Authorization is addressed in Module 3, Authorization of Telecommunication/ICT Services. It is a general term applied to all the legal instruments (such as licenses or concession agreements) used to facilitate entry to the electronic communications markets for services (including content) and networks. These legal instruments set out the rights and obligations of the authorized party as well as of the government in the case of concession agreements. The authorization process is the means of introducing and encouraging competition in the sector.
Granting an authorization can confer certain privileges on the grantee, especially where there are a limited number of authorizations. Consequently, the authorization process is best performed outside the political process. In circumstances where only a small number of operators are to be authorized, transparent competitive processes are considered best practice. While the use of radio spectrum is most frequently associated with limited market entry, there is a growing presence of “unlicensed spectrum” or “license-exempt” market entry. The rise of Wi-Fi is due, in large part, to the availability of unlicensed spectrum.
Unlicensed spectrum rules allow anyone to operate devices on a designated spectrum band without obtaining a specific authorization, provided that 1) they do not cause harmful interference to others operating in the same or adjacent bands; 2) they operate within range limits; and 3) they operate within certain technical parameters including maximum power outputs. For example, the Federal Communications Commission in the United States opened unused portions of the television broadcasting spectrum, called the “TV white spaces”, for the operation of unlicensed devices, subject to certain limitations. To protect incumbent services against harmful interference, the rules for the TV white spaces require unlicensed devices, which may be for fixed or mobile use, to include geolocation capability, spectrum-sensing technology and the ability to access a database of the incumbent services in order to detect at what frequencies incumbents such as TV broadcasters are using at that location.[1]
When competition was first introduced, the original licenses were hefty documents containing specific details regarding the technology to be used and behavior of a particular licensee. These documents represent the high point of ex ante regulation. Gradually the legacy of this practice is being superseded by issuing light-touch, general authorizations that apply across all sectors or in a particular sub-sector or “class.” In some instances, no authorization or formal approval is required. Market entry is unlimited and any regulation that takes place is ex post in the context of competition policy. General authorizations are well-suited to activities characterized by rapid technological change and dynamism. Nevertheless, the legacy of the original licensing practices lingers in many jurisdictions.
Many of the original service-specific and detailed licenses were issued around the time that the MPTTs and PTTs were being restructured and some assets were being privatized. At the time there was a very limited body of regulation, which led to the license being used as the primary regulatory instrument. Regulators have since implemented and updated a substantial body of regulations, which has eliminated the need to issue particular, detailed and specific authorizations. Instead, regulators can simply refer to the relevant regulations where necessary.
The early authorization methods also had an impact on the fees charged, the legacy of which is still present. Fees are frequently composed of different elements but generally entail an initial component and recurring charges. Many initial fees were established at auctions where particular privileges were for sale, often linked to a scarce national resource. By this means, governments were able to have early access to the future income streams of operators rather than waiting for their tax contributions over the life of the authorization. In the end it is usually the customer who pays the fees of the operator. One way of optimizing consumer welfare and promoting competition is to charge fees that enable the regulator to recover the costs of regulation. This also minimizes the costs of regulation. Though this is regarded as best practice numerous other methods have been adopted that tend to distort the functioning of the market.
Convergence introduces a new set of issues for the authorization agenda. Authorization has tended to follow a process that allows applicants to provide specific services with specific technologies. In a converged environment, such distinctions become irrelevant. Although service-specific authorizations remain, multi-service authorizations and unified (or global) authorizations are becoming more prevalent. The unified authorizations are technology- and service- neutral and allow licensees to provide all types of services under a single authorization, using any type of communications infrastructure and technology capable of delivering the desired service. Like unified frameworks, multi-service authorizations are also technology-neutral and permit licensees to offer a broad set of services under one authorization. Like the service-specific framework, however, the multi-service authorization still prohibits the licensee from providing certain categories of service, such as television broadcasting.[2] Further, multi-service authorizations often remain separated into class and individual license categories, which is also similar to the service-specific framework.
In creating a regulatory environment that promotes convergence and NGNs, four inter-related authorization/licensing trends have emerged. These are neutrality, simplification, flexibility and reduction of the administrative burden. Authorizations are increasingly becoming service-neutral and technologically neutral by allowing licensees to offer a wide range of services over the technological infrastructure of the licensee’s choice. Frameworks are becoming more simplified through the introduction of unified licenses in which many different service-specific licenses are combined under a single authorization. Unified licenses are appearing in some jurisdictions, such as Kenya, and work in tandem with technology and service neutrality to allow the licensee to use any platform to deliver nearly any service. The shift to a flexible authorization framework helps to attract investment in ICTs, for example, by allowing licensees to provide 3G services over the spectrum bands assigned to them in their 2G authorizations. Finally, regulators can attract investment and encourage competition in the ICT sector by reducing administrative burdens, which is particularly helpful for allowing new entrants to enter the market. Figure 1 below shows the process by which a service-specific licensing regime may be reformed into a unified licensing framework.
Figure 1. Process for Simplification of the Licensing Regime
Clearly, there will be restrictions on the number of licenses issued where resources like the radio spectrum are limited. Consequently, special obligations will continue to be placed on authorizations for scarce resources, as well as for dominant operators or operators with significant market power. However, these obligations should not preclude various arrangements that would facilitate, for example, fixed mobile integration. Existing restrictions on, or unequal treatment of, authorized operators offering similar services may impede convergence. Regulators should reexamine certain policies that discriminate against providers and services, such as rules that allow cable TV operators to enter the voice and data markets, but exclude telecommunications operators from the video market.
ENDNOTES
[1] FCC, FCC Adopts Rules for Unlicensed Use of Television White Spaces (2008) at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-286566A1.pdf.
[2] GSR 2009 Discussion Paper, Mindel De La Torre, Report from ITU-D Study Group 1, Question 10-2/1 Regulation for Licensing and Authorization of Converging Services at http://www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR09/doc/STudyGroup_draftreportQ10.pdf
Related Content
Module 3. Authorization of Telecommunication/ICT Services