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AGENDA
1. WHY CONVERGENCE REGULATION 2. INTEGRATION OF POLICY SETTINGS AND REGULATORY FRAMEWORKS 3. 3 THE IMPORTANCE OF PRATICAL TRANSITIONAL MECHANISMS 4. INSTITUTIONAL FRAMEWORK - THE CONVERGENCE POLICY MAKER AND SECTOR REGULATOR 5. LICENSING KEY PRINCIPLES, MAPPING AND MIGRATION 6. CLOSING KEY POINTS TO NOTE ON CONVERGENCE LICENSING
The term has variously been used to describe recent technological developments, merger and acquisition strategies and new service and application types. Major global institutions have been attempting to define convergence for the purpose of legislative and regulatory reform:
The ability of different network platforms to carry essentially similar types of services and applications. European Union (1998) Digital convergence can be seen as the coming together of previously technologically y g, p publishing, cable g, and commercially distinct markets such as broadcasting, print p television, fixed wire voice telephony and cellular mobile and fixed wireless access. ITU (1999) p y , previously y The processes by which communications networks and services, which were p considered separate, are being transformed such that: different networks and services carry a similar range of voice, audio-visual and data transmission services, different consumer appliances receive a similar range of services and new services are being ( ) created. OECD (2004)
As a prelude, convergence strategies are now following broader market liberalisation and has led to new licensing approaches
South Africa
Establishment of ICASA - Expansion of broadband - Promotion of cross platform competition (especially cable v DSL) e-Korea Plan Electronics Comms Act
Korea
- Convergence regulator established - Technical neutral licensing - Encouraging alternative facilities operators (eg power utilities etc)
India
National Telecommunications Policy Communications Convergence Bill
Australia
Telecommunications Act
- Technical neutral licensing - Service and facilities exemptions + class licensing - General competition provisions
Malaysia
National Telecommunications Policy Market liberalisation Convergence Provisions 1994 1995 1996 1997 1998 1999 Communications and Multimedia Act
- Convergence regulator established - Technical neutral licensing - Service and facilities exemptions + class licensing
2000
2001
2002
2003
2004
Countries Malaysia Singapore Indonesia I d i Philippines Thailand Brunei B i Cambodia Vietnam Myanmar Laos
Note: (*) Convergence at Ministerial level (**) Single Regulatory body
* underway d underway d ** ** * X X X X X X X X
Emerging characteristics are now beginning to define the licensing dynamics in convergence markets
Past Segmented modes of service delivery Analogue, dedicated channel, circuit switched Vertically integrated, end-toend delivery Distribution networks as a natural monopoly Investment dominated by physical plant h i l l t Key regulatory focus on interconnection Business markets drive innovation and rollout Discrete national and international markets Stable comparative advantage Future Market pressures
Integrated modes of service Fluid market boundaries and customer segments Increasingly diverse, hybrid solutions for connectivity delivery Digital, synchronous channel, Shift from time-based to flat rate (eg VoIP) charging Shift to commodity based pricing (eg international bandwidth) packet switched Highly segmented, specialised delivery Customer access is fully contestable Investment dominated by software and systems ft d t Key regulatory focus on access and interworking Multi-carrier markets have become the norm Continuing growth of niche market opportunities and vendors Substantially lower barrier to market entry Alternative access technologies (eg cable, fixed wireless) Increased focus on wholesale markets and competition Facilities sharing emerging as a viable strategy for 3G/WiMax Calls for an adaptive and flexible regulatory environment General competition principles apply to sector management
g g Consumer markets drive new Changing economics of network investment Emphasis on retail distribution and service applications applications Interdependent national and Communications industry globalised and trade exposed Alignment of national regulations with global realities international markets Dynamic comparative advantage Skills and IP are key sources of competitive advantage Increasing propensity and velocity of customer churn
Convergence in the Malaysian context integration of value chains of the information & multimedia industries
Integrated convergence business models and policy solutions
New Imperatives
Convergence is the progressive integration of the value chains of the information and multimedia content industries telecommunications, posts, broadcasting, print, multimedia, e-commerce and data processing into a g, p , , p g single value chain based on the use of distributed digital technology.
