendments
Short License
Amendments with mutual consent
Unilateral amendments of specific types license conditions
• Spectrum Auctions. License for service and associated spectrum provided together
• Service Areas- Geographical areas defined in the license
 Financial Viability
 Larger areas permit cross subsidization
 National licenses provide seamless service to consumers
Principles of Licensing
Fundamental Principles of Licensing (Continued)
• Qualification Criteria- Distinguish between qualification and selection criteria. General
authorizations only qualification criteria
• Selection Criteria Single criterion
 Auction
 Lowest subsidy bidder wins
 Comparative evaluation
Principles of Licensing
Typical License Conditions
Table of Contents
Part I:
The License
1. Period of License
2. Payment of License Fee
3. License is not Transferable
4. Description of Systems and Services
Part II:
Basic Obligations of the Licensee
5. Provision of Domestic Services
6. Provision of International Services
7. Provision of Emergency Call Services
8. Public Maritime Emergency Services
9. Co-operation with Civil/Public Bodies
10. Provision of Directory Enquiry Services
11. Provision of Integrated Directories
12. Integrated Directory and Enquiry Services
13. Public Payphones
Part III:
Technical Obligations
14. Use of Telecommunication Equipment in the System
15. Operation of Radio Communication Stations
16. Use of Radio Frequencies
17. Assignment of Numbers
Part IV:
Access and Interconnection Obligations
18. Requirements to Provide Access
19. Connection to Other Systems
20. Arrangements for Connection System
21. Changes to System
22. Infrastructure Sharing and Deployment
Part V:
Service Obligations
23. Price Control/Tariff Arrangements/Quality of Service Standards
24. Publication of Charges, Terms and Conditions and Other Information
25. Confidentially of Subscriber Information
Part VI:
Other Obligations
26. Codes of Practice
27. Number Portability
28. Accounting Separation
29. Restriction on Undue Discrimination
30. Restriction Against Anti-Competitive Arrangements
31. Restriction on Exclusive Arrangements for International Services
32. Contracts with Third Parties to Operate or Provide Licensed System or Services
33. Ownership, Shareholding and Management Arrangements
34. Direction by the Regulator
35. Dispute Resolution
36. Provision of Information to the Regulator
37. Participation in Emergency Activities
38. International obligations
Part VII:
Suspension, Variation and Termination
39. Penalty Framework for Breach of License Conditions
40. Variation of Terms of License
41. Suspension/Cancellation
42. Termination of License
Part VIII:
Misc
43. National Security
19
44. Force Majeure
Licensing and Convergence
What is convergence?
From a licensing perspective, there is no universally accepted definition of convergence. The term
has variously been used to describe recent technological developments, merger and acquisition
strategies and new service and application types. However, major global institutions have
attempted to define convergence for the purpose of legislative and regulatory reform:
“The ability of different network platforms to carry essentially similar types
of services and applications.” European Union
“The coming together of previously technologically and commercially distinct
markets such as broadcasting, print publishing, cable television, fixed wire
voice telephony and cellular mobile and fixed wireless access.” ITU
“The processes by which communications networks and services, which were
previously considered separate, are being transformed such that: different
networks and services carry a similar range of voice, audio‐visual and data
transmission services, different consumer appliances receive a similar range
of services and new services are being created.” OECD
Licensing and Convergence
Convergence trends
Trend in licensing practices reflects developments in telecommunications market, especially rapid
growth in data and internet services. Licensing types and categories tend to reflect the value
chain of telecommunications services.
Value chain consists broadly of network infrastructure, followed by content delivery and other
applications, and value‐added services.
Key challenge for licensing frameworks is rise of internet services ( ‘over the top’ or OTT services).
Includes applications such as Skype, WhatsApp, Viber, LINE, etc. Are extraterritorial and often
don’t need physical infrastructure to operate in a jurisdiction.
Trend towards unified licensing
Convergence in the telecommunications sector has meant countries have begun to reevaluate
how regulatory layers are defined, including how best to structure license categories.
A unified license combines licensing for both the provision of services and the operation of
network facilities. A unified licensing regime should provide a simplified licensing procedure,
allowing service providers to use any technology, ensuring greater flexibility and an efficient use
of resources.
India’s transition to unified licensing
Unified Licensing-India
• India issued guidelines for Unified Access Services licensing (UASL) in 2003.
• Salient features:– Existing operators were provided option to continue or migrate towards new UASL.
– Other terms and conditions w.r.t service area, roll out obligations and Bank Guarantee
remained same.
– Any technology can be deployed by UASL without any restriction.
– No additional fee for Cellular operator to migrate to USAL.
– Basic Service Operator shall pay fee equal to cellular operator fee for migrating to USAL.
•
Authorization under Unified License comprises for any one or more services listed
below:
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Unified License (All Services)
Access Service (Service Area-wise)
Internet Service (Category-A-B-C with All India jurisdiction)
National Long Distance (NLD) Service
International Long Distance (ILD) Service
Global Mobile Personal Communication by Satellite (GMPCS) Service
Public Mobile Radio Trunking Service (PMRTS) Service
Very Small Aperture Terminal (VSAT) Closed User Group (CUG) Service
INSAT MSS-Reporting (MSS-R) Service
Resale of International private Leased Circuit (IPLC) Service
Reference- i-http://www.ictregulationtoolkit.org/en/toolkit/docs/Document/652
ii- http://www.dot.gov.in/licensing/unified-license
Multi Service Licensing-Malayasia
• Malaysia has moved from a system of 31 different types of servicespecific authorizations to four different multi-service authorizations.
• The four categories of authorizations are:
– Network Facility Provider (NFP) Licenses
• NFP Licenses authorize licensees to provide network facilities. NFP licensees include
owners of satellite earth stations, fibre optic cables, communications lines and
exchanges, radio communication and transmission equipment, mobile
communication base stations and broadcasting towers and equipment
– Network Service Provider (NSP) Licenses
• NSP licensees are authorized to provide network services such as basic connectivity
and bandwidth that support a variety of applications.
– Application Service Provider (ASP) Licenses,
• ASP Licence may provide various application services such as voice services, data
services, Internet access services, and VoIP. CASP Licenses are a special subset of ASP
Licenses
– Content Application Service Provider (CASP) Licenses.
• CASP licensees are authorized to provide traditional broadcast services and other
content-based services such as online publishing and information services
Thank you
Fundamentals of Licensing
• Licensing is one of the core elements of any communications market’s regulatory
framework. Licensing is integrally tied to the structure of the communications market.
• Licensing determines the degree of competition between operators, revenues earned
by governments from fees, and the conditions under which market participants can
operate and supply services in the market.
• An effective, forward‐looking licensing framework is essential for the successful
deployment of value‐maximizing technologies, the promotion of effective competition
between operators, and for the facilitation of investment in the communications
sector.
• Telecommunications is viewed as an essential public service with large positive
externalities (like other network industries such as water, electricity and gas). Public
policy places a strong emphasis on effective regulation.
• Given that the telecommunications sector must be regulated, governments and
regulators need a framework that defines what is regulated, who is regulated, and
how they are regulated. This is the purpose of licensing.