Recommendations document on national roaming access terms and conditions, as well as MVNO access terms and conditions Based on Agreement No 2407/01 Final Strictly Private and Confidential Table of Contents DISCLAIMER ...................................................................................................................................... 5 LIST OF ABBREVIATIONS ................................................................................................................ 6 INTRODUCTION ................................................................................................................................. 7 1. NATIONAL ROAMING ........................................................................................................... 10 1.1 DEFINITION OF NATIONAL ROAMING ................................................................................................ 10 1.2 NATIONAL ROAMING SCHEMES ....................................................................................................... 11 1.3 USE CASES OF NATIONAL ROAMING IN EU/UK ................................................................................ 11 1.4 PRICE CONTROL MECHANISMS ....................................................................................................... 12 2. MOBILE VIRTUAL NETWORK OPERATOR ........................................................................ 15 2.1 DEFINITION OF MVNO .................................................................................................................. 15 2.2 TYPES OF MVNO ......................................................................................................................... 15 2.3 REGULATORY APPROACHES TO MVNO .......................................................................................... 22 2.4 USE CASES OF THE MVNO REGULATION ........................................................................................ 23 3. REVIEW OF SELECTED REGULATORY APPROACHES AND RECOMMENDATIONS ... 25 3.1 RECOMMENDATIONS ON NATIONAL ROAMING TERMS AND CONDITION ............................................... 25 3.2 RECOMMENDATION ON REGULATORY FRAMEWORK FOR MVNO ....................................................... 27 3.3 USE CASES OF SELECTED SECTIONS OF THE REFERENCE OFFER FOR WHOLESALE ACCESS (MVNO AGREEMENT) ............................................................................................................................ 36 4. OVERVIEW OF RETAIL MINUS METHODOLOGY .............................................................. 41 5. GEORGIAN MOBILE MARKET ANALYSIS .......................................................................... 43 5.1 GEORGIAN MOBILE MARKET OVERVIEW ........................................................................................... 43 5.2 POTENTIAL MVNOS IN GEORGIA ................................................................................................... 48 2 Final report: Georgian National Communications Commission – Consultancy on and development of national roaming access terms and conditions, as well as MVNO access terms and condition Agreement number: No 2407/01 To: Georgian National Communications Commission 50/18 Ketevan Tsamebuli Ave/ Bochorma Str., 0144, Tbilisi Prepared by: PricewaterhouseCoopers Advisory s.r.o. Twin City, Block A, Karadžicova 2, 815 32 Bratislava, Slovak Republic 3 Version 1.4 Status final Date 25.11.2019 Prepared by Boris Husar, Marek Komada, Martina Habanova Reviewed by Ivo Dolezal Approved by Ivo Dolezal 4 Disclaimer Any person who is not an addressee of this report or who has not signed and returned to PricewaterhouseCoopers Advisory, s.r.o. a release letter is not authorised to have access to this report. Should any unauthorised person obtain access to and read this report, by reading this report such person accepts and agrees to the following terms: The reader of this report understands that the work performed by PricewaterhouseCoopers Advisory, s.r.o. was performed in accordance with instructions provided by our addressee client and was performed exclusively for our addressee client’s sole benefit and use. The reader of this report acknowledges that this report was prepared at the direction of our addressee client and may not include all procedures deemed necessary for the purpose of the reader. The reader agrees that PricewaterhouseCoopers Advisory, s.r.o., its partners, principals, employees and agents neither owe nor accept any duty or responsibility to it, whether in contract or in tort (including without limitation, negligence and breach of statutory duty), and shall not be liable in respect of any loss, damage or expense of whatsoever nature which is caused by any use the reader may choose to make of this report, or which is otherwise consequent upon the gaining of access to the report by the reader. Further, the reader agrees that this report is not to be referred to or quoted, in whole or in part, in any prospectus, registration statement, offering circular, public filling, loan, other agreement or document and not to distribute the report without prior written consent of PricewaterhouseCoopers Advisory, s.r.o. 5 List of abbreviations Abbreviation Explanation 2G Second generation network 3G Third generation network 4G Fourth generation network ARPU Average Revenue per User AUC Authorization centre BSC Base station controller BSS Base station subsystem BTS Base transceiver station EIR Equipment identity register GMSC Gateway mobile service switches center GNCC Georgian National Communication HLR Home location register LRIC Long-run Incremental Costs MNO Mobile network operator ME Mobile equipment MS Mobile station MSC Mobile switching centre MVNE Mobile virtual network enabler MVNO Mobile virtual network operator NR National roaming NRA National regulatory authority OMC Operation and maintenance center PSTN Public switched telephone network RAC Radio Access Controller SIM Subscriber identity number VAS Value added services VLR Visiting location register 6 Introduction The document “Recommendations document on national roaming access terms and conditions, as well as MVNO access terms and conditions” was prepared as part of the project Consultancy services and developments of national roaming access terms and conditions, as well as MVNO access terms and conditions. The implementation of the project is governed by the Agreement on State Procurement concluded between the Georgian National Communication (“GNCC”) and PricewaterhouseCoopers Advisory, s. r. o. (“PwC”), dated 1st of August 2019. The GNCC foresees the rising demand for National Roaming (“NR”) and also, the opportunities for establishment of Mobile Virtual Network Operator (“MVNO”) which will need an access to existing mobile operator’s infrastructure that would complement the objectives of the GNCC, which are set out in Article 11. of The Law of Georgia on Electronic Communications (“Telecommunication Law”): • to establish, maintain and develop a competitive environment in the field of provision of electronic communications networks and facilities and electronic communications service; • to ensure that electronic communications service provide authorised undertakings provide users (including disables users) with services of good quality, a wide range of electronic communications services and affordable tariffs; • to encourage authorised undertakings owning electronic communications networks and facilities to efficiently invest in innovative technologies; by among other things by access regulation to electronic communications network elements and/or technical, economic and legislative relations. Currently both relevant markets for Mobile call termination and mobile call origination are regulated by GNCC’s decision and tariffs on these wholesale services are calculated by cost oriented bottom-up costing model using Long term incremental costs methodology (“BU-LRIC”). The purpose of this document is to provide regulatory support and guidance to GNCC related to the development of the fair, non-discriminatory obligations for NR and MVNO access terms and conditions. The document can be divided into three main sections: 1. General assessment of the National roaming, including definition of the service, examples of the cases of NR in EU/UK member states, and definition of pricing principles. 2. General assessment of the MVNO, including definition of the MVNO, different types of the MVNOs, examples of the MVNOs that operate in EU/UK member states or in other parts of the world and review of regulatory approaches used by the regulatory authorities in selected countries. 3. Recommendations and development of “cost model” for MVNO’s tariffs/rates for wholesale voice and data services based on the Retail minus Figure 1 - Different levels of infrastructure sharing and/or methodology for voice, SMS and data roaming agreements services. Passive infrastructure The telecommunications sector is characterized by high sharing investments to technology and infrastructure, which is also the case for the mobile network operators. The mobile infrastructure consists of many different network Active infrastructure National roaming elements, such as towers, masts and poles, sharing infrastructure for electronic equipment, cables, antennas, radio and transmission equipment and much more. The mobile network operator (“MNO”) has to MVNO access model invest significant amount of his resources in the infrastructure to be able to provide the voice, SMS and data services in a certain geographical area. 7 The MNO