Convergence markets are economic markets for: Network services and related services Applications services, i l di A li ti i including content applications services, and related t t li ti i d l t d services Access to necessary facilities
TRANSPORT
Content/applications licensing and conditions - economic & social APPLICATIONS SERVICES MARKET FUNCTION
GRA/Presentation Convergence Law and Licensing /4 May 2011
Content and Applications Voice, data, interactive content, e-transactions, radio, TV, Internet
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Po olicies
Privatisation Policy
National IT Policy
Digital Signature Act Copyright Act py g Computer Crimes Act Telemedicine Act Electronic Government Act
Communications & Multimedia Act Malaysian Communications & Multimedia Commission Act
Laws
Im mplementation
Knowledge Economy
Vision 2020
MSC Flagship E-Government Smart School Tele-health Multi Purpose Card R&D Cl t Cluster Cross Flagship
Framework for Industry Development MY Creative Content y 1MY Payment Connecting 1MY E-Learning E-Healthcare
10 Entry Point Projects (EPP) E-Government Broadband for all Broadband Reach Smart Network Regional Network
DRIVETOWARDSCONTINUEDHIGHGROWTHINCOMMUNICATIONSERVICESANDENABLEPARADIGM SHIFTFROMINFRASTURE&ACCESSTOAPPLICATION&CONTENT
Theme1:ServingTomorrow Platform,Application,Content
Theme2:PushingBoundaries IndustryEnablement
EPP1 NurturingMYscreative contentindustry t ti d t EPP2 Deploying1MY payments EPP3 Connecting1MY Connecting 1MY
EPP4 EstablishingELearning
EnsuringBroadband forall EPP8 ExtendingBroadband Reach EPP9 OfferingaSmart Network EPP10 ExtendingRegional Extending Regional Network
1. Creating a global hub: To establish Malaysia as a major global centre and hub for communications and multimedia information and content services 2. Building a civil society: To promote a civil society where information-based services will provide the basis of continuing enhancements to quality of work and life 3. Nurturing local content & culture: To T grow and nurture local i f d t l l information resources and cultural representation th t f ilit t the ti d lt l t ti that facilitates th national identity and global diversity 4. 4 Ensuring long term benefits for end-users To regulate for the long term benefit of end users 5. 5 Nurturing user confidence To promote a high level of consumer confidence in service delivery from the industry
GRA/Presentation Convergence Law and Licensing /4 May 2011
6. Promoting access & equity To ensure an equitable provision affordable service delivery over ubiquitous national infrastructure 7. Creating a robust applications environment To create a robust applications environment for end users 8. Facilitating efficient allocation of resources To facilitate the efficient allocation of resources such as skilled labour, capital, knowledge and national assets 9. Developing industry capabilities To promote the development of capabilities and skills within Malaysias convergence industries 10. Promoting secure and safe networking To ensure information security and network reliability and integrity
1.
Transparency and clarity: Transparency and clarity are necessary to ensure that all market participants have a full understanding of the way the regulator implements the Governments policies and have confidence in their investment decisions. Less rather than more regulation: In line with the liberalisation policy for the sector, the focus of the legislation has been in the context of moving towards less regulation where market participants play key roles in developing voluntary industry codes Flexibility: Elements of flexibility have been incorporated to enable long lasting application in line with rapid changes in the industry environment. Focus on generic rules: In developing the new legislative rules, the bias was towards establishing generic rules which have widespread application to provide flexibility so that when there is need for amending any of its provisions, the recourse is only to amend the regulations or subsidiary legislation
2.
3.
4.
