Licensing frameworks traditionally consisted of a large number of different service categories, and applicants applied for separate licences in order to provide each service. In addition, licences were often granted based on the type of technology that was being offered by the applicant (
e.g., VSAT licence).
Convergence has had an impact on this categorization and made it complicated for regulators to continue to grant licences in this manner. For example, a cable television operator intending to provide “triple play” services generally would require three different licences, one for each of the bundled services (i.e., broadcasting, voice and data), instead of one single licence. Countries have been modifying their licensing frameworks to address this new situation by simplifying their licensing regimes. This has been primarily implemented by: (i) introducing technology-neutral licences with broader service categories; (ii) establishing a unified and technology-neutral licence that allowsoperators to provide multiple services under one licence using any kind of technology; (iii) “de-licensing” whereby the operator merely needs to submit a notification or registration with the regulator, although specific rights of use may be required when scarce resources such as spectrum or numbering are involved in the provision of a service;or (iv) not requiring any registration or notification on the basis that the services provided fall outside of the regulator’s authority or because the regulator has decided to forbear from regulating a particular service.
However, these modifications may not be sufficient to fully address convergence if they are not accompanied by related measures in the regulatory framework to introduce competition and non-discrimination. For example, in many jurisdictions, cable television operators, which were initially licensed to provide broadcasting services, can provide voice and data services without any specific restriction. On the other hand, traditional telecommunications operators may not be allowed to compete with cable operators if broadcasting service licences are restricted. In this case, the lack of reform in broadcasting legislation becomes a bottleneck that restricts competition and discriminates against telecommunication operators.
The modification of the licensing regime may not be an easy task for policy-makers and regulators because of the existing legal framework and market structures already in place. However, necessary reforms may be introduced through a transition process in which market and legal structures are smoothly adapted. A regulator willing to follow this transition into a technology-neutral licensing regulation likely will address the following decisions (Box 4-5):
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Box 4-5: Decisions to Undertake in the Transition to a Technological-neutral Licensing Regime1
- Deciding which model of licensing will be adopted.
- Deciding whether the existing licensing framework will be overhauled in one step or through a gradual, phased in fashion.
- Deciding which entity or entities will be responsible for licensing, authorizations, and notifications.
- Mapping various services licensed under a service or technology-specific regime to a less burdensome licensing regime
a. This includes deciding which services may still be subject to licensing, which may require only an authorization or notification process and which may become unlicensed as well as eliminating any geographical licensing restrictions and redesigning the application process.
- Ensuring a level playing field under the new licensing regime so that neither existing service providers nor new market players will be at a competitive disadvantage, i.e., whether existing licensees will require any compensation for moving to the new licensing regime or whether the transition can be accomplished in the absence of compensation; how to address issues such as large licence fees paid during a period of limited competition while reduced licence fees apply in the new regime, changes to bank guarantee policies, etc.
- Revising existing universal access/service regulations, including modifications to network rollout, coverage or investment requirements as well any contributions to universal access funds and reviewing which services consumers should be provided under the nation’s universal access/service definition.
- Reviewing and updating other regulations such as quality of service, interconnection, spectrum and numbering, both to transfer any such regulations currently included in licence terms and conditions to stand-alone regulation as well as updating such regulations to accommodate convergence.
- Developing a regulatory framework that incorporates recent technological developments, such as WiFi, VoIP and WiMax and anticipating a continuous technical and market evolution.
- Developing regulatory capacity to regulate disputes, enforcement and sanctions.
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(a) General Licence Categories and Technology Neutrality
The first trend in licensing reform is to introduce technology-neutral licences that combine converged services or broaden the types of services that fall within one licence.
For example, in Malaysia, the prior licensing framework consisted of 31 service-based licences, whereas its new framework consists of four general and technology-neutral licences: Network Facilities Provider (NFP); Network Services Provider (NSP); Application Services Provider (ASP); and Content Application Services (CSP)(a special subset of application services that includes television and radio broadcast services and Internet content services).2
The Eastern Caribbean Telecommunications Authority (ECTEL), has developed a technology-neutral licensing approach with four categories of licences: Individual Licences (generally for services that are infrastructure-oriented); Class Licences (ISPs or resale, among others); Frequency Authorization Licences (that is an ancillary licence that would be required in addition to an Individual or Class Licence); and Special Licences (that are foreseen for special cases in emergency circumstances). 3 ECTEL classifies licences based on the service that will be provided without regard to the type of technology being used. For instance, whereas previously an operator might obtain a VSAT licence, it now obtains a licence for the service (i.e., a private or a public network service) it will be offering using that VSAT.
(b) Unified Licensing
A second trend is the introduction of a unified licensing regime, in which licences evolve into a single licence covering a wide range of services. This approach has been or is being adopted by various countries, including Kenya and India.
