best practices in license renewal - pta · best practices in license renewal muhammad aslam hayat...
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Best Practices inBest Practices inLicense RenewalLicense Renewal
Muhammad Aslam Hayat
Vice President, Telenor Pakistan
IMPORTANCE OF RENEWALAn early, fair,transparent
andparticipatory
renewalprocess and
resultantrenewal onreasonable
terms would:- promoteinvestors’
confidence- act as an
incentive forlong term
investment
Uncertaintyabout licenserenewal is a
mainconsideration
for mobilecompanies in
theirinvestment
decisions
High fees mightimpact financial
stability ofoperators and
reducepossibility of
furtherinvestment. It
would alsoconstitute a
barrier to faircompetition if
differentlicensees have
differentrenewal dates
A balanced andpro-investment
decision onrenewal will
have a positiveimpact on
internationaland domestic
investors
Mobilecommunication
is a long termbusiness
Predictabilityand
transparency inbusiness
environment ismust forbusiness
An early, fair,transparent
andparticipatory
renewalprocess and
resultantrenewal onreasonable
terms would:- promoteinvestors’
confidence- act as an
incentive forlong term
investment
Uncertaintyabout licenserenewal is a
mainconsideration
for mobilecompanies in
theirinvestment
decisions
High fees mightimpact financial
stability ofoperators and
reducepossibility of
furtherinvestment. It
would alsoconstitute a
barrier to faircompetition if
differentlicensees have
differentrenewal dates
A balanced andpro-investment
decision onrenewal will
have a positiveimpact on
internationaland domestic
investors
Previous discussion atSATRC
SATRC-11/INP-18, 24 – 26 November 2009, Colombo, Sri Lanka
LimitedKnowledgebase
Renewal MethodsAdministrative process:
Parties sit and negotiate terms and conditionof renewal. In most cases government takesfront seat instead of Regulator.
Pros:It reduces the risk of involvement of any thirdparty and negotiations take place with existinglicensees only. Existing operators have a chanceto actively participate in process and convincegovernment/regulator for reasonable terms
Cons:This process is inherently non-transparent,unless proceeded with public knowledge (e.g.,a press release for start of process) or holding apublic consultation
Re-auction of spectrum:License/spectrum is auctioned allowingexternal bidders to also bid and highest bidbecomes benchmark for renewal. Existingoperators are given first right of refusal.
Pros:This process is comparatively transparent andwould determine true value of spectrum/license.
Cons:External bidders can influence decision ofGovernment and chances of a crazy bid by anambitious bidder cannot be ruled out.Since it involves an auction therefore process istime consuming.
Administrative process:Parties sit and negotiate terms and conditionof renewal. In most cases government takesfront seat instead of Regulator.
Pros:It reduces the risk of involvement of any thirdparty and negotiations take place with existinglicensees only. Existing operators have a chanceto actively participate in process and convincegovernment/regulator for reasonable terms
Cons:This process is inherently non-transparent,unless proceeded with public knowledge (e.g.,a press release for start of process) or holding apublic consultation
Re-auction of spectrum:License/spectrum is auctioned allowingexternal bidders to also bid and highest bidbecomes benchmark for renewal. Existingoperators are given first right of refusal.
Pros:This process is comparatively transparent andwould determine true value of spectrum/license.
Cons:External bidders can influence decision ofGovernment and chances of a crazy bid by anambitious bidder cannot be ruled out.Since it involves an auction therefore process istime consuming.
Best PracticesEnsure regulatory certainty
and ease investors’ concerns
• Codify a clear regime of licenserenewal (renewal procedures,reasons for refusal and appeals)
• Adopt principle of renewalexpectancy
• Strike right balance betweencertainty in renewal processand regulatory flexibility
Procedures for Renewal In case of non-renewal
• Provide a minimum noticeperiod
• Delay vacancy of spectrum togive enough time for operatorsto adapt strategies
• Ensure exit strategies foroperators
• Ensure continuity of service toconsumers
• Initiate renewal process well inadvance of expiry
• Perform periodic forwardreview of market and needs
• Disclose and publish reasons fornon-renewal
• Adopt public consultationprocess
• Guarantee a right to appeal
• Codify a clear regime of licenserenewal (renewal procedures,reasons for refusal and appeals)
• Adopt principle of renewalexpectancy
• Strike right balance betweencertainty in renewal processand regulatory flexibility
• Provide a minimum noticeperiod
• Delay vacancy of spectrum togive enough time for operatorsto adapt strategies
• Ensure exit strategies foroperators
• Ensure continuity of service toconsumers
License Renewal fees
• Beware that heavy license feeburdens reduce possibilities ofmaking further investment
• Establish models for licensingand spectrum pricing
Change in license conditionsand obligations
Spectrum implications oflicense renewal
• Strike a balance betweenprotecting ongoing investmentand optimal exploitation ofspectrum resources
• Leveling the playing field atlicense renewal betweenoperators entering marketunder different regimes toavoid windfall gains
• Initiate renewal process well inadvance of expiry
• Perform periodic forwardreview of market and needs
• Disclose and publish reasons fornon-renewal
• Adopt public consultationprocess
• Guarantee a right to appeal
• Renewal process is a goodoccasion to review licenseconditions
• Ineffective mandatory serviceobligations can have anti-competitive impacts
Pakistan CasePakistan Case
Cellular OperatorsCellular Operators of Pakistanof Pakistan
(ex Mobilink & Warid)(ex Mobilink & Warid)
LICENSING TIMELINES
Paktel &Instaphone got
licenses
Instaphone seizedto operate in 2006
1992
Ufone got license
2004
Zong acquiresPaktel
2014
Telenor got 3G/4Glicense in auction
2017
1989
License issued toMobilink
1999
Telenor & Waridgot license in
auction
2007
3G/4G Auctioned onApril 23rd
4 Operators wonlicense for 3G
Services.1 Operator won 4G
services.
