Transcript INTERCONNECTION

1st REGULATORY MEETING FOR THE ARAB REGION
INTERCONNECTION:
THE MOROCCAN EXPERIENCE
M. ELKADIRI,
Technical Director ANRT
[email protected]
Algiers 19-21 April 2003
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WHY INTERCONNECTION?
Interconnection is one of the main issues of the
liberalization process :
The access of a new entrant to the market is
conditioned by the current interconnection
policy.
Interconnection tariffs are the “Hard-core” of
competition
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DEFINITION AND SCOPE OF
INTERCONNECTION
New
entrant´s network
•Incumbent’s network
•PoI**
•Long distance
network*
•Definitions
•Tandem
•PoI
•Core network
•Tandem
•Local switch
•Access
network
•Feeder
•Remote concentrator
•Distribution
* In Europe, long distance network often considered as part of core network
** Point of Interconnection
Source: Team analysis Mckinsey
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DEFINITION AND SCOPE OF
INTERCONNECTION
INTERCONNECTION IS ONE OF REGULATORY LEVERS AND CANNOT BE CONSIDERED IN ISOLATION
Example regulatory levers
Industry structure
Pricing
Regulatory levers
Interconnect
•
•
•
•
Number of competitors
Speed of liberalisation
Area of competition and type of players that can compete
Licensing procedures and conditions
• Price caps (x factor, basket weights, subcaps . . . )
• Tariff rebalancing
• Interconnect charges
• Process of setting / negotiating interconnect charges
• Establishing points of physical interconnection and/or
co-location
Equal access
• Length and ease of prefix
• Pre-subscription mechanism
• Number portability
Cross-subsidy
Support
• Access deficit compensation
• Universal service obligation definition, funding
mechanisms
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MOROCCAN REGULATORY FRAMEWORK OF
INTERCONNECTION
1- The post and telecommunications Act n° 24-96 which sets up :
The right of interconnection for each operator.
The necessary conditions which should respect in interconnection
 The power of the regulator to solve interconnection disputes.
2- The Interconnection decree which specifies :
 The main clauses (technical, financial and administrative clauses) that each
interconnect agreement should include.
 The operator’s obligations ( General obligations for all operators and
specific ones for SMP).
 The principles of interconnection tariffs.
 The conditions of interconnect offer.
 The ANRT prerogatives.
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LEGAL FRAMEWORK
OPERATORS ’OBLIGATIONS
Respect of principles and rules of
interconnection.
Produce all necessary information to the
regulator.
Operators with market share more than 20% of
a telecommunications service must submit an
interconnection offer to the regulator for
approval. They have to inform the regulator of
the modifications concerning the RIO.
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LEGAL FRAMEWORK
THE ROLE OF ANRT
Ensure clear terms, conditions and fair prices
for interconnection
Make sure that the interconnect agreement is in
accordance with interconnection decree
and approve the interconnection offer
Impose sanctions and penalties for violation of regulation
Play a role of arbitrator in the interconnect dispute
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LEGAL FRAMEWORK: Dispute resolution
REFERALL TO THE ANRT
How?
When?
Inquiry
of the dispute file made
by
the Director of the
ANRT
No conclusion of the
interconnect
agreement
Problems related
to the
interconnection
tests
Decision of the
(administrative
committee)
30 days
15 days
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INTERCONNECTION: The players
Regulator
ICX
Interconnection
Operator 2
Operator 1
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Resolution of interconnection Dispute
The first interconnection dispute that the ANRT had to arbitrate was over
termination tariffs :
1- The dispute: Disagreement between IAM (the incumbent) & Medi Telecom (the
new entrant) about interconnection Tariffs.
2- The dispute inquiry :
ANRT entrust the inquiry to an internal Interconnection comity, which was
supported by international experts.
3- The inquiry process :
- Benchmark
- Audition of both parties.
- Analysis of the interconnection cost models of both parties
4- The decision of the administrative comity of the ANRT :
With reference to the commission inquiry report, the administrative commission of
the ANRT decided that Interconnection tariffs proposed by the interconnection
commission are applicable.
