Kingdom of Saudi Arabia. Licensing of Data Telecommunications Services

Transcription

1 Kingdom of Saudi Arabia Communications and Information Technology Commission Licensing of Data Telecommunications Services A Public Document Issued by CITC in Riyadh, Tuesday 17/9/1424H/, 11/11/2003G 1

2 TABLE OF CONTENTS INTRODUCTION... 3 FORM OF RESPONSE... 4 LICENSING AND REGULATORY FRAMEWORK... 5 NUMBER OF DATA TELECOMMUNICATIONS SERVICE LICENSES... 5 VALUE-ADDED RESELLERS... 6 SCOPE OF SERVICES TO BE LICENSED... 6 NATIONAL AND INTERNATIONAL FACILITIES... 7 INTERCONNECTION... 8 INFRASTRUCTURE SHARING AND CO-LOCATION... 9 NETWORK ROLLOUT OBLIGATIONS TARIFF REGULATION SERVICE OBLIGATIONS RADIO SPECTRUM TELECOMMUNICATIONS EQUIPMENT LICENSING AND OTHER FEES LICENSING PROCESS LICENSING SCHEDULE OTHER LICENSING ISSUES RESPONSES th November, 2003 Public Document - Licensing of Data Telecommunications Services 2

3 Licensing of Data Telecommunications Services in the Kingdom of Saudi Arabia Public Document INTRODUCTION Pursuant to the Telecommunications Act, the Bylaw and the Ordinance, the Communications and Information Technology Commission ("the CITC"), is the entity authorized to regulate the telecommunications sector in the Kingdom of Saudi Arabia ("the Kingdom"). The Telecommunications Act ("the Act"), enacted in June, 2001, and effective in December, 2001, provides the legislative foundation for developing the sector and determines that it is regulated pursuant to a number of objectives including: "to promote and encourage fair competition in all fields of telecommunications, to ensure clarity and transparency of procedures and to ensure principles of equality and non-discrimination". The CITC Ordinance ("the Ordinance"), effective in June, 2001, created CITC and defines its functions, governance, and financing. The Telecommunications Bylaw ("the Bylaw") was issued in July, 2002 and became effective immediately. The Bylaw provides for the regulation of the telecommunications sector by the CITC in the Kingdom. At present, Fixed, Mobile and Data telecommunications services in the Kingdom are offered by Saudi Telecommunications Company ("STC"). However, internet services, using STC s network, are already open to a large number of service providers. As part of the liberalization process, VSAT licenses have recently been awarded to four new VSAT service providers. The CITC is also initiating a process to license cellular mobile service provider(s). Studies indicate that an opportunity exists for new service providers to offer Data telecommunications services and licensing such service providers will mark an important step in the opening of the telecommunications market to competition in the Kingdom. Data telecommunications service licenses are expected to be awarded in 1425/ th November, 2003 Public Document - Licensing of Data Telecommunications Services 3

4 This Public Document and Public Notice CITC PN /2003, dated 17/9/1424H, (11/11/2003G), are being issued by the CITC to initiate the Data telecommunications service licensing process. This Public Document invites comments on the approach to be adopted by the CITC in licensing the Data telecommunications service providers, and on key issues and conditions for the Data telecommunications service licenses. Comments are invited from candidates interested in being short-listed for the right to apply for Data telecommunications service licenses. Comments are also invited from STC, Internet Service Providers and other organisations such as government, industry, trade, academic, telecommunications equipment suppliers and service providers, and any other interested parties or other members of the public. FORM OF RESPONSE The CITC invites comments on all issues related to the Data telecommunications service licensing process that are discussed in this Public Document. The CITC particularly invites comments and responses to the specific numbered questions set out in the Document. Parties are invited to provide detailed comments, wherever possible, and to provide relevant data, analysis, information or experience from other countries to support their comments. In providing their comments, parties are requested to indicate the number of the consultation question(s) in this Public Document to which their comment relates, even if they do not comment on all questions. The CITC specifically encourages parties considering partic ipating in the licensing process to devote the necessary resources at the present stage to provide useful and detailed answers to all questions raised in this Public Document as these answers will be taken into account in the subsequent finalisation of the licensing process. The CITC will carefully consider responses from all interested parties in developing its approach to licensing Data telecommunications service providers in the Kingdom. However, this Public Document and any responses to it are not binding on the CITC and all responses are the property of the CITC. In providing their comments, parties are requested to specify contact details including the name of the party (and all related parties if the respondent is part of a consortium) in addition to an address and phone number(s). 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 4