Kenya’s new licensing regime, announced in September 2004, adopted a unified and technology-neutral licensing framework that permits any form of communications infrastructure to be used to provide any type of communications service.4 This licensing regime differs significantly from the previous service-specific licensing regime consisting of 46 types of licences grouped into nine categories. Kenya is introducing its new regime gradually and has established a transition period during which it will issue three types of technology-neutral licences (i.e., individual network operator (major) licence, non-facility based service provider (minor) licence, and frequency licence), before completely moving to a unified licensing regime.
The Telecommunications Regulatory Authority of India (TRAI)5 has also adopted recommendations for its future licensing framework in order to introduce a unified licence regime. It proposes to implement three different categories of licences (i.e., unified licence, class licence and, simple authorization), with a unified licence allowing an operator to provide any kind of service.
(c) De-licensing
A third trend is the movement in certain countries towards lighter licensing regimes or de-licensing. Traditionally, many countries used three general approaches to authorize telecommunications networks and services -- individual licences, class licences, and open entry. In the initial phase of liberalization in particular, countries leaned towards a higher degree of regulatory control over market entry, thus requiring individual licences in most cases, where: (i) there was a need for access to public property and/or locations of public use and/or third party’s properties to roll out the networks (i.e., deploy a base station or a fiber network); (ii) there was a need for scarce resources (e.g., frequencies and/or numbers), and (iii) the government of a particular country determined that the service needed to be provided in a certain way.
Convergence has called this premise into question, with countries realizing that burdensome administrative procedures relating to market entry limit the offer of a greater variety of applications or services. As a result, many countries (including all 25 EU member states) are moving towards a general authorization regime.
De-licensing involves a general authorization or class licence system in which operators are free to provide services subject to regulatory obligations. Typically, the operator must submit to the regulator a notification containing minimal information before, or within a short time after, initiating service. However, operators do not have to wait for approval before commencing service.
A registration regime typically requires minimal information, but involves stricter formalities in that prior acceptance of the registration by the regulator is required for the operator to commence its activities. In addition, unlike a notification, a registration may be rejected by the regulator.
In April 2004, Japan implemented a review of its Telecommunications Business Law and established a registration and notification regime. Operators in Japan that install networks of a certain size and scale must obtain a registration from the Ministry for Internal Affairs and Communications. However, all other operators are only required to submit a notification to the Ministry.6
The EU has moved towards a simple authorization regime using minimal regulatory intervention and requiring individual licences only where strictly necessary (e.g., for the use of resources such as radio frequencies and numbering). The regime covers authorization of all electronic communications networks and services regardless of whether they are provided to the public. The objective of the new framework is to ensure the freedom to provide electronic communications networks and services, subject only to the conditions relating in particular to welfare, public security, and public health. However, one interesting aspect of the new regime is that the definition of “electronic communications networks and services” is so broad that in certain EU jurisdictions various services that were previously unregulated now require a notification and operators are now subject to a variety of related obligations (e.g., fees and taxes) to which they were not previously subject.
(d) Eliminating Licence Requirements on New Converged Services
A fourth trend to address convergence is to eliminate filing requirements with the regulator on the basis that the services fall outside of the regulator’s authority or because the regulator has decided to forbear from regulating a particular service.
This approach has been followed in the United States for ISPs and the services they provide (e.g., e-mail, Internet access, and VoIP). To date, services provided by ISPs have been treated as unregulated “information services” in order to promote the continued development of the Internet.7
(e) Adherence to Regulatory Requirements and Obligations
As many regulatory functions were based on a license regime at inception, the move to forbear from licensing is viewed by some, as eroding the regulator's authority in relation to the new entrant, leading to a license being issued even when regulatory oversight is no longer required. Although a regulator may decide that certain categories of service or network providers will not be subject to licensing requirements, this does not exclude the possibility of the regulator imposing certain regulatory obligations on such providers, such as contributions towards universal service funds or compliance with emergency service requirements. For example, although the FCC has not implemented licensing, notification or registration requirements for ISPs, it has determined that certain VoIP providers must comply with emergency number (E911) requirements. This determination is part of a rule-making proceeding that was initiated by the FCC to determine whether VoIP services should be regulated and whether providers of such services should be subject to certain regulatory requirements. 7
ENDNOTES
1 Mindel De La Torre and Sofie Maddens, Transitioning Regulation from Old to New, in Trends in Telecommunications Reform 2004/2005:Licensing in an Era of Convergence, ITU (2004).
2 Malaysia Communications and Multimedia Act 1998, Act 588, available at http://www.mcmc.gov.my/mcmc/the_law/ViewAct.asp?cc=4446055&lg=e&arid=900722.
3 For more information see http://www.ectel.info.
4 For further information see http://www.cck.go.ke.
5 See http://www.trai.gov.in.
6 Telecommunications Business Law (Law No. 86 of December 1984) as amended by Law No. 125 of 24 July 2003), available at http://www.soumu.go.jp/joho_tsusin/eng/Resources/laws/2001TBL.pdf.
7 47 U.S.C. § 230 (b).