Transcript Infrastructure Services

FIRST TELECOMMUNICATION REGULATORY
MEETING FOR THE ARAB REGION
CORPORATE NETWORKS AND OPENING OF FIXED
SERVICES
Mostafa TERRAB
Lead Regulatory Specialist
ALGIERS, April 19, 2003
OUTLINE
• Why are competitive fixed-services and
corporate networks important?
• Regional telecom specificities
• Options for improving fixed-services and
corporate network provision
International trade is not supported by sufficient
Internet connectivity
Countries under study are underserved
in the area of international connectivity
Portugal
Greece
Jordan
Egypt
UAE
Morocco
Algeria
1000
2000
3000
4000
International Internet
bandwidth (Mbit/s)
0
20 000 40 000 60 000 80 000
International trade
(USD millions)
Source: Telegeography, Packet Geography 2002, Analysys
Bandwidth/international trade
ratio (Bit/s/USD100 000)
Germany
357.1
France
313.7
USA
109.2
Spain
95.1
Italy
75.7
Portugal
58.3
Greece
30.7
Jordan
11.4
Egypt
11.2
UAE
8.9
Morocco
7.6
Algeria
4.6
ICT is a Key Trade Enabler
B2B / E-Commerce / ERP
ICT
TRADE
Supply Chain Mgt Transport
EDI
& Logistics
E-Finance
Electronic
Trading
FINANCE
The Textile Supply Chain
Fixed Penetration is a Key Driver of Internet Usage
70%
Internet penetration
2
Norway
y = 0.7x + 0.2x
R2 = 0.8
60%
Japan
50%
40%
UAE
Portugal
Germany
30%
20%
Morocco
10%
0%
0%
USA
UK
Italy
Egypt
Algeria
Jordan
20%
Greece
40%
60%
80%
Fixed line penetration
Significance: VPN is main solution for SMEs
Source: ITU, Analysys
The “I” Before the “E”
But also the “R” before the “I”
Key Telecom Indicators
Main lines
per 100
inhabitants
2000
Sub Saharan Africa
East Asia & Pacific
Latin America &
Caribbean
Middle East & North
Africa
1995
Sub Saharan Africa
East Asia & Pacific
Latin America &
Caribbean
Middle East & North
Africa
Cellular
Subscribers
per 100
inhabitants
Internet
Users per
10000
inhabitants
1.4
10.1
14.8
1.7
7
12.3
3
4
30
9.2
3
1
1.1
4.1
9.1
0.1
0.5
0.8
1
0
1
5.8
0.1
0
Number of Fixed Lines / Pop (source ITU)
Number of Mobile Lines / Pop (source ITU)
Mobile Overtaking Fixed Penetration
80%
60%
40%
20%
0%
Algeria
Egypt
Jordan
Fixed penetration
Source: ATRN Database, ITU
Morocco
Mobile penetration
UAE
Wireless Rural Access?
Source: ITU
Strictly monopolistic markets are holding back
development of the leased line market
60
50
Algeria
Egypt
Jordan
Morocco
Spain
Portugal
40
30
20
10
2001
2000
1999
1998
1997
1996
1995
0
Number of leased lines per 10 000 inhabitants (source: Analysys)
Companies interviewed (Analysys 2002)
revealed service can be improved
• Poor service quality: Lack of Service Level Agreements
• Long lead times for corporate users:
Algeria
Egypt
Jordan Morocco
3 months
2–3 months 6
months
3 months
UAE
1–1.5
months
• Companies (that can afford it) often prefer to use their
own private links (low degree of infrastructure sharing)
Source: Analysys Interviews
MENA is lagging in the liberalization of ISP and leased
lines markets
Status of ISP market in different regions
Status of leased line market in different regions
100%
100%
80%
80%
60%
60%
40%
40%
20%
20%
0%
0%
Competition
Monopoly
Source: ITU World Telecommunication Regulatory Database 2000
Monopoly
Competition
Data and leased lines delivery by alternative operators is constrained
Algeria
Egypt
Jordan
Morocco
UAE
Yes
Yes
Yes
Yes
No
(2000)
(1998)
(2001)
(1997)
No
No
No
No
No
No
No
No
Yes
No
No
Yes
No
No
No
Yes
No
No
2
Yes
No
Yes
2
Yes
No
No
2
Yes
No
Yes
2(3)
No
No
No
1
4
38
8
10–20
1
Independent regulator
(date)
Liberalization status
Fixed telephony
Leased lines
Data (1)
ISP (2)
Fixed satellite services
VSAT
Number of mobile
operators
Number of ISPs
(1)
Provision of data services on top of infrastructure (mainly leased lines) supplied by incumbent operators, e.g. IP VPN
(2)
ISPs in national markets. Note that the regulatory treatment for international service provisioning varies by country
