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Best Practices in License Renewal

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Best Practices in License Renewal Best Practices in License Renewal Muhammad Aslam Hayat Vice President, Telenor Pakistan IMPORTANCE OF RENEWAL An early, fair, transparent High fees might and impact financial participatory stability of renewal operators and process and reduce resultant possibility of renewal on Uncertainty further A balanced and reasonable about license investment. It pro-investment terms would: renewal is a would also decision on - promote main constitute a renewal will Predictability investors’ consideration barrier to fair have a positive Mobile and confidence for mobile competition if impact on communication transparency in - act as an companies in different international is a long term business incentive for their licensees have and domestic business environment is long term investment different investors must for investment decisions renewal dates business Previous discussion at SATRC SATRC-11/INP-18, 24 – 26 November 2009, Colombo, Sri Lanka Limited Knowledgebase Renewal Methods Administrative process: Re-auction of spectrum: Parties sit and negotiate terms and condition License/spectrum is auctioned allowing of renewal. In most cases government takes external bidders to also bid and highest bid front seat instead of Regulator. becomes benchmark for renewal. Existing Pros: operators are given first right of refusal. It reduces the risk of involvement of any third Pros: party and negotiations take place with existing This process is comparatively transparent and licensees only. Existing operators have a chance would determine true value of spectrum/license. to actively participate in process and convince Cons: government/regulator for reasonable terms External bidders can influence decision of Cons: Government and chances of a crazy bid by an This process is inherently non-transparent, ambitious bidder cannot be ruled out. unless proceeded with public knowledge (e.g., Since it involves an auction therefore process is a press release for start of process) or holding a time consuming. public consultation Best Practices Ensure regulatory certainty Procedures for Renewal In case of non-renewal and ease investors’ concerns • Provide a minimum notice • Codify a clear regime of license • Initiate renewal process well in period renewal (renewal procedures, advance of expiry Delay vacancy of spectrum to reasons for refusal and appeals) • Perform periodic forward • give enough time for operators • Adopt principle of renewal review of market and needs to adapt strategies expectancy • Disclose and publish reasons for • Ensure exit strategies for • Strike right balance between non-renewal operators certainty in renewal process • Adopt public consultation Ensure continuity of service to and regulatory flexibility process • • Guarantee a right to appeal consumers Change in license conditions Spectrum implications of License Renewal fees and obligations license renewal • Strike a balance between • Renewal process is a good • Beware that heavy license fee protecting ongoing investment occasion to review license burdens reduce possibilities of and optimal exploitation of conditions making further investment spectrum resources • Ineffective mandatory service • Establish models for licensing • Leveling the playing field at obligations can have anti- and spectrum pricing license renewal between competitive impacts operators entering market under different regimes to avoid windfall gains Pakistan Case Cellular Operators of Pakistan (ex Mobilink & Warid) LICENSING TIMELINES Paktel & Instaphone got licenses Instaphone seized Zong acquires Telenor got 3G/4G to operate in 2006 Ufone got license Paktel license in auction 1992 2004 2014 2017 1989 1999 2007 2016 Telenor & Warid 3G/4G Auctioned on License issued to PMCL got 3G/4G got license in April 23rd Mobilink license in auction. auction 4 Operators won license for 3G Services. 1 Operator won 4G services. Spectrum Assigned with Different Licenses Year First OPERATOR Spectrum Expiry Remarks Awarded Renewal ZONG 1989 2004 2019 License JAZZ (Warid) 2022 awarded for 900 & 1800 1992 2007 mobile cellular UFONE Mhz 1998-99 2014 2029 services TELENOR 2004 2019 (Technology JAZZ (Warid) 2004 2019 Neutral License) JAZZ TELENOR 900 & 1800 2014 2029 UFONE Mhz ZONG ZONG 1800 Mhz 2014 2029 License TELENOR 850 Mhz 2016 2031 awarded for NGMS JAZZ 1800 Mhz 2017 2032 Proposed Renewal PROCESS A mixed process consisting of administrative and re-auction methods in two phases is proposed In first phase Licenses will be renewed through an administrative process up to a target year on proportional renewal fee In second phase, in the target year all spectrum will be allocated through market method (re-auction) Proposed Framework for Renewal of Cellular Mobile License (2019) Harmonized Proposed Duration for Expiry auto-renewed license before auction in 2029 2029 JAZZ (Mobilink) EXPIRY 2022 7 Years TELENOR EXPIRY 2019 10 Years ZONG EXPIRY 2019 10 Years UFONE Expires during Cut-off Year EXPIRY 2029 JAZZ (Warid) 10 years EXPIRY 2019 Suggested Approach 1 3 Administrative Renewal 2 First right of refusal to till 2029 Market method in 2029 incumbents Advantages of Proposal For Operators Government/Regulator • Availability of entire spectrum allocated • This will help Regulator in re-planning to Operators in 850, 900 / 1800 / 2100 MHz based on developments in technologies in in 2029; 2029; • Any other spectrum band suitable for • Government will get market based value Mobile Broadband will also be available of spectrum and only efficient operators for auction in 2029; will stay in the market; • Increased supply of spectrum thus more • Harmonized renewal for all times to choices and depending on technological come; developments, operators will have an • Enhanced confidence of the investors in opportunity in 2029 to re-look at less government for this visionary reform in efficient bands; mobile sector; • Uniformity in all license conditions for all • This balanced and pro-investment times to come; decision on renewal will have a positive • Licenses issued in 2016 (850 MHz) and impact on international and domestic 2017 (1800 MHz) can be aligned to expire investors and would serve as a green in 2029 as well signal for operators to continue to invest • Harmonized renewal for all times to come in their networks and fulfil their with same terms and conditions for all obligations. players in market THANKYOU.
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