5 LICENSING AND REGULATORY FRAMEWORK The CITC will license the new Data telecommunications service providers in a manner that complies with its functions and powers under the Act, the Ordinance and the Bylaw. Article Eighteen of the Act authorizes the CITC to issue telecommunications licenses for services such as Data telecommunications services, in accordance with the Act and the Bylaw. Article 10.1 of the Bylaw states that the provision of telecommunications services to the public and the operation of a telecommunications network used to provide a telecommunications service to the public requires a license issued by the CITC. Chapter 2 of the Bylaw sets out the CITC s general approach, rules and procedures for the licensing of telecommunications services. Other chapters of the Bylaw provide the general regulatory framework for the operation of telecommunications networks and provision of telecommunications services in the Kingdom. The Bylaw sets out many of the key rights and obligations of telecommunications service providers, including Data telecommunications service providers. The Bylaw deals with key regulatory issues, including access to property by telecommunications service providers, competition between service providers, interconnection, disputes between service providers, tariffs, relations between service providers and users, universal access and universal service policies, frequency, numbering and telecommunications equipment regulation, network intrusions and violations of the Act and its Bylaw. Interested parties, and particularly prospective Data telecommunications service providers, should review the Bylaw for a description of the general regulatory framework that will apply. Key statutes and documents relating to the regulation of telecommunications in the Kingdom are available on the CITC s web site ( NUMBER OF DATA TELECOMMUNICATIONS SERVICE LICENSES The CITC's prime objective is to encourage the rapid rollout and availability of advanced and affordable Data telecommunications services throughout the Kingdom. To meet this objective, the CITC is reviewing market studies and the experience of other countries in licensing Data telecommunications services. 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 5

6 At present, other than VSAT and internet services, only STC provides Data telecommunications services in the Kingdom. As previously indicated, the CITC plans to award Data telecommunications service licenses in 1425/2004. In licensing the new Data telecommunications service providers, the CITC intends to maintain a level playing field for all Data telecommunications service providers, by ensuring that they operate under the same general license terms and conditions. Accordingly, at the time one or more Data telecommunications service licenses are issued by the CITC to commence service, the conditions of STC's license for Data telecommunications services will be amended, as required, to conform with the regulatory approach applied to the Data telecommunications service providers. The CITC would appreciate receiving comments and supporting information and analysis from interested parties on the advantages and disadvantages of the CITC's plan to license more than one service provider. Accordingly, the CITC would appreciate receiving comments that address the following question. 1. How many Data telecommunications service providers should the CITC license? Please provide supporting rationale. VALUE-ADDED RESELLERS In a number of competitive markets, Data telecommunications services are being provided by value-added resellers as part of a wider services offering. The CITC is considering whether it should license such value-added resellers and invites comments on this matter which specifically address the following questions. 2. Should the CITC differentiate between licensing facilities-based Data telecommunications service providers and resellers? If so, how should it define the different types of provider and differentiate between them? 3. Do Data telecommunications service resellers need to be licensed or is a different approach recommended? If a license is needed what type of license is recommended and when should it be issued in relation to the current licensing process? Please support each answer. SCOPE OF SERVICES TO BE LICENSED The CITC currently expects that Data telecommunications service licenses will be national licenses which will cover services such as the provision of leased line, 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 6

7 managed data network services including x.25, frame relay, wavelength services, IP-VPN and ATM as well as IP transit and access. However, the CITC wishes to obtain views regarding the scope and geographic coverage of services which should be covered in such licenses in order to meet the Data telecommunications service needs in the Kingdom and in relation to the range of services offered in other countries. 4. Please comment on the type, scope and geographic coverage of services that the new Data telecommunications service providers should be entitled or required to provide. Describe any specific services that the new Data telecommunications service licensees should or should not be authorized to provide, with supporting reasons. 5. If more than one Data telecommunications service provider is licensed, should the service conditions be the same for all licensees? If different service conditions are to be proposed, dealing with other matters, please specify. NATIONAL AND INTERNATIONAL FACILITIES The new Data telecommunications service providers will be permitted, but not required, to build national network facilities. Such national network facilities may be used to link respective Data switching networks throughout the Kingdom and/or establish direct access lines to customers. Such national network facilities or access lines may include fibre optic or other cable lines as well as microwave or other radio links. If necessary, the CITC shall issue Radio Communications licenses to permit construction and operation of such national network facilities. Alternatively, the new Data telecommunications service providers may choose to lease or otherwise acquire some or all of the national and access transmission capacity from STC. The CITC will require STC, as a dominant service provider, to make available to the new Data telecommunications service providers interconnection and access to its infrastructure. The new Data telecommunications service providers may acquire national and access services from service providers other than STC, provided such telecommunications service providers are licensed by the CITC. The new Data telecommunications service providers will be entitled to carry international Data traffic on their own networks in and out of the Kingdom. 6. Please comment on any requirements for the provisioning of national and international telecommunications facilities that are considered necessary 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 7