(3)
Mobile operators have the right to operate their own international gateway
Source: ATRN Database, ITU 2001 regulatory surveys
Regional MENA Specificities
• Fixed/mobile substitution for voice
services
• Mobile duopolies (more or less regulated)
Low fixed penetration
• Fixed monopolies
• Untapped growth potential for data
services and Internet
• Challenge: approaches to foster a
dynamic market for fixed services
Typical Country Situation
Current
-State owned (partially privatized) vertically
integrated incumbent (GSM1, F1, ISP1, NI1)
-GSM2 (mobile duopoly)
-VSAT
-Constrained VAS providers (ISPs; Nis)
-Low Fixed Penetration
-Fast growing mobile uptake and penetration
-Fixed/mobile substitution for voice services
-Growth potential for data services and Internet
-Unbalanced Tariffs
-High international tariffs
Next Steps /
Challenges
- GSM3 / UMTS
- Privatization with
or without structural
separation
- Fixed Challenge:
attract investment
in fixed services
Licensing Approaches and
Policy/Regulatory Tool-Box
License Types
• SNO
• Backbone Licenses
• WLL licenses
• WiFi—unlicensed spectrum
• International/LDI
• Rural/US licenses
• Alternative Infrastructure
licenses
• Privatization approach
• Structural Separation
Policy/Regulatory Levers
• Interconnection
• Universal service
• Frequency Mgt and pricing
• Carrier (pre-) selection
• number portability
• National roaming
• Incumbent regulation
• Regulation of dominance
• Market structure
Licensing Approaches
•
•
•
•
•
•
•
Long-Distance International  Local
Fixed  Mobile
Wire-line  Wireless (Cellular, WLL, VSAT)
National/Urban  Regional/Rural
Voice  Data
Individual Licenses  Class Licenses
Infrastructure  Services (Approach
driven by technological trends and corporate
strategies)
Infrastructure/Services Regulated Virtuous Circle
Infrastructure:
- Natural Monopoly?
-Oligopoly
-Dominant
Operators
Investment Incentive=Revenue Growth
Generated by Innovation
In Services
Infrastructure Roll-Out
Expanding Market and
Reach of Services
Need Strong Regulation
to strike balance between:
Services:
-competition
-value-added
providers
• Carrot =Revenue Sharing
= Incentive to expand
network
• Threat = Conditional right
to infrastructure
Options for Opening Fixed Services
• Top–Down: Second National Operator (SNO)
– Attempts to re-create successes in mobile licensing
– Unsuccessful in many instances (South Africa, Morocco,…)
– Not adapted to current market conditions
• Bottom–Up: Licensing strategies equivalent to
incremental relaxation of regulatory constraints
imposed on VAS providers (ISPs and Network
Integrators) and on existing operators (Cellular, VSAT,
GMPCS,…)
– In-line with industry trends: growth driven by innovation in
services; threshold return on infrastructure investment.
– Requires strong regulatory intervention (interconnection,
dominance)
Current Situation (in Most Countries)
Right to Use Public Domain Infrastructure
YES
Public Operators
NO
Services Open to Public
YES
LICENSES
Independent
Networks “closed
user group”
AUTHORIZATIONS
NO
Value Added
Services
DECLARATIONS
On-Premise
Private Networks
Options for Opening Fixed Services
YES
Conditional
NO
Licenses
ISPs
Network
Integrators
VAS
ISPs
Network
Integrators
YES
NO
Definition of
“Public” and
“closed”
Services Open to Public
Right to Use Public Domain Infrastructure
Indep.
Networks
Private
Networks
Licensing / Regulatory Principles
• Technological neutrality s.t. spectrum
• Simplify Market Structure
– Maximize regulatory readability
– Avoid intractable regulatory complexity, given degree
of tariff rebalancing and infrastructure roll-out
imperative (squeeze; predation;…)
• Best candidates are “local” candidates:
– Know the market – Capacity to assess risk
– Can leverage existing investments (e.g., GSM2; ISPs;
INCUMBENT; Alternative Infrastructure) – risk
management