THE NEW TELECOMMUNICATIONS LICENSING REGIME

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THE NEW TELECOMMUNICATIONS LICENSING REGIME
The Regulatory Implications

• Ssemboga Ann Rita
• Economist
• Consultative Workshop Friday, October 20, 2006

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Structure of presentation

• Background
• Defining the New market structure
• Implications
• Implementation

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Background

• 24th July 2005 End of Exclusivity
• 11th May 2006 Ministerial guidelines on opening
  up services to full competition released
• 14th August 2006 Regime became effective-UCC
  started receiving applications for service
  licenses
• 20th October 2006 Ministerial guidelines on
  opening infrastructure to full competition
  gazetted
• This effectively means that the
  telecommunications sector in Uganda is fully
  Liberalized.

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Defining the new telecoms Market

• The key principles and objectives of the new
  market structure are
• To ensure timely rollout of backbone and
  distribution infrastructure throughout Uganda.
• To encourage the free growth of new applications
  and services leveraging on the technological
  developments in the Information and Communication
  Technology (ICT) area.
• To provide an effective and fast response to
  market and customers' needs through a simplified,
  clear and transparent licensing regime while
  ensuring flexibility and efficient utilization of
  resources,
• To take into account convergence, while making
  sure it is not used as an excuse to restrain new
  entrants
• A licensing regime that encourages rural,
  regional players and global ICT applications.

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Defining the new telecoms Market Cont.

• The new regime classifies the market under 2
  broad licensing categories namely
• Service Provider License.
• Infrastructure License categories.
• We recognize the legal rights of existing
  operators and thus shall continue to the extent
  that they are not inconsistent with the new
  regime or any amendments under the Act.
• NTOs
• Cellular Telecom Operators
• Licensed ISPs

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The new market structure in Uganda.
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Implications

• Full liberalizations requires that we
  review/redefine and set new rules for
• Competition
• Tariff Regulatory provisions
• Interconnection
• Costing and regulatory accounting provisions
• among others
• Full liberalization does not mean fair and
  effective competition
• Nature of the industry Utility network industry
• High Sunk investment costs required- the ease of
  entry and exist is limited
• Historical players

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Implications cont.

• Recap of the legislative mandate
• Section 56, 57,58 gives UCC the mandate to
  promote, develop and enforce fair competition and
  equity of treatment.
• cf S.4 (f) to develop a tariff system that
  protects consumers from excessive tariff increase
  and avoids unfair competition while function
• cf S. 4(t) gives UCC the right to regulate
  interconnection and access systems between
  operators and users of telecommunication
  services.
• The Legislative mandate provides the context
  within which UCC is reviewing the regulatory
  regime.

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Defining the New Regulatory Regime

• Regulation shall be based on
• The level of competition
• Consumer protection, empowerment and QoS
• Process for defining and monitoring competition
• Define acts that constitute unfair competition
  (Predatory pricing, margin pricing, price
  discrimination, cross subsidization etc)
• Define relevant Market (Measure the degree of
  substitutions, ease to switch)
• Set Parameters or define Dominance
• Define obligation for Dominant operators
• This is a complex exercise which shall require
  full consultation and consensus.

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Defining the New Regulatory Regime
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Defining the New Regulatory Regime

• Obligation for operators with MP
• Offer cost based interconnection rate
• Implement cost based accounting systems (FDC-
  bottom-up and top down, LRIC)
• Rate regulation (Wholesale and retail)
• Quarterly and annual reporting requirements
• Obligations for Operators without MP
• Mandatory interconnection
• Rate Notification
• Quarterly and annual reporting requirements
• Additional requirements for operators with
  combined licenses
• Regulatory account separation (Infrastructure
  from services)
• Offer a retail and wholesale price for
  infrastructure

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Defining the New Regulatory Regime

• Account Separation
• Previous separate based on services, i.e. fixed,
  mobile and data services.
• New Separate based on the license categories,
  i.e. infrastructure and services.
• This shall be a requirement for operators with
  combined licenses.
• Operators with market power may also be required
  to separate their accounts for interconnection
  services if interconnection shall be defined as a
  separate market

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Defining the New Regulatory Regime

• Interconnection for both infrastructure and
  services licenses shall remain mandatory in the
  new regime.
• In principle, interconnection shall remain a
  matter of commercial negotiations between
  entities offering services and infrastructure.
• Operators who are designated to posses market
  power shall be required to offer cost based
  interconnection rates.
• A guideline document on interconnection shall be
  circulated for detailed consultation.

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Defining the New Regulatory Regime

• Tariff Regulation
• Based on the level of competition in the
  respective market
• Operators with MP rate regulated (Price cap, RoR
  )
• Operators without MP- Rate notification-Reserve
  the right to intervene rates are not competitive
  or not conducive to consumers
• Combined licenses separate whole sale and retail
  price

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Defining the New Regulatory Regime

• All licensees shall be required to submit
  operational information to the Commission on a
  quarterly and annual basis.
• This information is required for efficient
  monitoring and regulation of the industry.

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Conclusion

• Presentation is a pointer to how the sector shall
  be regulated
• Detailed guidelines shall be circulated for
  consultation and consensus
• Important to lay the rules
• UCC shall remain a referee in the sector, limited
  role as long as the game is fair

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Merci Beacoup