8 for the development of efficient Data telecommunications networks in the Kingdom. 7. Please indicate to what extent STC should be required to provide national and international services and facilities to the new Data telecommunications service providers and the technical and commercial terms and conditions which should apply. Please provide information and international examples to support the recommendations. INTERCONNECTION Interconnection between the networks of Data telecommunications service providers and between existing telecommunications networks may be necessary for the efficient provision of Data telecommunications services. All licensees will be expected to interconnect their networks and services in accordance with Chapter 5 of the Bylaw. Pursuant to Article 36 of the Bylaw, the CITC has issued Interconnection Guidelines that will require the dominant service provider to provide a Reference Interconnection Offer ("RIO") in accordance with Article 41 of the Bylaw. Article 39 of the Bylaw requires dominant service providers such as STC, on request, to provide interconnection to its telecommunications network and to provide access to its telecommunications facilities to any service provider. This Article will apply to the new Data telecommunications service providers, which may request STC to provide them with interconnection and access to network facilities. Among other things, Article 39 requires STC s interconnection services and tariffs to be: non-discriminatory, as between similar telecommunications service providers; provided under the same conditions and of the same quality as the interconnection services STC provides to itself or its affiliates. Article 37 of the Bylaw requires all service providers, including the new Data telecommunications service providers, to enter into good faith negotiations to provide interconnection upon receipt of a request for interconnection from another telecommunications service provider. The CITC will respond promptly to resolve any disputes relating to interconnection, in accordance with the procedures set out in the Bylaw. 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 8

9 8. Please make any recommendations on the terms and conditions, including tariffs, for national and international interconnection with STC s networks to provide connectivity for the new Data telecommunications service providers. Comments are invited on the necessary technical and commercial conditions for interconnection. Please provide information and international precedents to support the recommendations. 9. How should access to and from the customer premises to the local switch be regulated for Data telecommunications services? 10. Should private Data telecommunications networks carrying both voice and data traffic be allowed to interconnect with the public switched telecommunications network? Please provide supporting rationale. If so, at what point should this be allowed? INFRASTRUCTURE SHARING AND CO-LOCATION The CITC considers that the sharing of network infrastructure and facilities between Data telecommunications service providers can provide an efficient and cost-effective approach to the provisioning of Data telecommunications networks. The sharing of towers, poles, conduit, central office space and other facilities can benefit both the owner and shared user of such facilities. Assuming appropriate tariffs are established, telecommunication service providers sharing such passive network infrastructure and facilities can all benefit from the sharing arrangements. In particular the CITC considers that the mutually co-ordinated deployment of infrastructure in remote areas of the Kingdom has a number of potential benefits. Article 28 of the Bylaw mandates co-location to be provided where economically feasible and no major additional construction work is required. Telecommunications service providers shall agree on the amount to compensate the service providers for the co-location provided. The CITC will respond promptly to resolve any disputes relating to infrastructure sharing or co-location in accordance with the procedures set out in the Bylaw. 11. Please comment on the facilities-sharing arrangements that are considered appropriate between the new Data telecommunications service providers and STC. Please include comments about the tariffs or tariff approaches that are considered appropriate for such arrangements. 12. Please comment on the extent to which the mutually co-ordinated deployment of infrastructure sharing should be permitted in remote regions of the Kingdom. 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 9

10 NETWORK ROLLOUT OBLIGATIONS The CITC invites comment on the requirement, if any, to establish network rollout obligations for the new Data telecommunications service providers. 13. Please comment on the desirability of establishing network rollout obligations that should apply to the new Data telecommunications service providers. Should market forces dictate the coverage or should specific geographic locations be recommended and, if applicable, specific percentages of the population of the Kingdom to be covered in each year after licensing? TARIFF REGULATION Chapter 7 of the Bylaw establishes mandatory price regulation for some types of telecommunications service providers, and not for others. Chapter 7 generally requires universal service providers and dominant service providers to file with and to obtain approval from the CITC for their rates and tariffs to users and other service providers. The terms universal service provider and dominant service provider are defined in the Bylaw. In its Decision No. 1/1423, dated 23/6/1423H (1/11/2002G), the CITC designated STC as both a universal service provider and a dominant service provider. In the same decision, the CITC required STC to file a full and detailed schedule of all of its tariffs in effect at the time of the decision. Consistent with the Bylaw, the decision also required STC to obtain prior CITC approval for any subsequent changes to its tariffs. Accordingly, STC s rates for Data telecommunications services and other telecommunications services have been filed with and are regulated by the CITC today. The CITC does not intend to subject STC to an undue competitive disadvantage in terms of its tariff regulation. Therefore, the CITC intends to deal expeditiously with STC in response to any applications to change its Data telecommunications tariffs. The Bylaw does not require the regulation of the tariffs of non-dominant service providers, or of service providers that are not universal service providers, unless the CITC issues a decision to the contrary. The CITC does not, at this time, intend to require regulatory approval of the tariffs of the new Data telecommunications service providers. Such licensees are not expected to be dominant service providers, at least in the early stages of competition. STC s presence, as the dominant Data telecommunications service provider, should provide sufficient market discipline in the early years to ensure 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 10

