“THE ECTEL EXPERIENCE -

REGULATORY ISSUES POST LIBERALIZATION”

ASSESSMENT OF THE TELECOMMUNICATIONS SECTOR IN CARICOM:

Appropriate strategies for a single market. Port of Spain Trinidad,

Caribbean Regional Negotiating Machinery

Mr. Donnie Defreitas MSc, (Hav.), ECTEL

September 2007

Introduction

ECTEL was established 2000 to provide the

regulatory framework for telecoms in the

five Member States;

Dominica, Grenada, St. Kitts/Nevis, St. Lucia

and St. Vincent and the Grenadines are the

signatory Member States;

Liberalization begun in earnest in 2003 with

the roll out of the new mobile licences

Successes of the process

The success of five Caribbean Member States in preparing and promulgating new Telecoms Acts with accompanying regulations in less three years is not to be underestimated

The issuance of new non-exclusive licences to the The issuance of new non-exclusive licences to the incumbent and licences to new entrants in the same period is also well documented

Add to that successful negotiations with a powerful monopoly and significant reductions in rates we now go from business as usual to a new paradigm

Revenues

� Total telecommunications revenues grew by

5.4 per cent to $712 million.

� Mobile accounts for the largest share (48 per

cent) of revenues.

� Fixed services 46%

� Internet services’ 6 %

Investment

� Investment in the telecommunications sector

appeared to have peaked at EC$205 million in

2003.

� For the period ending March 2006 the sector

attracted an estimated EC$111 million.

Employment

� Direct employment by telecommunications providers

edged upward 12.6 per cent to over 1360.

� Total number of persons employed in the sector

about 2,500 persons.about 2,500 persons.

� Includes areas such as customer premise services,

retail outlets for mobile handsets, sale of accessories

and phone cards, service and repair of mobile

handsets and management of customer care centres.

Licences issued in ECTEL Member

States (March 2006)

� Forty-five licences had been issued in the

ECTEL Member States,

� Twelve for Fixed Public Telecoms,

� Seventeen for Public Mobile Telecoms

� Fourteen for Internet Network and Services

� Two (2) for submarine cable systems.

Criteria for success

� Commitment and political will from decision makers, translated into law;

� Identification and removal of barriers to market entry;to market entry;

� Interconnection mandatory

� Universal Service guaranteed

� Fair competition practices between providers ensured.

ECTEL

� Five Member States: Dominica,

Grenada, St. Lucia, St. Kitts and

Nevis, St. Vincent and the GrenadinesNevis, St. Vincent and the Grenadines

� Established by Treaty in 2000 May 04

with Directorate located in St Lucia

� Mandate of harmonized approach to

development of Telecoms sector

Telecoms Sector: platform for success

� Telecommunications (ICT) central to all economic activities;

� Central to development of the services sector, the region’s success sector;

Governments vision that liberalization of � Governments vision that liberalization of the sector would provide for a competitive telecommunications platform that would provide a suitable environment for tourism and other critical economic sectors.

� Also satisfy the educational and social needs and stimulate new investments.

Sector Challenges

� Monopolistic provision of services;

inimical to progress.

� Need to liberalize their telecom sector

to improve competitiveness;

� Varying years for licences termination

� Need for unified approach in dealing

with incumbent;

Commitment into Law - ECTEL

� ECTEL regulatory framework has a

two-tiered arrangement, first

regional regulatory grouping of

independent states; independent states;

� At the national level, there is the

NTRC and at the regional level there

is the ECTEL Directorate as an

advisory body;

ECTEL –Form and Function� Each Member State cedes some of its

“sovereignty” to a regional centre;

� The NTRC must liaise and consult � The NTRC must liaise and consult

with the ECTEL Directorate and the

commission must act independently

on all regulatory matters placed

before the commission.

ECTEL Structure

� Council of Ministers

Formulation of Policy

� Board of Directors� Board of Directors

Implement Policies

� Secretariat

General administration of Treaty and day to day running of ECTEL

Relationship between ECTEL and

NTRCs

Relationship between ECTEL and NTRC

ss

Legislative FrameworkEach Contracting State:

� Enacted harmonized Telecommunications Act;

Established a commission;� Established a commission;

� Put in place a licensing regime, spectrum management processes and dispute resolution procedures.

Regional Experience

ECTEL approach was full liberalization through joint negotiation

�Commitment at highest levels required;

�Attitude of the incumbent to reform�Attitude of the incumbent to reform

crucial;

�No reduction in revenues to the incumbent expected;

�The legislation must provide for technology neutrality.

Investments and Employment

� Significant Capital investments; 2001-$103M; 2003 - $220M and 2004 $145M;

� Employment witnessed a marginal increase in the numbers

� Significant reduction of prices: 2001 1 min to the USA = US $1.20; 2006 = US 40cents

The Role of Government

Government should enact legislation that:

� Provides for competition with standards for interconnection and standards for interconnection and interoperability

� Ensures access to natural resources;

� Protects the rights of consumers.

� Guarantees quality of services.

Critical Success Factors (CSFs)

� Independence from the political directorate and industry providers

� Suitable legislative framework and consistency in the application of consistency in the application of laws

� Harmonized approaches and guaranteed funding for the regulatory body

Success factors

� Professionally trained, competent regulators;

� Commitment of policy makers;Commitment of policy makers;

� Responsiveness to emerging situations;

� Demonstrated benefits to key stakeholder;

� Technology neutrality;

� Accepted cost models for services;

Other Critical Challenges

� Sustainability of funding

� Recruitment and retention of high

quality professional staffquality professional staff

� Confidence by Government, the

industry players and the public in

the regulatory process.

Post Liberalisation

� Explosive growth in the mobile sector

� Local access to networks still a virtual monopoly

� New opportunities now being offered by new � New opportunities now being offered by new submarine cables

� Limit of available natural resources the only restriction on the issuance of licences

� Option of triple play by Television Cable operators now being considered

Key lessons learnt

� Commitment of government and decision makers

� Open and transparent processes and consistency in the application of laws with dispute settlement mechanism that is open, consistency in the application of laws with dispute settlement mechanism that is open, efficient and cost-effective;

� Need for continuous review of the legislation, systems and processes

� Require regulatory independence with highly trained and competent staff with mandatory program of Continuous Professional Development (CPD)

Small committed states need to share

Challenges still to be addressed

� Appropriate Policies for technological convergence required;

� Cost models for termination services to be concludedconcluded

� Interconnection arrangements to be updated

� Regulatory convergence to be addressed

� Design of relevant Universal access mechanisms

Outstanding� Complementary legislation (Competition, E-legislation, Broadcasting)

� Policy for ICT that appreciates a role for the regulator and for the promoter of competitionregulator and for the promoter of competition

�Information and Communications Technologies (ICTs) with telecommunications being the transmission medium will be the focus of the regulators.

�Investment promotion that takes advantage of emerging competitive telecoms platform

A New focus

Convergence and ICTS will be the new focus with priority for;

Infrastructure Infrastructure

E- Government Services & E-Commerce

Education: Building Human Capacity

Awareness and Sensitization

and National ICT Plans

Thank you

ECTEL has achieved much but much is

left to be desired

Work continues and this initiative by Work continues and this initiative by

CRNM will go a long way towards

coordinating our activities.

Thank you for the opportunity for

making our small contribution.

For Further information

Contact us at www.ectel.int or

Donnie De Freitas

Director of Technical Services

ECTEL

Castries St. Lucia.

Phone (758) 458 1701

Fax (758) 458 1698

Email ddefreitas@ectel.int