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The 1st Interco dispute
IAM proposal 41,5%
MédiTél proposal 20%
58,5%
80%
PSTN
MOBILE
IAM proposal 61%
MédiTél proposal 80%
MOBILE
39%
20%
PSTN
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ANRT’s Decision
Interconnexion Mobile vers Fixe: tarif normal
0,600
3, 67%
4, 87%
DEU
Prix en $ payé par l'abonné
ITA
0,500
5, 48%
25, 00%
FR A
0,400
4, 27%
HOL
SL O V E
5, 42%
21 , 05%
1 1 , 30%
SU E
7, 78%
E ST
BUL
AUT
0,300
24, 00%
HON
8, 92%
30, 61 %
A LB
1 9, 23%
P OL
25, 89%
ROM
SL O V A
DAN
0,200
20%
Proposition MT
0,100
39,00%
Offre IAM
27,13%
Recom m andation
ANRT
0,000
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
45,00%
% retenu par le fixe
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ANRT’s Decision
ICX Fixe vers Mobile
0,6
82%
All Ita
tarif public (US $)
0,5
0,4
0,3
0,2
0,1
Pol
Autri
Slov
76%
59%
59%
59%
Proposition
IAM
Bulg
Eston
74%
74%
93%
Fr
80%
Sue
81%
Alb
88%
Hol
Slov 77% 81% Hong
Recom m andation
72%
80% 84%
ANRT
Dan
71%
Rom
Proposition
MediTel
0,0
50%
60%
70%
80%
90%
100%
taux de rémunération du reseau mobile
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Approval of interconnect offer
The TECHNICAL AND TARIFF INTERCONNECTION OFFER should be
published by the operator who holds a market share higher than 20% of a
telecommunications service.
- It must be approved by the regulator.
- The regulator shall be informed on the modifications of the interconnection
offers.
Process of approval of the interconnection offer
-Effective cooperation with the incumbent operator in term of providing
relevant information related to interconnection cost.
-Efficient tools for analysing and assessing the tariff offer.
The principal difficulty : INFORMATION ASYMMETRY
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MOROCCAN COST ALLOCATION MODEL
ANRT developed its own tools for calculations and assessment of interconnection costs for.
- assessing the relevancy of the interconnect tariff data provided by operators
- preparing the regulator for interconnect dispute arbitration
- checking the eventual anti-competitive behaviour of the operator in the telecommunications
market.
-The MCAM was developed with international experts and ANRT’s
multidisciplinary team .
-The MCAM provide two basic deliverables:
 financial results by service using Fully Allocated Costing
methodology based on “cost causation” and
 unit cost information suitable for calculating interconnect
conveyance costs.
- MCAM is based on historic costs.
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MOROCCAN COST ALLOCATION MODEL
Operator 1
Operator 2
Operator 2
MCAM
Service
Costs
Operator 3
Excel Models
USO
Costs
Fixed
interconnect
Costs
Mobile
interconnect
Costs
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MCAM STRUCTURE
Drivers
Cost
Pools
Manpower
Analysis
Current
Account Cost
Functional
Activities
Direct
Shared
Capital
costs
Final
Services
Common
Algorithms
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NEW CHALLENGES
There are many issues related to interconnection to be faced:
 to adapt the legal framework of interconnection to the
international context and the development of technology.
 To allow visibility to operators including those expected to enter
the market.
 To foster the telecommunications market as whole.
ANRT had launched a public consultation in order to set up
Interconnection guidelines to precise the legal framework:
 Definition of relevant market and the determination of SMP
 Introduction of the long run incremental cost (LRIC) method
 Carrier pre-selection.
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CONCEPTS OF RELEVANT MARKET AND
SMP (Significant Market Power)
-The definition of the relevant market in both its service and geographic
dimensions often has a decisive influence on the assessment of a
competition case.
-a possible relevant market could be :
Market of fixed telephony
Market of mobile telephony
Market of leased lines
Market of Interconnection.
-ANRT:
-determine the criteria of the relevant market
and
-establish the methods of assessing the position of operators in
the market of concern.
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LRIC (Long run Incremental cost)
The LRIC (Long run Incremental cost) method will allow the
regulator to assess the operators efficiency through the
orientation of their interconnection tariffs toward costs.
On the other hand, LRIC would insure the respect of the following
principles :
•relevancy
•efficiency
•economic optimum
• financial viability
• fair competition
- The current challenge for ANRT is to develop a tool for
interconnection costs calculations based on LRIC Approach.
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INTERCONNECTION & NEW services
Introduce adaptation to the legal framework
of interconnection in order to take into
account the specification related to
advanced services like UMTS, IP telephony,
GPRS etc…
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LONG TERME CHALLENGES :
LOCAL LOOP UNBUNDLING
Important competitive stakes:
• Diversity of choice for customers
• Reduction of the access cost to the market.
• Efficient means for the new entrant ( Direct
relationship with the customer)
Opportunities for the development of the economy via the
development of internet access.
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LONG TERM CHALLENGES :
NUMBER PORTABILITY
Number portability is the possibility for the customer to
keep his phone number while he :
• change the geographical zone
• change the operator
• change the telephonic services
Number portability fosters the development of
competition.
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CONCLUSION
“healthy” interconnection process :
Independent team with wide ranging expertise
Good calculation tools
Good benchmark knowledge
And….
But,
For sure, your decision will be challenged
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www.anrt.net.ma
MERCI
POUR
VOTRE ATTENTION
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