11 the new Data telecommunications service providers will not charge excessive rates. The CITC intends to monitor the evolution of competition in the Data telecommunications and other markets carefully, to determine what type of tariff regulation is required, if any, to protect the user interests. In appropriate circumstances the CITC may exercise its power to regulate the tariffs of competitive Data telecommunications services, or to remove the requirement for regulation of STC Data telecommunications services. 14. Please comment on the approach to tariff regulation of Data telecommunications services outlined above. If any changes are proposed to this approach, please provide detailed supporting reasons and international examples. SERVICE OBLIGATIONS Chapter 9, of the Bylaw, requires universal telecommunications service providers to meet specific quality of service standards developed by the CITC after consultation. Such telecommunications service providers are required to measure and report their quality of service to the CITC to demonstrate compliance with the quality of service standards. The CITC may also apply a quality of service regulation regime to dominant telecommunications service providers. In its Decision Number 1/1423, dated 23/6/1423H (1/09/2002G), the CITC designated STC as a universal service provider and a dominant service provider. STC s quality of service report is expected to cover standards for Data telecommunications services as well as fixed services. However, consistent with the Bylaw, in a competitive environment the CITC may decide to relieve STC of its obligations to comply with regulated Data telecommunications service quality standards. Consistent with the approach of the Bylaw the CITC does not, at this time, plan to establish specific performance standards or quality of service standards for the new Data telecommunications service providers, since these licensees will neither be universal service providers nor dominant service providers. However, if a Data telecommunications service provider becomes dominant in Data telecommunications services markets, or if designated as a universal service provider under future universal service policies, the CITC may require compliance with quality of service regulation in accordance with Article 67 of the Bylaw. 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 11

12 15. Please comment on the proposed approach to regulate service obligations for Data telecommunications services. RADIO SPECTRUM The CITC intends to grant radio licenses, as required, to the Data telecommunications service providers pursuant to Chapter 10 of the Bylaw and seeks input on the specific requirements for such licenses. 16. Please provide specific recommendations for the radio frequency bands, bandwidths and radio license conditions that are considered necessary for Data telecommunications services in the Kingdom. Please provide details and international precedents to support the recommendations. Please indicate approaches that should be used to optimize spectrum efficiency. TELECOMMUNICATIONS EQUIPMENT Article 92, of the Bylaw, authorizes the CITC to issue a decision authorizing domestic or foreign organizations and testing facilities for type approval of telecommunications equipment and facilities. The CITC is currently developing the processes for type approval of telecommunications equipment. 17. Please recommend any technical standards, procedures or other steps that the CITC should take, pursuant to Chapter 12 of the Bylaw, to ensure the orderly and prompt technical approval of all equipment and facilities that may be required by the Data telecommunications service licensees in the Kingdom. 18. Should the CITC recognise type approval granted in other jurisdictions and pre-approve equipment accordingly? Under what conditions should the CITC pre-approve equipment with no further testing? LICENSING AND OTHER FEES Article 9 of the Bylaw states that the CITC may establish fees for, among other things, the commercial provision of telecommunications services, issuance and renewal of telecommunications licenses, and issuance and renewal of radio licenses for use of frequency spectrum. Currently, STC pays 20% of its annual net revenues for the commercial provision of telecommunications services. In addition, STC pays 1% of its annual net revenues for the license and SR 200 M annually for the use of frequency spectrum, pursuant to the provisions of Council 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 12