LEGISLATION
REGULATIONS
Chronology and timing of issuance of instruments is important to provide transparency, clarity and certainty to process
GRA/Presentation Convergence Law and Licensing /4 May 2011
INSTRUMENTS
Ministerial Instruments
Commission Instruments
C Commission D t i i Determination on Access List (Determination No. 1 of 2001) i ti A Li t (D t i ti N f Commission Determination on Universal Service Provision (Determination No. 2 of 2001) Commission Determination on the Mandatory Standards for Quality of Service ( (Public Switched Telephone Network Service) p ) (Determination No. 1 of 2002) Commission Determination on the Mandatory Standards for Quality of Service (Public Cellular Service) (Determination No. 2 of 2002)
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Broad overview of the Communications & Multimedia Act 1998: Clear Transition Provisions Essential for Regulatory Certainty
Legislation divided into 11 Parts Part II: Ministerial Powers & Procedures Ministerial Determination Ministerial Declaration Power to make regulations Part III: Appeal Tribunal Appointment of Chairman (High Court Judge) by Minister Review decision/direction of MCMC Part IV: Licences 2t types of li f licences i di id l and class individual d l Part V: Powers & Procedures of the MCMC Commission Direction & Determination Conduct of public inquiry Resolution of disputes Power to gather information / investigate Industry forums Mandatory standards Part XI: T P t XI Transitional provisions iti l i i Transition process
GRA/Presentation Convergence Law and Licensing /4 May 2011
Part VI: Economic Regulation Licensing Prohibition on anti-competitive conduct p Access regime Part VII: Technical Regulation Prohibition to use spectrum without assignment Numbering/electronic addressing/standards Part VIII: Consumer Protection Consumer complaints Universal Service Part IX: Social Regulation Licensing of content Prohibition on offensive content Content Forum Part X: General Offences/penalties/general enforcement
Transition Process
The CMA has specific provisions to address the transition process from old regime to new regime. A clear transition process is important as it provides certainty to existing licensees. Key issues for an existing licensee would typically be: What happens to the existing licence? Is there a requirement to migrate? If yes, what are the advantages and disadvantages of migrating to a new licence? Relevant procedures for transition or maintenance of an R l t d f t iti i t f existing licence Timeframe for transition
Operator Licences
Choice of migrating to new licences or remain on old licence
Determination of initial
Regulations
Preserved P d
New Regulations
Supersede old regulations p g
Last day for existing licensees to register existing licence (s 278) & indicate intention to migrate (s 280)
1 April 1999
1 April 2000
Licensees indicate intention to migrate or not migrate (s 280) Licensees register existing licences (s 278)
Registered licences g Continue in existence (s 278) Holders of registered licences may seek new licences (s 281)
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Institutional Framework
The set up 1 Nov 98 Redefinition of the Ministrys functions and f i d formation of MCMC Ministry of Energy, Telecommunications & Post 1 Apr 99
Ministry of Energy, Communications & Multimedia* Malaysian Communications and Multimedia Commission formed
Replacement of sectoral Acts by a convergence Act Replacement of sectoral regulators b a l t by convergence regulator
Telecommunications Act 1950 Communications and Multimedia Act 1998 Broadcasting Act 1988
(*) Note: 7 January 2003 - Ministry of Energy, Water & Communication (MEWC) 9 April 2009 Ministry of Information, Communications & Culture (MICC)
GRA/Presentation Convergence Law and Licensing /4 May 2011
Institutional Framework
The set up..
Parliament
Recommendation R d ti
Selfregulation: Access Consumer C&M Postal Digital Signature Content Technical
Referral
Commission (Regulator)
Liaison
Industry Fora
Industry Players
Institutional Framework
Roles and Responsibilities of Policy Maker Ministry of Information, Communications & Culture
To PLAN, IMPLEMENT, FACILITATE AND RE-EVALUATE policies and information programs to elevate peoples receptiveness towards Vision 2020 To PLAN, IMPLEMENT AND FACILITATE management services and delivery systems To DISSEMINATE information related to philosophy policy and national program effectively to PRODUCE philosophy, knowledgeable, informative and cultured community. To DEVELOP, SET UP AND REGULATE communication facilities and services and content industry To INSTILL arts, culture and heritage through arts and culture programs and activities towards One Malaysia To ENHANCE national revenue through contribution from creative and communication industry To PRODUCE knowledgeable, creative and innovative human capital
Institutional Framework
Roles and Responsibilities of Regulator Regulator - Malaysian Communications and Multimedia Commission (MCMC)
to ADVISE the Minister on all matters concerning the national policy objectives for communications and multimedia activities; to IMPLEMENT and ENFORCE the provisions of the CMA to REGULATE all matters relating to communications and multimedia activities not provided for in the CMA to CONSIDER and RECOMMEND reforms to the law; to SUPERVISE and MONITOR communications and multimedia activities; to ENCOURAGE and PROMOTE the development of the C&M industry; p y; to ENCOURAGE and PROMOTE self-regulation; to PROMOTE and MAINTAIN the integrity of all persons licenced or otherwise authorised; to RENDER ASSISTANCE in any form to, and to promote cooperation and coordination amongst, persons engaged i C&M activities; and d in ti iti d to CARRY OUT ANY FUNCTION under any written law as may be prescribed by the Minister by notification published in the Gazette.
