This section provides further information on a subject introduced earlier in this module, namely the qualification process for applicants for individual licences.
In some licensing processes, the qualification phase and selection phase are dealt with separately, such as in the classic “two envelope” approach. Under this approach, the qualification phase occurs first. The first envelope is opened and the submissions of applicants are reviewed to determine which ones are technically, financially or otherwise qualified to proceed to the selection phase.
The second envelopes of non-qualified applicants are usually returned un-opened. Sometimes an explanation is given as to which qualification criteria the applicant failed to meet. Such an explanation is consistent with the requirement of the WTO Regulation Reference Paper to make reasons for denial of a licence known to the applicant upon request.
Where the qualification and selection processes are run separately, such as under the two envelope approach, an applicant’s second envelope contains information related to the selection criteria. The most common and objective selection criterion is the financial amount of a bid. This may be based on the highest bid, for example, for a 3G licence. It may also be to the lowest bid, for example, in the case of a least-cost subsidy auction. Such auctions are discussed in Module 4, Universal Access. Selection criteria are discussed further below.
In some cases, the qualification and selection processes are held simultaneously, such as in a comparative evaluation process.
Qualification criteria should be published in advance of the commencement of the qualification phase. This is consistent with the provisions of the WTO Regulation Reference Paper, which stipulate that “all licensing criteria” must be made publicly available.
In order to maximize the transparency of the process, direction may be provided on how potential applicants can demonstrate that they have met qualification criteria, such as technical competence or financial backing. As previously indicated, one of the most common type of evidence involves prior experience in operating a network with a specific number of subscribers.
There are potentially negative consequences to adopting very specific qualification criteria and to specifying the type of evidence that will suffice to demonstrate that these criteria have been met. This specificity makes the process more rigid and constrains the regulator’s flexibility to address novel situations or unexpected but useful qualifications. Maintaining some degree of regulatory discretion in the qualification process may be appropriate.
Transparency in the qualification phase is maintained by communicating clearly with potential applicants about how their submissions will be evaluated. In particular, it is advisable to inform potential applicants whether minimum compliance with pre-qualification criteria is sufficient to advance them to the selection phase of the competition. There has been litigation against regulators in some countries where qualification criteria were specified but some otherwise qualified applicants were subsequently rejected on the basis that they were less qualified than others.
In order to increase certainty of the licensing process, as well as its transparency, regulators usually state the date for a decision on which applicants have successfully qualified to advance to the selection phase. This date, as well as other significant dates in the qualification process, is frequently included in a schedule provided in the qualification process materials issued to potential applicants.