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David Butcher and Associates
Bangladesh Telecommunications Regulatory Commission
Unified Licensing Regime Consultancy
Stakeholder Meeting 27 September 2009
David Butcher and Associates
Today’s Agenda
• The purpose of today’s 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
David Butcher and Associates
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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David Butcher and Associates
Licensing Overall
David Butcher and Associates
What is a Unified License
Network Services
Applications Services
Content Services
Network Facilities
Unified Licenses are technology-neutral and service-neutral
ULR licensing promotes vertical separation between facilities, network, applications, and
content
Tel
ecom
fix
ed l i
neli c
ense
Mob
ile li
cens
e
ISP
lice
nse
VA
lice
nse
Old licenses were issued based on specific technologies, and services to vertically
integrated businesses
All activities related to the provision of a particular service are vertically
integrated for the provision of that service
Ser
vice
L
ice
nce
Net
wo
rk
Lic
en
ce
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David Butcher and Associates
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.
• ISSUES– 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
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David Butcher and Associates
Licensing: - International Best Practice
David Butcher and Associates
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
• ISSUES– 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),
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David Butcher and Associates
Best Practice Objectives
• FINDINGSITU 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
• ISSUES– to which of these objectives
should Bangladesh give priority?
– which of these objectives support the poverty alleviation goals of the GOB?
• RECOMMEDATIONSWe 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
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David Butcher and Associates
Efficient Network Configuration
• FINDINGS– should there be a separate
circuit switched voice and data network?
– most administrations have separate networks for voice and data.
• ISSUES– voice network is more
expensive to operate, – requires more investment and – it is uneconomic to terminate
data calls on a voice network.
• 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.
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David Butcher and Associates
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.
• ISSUES– 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.
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David Butcher and Associates
Future Shape of Licenses
David Butcher and Associates
Objective: Neutrality, Flexibility, Efficiency
BTRC Objective Decision Response
Unified License Regime
Multiple Categories
Single or Multiple? 1
Many Categories
Exemptions
Categories or Facilities-Services split 2
Design Authorisation
Exemptions
Single Authorisation
Individual-spectrum
Exemptions
Services (SBO)
3
Facilities (FBO)
Individual – dominant
3
Exemptions
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David Butcher and Associates
Which Model is Appropriate for Bangladesh?
• FINDINGS– Options are:
• single authorization (license), • multiple categories or • two categories focused on
facilities (infrastructure) and services respectively?
– 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
• ISSUES– ICT businesses’ dual nature: – (1) management of easements
and the construction and maintenance of networks.
– (2) a sophisticated services operation (including exchanges).
• 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.
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David Butcher and Associates
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.
• ISSUES– 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.
– regional franchises do not create a competition framework.
• 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.
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David Butcher and Associates
Technological Neutrality
• FINDINGS– in Bangladesh licenses are
currently technology specific,
• 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.
• 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.
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David Butcher and Associates
Content and Applications
• FINDINGS – Bangladesh currently has no
regulation of content or applications,
• ISSUES– is there a role for licensing
content and applications?– some other jurisdictions (e.g.
Malaysia) have licensing for content and 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.
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David Butcher and Associates
Appropriate Fees, Charges, Revenue Shares
David Butcher and Associates
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.
• 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?
• 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.
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David Butcher and Associates
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.
• ISSUES– 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 long-term government revenues.
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David Butcher and Associates
Migration Issues
David Butcher and Associates
Content of Licenses
• FINDINGS– most licenses have a term of
15 years, some are due to expire soon (2012?).
• ISSUES– 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.
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David Butcher and Associates
Amortization of Legacy Investments
• FINDINGS– the proliferation of licenses
has led many investors to consume large proportion of Bangladesh’s investment capital in businesses that are not viable without government protection,
– a migration plan will not be acceptable must amortize these investments.
• ISSUES– 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.
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David Butcher and Associates
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.
• 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
• 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.
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David Butcher and Associates
ULRs aim at facilitating Next Generation Networks (NGN) Service Convergence via an IP Network Digital Platform
IP Network PlatformIP Network Platform
IP CORE Network / IP CORE Network / VPNsVPNs
AccessAccess
WLANWLANWLANWLAN
DSLDSLDSLDSL
TDMTDMTDMTDMIXCIXC
Frame/ X.25Frame/ X.25Frame/ X.25Frame/ X.25
GPRSGPRSGPRSGPRS
SCDMASCDMA
EthernetEthernetEthernetEthernet
CDMAWCDMACDMAWCDMACDMAWCDMACDMAWCDMA
InternetInternetTransportTransport
IP TransitIP Transit
Hosting & ContentVoIPVoIPService
Application
IP VPN
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David Butcher and Associates
Schedule of Interventions
David Butcher and Associates
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.
David Butcher and Associates
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!
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