Note: N t on 1 N November 2001 MCMC took over the regulatory functions of the Postal Services Act 1991 and th Di it l Si b t k th l t f ti f th P t l S i A t d the Digital Signature A t 1997 t Act 1997.
Institutional Framework
Roles and Responsibilities of Industry Fora Industry Fora Self Regulating Bodies
Access Forum
Content Forum
Consumer Forum
Technical Forum
to PRODUCE Voluntary Industry Codes which guides industry conduct participation from both consumer and service suppliers for the benefit of consumers
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Implementation involved:
Facilitating the entry of new players into the market g y p y Migrating the old licensees issued under the repealed Telecommunications Act and Broadcasting Act into the new converged licensing framework under the CMA
Communications and Multimedia Act 1998 Content Services Applications Services Network Services Network Facilities
Under the old licensing framework, all activities related to the provision of a particular service are vertically integrated for th f the provision of that service i i f th t i
Source: MCMC presentation to industry 2005
GRA/Presentation Convergence Law and Licensing /4 May 2011
The new licensing framework promotes vertical separation between facilities, network, applications, and content Caters for new convergence service that may not be in market today
CASP ASP NSP Service specific licenses, e.g. for the provision of telecommunications or broadcasting services will no longer be issued. Providers can therefore now P id h f choose which segment of a market they wish to enter facilities and/or service.
Source: MCMC presentation to industry 2005
GRA/Presentation Convergence Law and Licensing /4 May 2011
ASP
ASP NSP
NFP As an example, a company wishing to example provide facilities-based telecommunications and wholesale services need only be issued with individual NFP and NSP l d d l d licences. This company will not require separate or additional licensing if it wishes to deploy new technologies, e.g. 3G. d l t h l i 3G
Two types of licenses are issued for each category, t for ASP* except f ASP*. Only activities with significant economic or g social impact are individually licensed. The long term objective is to move towards less regulation. CASP ASP NSP NFP
Less regulation g
CASP ASP NSP NFP
Class
Individual
Source: MCMC presentation to industry 2005 * From 1 April 2005
GRA/Presentation Convergence Law and Licensing /4 May 2011
Licensed
Unlicensed
Generic provisions of Act apply to all relevant activities p pp y Standard licence conditions common to Individual and Class licences d dua a d C ass ce ces Standard Licence Conditions common to Individual Licences Special conditions Undertakings Individual
Source: MCMC presentation to industry 2005
GRA/Presentation Convergence Law and Licensing /4 May 2011
Class
Exempt
CMA Licence
Remarks
Domestic Network Operators Mobile Cellular Very Small Aperture Terminal Services
Control market entry and ownership of significant national assets Monitor operations Compliance with minimum standards Monitor operations & compliance with minimum standards Monitor operations & compliance with minimum standards
ASP class NFP class NSP class ASP class CASP individual
Control market entry & monitor operations Protect community values & standards Compliance with minimum standards
CLASS LICENCE
Limited content applications service limited in its availability to (i) vehicles, vessels, etc; (ii) single commercial or residential building; (iii) restricted geographical area PSTN, Public cellular services, IP telephony Public payphone service Public switched data service Audiotext hosting services, Directory services Internet access services, Messaging services Niche customer access Niche connection service
EXEMPTED ACTIVITIES
Internet content services
ASP
PSTN, Public cellular services, IP telephony Public payphone service Public switched data service (note: shifted to class from 1 April 2005)
Electronic transaction services Interactive transaction services Networked advertising boards Web hosting or client server
NSP
Bandwidth services Broadcasting distribution services Cellular mobile services Access applications services, Space services Switching services, Gateway services
NFP
Earth station, Fixed links and cables Radio communications transmitters and links Satellite hubs, Satellite control station, Space station, Submarine cable landing centre, Towers, poles, ducts and pits used in conjunction with other network facilities
Broadcasting and production studios t di Incidental network facilities Private network facilities
Control the use of scarce spectrum resources Minimise spectrum interference Authorises a person to use one or more specfied frequency bands for any purpose in accordance with the assignment conditions
Control the use of devices which use scarce spectrum resources Minimise spectrum interference Authorises a person to use a specified frequency band to operate a network facility of a specified kind or for a specified purpose
When used:
When used:
When used:
Spectrum frequencies which are used for provision of major communication services or command a high market value
Apparatus which use spectrum for the provision of major communications services
Apparatus which use spectrum which may cause interference with other licensed activities
Spectrum Assignment
Apparatus Assignments
Class Assignment
Previously under old regime, no y g spectrum assignments were issued. There is no migration issues to be dealt with. First spectrum assignment was issued f 3G i 2003 i d for in 2003.
