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Are Regulations in Arab Countries Favorable for Broadband Communications? Kamal S. Shehadi, PhD

Are Regulations in Arab Countries Favorable for Broadband Communications? Kamal S. Shehadi, PhD. Arabcom Beirut June 16-17, 2004. Most Arab countries suffer from low internet and data penetration. Total Country Connectivity Measure (TCCM) 2003.

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Are Regulations in Arab Countries Favorable for Broadband Communications? Kamal S. Shehadi, PhD

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  1. Are Regulations in Arab Countries Favorable for Broadband Communications?Kamal S. Shehadi, PhD Arabcom Beirut June 16-17, 2004

  2. Most Arab countries suffer from low internet and data penetration Total Country Connectivity Measure (TCCM) 2003 • Calculated by adding the household mainlines penetration, GSM penetration, and Internet users penetration rates in each country • Source: Operators, Arab Advisors Group

  3. In the next few months, the region will witness a significant wave of licensing Completed Forthcoming Mobile Bahrain Algeria Tunisia Jordan KSA Oman Morocco (?) Jordan Bahrain KSA Morocco Fixed/ Broadband Others? UAE Lebanon (?) Not Defined

  4. In Saudi Arabia, the regulatory authority is getting ready to issue two data licenses which would allow the licensee to establish its own infrastructure Current Status of Competition in the Saudi Arabian Telecom Market Partial Liberalization of the Mobile Market and Liberalization of the Data Market Mobile market • Saudi Arabia will open up its mobile market to another operator in the last quarter of 2004 • A pre-qualification request was launched in January 2004 • The deadline for offers is end June 2004 • The bidders have to be consortia made up of at least five Saudi enterprises and one mobile operator • 2 distinct bids for GSM and UMTS should be submitted • License duration: 25 years • Number of pre-qualified consortia: 11 • A consultation for mobile number portability has been launched Data transmission market • In January 2004, Saudi Arabia also published a Request for Pre-Qualification for the licensing of the data transmission sector (excluding voice) • Number of licenses: 2 • New entrants would be obliged to deploy a minimum of points of presence in the major cities, and will be authorized to deploy their own networks and international gateways. • The distribution of licenses is also scheduled for the summer of 2004 • License duration: 25 years • Number of pre-qualified consortia: 16 Fixed Mobile Internet Data Transmission Saudi Arabia Monopoly Until 2007 Monopoly Duopoly until 2007 Competition Monopoly until 2004 Penetration of Telecommunications Services in Saudi Arabia (2002)

  5. Mobile Internet Data Transmission Algeria Monopoly until 2004 Competition as of 2004 (3 operators) Competition Monopoly until 2004 In Algeria, the licensing of two ILD service providers failed for a number of reasons, including the need to rebalance LD tariffs and lower interconnection Current Status of Competition in the Algerian Telecom Market International and Urban Fixed Telecommunications Licenses • Number of licenses: 2 • Deadline: April 29, 2004 • No offers were made for the LDI license • Evaluation of offers: best offer receives license, second round organized within 5 days, and second license granted to the bidder with the same offer as the first licensee • Coverage: land, maritime and satellite channels • Exclusivity period: no new license for two years starting 29/01/04 • Obligatory and optional services: Voice service from a fixed line to another Wilaya, international or mobile number, international incoming to Algerian fixed or mobile number, from a capacity location to other operators, within a Wilaya unauthorized, Voice over IP and local loop unauthorized • Network: wireline and wireless network authorized • Interconnection: with operators using the public networks and sub-marine cables, with Algerie Telecom, tariffs for pre-selection not yet proposed • Universal Service Obligations: 3% of gross turnover • License duration: 15 years renewable by periods of five years Fixed Penetration of Telecommunications Services in Algeria (2003) Source: Information Memorandum of Algeria Source: Information Memorandum of Algeria

  6. In Jordan, the TRC is proposing an open licensing regime for telecommunications services Current Status of Competition in the Jordanian Telecom Market Liberalization of Mobile and Fixed Markets Fixed Mobile Internet Data Transmission Mobile market • Jordan currently has two mobile operators • The Government had promised duopoly until end-2003 and decide to have full competition in 2004 • The Telecommunications Regulatory Commission (TRC) has launched a request for offers to select a third mobile operator in the country. Four companies have responded so far: BATELCO, Investcom Holding & Scancom of Luxembourg, Saudi Oger and Umniah Telecommunications and Technology Company (Jordan) • The risk for the third mobile license comes from the Trunk radio operator that is interconnected with the public telecom networks and can thus compete with the GSM operators. Closed user group tariffs have already dropped by 50% • The deadline for the submission of bids was March 28, 2004 Fixed market • The Jordanian government has confirmed its intention to liberalize fixed services from January 2005 • TRC is currently preparing the terms, conditions and processes of selection, to be published before June 30, 2004 • The submission of expressions of interest would start September 2004 Jordan Monopoly until end 2004 Duopoly until end 2003 Competition Competition Penetration of Telecommunications Services in Jordan (2002) Source: Arab Advisors Group, Ministry of Information and Communication Technology of Jordan, TRC

  7. Topics for discussion Broadband Licensing Issues • Consultative and Transparent Process: The regulatory authority consults stakeholders on the terms and conditions of a license • No Constraints on Broadcasting: The legal and regulatory constraints on content and broadcasting are not too restrictive • Tariffs Rebalanced: Tariffs have already been rebalanced or will have been rebalanced before the license becomes effective • LRIC Interconnection: Interconnection tariffs with the incumbent network are cost-based, and preferably based on Long Run Incremental Costs • Financial Obligations: No onerous financial obligations are imposed on the licensees, whether for universal service or as licensing/entry fees • Other regulations: Unbundling of the local loop, carrier pre-selection, etc. • Maintain Commercial Flexibility: No or limited roll-out obligations (unless license also includes international subject to limited market entry)

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