TRA's Telecommunications Liberalization Roadmap

1. TRA's Telecommunications Liberalization Roadmap Dr. Kamal Shehadi Chairman/ CEO Telecommunications Regulatory Authority March 11, 2009 UN-ESCWA, Beirut, Lebanon

2. Although reform has started with the establishment of the TRA, most telecommunications markets in lebanon are stagnant and suffer from lack of competition Current Indicators Penetration Number of SP Private / State-owned Level of Competition Mobile Market 35% 2 State-Owned Monopoly Fixed Market 63% (*) 1 State-Owned Monopoly Internet Market 32.5% (*) ~ 16 Private Competition ADSL Market ~ 7.7% (*) ~ 8 MoT / Ogero Private (bitstream, line sharing) Limited Competition (*) per household

3. The TRA has assessed the strengths and opportunities of the telecommunications market in its reform and liberalization process Strengths Weaknesses Opportunities Fixed Voice • Relatively good copper infrastructure • Regionally competitive price per minute • De jure MoT monopoly • Lowincentive to upgrade the infrastructure and introduce new technologies • Low penetration rate • Stagnant growth • High pent-up demand and important growth potential in all telecom markets • Appropriate Regulatory framework to attract investors. • Favorable social, cultural and demographic characteristics ( e.g. consumer’s early adopters of telecom services) • Pent up demand for Mobile services • High Mobile revenues • High charges • Lag behind in terms of new technologies • Low market penetration • Limited choice in mobile bundled tariffs packages • Shortage of adequate investments Mobile • Relatively competitive • Lucrative segment • New wireless technologies deployed • Pent-up demand for data and internet services • Shortage in international bandwidth • Access controlled by the MOT • High int’l bandwidth prices, and non optimal allocation of bandwidth among providers • Incomplete Regulatory framework Data

4. The TRA proposes the introduction of competition across all telecoms markets while allowing LibanTelecom exclusivity over some services for a limited period of time * ** 3 1 ? ? 2 *** 3 **** 2 Open licensing Market Review License Award Notes • * The privatization of the mobile sector will depend on the regional and international financial markets conditions • ** Two mobile operators and Liban Telecom • *** Two mobile operators and Liban Telecom • **** Two National Broadband Licenses, subject to CoM’s decision

5. TRA has made significant progress on the broadband roadmap The TRA plans to issue two types of Broadband Licenses • National Broadband Licenses (NBLs) with: • Rights to build/offer (fixed and spectrum based) Access, National Backbone and International network/services • Obligations to meet access and national backbone rollout conditions with minimum build for fiber • Exclusivity period to interconnect new sites of other BL providers via its national backbone • Broadband Licenses (BLs) : • National or regional • With or without spectrum • Existing Data Service Providers continue to use their national Microwave backbone to backhaul existing sites • BLs originally rely on the NBLs for new site connectivity Broadband Deployment Timeline Draft RFA for Consultation (including BB License) Spectrum Re-farming & RTU fees Broadband Policy Statement ROW & Ducts Decree Launch of NBL Auction July 09 December 09 April 09 Q2 09

6. TRA plans to launch an international public auction in order to establish across Lebanon, best in class core, Metropolitan, and access networks competition

7. The National Broadband Licenses and the Broadband Licenses will complement each other to provide competition at all levels of the broadband value chain Illustrative Sketches of the Core / Metropolitan and Access Networks Core Metropolitan Access Lebanon Beirut Ras Beirut Achrafieh Ras Beirut Tripoli Ras Beirut User1 Bekaa Sin El Fil Mazraa User1 User1 Saida Beirut Liban Telecom National Broadband Licenses Broadband Licenses for own use only Liban Telecom National Broadband Licenses Liban Telecom National Broadband Licenses Broadband Licenses TRA has already issued interim license for Incumbent DSPs. TRA has started a spectrum refarming exercise, which is intended t to free up some of the spectrum currently used by DSPs and other operators and make it available to new entrants as well as incumbents in a manner that allows optimal use of spectrum

8. The regulatory framework and the public consultation process adopted by TRA aim at ensuring the success of liberalization Drafting Stage Draft Ready Stage Consultation Stage Final Review (TRA Board) Issued Significant Market Power Regulation Unbundling Regulation VOIP Policy Statement Spectrum Refarming and Packaging Plan Liberalization Roadmap • Decisions: • VSAT, • Trial IPTV • Spectrum trial Allocation for MoT / OGERO Spectrum Management and Licensing Regulation Broadband Policy Statement National Roaming Accounting Separation Regulation Improving FM Broadcasting Pricing Regulation Universal Service Digital Migration Strategy for TV Broadcasting Quality of Service Regulation * Interconnection Interim Pricing Decision Type Approval Regulation CS / CPS Access to Information Regulation Interconnection Regulation Numbering Regulation Spectrum Pricing Opinion National Numbering Plan Licensing Regulation Decision for establishment of call centers Lebanese National Frequency Table * Decision approved by the board, but will be issued concurrently with the Mobile Auction Award. Consumer Affairs Regulation

9. Lebanon's commitment • Bring the country back to the international telecommunications scene through market liberalization • Reconnect the Lebanese population with the world by building a thriving, innovative, and competitive telecommunications market place, driven by a technologically advanced infrastructure-based sector and offering services at internationally competitive prices and quality • Promote the interests of telecom Lebanese consumers in the market to make sure they are getting good quality of service at affordable and competitive prices and that their right to safe, secure and confidential access to telecommunications is safeguarded • TRA is providing a regulatory framework in line with international best practices