Fixed e.g. coast station, g aeronautical fixed station, land station. Space e.g. space station, broadcasting satellite station, fixed t llit t ti fi d satellite station Mobile e.g. aircraft station, ship station, aeronautical mobile station, mobile station, cellular radio base station trunked radio station, station, paging base station, Broadcasting e.g. broadcasting transmitter, broadcasting repeater Migration issues as previously regulated as radiostation licences under old regime.
Amateur station Cellular station Citizen band station Cordless telephone Medical and biological telemetry Security devices Wireless microphone station
Liberalisation
The migrating process was most challenging migrating old licensees to new regime
1998 MCMC
2003 Migration II
Industry sessions y Drafting subsidiary legislations Managing transition process - interim arrangements on access, numbering - registration of old licences by designated date (1.4.00) to ensure continued validity Migration for radio & broadcasters completed first by July 2000
Series of consultations with licensees Mapping process Principle of no worse off Draft licence template Indication of intention to migrate All major telcos issued their individual licences from May 2001 onwards Minister issues niche guidelines & NFP/NSP class licences Sept 02 Briefing to licensees - Nov 2002 & break out breaksessions
NumberofLicences
600 500 Individual 400 Class 300 200 100 0 NetworkFacilities Provider NFP NetworkService provider NSP ApplicationsService Content Provider ASP ApplicationsService provider CASP 114 29 116 30 52 29 526
Note: Licenses issued under the repealed Acts but registered pursuant to s 278 of CMA.
GRA/Presentation Convergence Law and Licensing /4 May 2011
Some suggested overarching principles that can govern licence migration are as follows:
Facilitate entry into convergence markets (including ability to offer content services if applicable; Is not inconsistent with the local Companies Act and does not jeopardise listing on any stock exchange, where applicable; Adds value to underlying asset base, service offerings and competitive position so as to increase a companys market capitalisation; Conditions leave the company no worse off than its old licence; Avoids the imposition of asymmetrical regulation on the company which reduces its freedom and ability to compete; Allows corporate restructuring to meet the challenges posed by market and technology convergence; Minimises licence fees, administration and compliance costs;
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The push for convergence licensing arrangements should focus on the following:
Clear policy settings and national vision for the ICT sector; Adopting industry licensing structures where there is a split between facility and service based operators (such as that in jurisdictions such as Malaysia Singapore Malaysia, etc). Endorsing a framework where there is both individual and class licensing arrangements for both facilities and service based operators to reduce the burden of unnecessary and intrusive regulation in certain parts of the industry. Creating a set of practical transitional mechanisms for existing licenses (such as sunset provisions) where moving to a technologically neutral licensing regime regime. Ensuring fair and transparent conditions and obligations should be universal in the licence, that leave the company no worse off than its old licences. Making the reasons for not granting a license [or an extension to a license] transparent and known to the applicant. Clear licence mapping and migration processes that aim to provide certainty to licencees and potential investors.
GRA/Presentation Convergence Law and Licensing /4 May 2011
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