2016
PMCL got 3G/4Glicense in auction.
Spectrum Assigned with Different Licenses
ZONGJAZZ (Warid)UFONETELENORJAZZ (Warid)
OPERATOR Spectrum YearAwarded
FirstRenewal
Expiry Remarks
19891992
1998-9920042004
200420072014
20192022202920192019
Licenseawarded for
mobile cellularservices
(TechnologyNeutral License)
900 & 1800Mhz
JAZZTELENORUFONEZONG
JAZZTELENORUFONEZONG
900 & 1800Mhz
2014 2029
ZONG
TELENOR
JAZZ
1800 Mhz 2014 2029License
awarded forNGMS
850 Mhz 2016 2031
1800 Mhz 2017 2032
A mixed process consisting ofadministrative and re-auction
methods in two phases isproposed
Proposed RenewalPROCESS
A mixed process consisting ofadministrative and re-auction
methods in two phases isproposed
In first phase Licenses will be renewed through anadministrative process up to a target year onproportional renewal fee
In second phase, in the target year all spectrum will beallocated through market method (re-auction)
Proposed Framework forRenewal of Cellular Mobile License (2019)
JAZZ (Mobilink)
TELENOR
ZONG
UFONE
JAZZ (Warid)
HarmonizedExpiry
2029
Proposed Duration forauto-renewed licensebefore auction in 2029
EXPIRY 2022
EXPIRY 2019
EXPIRY 2019
7 Years
10 Years
10 Years
Expires during Cut-off Year
10 years
JAZZ (Mobilink)
TELENOR
ZONG
UFONE
JAZZ (Warid) EXPIRY 2019
EXPIRY 2029
7 Years
10 Years
10 Years
Expires during Cut-off Year
10 years
Suggested Approach
Administrative Renewaltill 2029
1
Market method in 20292 First right of refusal to
incumbents
3
Advantages of Proposal
For Operators Government/Regulator
• Availability of entire spectrum allocatedto Operators in 850, 900 / 1800 / 2100 MHzin 2029;
• Any other spectrum band suitable forMobile Broadband will also be availablefor auction in 2029;
• Increased supply of spectrum thus morechoices and depending on technologicaldevelopments, operators will have anopportunity in 2029 to re-look at lessefficient bands;
• Uniformity in all license conditions for alltimes to come;
• Licenses issued in 2016 (850 MHz) and2017 (1800 MHz) can be aligned to expirein 2029 as well
• Harmonized renewal for all times to comewith same terms and conditions for allplayers in market
• This will help Regulator in re-planningbased on developments in technologies in2029;
• Government will get market based valueof spectrum and only efficient operatorswill stay in the market;
• Harmonized renewal for all times tocome;
• Enhanced confidence of the investors ingovernment for this visionary reform inmobile sector;
• This balanced and pro-investmentdecision on renewal will have a positiveimpact on international and domesticinvestors and would serve as a greensignal for operators to continue to investin their networks and fulfil theirobligations.
• Availability of entire spectrum allocatedto Operators in 850, 900 / 1800 / 2100 MHzin 2029;
• Any other spectrum band suitable forMobile Broadband will also be availablefor auction in 2029;
• Increased supply of spectrum thus morechoices and depending on technologicaldevelopments, operators will have anopportunity in 2029 to re-look at lessefficient bands;
• Uniformity in all license conditions for alltimes to come;
• Licenses issued in 2016 (850 MHz) and2017 (1800 MHz) can be aligned to expirein 2029 as well
• Harmonized renewal for all times to comewith same terms and conditions for allplayers in market
• This will help Regulator in re-planningbased on developments in technologies in2029;
• Government will get market based valueof spectrum and only efficient operatorswill stay in the market;
• Harmonized renewal for all times tocome;
• Enhanced confidence of the investors ingovernment for this visionary reform inmobile sector;
• This balanced and pro-investmentdecision on renewal will have a positiveimpact on international and domesticinvestors and would serve as a greensignal for operators to continue to investin their networks and fulfil theirobligations.
THANKYOU