Regulatory reform never occurs in a vacuum. When new forms of authorization are introduced, there will almost certainly be service providers active in the ICT sector that hold authorizations issued under the licensing framework that is being replaced. Regulators and policy makers must consider how to manage these service providers.
The question of how to transition existing licensees to a new, converged licensing framework becomes particularly important if the terms and conditions attached to existing authorizations are more favourable than those attached to the converged authorizations. In such a case, issues of fairness may arise if existing licensees are forced to transition to the new authorization regime. However, the failure to transition existing licensees may create competitive advantages for such licensees that ultimately distort competition and discourage new players from entering the market.
Conversely, existing licensees may be subject to a competitive disadvantage if the terms and conditions of existing authorizations are not as favourable as those attached to the new, converged authorizations. In such a case, if licensees are not permitted to migrate to the new authorization regime prior to the expiration of the term of their existing authorization, these licensees may find themselves subject to less favourable terms and conditions for several years. This situation also raises concerns about unfairness in the regulatory process and the distortion of competition.
Transitioning existing licensees to the new authorization framework is an important matter even when there are no substantial differences between the terms and conditions of existing authorizations and those of the new unified or multi-service authorizations. Maintaining different authorization frameworks imposes costs and administrative burdens on regulators. Transparency, efficiency, and regulatory certainty are all enhanced when all service providers are subject to the same authorization regime. However, requiring existing licensees to migrate to the new, converged authorization framework may trigger legal challenges and allegations of unfairness. Accordingly, it is often prudent to give existing licensees the option to migrate to the new authorization regime immediately or to continue to offer services under their existing authorizations until their terms expire. Indeed, many countries provide existing licensees with this option, as the experiences of countries such as Tanzania, Botswana, and India illustrate.
Box 1: Features of the Transition to the Multi-Service Authorization Regime in South Africa|
Chapter 15 of the Electronic Communications Act, 2005 (ECA) sets out the general framework for the transition to South Africa’s new technology- and service-neutral multi-service authorization regime. The key features of the transition include:
--Mandatory migration to the new authorization regime. The migration occurs through a conversion of existing licences to one or more licences that comply with the ECA.
--The Independent Communications Authority of South Africa (ICASA) must convert all existing licences by granting new licences that comply with the ECA within 24 months of the adoption of the ECA. (The schedule for conversion has been extended into 2008.)
--The new licences must be granted on no less favourable terms than the existing licences. However, as part of the conversion process, the ICASA may grant rights and impose obligations on a licensee to ensure that existing licences comply with the ECA.
--All existing licences issued under the Telecommunications Act (one of the predecessors to the ECA) remain valid until converted to a new licence by the ICASA. Existing licences remain subject to all terms and conditions that are not inconsistent with the ECA until these licences are converted and re-issued under the ECA.
--All licences converted pursuant to the ECA retain their original term of validity unless otherwise specified by the ICASA.
--Once an existing licence is converted and re-issued, the new licence is governed by the terms of the ECA and the existing licence is considered to have been surrendered and is of no force or effect.
--The ICASA is not permitted to grant or to include in the terms of a converted licence any monopoly or exclusionary rights in any network or services contemplated in the ECA or related legislation. Existing monopoly and exclusionary rights are null and void, subject to the proviso that radio frequency spectrum that is assigned to a licence holder is not considered to be a monopoly or to constitute exclusionary rights.
Source: South Africa, Electronic Communications Act, 2005, Act No. 36, 2005, Chapter 15
The experiences from a number of countries that have implemented unified or multi-service authorization regimes suggest that the following practices are helpful in managing the transition to a new unified or multi-service authorization regime:
§ Engage industry stakeholders in discussions about the new authorization regime. Most countries conducted consultation processes on the proposed unified or multi-service authorization regime prior to implementing any changes. In some countries, the consultation process has gone through a number of phases. In Hong Kong, China, for example, the regulator and the policy maker concluded three rounds of consultations before introducing the framework for the unified licensing regime. The Nigerian transition to a unified licensing regime was also proceeded by three rounds of consultations.
§ Once the details of the unified or multi-service authorization regime has been finalized, host meetings with existing licensees and other industry stakeholders to explain the new regime. The status of existing licensees and their options with respect to the new authorization framework should be carefully explained to them. It is also helpful to develop materials for existing licensees (as well as other stakeholders) that explain the nature of the new authorization framework and that provides guidelines for applying for authorizations. Uganda, Tanzania, Singapore, and Botswana have all published information designed to provide stakeholders with information about their unified or multi-service licensing frameworks.
§ Be flexible in terms of the time frame for implementing the new unified or multi-service authorization regime. In many countries, existing licensees are given a period of time in which they may apply for a unified or multi-service authorization under the new licensing framework. After this period of time expires, if a licensee has not yet applied for a new authorization, the licensee is deemed to have elected to continue its operations under its existing authorization for the duration of the term of that authorization. While it is important to set deadlines, the experience of Tanzania suggests that flexibility with respect to such deadlines is important. The Tanzanian Communications Regulatory Authority (TCRA) initially set a 12 month period for existing licensees to migrate to the new Converged Licensing Framework (CLF). However, at the end of this 12 month period, several communications operators had not yet migrated to the new regime since they were not sure about which authorization category was most appropriate for them. Under the circumstances, the TCRA granted a six month grace period for such operators to complete the migration process. During this period, the TCRA held a number of meetings with operators to provide them with information about the CLF and to explain the advantages of migrating to this framework.
§ Employ incentive regulation to encourage existing licensees to migrate to the new unified or multi-service authorization regime. In Tanzania, for example, the TCRA waived application fees and initial licences fees for existing licensees that chose to migrate to the CLF.
§ Existing licensees should be migrated to the new authorization regime on the same or more favourable terms and conditions as those featured in the new authorization regime.
§ Provide existing licensees with the option of migrating to the new unified or multi-service authorization regime, but do not require such a migration. In Tanzania, operators that elected to migrate to the CLF were issued fresh authorizations. i.e., authorizations whose term began as of the date of issuance and was not off-set to account for the years that the operator had held its previous licence. Similarly, in Botswana, existing licensees who opted to apply for a new multi-service licence were granted a new authorization with a full term. Licensees that opted not to apply for a new authorization were advised that they would continue to operate under their existing authorization until their current authorization expired.