13 of Ministers Resolutions No. 135, No. 171 and No The Council of Ministers Resolution No. 171 indicates the 20% fee will be reviewed upon opening the telecommunications sector to competition and allowing new service providers entry. The CITC intends to select the successful Applicants in part on the basis of their financial bids. The final determination of the terms and conditions for the fees will be established prior to the licenses being issued. 19. Please provide your views on the fee structure and the amount that should be applicable for the licensing of all Data telecommunications service providers, i.e., license issuance and annual renewal fees, frequency usage fees, fees for commercial provision of telecommunications services, etc. 20. Please comment on the appropriateness of imposing the current fee structure and amounts applicable to STC upon the new Data telecommunications service providers. LICENSING PROCESS The CITC proposes to adopt a two-phased approach for the licensing of the new Data telecommunications service providers. The two phases are: A. a Pre-Qualification Phase, to select candidates that will be included in a short-list and entitled to submit an application for a Data telecommunications service license. As indicated in CITC Public Notice /2003, interested parties will be able to purchase the Request for Pre- Qualification ("RFPQ") information from the CITC. Candidates may submit a completed RFPQ application, after payment of the required fee identified in the RFPQ package. The RFPQ will contain further details on the information requirements and pre-qualification criteria following the conclusion of the Public process. However, the CITC intends to pre-qualify candidates on the basis of the compliance of the proposed consortium structure with all CITC statutes, other applicable laws and other criteria. It is expected that in order to pre-qualify, candidates demonstrate that they have appropriate: (i) (ii) (iii) means of making available the technical, operational and commercial expertise as the new entrant; experience in the field of telecommunications for a certain minimum number of years; experience in the field of data telecommunications for a certain minimum number of years; and 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 13

14 (iv) experience in the field of data networking for a certain minimum number of years; and B. an Application and Selection Phase, to determine which of the applicants will be qualified and awarded a license. Pre-qualified candidates will be able to purchase a Request For Application ("RFA") package from the CITC. The RFA will include specific details of the information and content requirements for applications, the process to be adopted for the Application and Selection Phase and a draft Data telecommunications service license. The Application and Selection Phase will allow each prequalified candidate the opportunity to submit its financial bid for the license as well as its business plan (to include its technical, operational commercial and financial proposals) for the rollout of Data telecommunications services in the Kingdom. Applicants will also be required to provide the CITC with proof of adequate financial resources to fund their proposed plan. Applicants will be evaluated based on their business plan, technical and financial proposals. The CITC has retained a consortium of advisers to assist it in evaluating the applications received. Qualifying applicants will proceed to the Selection stage of the Application and Selection Phase. The successful applicants will be those with the best technical, operational and commercial plans as well as the most favourable financial proposals. The CITC intends to issue Data telecommunications service licenses to the successful applicants. 21. Please comment on the proposed procedure and the criteria identified to pre-qualify and short-list and select the Data telecommunications service applicants, as described in the Pre-Qualification Phase and the Application and Selection Phase above. Please provide details of any proposed modifications, with supporting reasons. 22. Please comment on the Application and Selection Phase with regard to the process to be used for Data telecommunications service license fees. Please also comment on an auctioning process which could also be used to award more than one Data telecommunications service license. LICENSING SCHEDULE The CITC is considering the following schedule for the licensing of the Data telecommunications service providers. 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 14

15 Public Comments are due on the Public Document on or before Wednesday 08/11/1424H (31/12/2003G). Pre-Qualification Phase The RFPQ phase will last for six weeks from when the RFPQ is issued. Responses must be submitted by the end of the six week period. Questions from interested parties concerning the RFPQ must be sent no later than two weeks after the RFPQ is issued and the CITC will provide answers to such questions during the following two weeks. Application and Selection Phase The RFA phase will last for ten weeks from the date on which the RFA is issued. Responses must be submitted within the ten week period. Questions from candidates concerning the RFA must be sent no later than three weeks after the RFA is issued and the CITC will provide answers to such questions during the following three weeks. After the submission of the Applications the evaluation and the Selection stage will take place. 23. Please comment on the feasibility of the proposed schedule for the licensing of the Data telecommunications service providers. OTHER LICENSING ISSUES The CITC intends to consider carefully all comments and suggestions submitted in response to this Public Document, in order to develop a fair, transparent and effective Data telecommunications service licensing process for Data telecommunications services. The CITC also intends to apply the knowledge and experience it gains in this Data telecommunications service licensing process to its other licensing actions, as it moves to open the Saudi Arabian telecommunications markets to competition. 24. The CITC would welcome any other constructive comments on the approach it should take to the Data telecommunications service licensing process. 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 15

16 RESPONSES Responses to this Public Document must be submitted to the CITC on or before Wednesday, 08/11/1424H (31/12/2003G) 2.30 pm, Local time, to either one of the addresses outlined below. 1. to: 2. Delivery by hand or by courier to: The Office of the Governor Communications and Information Technology Commission King Fahad Road Riyadh 11588, KSA. 11 th November, 2003 Public Document - Licensing of Data Telecommunications Services 16